The defense industry faces a range of challenges stemming from both external and internal factors. Understanding these aspects is crucial for effective management, strategic planning, and the implementation of modern PLM tools.
The global defense industry faces numerous technological challenges that require innovative solutions and advanced management tools. Key challenges include:
Digitalization progress in the EU significantly impacts the defense sector and military aviation. 69% of EU companies have implemented advanced digital technologies such as big data analytics, artificial intelligence, and robotics, bringing the EU closer to the U.S. level (71%). Digital transformation allows for better data and process management, making PLM technologies even more relevant.
In 2023, the European defense sector generated revenues of €158.8 billion, a 16.9% increase compared to the previous year. Specifically, the military aviation sector reached €64.8 billion, an increase of 15.8%. Such rapid expansion requires modern product lifecycle management systems to better coordinate production, supply, and equipment upgrades.
In 2024, total defense spending by EU countries reached €326 billion, about 1.9% of the EU’s GDP. Forecasts suggest this spending will rise by another €100 billion by 2027. For the 23 NATO member states in the EU, defense spending amounted to 1.99% of their combined GDP in 2024, with a projected increase to 2.04% in 2025. At the NATO summit in Vilnius, it was emphasized that 2% of GDP should be considered a minimum, with further increases necessary to ensure full preparedness for modern threats.
An important aspect is also the growing emphasis on research and development. In 2024, spending on research and technology (R&T) reached €5 billion, but the EU still has not met the agreed target of 2% of R&T spending. Despite increased investment, only two member states account for over 80% of total defense research spending, highlighting the need for better coordination and joint European research initiatives. A particular focus is on acquiring new military equipment – €61 billion was allocated for this in 2023, and in 2024, this figure exceeded €90 billion, representing 88.2% of total defense investments. This dynamic development requires effective project management tools, and PLM is a crucial solution in this regard, enabling:
Infrastructure challenges remain a crucial factor influencing the development of PLM (Product Lifecycle Management) technologies in the defense sector. Fourteen percent of companies in the EU indicate limited access to digital infrastructure as a barrier to investment, highlighting the need for IT infrastructure development and cybersecurity improvements in the defense industry.
Another challenge is the availability of skilled professionals. A shortage of workers with digital competencies may hinder the implementation of modern PLM systems. Training programs and initiatives to develop human capital in the defense sector are necessary to fully leverage the potential of digital PLM tools.
Digitalization also contributes to sustainable development. Technologically advanced companies are more likely to invest in environmentally friendly solutions, such as emissions reduction and intelligent optimization of production processes. Implementing PLM can improve resource management and reduce the defense industry’s carbon footprint, supporting the EU’s climate goals. The European Union has taken concrete steps to enhance defense cooperation through mechanisms such as PESCO and the European Defence Fund (EDF), which will allocate €8 billion for defense research and development and €300 million for joint military equipment procurement from 2021 to 2027. Additionally, the European Peace Facility has a budget of €17 billion aimed at supporting international stability and security. All these initiatives indicate that the EU is striving for greater defense autonomy, and PLM will play a key role in managing these dynamically evolving projects.
Currently, a significant portion of Europe’s defense spending goes toward purchasing military equipment from outside the EU. The European Defence Agency emphasizes the need to strengthen the European Defence Technological and Industrial Base (EDTIB) and develop common European production capabilities. Increased coordination within the EU and joint procurement efforts can not only reduce costs but also ensure greater industrial independence and interoperability of military equipment.
PLM systems can help companies comply with these regulations by:
PLM technology provides a systematic approach to managing information, processes, and technologies throughout a product’s entire lifecycle—from concept and design to production, disposal, or modernization. In the defense industry, PLM innovations help manage vast amounts of technical, logistical, and operational data that are essential for modern defense systems.
The defense industry has long been at the forefront of innovation and technological advancement, contributing not only to national security but also to progress in other economic sectors. Today, challenges such as cost optimization, shorter project timelines, and compliance with increasing regulatory requirements call for modern tools that support lifecycle management.
