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As they grapple with challenges ranging from pressure on costs to scarcity of talent to new competitors, Aerospace and Defense (A&D) companies are becoming more aware of the need to work in efficient extended enterprise. But realizing that goal means resolving tensions between familiar and new ways of working: security versus openness; intellectual property protection against shared innovation; pooling of skills against fierce competition for talent, to name just a few. Balancing these effectively to create a high performance extended enterprise is a major departure. It needs new thinking and different behaviour.
Greater integration between suppliers, partners and customers is the clear direction forward for the industry. To gauge the maturity of such efforts towards operating as an extended enterprise, Accenture commissioned a qualitative survey among twelve leading A&D companies. Research shows that A&D businesses grasp the necessity of working in an extended enterprise in order to address the challenges they are facing and drive growth, but are finding it challenging to do so. This point of view compares the progress A&D businesses have made so far with Accenture’s analysis and recommendations.
Research respondents all agree that achieving an efficient extended enterprise organization is critical to addressing the many challenges of globalization. However, getting implementation wrong can have significantly adverse effects on companies’ performance (operational and financial) and their resilience. Businesses therefore must be able to define the optimal level of extended enterprise for their organization to maximize the chances of its successful implementation.
Accenture maintains that a high performance extended enterprise should be articulated around five key streams of activity: collaboration and governance; agility of operations; skills and talent management; innovation and data sensitivity.
In building the extended network, Accenture has identified five key streams of activity for companies to consider:
Collaboration and governance: – building the circle of trust
Defining the right performance indicators and developing common standards and compliance with regulation and certification are advised, as are the challenges of working with contacts that balance risk and rewards between parties.
Agile operations: a lever for efficient collaboration
Being able to respond rapidly, decisively and effectively will become more and more important as market conditions and the A&D operating environment is subject to unpredictable, pervasive and rapid change.
Skills and talent management: breaking the extended enterprise silo
In Accenture’s view, the development of an extended enterprise rests on the ability to share skills, expertise and knowledge throughout the ecosystem. Sharing needs to happen to benefit the entire network, rather than in isolation.
Innovation: diversity of thinking for greater market differentiation
Ensuring continuous innovation within the extended enterprise comes from making sure that the whole network is optimized rather than focusing on local improvements or short-term advantage. Recognition of mutual dependency is key, and calls for a joint approach, including sharing risk and reward across partnerships, with portfolios designed to achieve common goals and shared innovation roadmaps.
Data sensitivity and regulatory compliance
The heavily regulated nature of the industry demands strict adherence to the highest levels of data security and regulatory compliance. In Accenture’s view, operating effectively as a highly collaborative extended enterprise but with robust data security and regulatory compliance needs a new approach with a commitment to joint certification to ensure regulatory compliance.
June 3, 2013
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