Resources, People, and Innovation: Driving Business Growth in Aerospace and Defense

Magnus Bjorendahl, VP-Aerospace and Defense, SAP
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2017
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Magnus Bjorendahl, VP-Aerospace and Defense, SAP

Magnus Bjorendahl, VP-Aerospace and Defense, SAP

Regardless of the industry, there are a variety of technological, demographic and economic factors driving an unprecedented era of change for today’s businesses. The “always on,” hyper-connected customer often uses more sophisticated and intuitive software at home than at work. For the first time in history, Millennials are outnumbering Baby Boomers in the workforce, affecting how today’s businesses hire, retain and engage talent. On top of this, increased pressure on natural resources is causing companies to adjust their approach to areas such as manufacturing, supply chains and employee management to effectively manage scarce resources. For aerospace and defense industry, there are additional pressures driving the need for business transformation. Airlines and defense customers are expecting products that are more capable, cost-effective and reliable. And with the volume of usable industry data being generated growing exponentially, aerospace and defense companies need to find ways to extract value from that data.

These changes in technology, workforce demographic and resources are just a few factors driving today’s companies to adjust the way they engage, react and respond in order to grow and stay competitive. The question that will begin separating the successful organizations from others is if they are prepared to capitalize on these opportunities.

Fortunately, this environment is rapidly evolving at a time when groundbreaking new software technologies, such as in-memory computing, cloud computing and mobile platforms are readily available. Today’s CIOs need to understand and embrace these new technologies to prepare their businesses for the future. With cloud computing, mobile and in-memory computing, aerospace and defense companies can further streamline and optimize business processes to cut waste and improve responsiveness. Aerospace and defense businesses of the future will have information readily available at the fingertips of decision makers, program managers and material planners. In a rapidly changing world this is critical. Defense contractors need to adjust to shifting priorities from the government, while commercial aerospace and defense manufacturers need to deliver on massive backlogs–and each segment is facing a variety of regulatory pressures that increase complexity. For original equipment manufacturers (OEMs) in the aerospace and defense ecosystem looking to stay ahead, it is critical to ensure current operations are both agile and efficient and that supply chain partners are seamlessly integrated to reduce supply chain risks. With the right technology in place to deliver consistent quality, aerospace and defense companies can ensure that IT will enable companies to execute on their broader business strategy, while ensuring compliance with government regulations and security standards.

From an employment standpoint, today’s aerospace and defense businesses are faced with the challenge of hiring and talent management among a new generation of technologically-savvy workers. The average age for aerospace and defense workers is 45-47 for an aeronautical engineer – compared to the median age of 42 for all American workers, according to a survey by Aviation Week and the Bureau of Labor Statistics. With many employees in this industry straddling this generational gap, the pressure is now shifting to how companies in this industry will evolve to compete with the likes of Google and Facebook. Recruitment and talent management is quickly becoming a true competitive advantage for the aerospace and defense companies who do it right, and recruitment tools are critical for companies when aligning their business strategy, moving into new markets and adapting to local practices. By leveraging the right analysis of workforce data to design, implement and monitor workforce optimization strategies, companies in the aerospace and defense space can reduce employee turnover by 32 percent. With the right IT-based human resources solutions, aerospace and defense companies can improve productivity and engagement with employees, achieve real-time insight into business needs, and support global expansion into new markets.

From an innovation perspective, modern aircrafts enerate up to one terabyte of data per flight from aircraft sensors. There is a tremendous business opportunity for OEMs in converting this data into actionable insights. These insights can reduce the number of flight disruptions and improve aircraft safety and aircraft reliability. To capitalize on the business opportunity, aerospace and defense companies need to define the right business models to monetize the value that is created for the customer. Performance Based Logistics (PBL) is one business model that shifts cost and risk to the OEM, thereby offering a significant opportunity in increasing margins by lowering operating costs. SAP’s performance benchmarking database shows that with the ability to adopt a preventative, predictive maintenance approach, organizations can reduce their unplanned downtime by 18 percent when compared to those that take a reactive approach. Secondly, aerospace and defense companies need to build an IT platform capable of digesting massive data sets, correlating and analyzing that data, and then triggering the appropriate actions. As every minute of flight delay cost thousands of dollars, speed is money.  An in-memory computing platform capable of handling a mixture of structured and unstructured information and able to apply predictive models to these large datasets is needed to handle these requirements.

The convergence of cloud, mobile, social and big data is reshaping the future of business, empowering a new era of business model transformation–and the organizations that properly prepare for and implement these solutions will be those that reap the real benefits. eep up with industry demand. Preparing for the IT challenges that will inevitably arise through the implementation of these differentiating systems will be critical, and the CIOs that put their organizations into a position to realize the benefits will be those that help their organizations grow and thrive.

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