For aerospace and defense firms, the digital thread can’t wait

Aerospace and defense (A&D) manufacturers are entering one of the strongest growth cycles in recent memory. Rising defense budgets, growing geopolitical instability, and sustained investments in military modernization are creating significant opportunities. According to a report by Kearney, global annual revenue will approach $750 billion this year and exceed $900 billion by 2030.

Despite the opportunity, many A&D manufacturers continue to face persistent challenges as they compete for new contracts, including labor shortages, supply chain volatility, aging infrastructure, increasing program complexity, and more stringent regulatory requirements.

Production capacity or pricing alone won’t guarantee success. Rather, the winners in the A&D industry will be those organizations that can make faster, better-informed decisions across the enterprise. This requires a level of visibility and coordination that many A&D organizations still lack today.

The solution isn’t simply to increase IT investments. For years, A&D manufacturers have invested heavily in digital tools and enterprise systems. Despite this, critical information often remains fragmented across engineering, production, finance, supply chain, and sustainment functions, resulting in delayed decision-making, reduced transparency, and limited ability to anticipate program risks before they impact operations.

To close these gaps, organizations must connect information across the entire product ecosystem so that decisions made in one area immediately inform actions elsewhere. This continuous flow of contextualized information is known as the digital thread.

The digital thread represents a shift from isolated decision-making toward enterprise-wide lifecycle intelligence. For organizations seeking to compete in the next generation of defense programs, it is rapidly becoming a strategic necessity.

The silent cost of fragmented operations

A&D organizations have historically adopted an incremental, patchwork approach to digital transformation where each investment addressed a specific business need:

• Engineering teams invested in product lifecycle management (PLM) platforms to manage product data.
• Finance and operations teams implemented enterprise resource planning (ERP) systems.
• Manufacturing organizations deployed manufacturing execution systems (MES) and shop-floor technologies.
• Sustainment teams introduced specialized maintenance and field-service applications.

Few of these investments, however, were designed to operate as part of an integrated data architecture.

The cost of fragmented operations, invisible at first, inevitably surfaces as market pressures place more demands on real-time intelligence, appearing as:

• Decision-makers who spend too much time reconciling conflicting reports.
• Program managers who struggle to understand how engineering changes affect cost and schedule performance.
• Manufacturing teams that must wait for engineering data to be manually translated across systems.
• Sustainment organizations that lack insight into the design and production history of deployed assets

The underlying issue is rarely a lack of data; A&D organizations possess more information than ever before. The challenge is that critical context remains trapped inside functional silos.

The digital thread as an enterprise operating model

A digital thread creates a continuous, traceable flow of information across the product lifecycle—from concept and design through production, deployment, and sustainment. Data retains its context as it moves through the enterprise, allowing stakeholders to understand not only what happened, but why it happened and what is likely to happen next.

In contrast to traditional technology capabilities, a digital thread is better understood as an operating model for managing complex products and processes. It’s a departure from digital transformation initiatives of the past, from ERP modernization efforts to PLM deployments.

The digital thread reframes these investments as components of a broader enterprise capability. Rather than optimizing individual functions, organizations create a shared source of product intelligence that enables more synchronized decision-making across teams. The result is not simply greater clarity, but greater organizational agility to align with expanding and emerging opportunities.

The results to date have been hard to ignore. Organizations that establish a robust digital thread can improve schedule predictability by as much as 25%, reduce unplanned maintenance events by up to 30%, and dramatically reduce the manual effort required for program reporting and earned value management (EVM).¹

Connecting engineering decisions to business outcomes

Let’s take a closer look at how the digital thread impacts design and development. Engineering organizations historically operate within specialized environments such as PLM, CAD, and model-based systems engineering platforms. Procurement, finance, supply chain, and program management functions, meanwhile, usually work from entirely different systems. This separation creates an intelligence gap between technical decisions and business consequences.

A seemingly routine engineering change can affect supplier qualifications, procurement timelines, production schedules, workforce requirements, and overall program cost. Yet those downstream implications frequently take weeks to become visible throughout the organization.

A digital thread fundamentally changes this dynamic. When engineering data is connected to operational and financial systems, stakeholders gain understanding into the broader impact of design decisions almost immediately. Manufacturing requirements remain synchronized with engineering intent, procurement teams receive earlier signals regarding sourcing implications, and program managers gain clearer insight into cost and schedule impacts before they escalate.

