The Digital Coming of Age

Seizing the Digital

Opportunity in Aerospace
Digital is transforming the aerospace and defense industry. Or is it?
Conventional wisdom would suggest that digital is a pervasive
change agent across the industry, changing how companies
interact with customers and suppliers, manage talent, make their
products, and support them in operation.

We wanted to know more.

“Digital” is generally defined as a set of technologies that include
social, mobile, analytics, big data, and cloud. Accenture takes this
technology-focused definition further, focusing on the impact
of digital technologies in a given industry. We do this from two
perspectives. The first is digital customers, markets, and channels—
understanding how digital can deliver a consistent, meaningful,
and relevant customer experience across all channels, customer
segments, and geographies. The second is the digital enterprise—
demonstrating the impact of digital on optimizing the efficiency
and effectiveness of internal operations and the delivery of
products and services.

The Digital Coming of Age | 1

Given that aerospace and defense Original Equipment Manufacturers (OEMs) and
tier one suppliers can be both digital customers and enterprises, the industry provides
a complex proving ground for the value of digital. To evaluate the impact of digital
in the industry, Accenture surveyed a global set of executives from several leading
commercial aerospace companies to understand how they view, value, and are
investing in digital. The perspective of these industry leaders and Accenture’s digital
experience leads us to an evolved understanding of the implications of digital within
the aerospace and defense industry and a set of recommendations for how the
industry can take full advantage of digital’s promise.

Accenture Digital Framework©

Digital Customers, Channels & Markets Digital Enterprise
Comms / Financial Products Health / Resources Comms / Financial Products Health / Resources
Media / Services Public Media / Services Public
Tech Digital Customers, Channels & Markets
Service Tech Digital Enterprise
Service

Comms / Financial Products Health / Resources Comms / Financial Products Health / Resources
Media / Services Public Digital Strategy & Business
Media /Architecture
Services Public
Tech Service Tech Service

Digital Sales Digital Corporate Functions

Digital Strategy & Business Architecture

Digital Marketing Digital Supply Chain , Manufacturing , Operations

Digital Sales Digital Corporate Functions

Digital Content Management Digital Connected Products

Digital Marketing Digital Supply Chain , Manufacturing , Operations

Digital Commerce
Digital Content Management Digital Connected Products

Digital Customer Service

Digital Commerce

Digital Customer Experience

Digital Customer Service

Digital Social Media & Collaboration

Digital Customer Experience

Digital Applications
Digital Social Media & Collaboration

Digital Connected Devices

Digital Applications

Analytics
Digital Connected Devices

Analytics
2 | The Digital Coming of Age
Developing a New Perspective
The aerospace industry was an early adopter of digital, particularly in digital design
and engineering. Our research shows that the industry is ready to take the next step.

Digital is now starting to transform every FIGURE 1 | In which one of the following areas is your company planning to invest the most
aspect of the aerospace value chain, in digital capabilities in the next two to three years to increase opportunities?
from the design of aircraft through to
the onboard passenger experience. The Engineering 53%
executives we surveyed are increasingly Customer service 23%
making strategic investment decisions
Supply chain 17%
through a digital lens that looks across
the asset lifecycle from the supply chain Manufacturing 7%
and manufacturing, to the in-flight
experience and aircraft service and
support. Combined with the existing FIGURE 2 | In your company, what are the top three most important internally focused reasons to
digital foundation in engineering, these invest in digital capabilities?
developments mark an opportunity to
Reduce cost 73%
optimize cost, service, and revenue.
While our survey shows that design and Improve efficiency 73%
engineering still attracts the greatest Improve product lifecycle management 53%
amount of digital investment, customer Better use of analytics/predictive analytics 47%
service, supply chain, and manufacturing
Reduce manufacturing delays 43%
are drawing digital investment (FIGURE 1).
Improve safety 10%
How then should aerospace companies
harness digital to improve outcomes
from design through the passenger and
FIGURE 3 | In your company, what are the top three most important externally focused reasons to
operator experience? While our survey invest in digital capabilities?
shows that many companies are investing
for a digital future, it also reflects that the Customer retention/improve customer relationship 73%
industry perceives some major challenges in
Grow revenues 70%
realizing that future. Internally, respondents
were particularly focused on how to Improve relationship with partners 43%
develop a digital strategy, attract and Differentiation from competitors 37%
retain digital talent, and understand the Identify new business opportunities 33%
maturity and effectiveness of emerging
Customer acquisition 23%
digital technologies (FIGURE 2). Externally,
the uses of digital to improve customer
relationships and to drive incremental
and new revenue were seen as the most
significant challenges (FIGURE 3).

