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Digitalisation - opening doors to new market opportunities

Posted 9 October 2020 · Add Comment

Giampiero Terzi, managing director of Accenture’s Communications, Media & Technology practice in the Middle East makes the case for digital transformation in the aerospace and defence Sectors

Pictured Right: : Author, Giampiero Terzi, managing director of Accenture’s Communications, Media & Technology practice in the Middle East (Image: Accenture)

 

Without a doubt, the Aerospace and Defense sectors today are facing unprecedented disruption on multiple fronts. New competition, such as agile new entrants offering greater cost efficiencies and innovative digital business models are redefining these fields.
The struggle for the right talent continues to intensify, with the industry finding itself challenged when it comes to attracting and retaining the best STEM professionals. In addition, current supply chains are facing increasing volatility in uncertain times, as agile new technology-focused competitors are changing dynamics across the value chain. 

And with overall demand for passenger aircraft set to double over the next two decades, original equipment manufacturers (OEMs) will need to ramp up production efficiency to continue to stay competitive. Defense demand is also growing fast at 2.1% CAGR over five years, driven by regional tensions and defense platform replacement in the US and Europe.
So, what can be done? And how can these companies weather this market overhaul, meet the rising demand, and secure a healthy bottom line while doing so?
Accenture’s research confirms that a comprehensive digital transformation strategy is essential to address the challenges companies in these sectors face. While 76% of aerospace and defense executives acknowledge this finding, 66% believe that digital will inevitably open the door to new market opportunities.
A growing number of aerospace and defense companies are embracing a range of digital technologies, from AI to robotics, analytics and automation. However, only the top 19% are achieving significant returns on their digital investments across key business functions and seeing the rewards of doing so reflected on the bottom line. These industry ‘champions’ are successfully scaling more than 50% of their digital proofs of concept  (See illuistration below)

*Figure 1: RODI for aerospace and defense champions - (RODI is calculated as Return on Investments (Net Gain/Total Investments) from scaled digital POCs across all the key business function)


Moreover, champions today achieve an improvement of up to four times on their digital investments when compared to other industry players. Aerospace and defense businesses that have embraced this imperative are already pulling ahead, with new business models that are moving them decisively from today’s core operations towards new approaches that drive growth.

On the other hand, those hesitant to do so are still lagging and need to step up their pace to reach their own digital destination. To do that, they need to focus on three things:

1. Digitalize across the value chain: To adapt to the disrupting forces reshaping both the Aerospace and Defense industry and the wider world, companies will need to embed digital across the entire value chain, across sales and contract, design and engineering, supply chain, manufacturing and aftersales service, and human resources and finance.
2. Collaborate to innovate: Aerospace and defense organizations operate in a complex ecosystem. To drive innovation and boost future readiness, they’ll need to collaborate across the industry and technology ecosystem, working together with a wide range of different partners, suppliers and vendors on new products and services.
3. Embrace new business models: New developments and systems require new business models: aerospace and defense organizations need to manage the wise pivot between today’s essential ongoing business continuity and new business models to shape the future, balancing current needs with the imperative of moving decisively to a new work environment.

There are some big rewards on offer and companies that successfully embrace digital at the core of their businesses are likely to obtain those rewards. Importantly, to fully harness Accenture’s three-point approach and accelerate purposefully towards digital transformation, companies need to establish a ‘digital-first’ mindset across all aspects of their business, putting digital at the heart of operations and building digital capabilities across the value chain. To learn more about mapping your digital transformation, view our industry specific Destination Digital report.

 

 

 

 

 

 

 

 

 

 

 

 

 

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