What aerospace and defense firms are investing in the digitization of their businesses? According to a new study by the Boston Consulting Group (BCG), the answer is just about everyone. But simply spending money on digital capabilities doesnt make you a leader in this rapidly changing sector.
How much a company invests in digital generally does not influence whether it is a digital frontrunner or a digital follower, says Greg Mallory, a BCG senior partner and a coauthor of the report. Rather, the frontrunners in the race to extract value from digital are those A&D companies that define an enterprise-wide digital vision to guide their investment decisions across functions and that establish the right supporting structures, roles, and culture.
The study of 110 senior executives and managers at A&D companies found that nearly 100% of the respondents reported their digital investments were yielding positive results. These leaders appeared to regard digital investments as a low-risk move, as nearly half (45%) were willing to invest without a short-term business case.
Respondents fell into two groups frontrunners or followerson the basis of their self-reported success, BCG stated, in using digital in three categories: to improve operations, increase revenues and drive innovation. Among all respondents, 81% invested in digital to improve operations, while 49% did so to increase revenue and 52% to innovate. Of the companies that invested in all three categories, 58% are considered frontrunners.
While the level of spending did not generally correlate to being a digital leader, BCG found that 41% of frontrunners had higher spending levels on operations, while 25% had lower spends.
BCG said there are eight technology drivers reshaping aerospace and defense:
Companies are generally investing in similar technologies, BCG found. 3D printing for prototyping, simulation-based design, predictive analytics, and real-time monitoring are the most commonly implemented technologies, the firm stated.
Frontrunners apply digital technologies more broadly across their functions. They implement a digital technology in an average of 13 functions, compared with only nine functions for followers. BCG reported that a company is four times more likely to be a frontrunner in operations if it applies digital across the life cycle of the product, from initial program management to aftermarket and sustainment activities.
To support this broader implementation, BCG found digital frontrunners are developing an organization to support this transition. This includes a digital organization placed in the corporate offices or in business units, or as a shared service. The biggest differentiator between frontrunners and followers, BCG reported, is having a chief digital officer (CDO), although few companies have created this leadership position.
Both A&D frontrunners and followers ranked culture as the top challenge in adopting digital. After that, frontrunners cited finding the right digital solution, demonstrating the benefits of digital and identifying the right technology provider or partner. Followers said demonstrating the benefits of digital was their second most important challenge.
BCG warned that there would not necessarily be a lasting advantage for todays A&D frontrunners.
As more companies adopt similar approaches and digital tools become cheaper, the first-mover advantage erodes, the study stated. To stay ahead as competitors catch up, companies must ensure that their digital strategies continuously evolve.
Originally posted here:
Aerospace and Defense: Who are the Digital Frontrunners? - IndustryWeek
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