In this episode discuss the increasing concern over cybersecurity threats from actors like China and North Korea, the importance of competitiveness and innovation in the defense space, and the use of AI in areas such as virtual reality simulations and data analysis. Jessica also highlights the significance of adhering to earned value management techniques and the challenges faced by the industry, including the longer product life cycles caused by factors like knowledge loss and resource demand. Overall, the podcast emphasizes the need for organizations to stay updated, comply with regulations, and leverage technological advancements to address industry challenges effectively.
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00:00 – Introduction
03:28 – The critical trend in the aerospace and defense industry
05:47 – The process on Cybersecurity
07:17 – Strengthening Cybersecurity
07:59 – AI in Aerospace
11:29 – Importance of getting more information
11:51 – Earned Value Management
15:01 – The product life cycle analysis
21:29 – Management is key
Transcript of “Challenge in the Defence Industry”
[00:01:01] Aaron Murphy: I’m glad to hear. To get things started, could you tell us about yourself and your background?
[00:01:06] Jessica Rivard: Sure. So, I had worked for most recently you mentioned Fincantieri Marine Group and I had worked in their IT and purchasing departments. Their main yard that they work with, Fincantieri Marine is a yard that works primarily as a subcontractor or prime contractor now with the US Navy. So, they’re shipyard and they build naval ships. Smaller than some of the larger aircraft carriers and such. But still a ship. So, with that came a load of aerospace and defense industry expertise and knowledge because of f illing the needs of the requirement to those systems, whether they were earned value management systems or prime business systems like MAIS was working with the different departments, finance, engineering, purchasing to be able to identify the need and meet the fundamental requirements to be able to be compliant with those regulations.
[Aaron Murphy: That’s fantastic. It sounds like there could be a lot of regulations, and something that you always have to be kept up to date with. So, is that something that you found where you constantly had to be researching and making sure you were ticking the correct boxes?
Jessica Rivard: For sure, but I found that I naturally like that research and gaining additional knowledge and insight. When dealing with the FAR and DFARS in that are related to contracts within the US government. For me it was an area that I was able to really delve into and specialize, and I liked the prescriptive nature that there wasn’t any real ambiguity and what was needed. In addition to the regulations, there are intent guides and auditing guides that help you to really hone in onto what the government and the different compliance agencies overseeing those regulations require.
[00:03:16] Aaron Murphy: Fantastic. It sounds like it was a very busy role. Can you tell us about a key trend in the aerospace and defense industry that people are discussing at the moment?
[00:03:29] Jessica Rivard: Sure. I think if anyone’s been watching the news, they can see that there’s been an uptick in concern of how we address things like cybersecurity and the threats from that, both a domestically and internationally from actors such as China and North Korea.
Additionally, looking in the defense space and innovation, making sure we’re competitive in that space. So as a way to do that, there’s portions of associations either directly for the government or indirectly more affiliated, who are really taking a hard look on whether the truly competitive nature of the government contracting industry is in their best interest.
They’re talking, recently I was at an event where a keynote speaker was speaking about how for him and the government China is our adversary as it relates to defense and innovation. That they’re turning through new innovations about three to four times the rate we are. In order to get us to a level that we can be competitive and truly secure, we have to up our game.
One of the ways that you do that is to improve the resources that you use to be able to [00:05:00] provide a more clear picture and have data-driven decisions at your fingertips. Cora offers an interesting platform and perspective to by which to do that, by allowing you to integrate disparate systems onto one platform and giving you the ability to really visually see where you have issues with your project that need to be addressed early on. It’s one of the reasons I was very attracted to Cora as a next step in my career.
[00:05:36] Aaron Murphy: That was a fantastic answer, and there always seems to be this growing focus as of lately with cybersecurity. And is it just due to the technology that other countries have that we haven’t step it up or what seems to be the process there?
[00:05:53] Jessica Rivard: On cybersecurity, I think people are just getting advanced and with the inventive of the internet and all of the things that come along with it, with every year and every month, we get new technology. And so, it’s a constantly changing space a constant defense wall to define how you are protecting yourself in against the new and innovative ways that people are trying to steal from you.
It’s just, it attacks broadened the area that needs to be defended from something that was truly a physical wall, a defense to something that is almost infinite in the areas that they can hit you. And it’s all about defining your cyber team to create an environment that reduces that penetrable area, right?
So, it definitely gonna be continuing to be an area we need to focus on as the global community because the attacks are only increasing and becoming more aggressive and hostile in nature.
[00:07:05] Aaron Murphy: Absolutely. And I suppose with the more barriers that we place in front of them, it slows them down and it gives us time to really build up and make everything more secure so that we can’t be, any of our information be stolen.