1. Enhanced design and prototyping
One of the most critical aspects of the defense industry is the design of new weapon systems, such as combat vehicles, firearms, and radar systems. PLM technologies enable design teams to collaborate in real time on a shared platform, reducing the time needed to develop new concepts and lowering prototyping costs.
For example, using computer simulations and digital twins within PLM systems allows for extensive testing of designs before creating physical prototypes. This approach minimizes design errors and increases the reliability of the final product.
2. Managing production complexity
Production in the defense industry is highly complex. Each weapon system consists of thousands of components that must be precisely synchronized. PLM helps manage this complexity by integrating data from different production stages and providing tools for monitoring progress and identifying potential bottlenecks.
3. Regulatory compliance
The defense industry is subject to strict regulations regarding security, environmental protection, and technical standards. PLM systems offer compliance tracking at every stage of the product lifecycle, simplifying audits and certification processes.
4. Supply chain efficiency
Modern defense supply chains are global and complex, involving multiple entities responsible for delivering components and services. PLM enables data integration from suppliers, manufacturers, and other partners, leading to more efficient supply chain management, minimizing delays, and reducing the risk of disruptions.
As part of the EU’s Digital Decade strategy and its 2030 objectives, the defense sector faces major challenges in digitalization and the adoption of modern technologies. According to the European Commission’s report on the state of the Digital Decade, current efforts by EU member states are insufficient to meet the targets related to digital skills, infrastructure, and the implementation of technologies such as artificial intelligence (AI) and data analytics. In this context, advanced PLM systems can play a key role in increasing innovation and operational efficiency within the defense industry.
The report highlights significant gaps in the EU’s digital transformation, including:
Digital transformation in the defense industry is not only a necessity but also an opportunity to achieve greater competitiveness and operational efficiency. PLM, as a tool that integrates data and processes, plays a key role in modernizing the sector. CTOs should prioritize investments in AI, cloud solutions, and digital education to ensure compliance with the Digital Decade goals and maximize the defense sector’s innovation potential.
Digital Thread is a communication framework that connects traditionally isolated elements of production and product development. In the defense sector, it enables the integration of data from various sources and systems, leading to better process management and resource optimization. The Digital Thread market is growing rapidly—its value is projected to increase from $11.42 billion in 2024 to $36.81 billion in 2030, with a compound annual growth rate (CAGR) of 21.5%. Over the longer term, between 2025 and 2034, the market could reach as much as $87.01 billion.
CIMdata research highlights growing investments in Digital Thread in the aerospace and defense sector:
PLM (Product Lifecycle Management) technology plays a crucial role in the Digital Thread ecosystem, enabling comprehensive lifecycle management. PLM systems integrate data and processes, improving operational efficiency, regulatory compliance, and decision-making. As a result, PLM remains one of the primary investment areas in the defense sector.
The implementation of Digital Thread can be significantly enhanced by adopting an Integration Platform as a Service (iPaaS). iPaaS enables organizations to integrate data and processes throughout the entire product lifecycle—from design and production to customer support. The benefits of using iPaaS include:
In the coming years, Digital Thread technologies will play an increasingly important role in the defense sector. Automation, real-time data analytics, and system integration will become standard, allowing companies to enhance efficiency, reduce costs, and better manage complex supply chains. Organizations that adopt these solutions will gain a strategic competitive advantage in the global defense industry.
Learn how Digital Thread can support PLM in your business
As Poland, in the context of industrial digitalization, we find ourselves in a unique position.
We can leverage more than two decades of experience from Western and Northern European countries in implementing and adapting enterprise-class systems such as PLM or ERP. This gives us a remarkable opportunity for faster adoption—thanks to the maturity and complexity of these systems—and an immediate transition to topics that realize the concept of the Digital Thread, focusing on system interoperability and the democratization of product data.
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