The defense industry is having a software moment. From the playfulness of Platform One’s cheeky and geeky “Waterfall, Only You Can Prevent” Smokey-the-Bear-meets-Yoda logo to its serious requirements for agile acquisition and development, the U.S. Air Force has doubled down on software. Likewise, the contracting community is focusing investment on software engineering, model-based design, software-defined hardware and supporting talent. The moment rapidly is becoming a movement. Nowhere is this more apparent than in sustainment.
Spare parts and MRO have long lives ahead of them. Geography, distance and kinetics matter. Still, this moment is different because software increasingly is being managed and contracted separately from the assets it supports. The Army’s commitment to a modular open-systems architecture for Future Vertical Lift to the Air Force’s Digital Century Series concept exemplify how software increasingly is being containerized and decoupled from the hardware it supports. This separation allows for hardware and software development, deployment and sustainment to be independently agile, yet coordinated. It also fundamentally challenges the premise of today’s sustainment business model.
The sustainment business as we know it is built upon providers’ monetization of the sales and servicing of proprietary parts over multiple decades of an asset’s lifetime, increasingly supported by advanced analytics. But what happens to this model when software and hardware life cycles move in parallel but at different speeds? What happens when intellectual property and asset capability increasingly are built on software? How sustainment providers respond will determine the ability to match faster, more frequent requirements and their market viability. To maximize effectiveness, sustainment providers must address these core business elements: their operating model, product management and changes in contracting and managing intellectual property (IP).
The separation of software raises two challenges to sustainment operating models. First, it shifts focus from parts and MRO to delivering mission outcomes “as-a-service,” a trend reinforced by my colleagues at Accenture Research who have found “product-as-a-service” business models are a leading investment target in aerospace and defense.
Second, it requires a new means of developing and deploying capability. Emerging requirements for more rapid, agile software drive capability insertion, requiring the sustainment function to operate in a commensurately agile and secure fashion. This major change will require sustainment providers to retain institutional knowledge while looking within and outside their companies for “as-a-service” operating models.
Software’s acceleration of the “product-as-a-service” delivery model poses more basic questions: How is the “product” defined, and how should it be managed? Today it is defined through coordinating parts availability and maintenance activities to maximize asset availability. Yet as software drives more frequent capability development and insertion, and acquisition is linked to achieving missions, how the sustainment “product” is managed also must change.
While customer contractual requirements for open architectures and model-based design will ease technical integration, product management will not be due to technical savvy alone. Rather, product management must be proactively iterative, converting a prioritized understanding of mission needs into a backlog of work that can be delivered in increments using modern software engineering. Most of all, product management must baseline, measure and judge itself by the value it delivers to its function and mission.
If program value and IP are embedded in agile software releases, what is the effect on contracting models? For example, should government customers fund software development, grant contractors its IP and then buy updates for the life of a program? Likely not. Long-term monopolistic structures reward long product development cycles. Frequent, fast product sprints will drive contractors to explore new contractual models, from internally funding product development and monetizing platform utilization to revenue-sharing with government investors to placing a greater proportion of their compensation at risk and tying it to mission outcomes.
The current software moment is poised to change the nature of sustainment. From operating models to IP protection and revenue generation, the incorporation of more frequent, mission-capable software is straining the bounds of current approaches. If sustainment providers can become more agile, embrace open architectures, extend product development into sustainment and focus on mission outcomes, then they can define their roles for the coming decades. If not, their customers and others will be more than willing to take up the software mantle in their stead.
Craig Gottlieb is the managing director in Accenture’s aerospace and defense practice, focused on innovation in aftermarket services.
The views expressed are not necessarily those of Inside MRO.
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