[00:07:17] Jessica Rivard: But just like regulations from the defense industry, the cyber needs, and. the dynamics of that threat change. And so, it requires cyber analyst to continually increase their knowledge and increase the innovative solutions that they’re implementing to reduce the potential for attack and reduce impact of attack if it occurs.
[00:07:46] Aaron Murphy: Absolutely. And to segway into another section here, another hot topic at the moment seems to be AI, artificial intelligence, especially with the integration of this chat GPT, with everything. Is there anything happening in the aerospace and defense industry in terms of ai?
[00:08:03] Jessica Rivard: Sure. There’s a couple of varied ways that AI is being utilized.I know in the shipyard that I had been working on, they were using something called Shipyard AI in conjunction with other virtual reality machines and integrations to be able to connect to overlay the actual camera output that you would see when walking through a ship with the model of things like your piping, so that when you were walking through a space you could envision how those wireways and piping runs would intersect and how that would look within a compartment prior to you actually doing the installation.
They did a similar thing in Italy and Fincantieri parent company showing their customers what a cruise ship would look like with the outfitting and finishing touches in the cabin before it was even completed. So truly being able to give you that touch and feel of what those textures and finishes are going to be like, ahead of time. So, if there is any changes and you are like, oh, that wasn’t what I was looking for, it can be done early and you don’t have as much impact to the performance of the project.
Aaron Murphy: Fantastic.
Jessica Rivard: That was one way that AI was used. Another way that I’ve seen AI used is more in line with the chat, what a Chat GPT and things like that would do in that it gives you a guided experience and in looking at your data to give you insights into making decisions. But more than that, to give you insights that you probably wouldn’t have even picked up on. So, we go through life in the general applying general heuristics and we look at our data based upon those HU heuristics and those, that particular paradigm, if you will.
Well AI, has the potential to look at it from completely different directions than you anticipated, and thus guiding you along to make decisions that may not even have come to your, to you as needing to be addressed. So, it’s really a way of breaking out the potential walls and boundaries we have in cognition.
So, for me, that’s a very interesting perspective in data analysis. I’m kind of a data nerd. So anyway, that we’re able to get a better look and be able to be more informed by our data, I think is wonderful.
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[00:11:05] Aaron Murphy: That’s amazing. Like it’s true, the more information you have, the better decisions you can make. And especially as you were saying, like being able to show the customers like what a ship is gonna look like. And instead of making changes at the end, which is gonna affect the overall budget as well, you’re saving time, which is fantastic and it’s a great application for it.
[00:11:25] Jessica Rivard: Agreed.
[00:11:27] Aaron Murphy: And you had previously mentioned about earned value management. Why is this so topical at the moment?
[00:11:33] Jessica Rivard: In addition to being required on many of, not all, the Navy contracts and most of the government contracts of a large value, you have the need to fulfil those requirements to get paid, right?
So, getting paid is always a good driver. But the second kind of focus on the importance of appropriately following earn value management techniques. There was a recent finding by the government on against a ship builder that was contracted for the US Navy on one of the classes of Phil Combat Ship.
Not the one built by my former employer, but the finding was that the three VPs on that organization had under reported EAC in an attempt to make the company look more profitable. And, they are being, they were brought up on charges related to wire fraud and attempted wire fraud. Now, that is a serious issue for sure, and I don’t know what the outcome will be of those, of that case, but it helps to inform both us and everyone in the GovCon A&D sector, how seriously that they should take earn value management and appropriately reporting. It is essentially more advanced accounting requirements and they take it just as seriously as they would you reporting your books that are related to managerial accounting. And it isn’t just reporting and the government expects you to treat it with the utmost value and to be a good steward of their money. And EAC is one of the ways that they capture that information to be able to access performance and to provide funding.
Aaron Murphy: That’s amazing. I actually can get over that. That’s quite shocking to hear. So, it’s a good thing to have the EVM in place and to see these little irregularities happening and you can follow up on it and make sure everything’s going by the book. But Wow, I really wasn’t expecting that. That’s crazy.
Aaron Murphy: And that’s just one example of why it’s important to have I suppose,
Jessica Rivard: Rather serious example, but yes. Only one.
[00:14:24] Aaron Murphy: Absolutely. And over the course of 15 years have, why have the product life cycles gotten longer rather than shorter over the last 30 years in the industry? Have you seen any changes or any examples to why this might be happening?