Given this perspective, how is the industry

investing in and applying digital?
The Digital Coming of Age | 3
Building the Digital Aerospace Enterprise
Our results indicate that the industry’s appetite to adopt and develop digital capabilities
is strong. Nearly half of the companies we surveyed are preparing to substantially invest
in digital capabilities over the next three years. How substantially?

Nearly 50% of respondents indicate that FIGURE 4 | What share of your total revenue do you estimate will be allocated to developing
over the next two to three years their digital capabilities in your company in the next two to three years?
companies will invest more than 5% of
their total revenues in digital, while nearly Don’t know: <1%: 1–4%: 5–10%: >10%:
30% of those surveyed will devote over 10% 17% 7% 27% 20% 29%
of their revenues to new digital capabilities
(FIGURE 4).
49%
Aerospace companies are developing digital will spend 5% or more of total revenue
strategies and capabilities to realize the
value of these investments. When asked
about digital strategy, respondents to our FIGURE 5 | What are the top three challenges for your company in developing a successful
survey indicate that they are focused on digital strategy in the next two to three years?
addressing three challenges: creating a
coherent vision for digital, securing digital
Difficulty creating a coherent vision
data, and improving the consistency of of the digital future 43%
information across their supply chains Data security 43%
(FIGURE 5). Inconsistent information at various parts 40%
of supply chain
We also asked respondents about their
perspectives on the digital capabilities that
will turn strategy into reality. They told us
FIGURE 6 | What are the top challenges for your company in developing successful digital
two main things: First, many question capabilities in the next two to three years?
whether digital technologies are mature
enough to deliver on their promise. Second,
Lack of confidence in sufficiently
the industry is finding that it requires a mature technologies 73%
more digitally savvy workforce, not only Lack of internal skills 70%
in IT but across the business in areas that
Lack of infrastructure 53%
will benefit from digital, data-driven
operations (FIGURE 6).

4 | The Digital Coming of Age

Driving the Digital Strategy
Looking further, we see that aerospace companies are taking steps to address the
needs for having a coherent digital strategy and building digital talent.

For example, our survey indicates that FIGURE 7 | Which function or functions within your company are currently in charge of
companies are moving toward centralized implementing the digital strategy and which will be in three years‘ time?
ownership of digital strategy, a move that
will provide a platform for driving forward Function within each business/ 2014 63%
a single, coherent digital strategy (FIGURE 7). geographic units 2017 60%
As digital strategies mature, aerospace
companies expect that they will generate Function across business/ 2014 47%
potential benefits across their supply geographic units 2017 60%
chains. Digital’s promises of improved
data accuracy, timeliness and insight
underscore the potential benefits that Digital transformation activities 2014 7%
survey respondents expect from imple- as a separate business (spin-off) 2017 13%
menting a digital strategy. In particular,
they pointed to reduced costs, fewer
program delays, and overall process FIGURE 8 | What will be the biggest impact of a digital strategy on your supply chain?
optimization as targeted outcomes of
their digital strategies (FIGURE 8).
Reduce costs 73%
Aerospace companies also expect that Reduce manufacturing delays 53%
their digital strategies will drive benefits Optimize processes 50%
in specific operational areas. Corroborating
Improve customer service 40%
the perspective gleaned from additional
Accenture research on product lifecycle Reduce risk of errors 33%
management in aerospace, our survey Speed to market 27%
results suggest high confidence in digital’s Higher profits 20%
ability to accelerate the design and
Develop new services 3%
development process (FIGURE 9).

FIGURE 9 | What will be the biggest impact of a digital strategy on your design and
development activities?

