Accenture (News - Alert) is releasing findings from a new aerospace and defense survey titled Digital Coming of Age: Seizing the Digital Opportunity in Aerospace (infographics included). See the survey’s key findings below.
Focused on the new and changing role of digital in the aerospace and defense industry, the survey polled executives about their companies’ digital investments, strategic priorities, and challenges. These executives work for aerospace and defense aircraft and engine manufacturers, as well as suppliers, from eight countries: Brazil, Canada, France, Germany, Italy, Spain, the United Kingdom and United States.
Accenture conducted this survey because of the growing need to use digital technologies to drive the strategies of aerospace and defense companies. Of course digital per se is not a new phenomenon in this market. The industry has been using digital technologies for many years particularly in airplane design and development. What is changing is the growing importance of making strategic investment decisions viewed through a “digital lens” and using digital strategies to enhance supply chain, manufacturing and aircraft-service methods. This shift marks a fundamentally new way of doing business that the industry is starting to embrace. The aim is to more widely to boost efficiencies, lower costs, and increase revenues.
Following are noteworthy survey findings and insights:
- When asked to rank the top challenges aerospace and defense companies will face in developing digital capabilities in the next two-to-three years, nearly three-fourths (73 percent)—the highest overall percentage—said they do not have confidence that their companies have sufficiently mature digital technologies. In addition, more than two-thirds (70 percent) said they lack these necessary digital capabilities and skills within their organizations.
- Participants were also asked to identify their top challenges to developing a successful digital strategy over the next two-to-three years. The top two were creating a coherent vision of the digital future and data security. Nearly half (43 percent) said they are finding it difficult to create a coherent vision of the digital future. The same percentage said data security is a major challenge to accomplishing this goal.
- Technology and IT organizations are driving these companies’ digital agendas and will continue to do so over the next three years. Currently, 83 percent of respondents said technology and IT groups drive their respective corporate agendas and that will rise to 90 percent in three years.
- However, marketing and corporate boards of director groups will have a larger role in digital strategies in the future. In three years, 43 percent of digital strategies will be driven by marketing groups, up from the current 23 percent. Similarly, 60 percent of corporate boards will drive the digital agenda in three years, up from 47 percent today.
- Engineering will continue to dominate digital investments over the next two-to-three years. More than half (53 percent) said they would invest in engineering—far ahead of customer service (23 percent), supply chain (17 percent) and manufacturing (7 percent).
- The biggest impact these companies anticipate from their digital strategies and investments is cost reduction. Nearly three-fourths (73 percent) ranked reducing costs among the top three biggest impacts of a digital strategy on their supply chains. This far exceeded the second biggest impact, reducing manufacturing delays, which were cited by 53 percent. Similarly, 87 percent of respondents cited reducing costs as a top three impact of a digital strategy on their design and development activities.
- Participants were asked to rank the biggest reasons their companies invest in digital capabilities. Nearly three-fourths (73 percent) cited retaining customers and improving customer relationships among the top three reasons. More than two-thirds (70 percent) ranked growing revenues among their top three.
- Within the next two-to-three years, nearly half (49 percent) said they will spend at least 5 percent of their revenues to develop digital capabilities, up from 30 percent of companies currently.
- When asked whether their company has a clearly defined digital strategy, 60 percent said they have one defined and are implementing it. Thirteen percent said they have one defined but have yet implemented it.
- Collaboration in design and development led the list as important to 93 percent of respondents. Supporting a digital supply chain and aircraft in-service functions rated high at 83 percent and 73 percent, respectively.
Based on these findings, aerospace and defense companies should consider several actions to capitalize on this digital movement. Those include:
Embrace the change to digital. Even if it is difficult to get a consistent and comprehensive vision, even if toolsets and platforms are not mature and standardized, even if talent is scarce internally, tomorrow’s digital winners will be the ones who embrace digital today. They will shape their vision by progressive trials tapping into multiple talent pools and remaining agile regarding technology. Instead of focusing on improving assets and capabilities they already have, companies need to define a new direction—powered by digital. For this industry it means shifting the corporate cultures from a long-cycle engineering-focused approach to a more agile, organization-wide digital mindset.
Be proactive on supply chain relationships. Closer digital connections throughout the supply chain are paramount to success in this newly coalescing digital arena. As such, suppliers should be proactive about making these connections happen faster and more efficiently, and establish closer relationships with their customers. These numerous connections should be made throughout the entire product lifecycle from design, to production, to in-service aircraft support.
Gain insight and speed without over-engineering processes. Analytics provides the ability to translate issues into business outcomes by synthesizing disparate data and generating insights translated into actions. All this drives better decisions. As they embrace digital strategies more fully, aerospace and defense companies need to better understand how to use analytics as a competitive differentiator. Analytics facilitate better forecasting and more rapid asset availability, reduce product lead times because of better supply chain visibility, and improve program management decisions.
This survey did not focus on digital technology per se – digital has been a part of this industry for several years. This survey centered on the need for aerospace and defense companies to take a step back and start thinking through how to solve the biggest challenges in their companies using a digital frame of reference for all of their big decisions. How they invest in supply chain, what systems they use, what product manufacturing systems they should embrace, what marketing strategies they should use – all of this should be thought through and executed from the point of view of a company that is completely digital or aspires to be. Think of this new type of digital transition as a much more comprehensive and integrated movement in which all decisions are digital decisions, all strategies are digital strategies, all investments are digital investments, and all products and services are digital products and services.
The results of this survey underscore that this industry is moving full throttle down this path but has many hurdles to overcome. There is no turning back and there is plenty of room for improvement. Companies need to take action now to seize the opportunities that going “all-in” on digital offers.
Damien Lasou is the managing director of Accenture’s Aerospace and Defense business.
John Schmidt is the managing director of Accenture’s North American Aerospace and Defense business.
Edited by Maurice Nagle