Getting the balance right

SAP SE’s global head of aerospace & defence industries, Torsten Welte looks at how best to balance the ‘Five Cs’ of aerospace-business success for sustainable growth.

A space mission’s success is about balancing trade-offs, a prime example being the balancing of cost and schedule against appetite for risk. Success in the aerospace business requires a different sort of balancing, and the calculus required to strike that balance is only getting tougher as sustainability becomes a critical success factor going forward.

While scientists are only beginning to explore the impact of increasing numbers of rocket launches on Earth’s climate, the impact of aviation is clearer. A recent Deloitte report reminded us that, absent a serious focus on sustainability, aviation emissions could nearly quadruple from their 2005 levels by mid-century, and with that account for 22% of global emissions – about 10 times their relative contribution today.

That’s unlikely to happen, of course, because many governments, driven by global climate treaties and the domestic laws that derive from them, won’t let it. Those interventions could be costly: A sustainability crackdown that catches the aerospace industry off guard could cost $40 billion in revenues and 110,000 jobs, Deloitte estimates.

The industry must prepare, and in doing so strike a balance between contradictory forces. To put those forces in context, and keeping sustainability in mind, consider the yin and yang nature of the ‘five Cs’ of aerospace-business success: complex manufacturing, collaboration, connectivity, compliance, and cybersecurity.

Squaring off

In one corner we have complex manufacturing, which will require much more thorough collaboration and connectivity across the network of suppliers and customers. For aerospace manufacturers, sustainability considerations overlay complex manufacturing: it’s about understanding the embodied energy in what you make and sell – ideally, taking into account potential reuse, downcycling, or materials extraction at end-of-life. It’s also about how much energy aerospace products will consume as they’re used.

In the opposite corner loom cybersecurity and compliance. These act in natural opposition to collaboration and connectivity. After all, the fewer people and the closer proximity of those people working on something, the easier it is to assure security and compliance. Also, having your data all in one secure place makes it easier to run comprehensive analytics and, generally speaking, manage the business.

Given the realities of regional and global supply chains and the intense specialisation of suppliers throughout the aerospace industry, cybersecurity and compliance must function in a complex manufacturing world increasingly defined by deep collaboration. Sustainability is only part of what’s driving this need. Simply doing good business today requires core enterprise resource planning systems, plus integrated business-network platforms that bring in a bevy of suppliers and customers across product development, logistics and service.

This may sound like the realm of aerospace majors, and indeed, they are moving in that direction – if not already there. But it also applies to smaller players. To thrive amid an environment of intense global competition and increasingly intense regulatory oversight, you must be able to connect and share data across a spectrum of business functions. It’s not easy, and it makes cybersecurity and compliance that much harder. But if you don’t - and your competition does - you’ll soon have less business to worry about.

Sustainability as catalyst

The demands sustainability will place on industry IT infrastructure is a catalyst for this sort of enhanced connectivity and collaboration. Manufacturers will soon have no choice but to track the carbon footprints of their products. Component suppliers will have to track carbon for their customers, just as their suppliers must do for them. Neither aerospace nor any other industry can seriously cut emissions – much less prove it to customers and regulators – without a precise, real-time understanding of one’s product-by-product emissions profiles. Doing so will require compliance systems of unprecedented specificity, and ensuring that such detailed information doesn’t fall into the wrong hands – be they those of competitors or geopolitical foes – will demand cybersecurity solutions of great sophistication.

Fortunately, these solutions are taking shape, and as the demands on them grow more sophisticated, they will evolve in kind. By securely and thoroughly connecting some of the most formidable companies in the world with thousands of small and midsize aerospace firms, we can continue to harness the creativity, nimbleness, and entrepreneurial zeal of a free-market system while reaping such benefits to centralisation as quicker top-down decision making, shorter product-development cycles, and more comprehensive data sources upon which to run advanced analytics. That’s a balance well worth striking.

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