Op-Ed: As Defence goes digital, Australia’s ambitions should grow

The impact of COVID is driving new business models predicated on a more collaborative business environment and tightly directed industry policies from governments across the globe. While the challenges are daunting and the price of mis-steps is high, Australia can emerge with a strong and resilient sovereign Defence capability from the new focus on digitisation.

While COVID has disrupted many industries, the nature of disruption to Defence projects is unique. Project timelines have not been extended, delivery deadlines remain firm, competition for hard-to-find skills is as intense as ever and demand has grown rather than softened.

Our defence manufacturing capability has never quite matured to a truly continuous build program. This has hampered the development of the sector by making it more difficult to retain specialised skills as they must be reacquired from project to project. These skills are in short supply in any event, building immense pressure on defence industries players working to tight deadlines.

The suite of major projects emanating from the recent government initiatives and announcements – 12 submarines and nine frigates, in addition to armoured vehicles and sustainment programs for existing assets – represents a peak in the build cycle. If these projects are to deliver on their promise – both in terms of their own outcomes and their contribution to the future of the industry – we will need to approach them differently.

Workforce constraints will necessitate defence manufacturers to utilise new ways of working and advanced technologies. As one example, digital twins should be used extensively. This enables the project to be tracked in a trusted and effective manner in a digital environment. The ability to design, build, interrogate and test project elements in a realistic digital environment will limit defects and re-work across the life of the project.

Existing defence assets coming to the end of their life cycle were built before digital twinning technology was prominent. A significant amount of time, money and labour goes into sustaining these assets. When multiplied across the vast space of entire projects or assets, the need for manual and non-digitised maintenance scheduling, tracking and reporting becomes incredibly burdensome.

Much of the record-keeping for maintenance on existing assets is labour intensive. There is very little re-use of data, and limited application of predictive analytics to assist maintenance. This is something we must address in the next generation of Australian defence industry projects.

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Digital twinning can help us understand the best and most effective way to maintain the asset from the very start of its life. This will contribute to keeping projects on track well into the future by allowing people with scarce and specialised skills to be moved from maintenance to asset design and build.

Another area where digitisation can ameliorate skills shortages and expedite projects is in virtual learning and engagement. Technology that allows a person to be physically present at an asset and able to draw meaningfully on the skills of remote experts will be invaluable. For example, a technician physically present at an asset in Adelaide can use a combination of secure video technology and digital twinning to draw on the expertise of a specialist located in Perth or Sydney to triage and resolve issues on the physical platform.

The potential of digital twins and automated, AI-assisted record systems is not fully exploited if their implementation is confined to the design and build phases of defence projects. In order to assist our ambitions towards a continuous build, they should be integrated into the entire product life cycle of assets.

We only get one chance to properly embed digital technologies in the life cycle of an asset, and that is at the very beginning of the project in the design and build phase. Manufacturers and suppliers of defence industry projects should embed these digital capabilities with a view to implementing them across the entire life of the asset. It is comparatively simple to digitise a project at the outset, but it is extremely difficult to effectively digitise an asset that has been in service for a decade or more.

The immediate business case for digitisation in the defence and aerospace industries is irrefutable. Those companies that have gone early and big on digitisation have seen an outside return on investment, surpassing both their own expectations and the economy-wide average. Our global research shows that the top 19 per cent of aerospace and defence companies, referred to as champions in the table below, achieve significantly higher than average returns on their digital investments, compared with their industry peers. Their digital returns even beat the industry average for returns on overall invested capital (ROIC).

In defence, the digitisation task sits at the nexus of technology, manufacturing processes and governance. Each of these elements has to be considered and adjusted for in order for the digitisation process to be effective.

In today’s environment, where multiple suppliers are working variously in competition and partnership from project to project, digitisation necessitates a collaborative approach. Many defence suppliers already have a culture of collaboration with other suppliers and OEMs on complex projects. This culture will need to be nurtured and expanded in the coming years.

In the Australian defence industry, there is ultimately only one customer – the Department of Defence. They may procure through different departments and branches of the armed services, but the purpose of this procurement is to equip our armed services and intelligence agencies with the capability to defend our citizens.

It is likely, as defence industry's spending becomes a greater part of the economic recovery from the coronavirus recession, that we will see a more directed industry policy that aims to build not just defence projects, but also extend sovereign capabilities in defence industry. This will result in a medium-term trend towards standardisation – something that will be seen across industrial sectors beyond defence.

The implications of this for Australia’s defence sector are profound. There have been suggestions in past years that defence industry could be a viable export for Australia.

The advent of digitisation in the defence industry and the trend towards the development of standard, secure digital platforms for application to the defence industry opens new possibilities. We are seeing these two factors converge, with integrated digital environments which will provide Defence with a capability to host and manage information and data across multiple industry-led programs now either under consideration or development.

As the defence industry digitises and projects are increasingly cloud-contingent, the secure digital tools and environments initially developed to enable collaboration and standardisation across Australia’s defence industry could be exported to the world through the channels of the global suppliers and OEMs who are already participating in the Australian defence industry supply chains.

It’s these possibilities that are in part responsible for our decision to launch a 2,000-headcount Accenture Delivery Hub in Adelaide to serve the burgeoning defence and aerospace industries centred in the city.

As the digitisation of the defence industry continues apace, a stronger focus on digital enablement can result not only in the successful delivery of projects, but in the re-shaping of Australia’s sovereign industrial capability in the defence industry both at home and as an exporter of digital technology to our allies.

Paul Mylon is the ANZ managing director of aerospace and defence for Accenture