Organizations that strengthen these lifecycle connections have reported reductions of 20% to 30% in engineering change cycle times,¹ accelerating the transition from concept to production while reducing costly rework. The strategic benefit is not merely speed, but the ability to make engineering decisions with a more complete understanding of operational, financial, and mission impacts.

Bringing production, finance, and program execution into alignment

Production environments operate in a constant state of change. Supplier delays, engineering revisions, workforce constraints, material shortages, and funding shifts can all influence program performance. Yet many executives still rely on reporting structures built around historical snapshots rather than current conditions.

This challenge is most keenly felt with government contracts, where earned value management, estimate-at-completion (EAC), and estimate-to-complete (ETC) metrics play a critical role in financial oversight. Without integrated operational data, these measures often require extensive manual reconciliation across multiple systems before leadership can act on them.

A digital thread allows for a more dynamic approach. By connecting manufacturing operations, program accounting, funding structures, and execution data, organizations can monitor performance as conditions evolve. Variances become visible earlier, forecasts become more reliable, and decision-makers gain greater confidence in both operational and financial reporting.

The shift is profound. Organizations that have implemented digital thread technologies have reported reductions of 30% to 50% in manual EVM reconciliation efforts while improving EAC forecast accuracy by 10% to 20%.¹ Equally important, program management moves beyond explaining yesterday's performance and begins anticipating tomorrow's challenges.

Transforming sustainment into a strategic asset

For many defense programs, the cost of maintaining in-service equipment—known as sustainment—can account for as much as 70% of total program cost.¹ Despite its importance, sustainment often remains one of the least integrated parts of the enterprise. Maintenance records, for example, may be separated from production history, or operational performance data may never reach engineering teams.

A digital thread closes this loop.

Linking field performance data with manufacturing history, engineering configurations, and supply information enables A&D organizations to gain a more complete understanding of asset behavior in operational environments. This enables predictive maintenance strategies, more effective spare-parts planning, and faster root-cause analysis of failures. Equally important, it provides engineering teams with a continuous feedback mechanism that can improve future designs.

With the aid of a digital thread, sustainment ceases to be a downstream support function and instead becomes an active driver of operational and financial performance. Organizations equipped with this kind of mature lifecycle awareness have seen reductions of 20% to 30% in unplanned maintenance events while improving readiness rates by 10% to 20%.¹

Why the digital thread is an imperative for all executives

Digital thread initiatives often turn up first on a CIO’s radar because implementation involves systems, data, and integration. For CIOs, a digital thread provides a framework that turns isolated modernization projects into a coordinated enterprise capability.

But the value of digital thread investments extends well beyond the CIO's office. COOs, for example, stand to gain greater awareness across production, supply networks, and program execution from it. For CFOs, a digital thread can lead to greater forecasting confidence and stronger financial controls. For strategy leaders, benefits include increased competitiveness through better bid accuracy, lower program risk, and improved operational predictability.

More importantly, a digital thread establishes the foundation for the next phase of digital transformation. AI, automation, digital engineering, and predictive analytics all depend on trusted, contextualized, and consolidated data.

Without a digital thread, A&D organizations risk scaling their business intelligence on top of a fragmented foundation. With it, they gain the ability to automate decisions, identify emerging risks earlier, and execute with greater speed and precision.

The next decade will belong to enterprises that know how to leverage their lifecycle data

The aerospace and defense organizations best positioned to meet the rising tide of the future won’t simply be those with the biggest facilities or the largest workforces. They will be the organizations that know how to turn their data into a strategic differentiator.

As defense demand accelerates and program complexity grows, competitive advantage will increasingly be defined by decision velocity—the ability to translate information into action faster than your competitors. The digital thread provides the foundation for that decision velocity. More than a connectivity initiative, it establishes the data architecture needed to support predictive operations, autonomous workflows, AI-driven decision support, and mission-ready execution at scale.

The issue facing A&D leaders isn’t whether they’re capturing enough data. It’s whether that data can move across the enterprise with sufficient context, traceability, and intelligence to create measurable business value.

Those that solve this challenge will do more than merely participate in the industry's next growth cycle; they will define it.

If you’d like a detailed blueprint on how leading A&D organizations are building lifecycle data connectivity at enterprise scale, read the complete Kearney and SAP whitepaper, The digital thread imperative in aerospace and defense.