When it comes to digital transformation in the aerospace industry, companies are likely not making as much progress as they might think, says Doug Gates, KPMG.
Gates is Global Chair of Industrial Manufacturing and Global Head of Aerospace & Defense at KPMG.
He told FINN: “We did a recent report. We found out why the chief executives of many of the aerospace companies – about 90% of them – believe that they are on-track to implement digital transformation. Around 50 or 60% are saying that they’re still at a very tactical level, not strategic.
“What we see is that a good portion of the investment they’re making is more on the tactical side and not really on things that are going to redefine their business.”
“So I do not think that they’re gaining really as much as they think they should be at this point,” Gates said.
Gates shared some examples of how transformation – done the right way – could ‘redefine’ aerospace businesses.
“As you start looking at the opportunities and the broad set of data [we] can get on products and factories – how do [companies] take that to transform [their] business? Whether it’s to drive new aftermarket services, greater value for their client, or simply to drive more innovation into their products by getting information back on how they’re really performing in the field.
The power of the platform
“We are working with a few companies that are looking at taking their service business and moving into a platform business, much like you would see with Uber etc. but they’re backing up and moving away from product sales, to a model where they sell by the hour, and deliver services as part of a bundled platform. That’s where we see there’s going be a transformational shift.”
On what’s holding aerospace businesses back from reaping the rewards, Gates cited KPMG’s report in which seven out of ten CEOs say they are “frustrated” and that transformation is just taking too long, meaning they have pressure from shareholders.
“It’s always the rub that you have,” Gates said. “Long-term investment versus short-term shareholder gain, and it is a long-term investment.”
- Lay out a strategy: “In many cases we see them throwing technology at the problem and investing heavily, but not with a grand scheme of the strategy and the business benefits.”
- Stick to the strategy
- Communicate: “Involve your shareholders, involve your customers, involve your suppliers.”
- Ge started: “Some are simply waiting on the sidelines thinking it’s going to come to them and it won’t.” Gates said. “Get started.”