Reduce costs 87%

Reduce manufacturing delays 77%
Optimize processes 70%
Improve customer service 40%
Reduce risk of errors 23%

The Digital Coming of Age | 5

Building Digital Capabilities
As aerospace companies begin to translate digital strategies into reality, they remain
concerned about the maturity of digital technologies.

The way forward to the digital enterprise
in aerospace may well follow that of the
industry’s products. Contemporary aircraft
are platforms, with software increasingly
used to augment or supplant physical
systems. Indeed, today’s aircraft have
nearly three times the number of
software-driven functions as their
predecessors from the 1990s.
(Source: EU Scarlett Program, 2014.)
Our survey also indicated a growing focus
in the industry on acquiring digitally savvy
talent. These requirements extend across
the entire enterprise, from software
engineering to digital marketing, operational
analytics, additive manufacturing, human
resources, and beyond. As their talent
supply chains broaden to acquire digitally
fluent talent, aerospace companies
are no longer competing for talent solely
within the industry but also across the
broader technology ecosystem. Too often,
they are losing. Aerospace companies will
need new talent supply chain strategies,
from identifying and developing new
sources of internal supply to selectively
using teaming arrangements and third
parties to augment their digital talent.

This shift to software has enabled greater FIGURE 10 | In which one of the following areas is your company planning to invest the most in its
flexibility and performance for aerospace digital capabilities in the next two to three years to increase opportunities?
assets. By taking the long view and building
open, flexible architectures, aerospace Engineering 53%
companies can benefit from mature digital Customer service 23%
technologies while creating a defined
Supply chain 17%
roadmap to incorporate digital capabilities
that will emerge over the length of a Manufacturing 7%
program’s lifecycle. Our respondents
indicate that they are taking such a
lifecycle-centric view to their digital FIGURE 11 | How important are the following capabilities for your company’s digital strategy?
investments. To this point, engineering
continues to garner the majority of
Important: Very important:
digital investments (FIGURE 10). 33% 60%
Design collaboration 93%
Yet as the bow wave of new programs
37% 56%
currently in development moves into Engineering collaboration 93%
operation, we see indications that digital
40% 43%
investments will similarly move into the Digital supply chain 83%
manufacturing, service, and support 40% 33%
functions. Our research suggests that the Supporting MRO 73%
industry is looking to digital as a means to 54% 13%
Forecasting and prediction using
support product and services development, 67%
big data technology
shorten design/development lifecycles, 36% 27%
reduce program and service delays, and Virtual prototyping 63%
increase the efficiency of Maintenance,
Repair and Overhaul (MRO) execution
and in-service support (FIGURE 11).

6 | The Digital Coming of Age

The Digital Coming of Age | 7
Recommendations
Our survey confirms that aerospace companies recognize that digital has the potential
to deliver significant benefits for their own businesses and for their customers.
From increased integration of design and manufacturing to new customer experience-
driven revenue streams, digital is driving fundamental changes in the industry.
Based on these research results, we suggest five important steps that aerospace
companies should take to realize the digital promise:

1
Develop a It sounds obvious: “develop a strategy.” Yet, our research
clearly shows that aerospace executives are wrestling with
comprehensive
the complexity of building digital strategies that can deliver
digital strategy measurable benefits, not just buzz. The challenge starts with
across the the breadth of digital’s reach and impact, from core enterprise
organization. activities such as engineering, to the operator and passenger
experience. As our survey indicates, aerospace companies
understand digital’s potential, but their investments have yet
to mature beyond the funding of “hot” functional areas such as
engineering to a prioritized roadmap of digital enablement.
Respondents understand that future investments in digital
will need to reach across the full value chain. This requires an
integrated digital vision that incorporates enterprise and customer
imperatives: enhancing supply chain operations, increasing
manufacturing efficiency, improving in-flight experience, and
improving fleet availability through aircraft service and support.

