RESEARCH REPORT

In brief

In brief

  • Only 15% of today's aerospace and defense companies have both strong digital operations strategies and the ability to generate value from them.
  • As commercial aviation picks up and defense budgets shift, companies will need to be flexible in meeting diverse and ever-changing needs.
  • Companies may need to focus on three key strategies to accelerate their transformations: leadership, governance and skills.


Winning the aerospace race for digital operations

More than a year into the pandemic, much is still up in the proverbial air for the aerospace and defense industry.

Passenger expectations and defense budget priorities are shifting. Space is becoming a bourgeoning frontier. Airlines are restructuring fleets. New competitors are emerging.

This inflection point makes winning the race for digital operations more urgent than ever.

Digital operations impact every part of the aerospace and defense business. And the time to act is now.

Piloting plans

Aerospace and defense companies have made tremendous strides in the race to mature their digital operations.

For most aerospace and defense companies’ digital operations maturity is somewhere between the pilot stage, with initial digital capabilities implemented in a single site, and the scale-up of those capabilities to multiple sites. (See Figure 1)

Graph shows Aerospace and Defense digital maturity. From Capability not relevant or not started to Capabilities are fully deployed in all sites/plants and provides measurable benefits.

Figure 1 – Aerospace and Defense digital maturity; Source: Accenture intelligent engineering and manufacturing Race for Digital Operations analysis.

Change is in the air

As aviation picks back up unevenly across the globe, companies will need to be flexible in meeting diverse and ever-changing needs.

If aerospace and defense companies remain captive to current enterprise technologies—siloed in on-premise data centers—they may not have the agility or decision-making ability required to capture this potential new growth.

Aerospace and defense companies have a unique opportunity to simultaneously grow their core business and plant flags in new segments such as urban air mobility and space-based services.

Well-funded challengers—whether privately held or supported by the billions being funneled into special purpose acquisition companies (SPACs)—will likely fill the void if companies don’t act now.

Charting a new course

Aerospace and defense companies sell to demanding customers and have some of the most complex operations and supply chains in the world. Building a cohesive digital strategy, let alone executing on it, is easier said than done.

15%

of today’s aerospace and defense companies have both strong digital operations strategies and the ability to generate value from those strategies. (See Figure 2)

Graph showing Value Index versus Digital Maturity Index. These are divided into Early Leaders, Value Makers, Traditionalists and Efficiency Executors.

Figure 2 – Assessing digital strategy and value creation; Source: Accenture intelligent engineering and Race analysis.

Companies need to focus on three key strategies to accelerate their transformations and win the digital operations race.

1. Leadership:

11%

of aerospace and defense companies currently have more than half of their leaders skilled in using analytics for decision-making.

Digital operations can’t be scaled if leaders don’t embrace and embed them. If leaders are not fluent in using data-driven analysis to make decisions, investments in digital operations and a more agile operating model will likely fail to live up to their potential.

2. Governance:

Success depends not only on driving decision-making from the top, but also pairing decision-making with the proper oversight of the quality and depth of data that informs it.

46%

of aerospace and defense companies governed and steered digital investments and transformation at the group executive or board levels.

33%

have a governance structure fully deployed for data management used for decision-making.

3. Skills:

Digital needs to be part of company culture to win this race. There is increased focus on preparing workers for success in the digital future.

22%

of aerospace and defense companies are currently investing to reskill greater than one in five of their employees.

61%

firms seeking to increase their digital talent (AI, data science, digital platforms, programming) teams in the next 5 years.

Taxiing for takeoff

What does winning this race mean for the bottom line? Aerospace and defense companies have placed significant digital bets, investing 2.4% of their sales in digital operations and expecting to increase that to 3.8% in the next five years.

They also anticipate seeing operating income impact from their digital plays increase from 2.4% to 3.9% in the same timeframe.

However, outcomes are not only about financial gains. Executives told us that sustainability, workforce engagement, ability to innovate, organizational agility and better customer experience had come to the forefront as success metrics for digital investments. As the industry taxis for takeoff, significant gains across all these fronts can be made with judicious investment in leadership, data governance and digital skills.

John Schmidt

Senior Managing Director – Aerospace & Defense, Global


Marc Gelle

Senior Managing Director – Aerospace & Defense, Europe


Ajay Chavali

Managing Director


Jeff Wheless

Principal Director – Aerospace and Defense, Accenture Research

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