[00:14:38] Jessica Rivard: I think, part of the force that kind of, it is adding up to delay triton of the baby boomer generation. So, a lot of what we have depended on over year after year is that historical knowledge, those craftsmen who grew up doing the work necessary to get a product from start to finish with a high degree of quality. So, now we have a loss of that knowledge and the turnover is much higher at manufacturing companies and people struggle to attract and keep employees, which results in things taking longer. Additionally, we’ve had many corporations and manufacturers that have downsized in, especially in the raw material sectors like steel, right?
The number of steel mills that are in existence, the US has greatly decreased over the decades, and we don’t have as many to choose from. So, if the raw materials are in short supply, then those are used to build engines. Those are used to build ships. Those are used to forge flanges and be able to produce what we need to build a product for the government.
So that’s one way that things have definitely been impacted. With also, with the advance and increases of the regulations necessary to meet the standards of the government does come overhead. And getting an industry to be able to meet those regulations in an efficient way that doesn’t increase out the delivery of that vessel or plane or whatever you might be building for the government. It’s a hard balancing act so that there, I don’t think it’s one thing that really has resulted in those turnarounds increasing. I think it’s a multitude of things in addition to Now the bid process taking longer because we’re not working together. We’re competing against one another and not able to leverage that cooperation in to, to speed up the time from, to award, from award to delivery.
[00:17:11] Aaron Murphy: That’s interesting and saying about the resource demand, especially with the steel manufacturing plants, is it that people aren’t going into that job industry anymore? That they’re more focused on kind of the software side or?
[00:17:25] Jessica Rivard: It’s in the US, there was a big switch from being a more manufacturing and industrial focused society to being more of a service focused society. So many of the jobs and even the plants that were focused on developing and producing raw materials are no longer in the us. They’ve shut down. And the government here in the US is realizing that wasn’t such a great thing. That makes us dependent on people that may be our adversaries. So, whether it’s the production of computer chips or the production of steel, it’s something that the US is now taking much more close look at and evaluating whether or not we need to subsidize and to rekindle those industries in order to have self-sufficient.
[00:18:25] Aaron Murphy: That’s interesting. Especially if you have to go and get your components in that from another country or another supplier. There’s not really that level of trust at the same time, because as you said, they could be selling into competitors and the competitors might say not to sell to X, Y, or Z for certain reasons. And then you have to take time into consideration where you could have had them in a week’s notice, just say, whereas you could, might have to wait three or four weeks for them to arrive. So, it really does slow down the process..
[00:18:54] Jessica Rivard: Or months. Yes, for sure. Lead time is a, a big part in evaluation of your supply chain is essential and management of that supply chain. It’s becoming a much more engaged and intensive requirement. And the job on the job, on the behalf of the purchasing agent is much more difficult than it was 15 years ago or more.
Aaron Murphy: Interesting. And in terms of like with competition and that you normally see ’em trying to buy out their competitors and, in the aerospace, and defense industry, are mergers and acquisitions still a big shaper?
Jessica Rivard: They, they definitely are something to take, taking into consideration. The government of course, doesn’t want there to be a monopoly on things, so they may get involved, but with any large defense contractor, a prime defense contractor, they’re going to be seeking out other companies that help to round out their product lines and allow them to be more effective in delivery. And with that, of course, becomes the integration of those ERP systems and PPM systems and earn value management systems to get them on a unified platform. And the integrations between the different business units for that prime contractor are essential for them to have delay in disruption as they go through the merger process.
Aaron Murphy: And I’d imagine it’s quite difficult as well during this process to get everyone to switch over to the same platforms and getting them all on board with everything
Jessica Rivard: that organizational change path. Management is key to being able to have a successful success on end Q projects and future projects.
[00:20:50] Aaron Murphy: Amazing. And could you speak maybe about the clash of the global and national in the A&D industry?
Jessica Rivard: Sure. Again, this is more along the same lines as we have been talking regarding cybersecurity. Cybersecurity and also cognisance of Raw materials and other materials being available within the US. So as a country, the US wants to defend itself. But doing that with a focus on competition within the US has put, sometimes, large prime contractors at odds and competing for the same number of bids and not necessarily being more of collaborative competitors, right? So, being able to compete while still allowing the ultimate goal of benefiting the campaign capabilities of the US government.
So, it takes us understanding that. Although our competition is within the US with other defense contractors the defense contractors themselves, the competition is or at least their customer’s competition is China and actors outside of the US. So, we really taking that to heart and understanding that we need to be more aware. And although of course we are a capitalist society, we need to still be able to meet the needs of the customer in a more collaborative way.
Contact Jessica via email: [email protected]
Jessica explores this topic in more detail in “Aerospace & Defense Projects: 8 Headaches Keeping Your PMO Awake at Night