8 | The Digital Coming of Age

 2
Establish a As aerospace companies shift from digital strategy to digital
operations, they will need to address two concerns voiced in
digital governance
our survey results: developing cross-functional digital teams
framework to and building confidence in digital technologies. Our experience
coordinate the indicates that digital strategy doesn’t become digital reality
development of without formalized leadership and governance to set the digital
digital assets and agenda and measure outcomes. To be most effective, digital
program governance should have internal authority and external
capabilities.
input. Internally, stakeholders from across the organization
should be represented in the governance process and have
objectives aligned to its outcomes. Externally, digital governance
should incorporate customer and business partner feedback to
accelerate acceptance across the supply chain.

The Digital Coming of Age | 9

 3
Use digital Our survey and market experience strongly suggest that digital is
central to aerospace companies’ thinking as they move toward
to support a
providing full lifecycle products and services. For product-centric
comprehensive companies, digital provides a platform for the rapid introduction
value chain. of complementary services and greater customer intimacy. In
return for access to new service channels, aerospace companies
must be prepared to deliver those services in a fashion that
addresses the specific requirements of customer segments and
even individual operators.

10 | The Digital Coming of Age

 4
Develop a plan Aerospace companies recognize that they face a shortfall in the
talent needed to enable their digital strategies. Importantly, as
for capability
digital becomes part of functions across the enterprise, the need
and skills for digital talent will extend far beyond the IT organization.
which taps into To address these gaps, companies must be able to identify and
multiple pools acquire cross-functional digital skills. This will require managing
of digital talent. multiple channels across the digital talent supply chain, from
traditional sources of hiring, to investments in key skill areas
and strategic teaming relationships with third parties.

The Digital Coming of Age | 11

 5
Use digital to Delays in entry to service and return to service from maintenance
have had significant impacts on OEM and supplier financial
improve collaboration
performance. Our research confirms that many aerospace
across the extended companies expect digital to build deeper and more pervasive
supply chain from collaboration across design, manufacturing, and aftermarket. As
manufacturing digital tightens connections across the supply chain, participants
through to service in the extended supply chain will seek to realize their long
sought-after objectives of lowering total cost and pooling risk.
and support.

12 | The Digital Coming of Age

Conclusion
As digital strategies offer new and improved ways to optimize the
supply chain, reduce time to market, and increase revenue, many
aerospace companies are considering how they use digital to
generate and sustain business results—a digital “coming of age.”
Our research confirms that now is the time to think proactively
about how to leverage digital technologies to solve big challenges.
Aerospace companies are aligning their cultures and operations
to the accelerated pace of digital, re-imagining how to serve
connected customers and their own internal operations.

Digital Coming of Age in Aerospace

Pilot and Passenger Operation & Engineering & Supply Research &
Experience Maintenance Manufacturing Chain Development

Flight Deck Predictive Product Lifecycle Enterprise Software Capabilities /

Data Maintenance Management / Collaboration Application
Process Optimization Lifecycle Services

Inflight Inventory Planning/ Order Information

Entertainment/Wi-Fi Optimization Forecasting Management Security

Personal Electronic Operations Automation/ Supplier Risk Partner

Devices Crew Management 3D Printing Collaboration Collaboration

The Digital Coming of Age | 13

Accenture Digital in
Aerospace Survey 2014
Accenture polled executives from 30
aerospace companies to assess the
maturity of digital in the commercial
segments of this industry and to discover
their views on the principal challenges
and opportunities associated with digital
implementations. These executives
represent aircraft manufacturers, engine
manufacturers and suppliers from Brazil,
Canada, France, Germany, Italy, Spain,
the United Kingdom and United States.
Copyright © 2014 Accenture. All rights reserved.
Accenture, its logo, and High Performance
Delivered are trademarks of Accenture.
This document is produced by consultants at
Accenture as general guidance. It is not intend-
ed to provide specific advice on your circum-
stances. If you require advice or further details
on any matters referred to, please contact your
Accenture representative.
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for the Aerospace & Defense industry, consulting, technology services and
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experience, comprehensive capabilities
Aerospace & Defense
across all industries and business functions,
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and extensive research on the world’s
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revenues of US$30.0 billion for the fiscal
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Contributors
Bouchra Carlier
Craig Gottlieb
Joyce Kline
Mélina Viglino
Jeffrey Wheless