Technology integration: Changing environment means more opportunity but more risk
As governments demand more for less with every defence procurement, system integrators face greater pressure to bring together myriad technologies into one solution. In September, General Dynamics Canada proudly marked its 60th year as a system integrator, leading such programs as the TCCCS/IRIS communications system, the CP-140 Aurora modernization upgrade, the mission system for the maritime helicopter project, and the regional/sector air operations centres.
Seated in the firm’s new, environmentally friendly engineering facility in Halifax, Mike Greenley, vice president of strategy and business development, spoke with associate editor Chris Thatcher about how the sector’s role has changed. A recent addition to General Dynamics Canada, Greenley developed his own defence services firm in 1996, later bought by CAE where he served in senior positions until the end of 2007.
What have been the most significant changes for system integrators over the past decade?
For me, the biggest change has been the growth of opportunity for system integration skill sets. As governments in a number of countries have shrunk the size of personnel working on defence procurements, they’ve shrunk their engineering skill sets. That has resulted in the need for industry, globally, to pick up the system integration role. We’ve also seen a shift from custom development of defence solutions to an environment where defence departments want an integration of existing components – government-off-the-shelf or commercial-off-the-shelf products – to be integrated into the solution. In the past, you might have had hardware or software experts focused on certain components or subsystems; now, as a system integrator, you’re not always working with your own technology – you’re delivering an integration of existing commercial technologies, moving away from proprietary solutions. This shift brings its own challenges, and requires a broader range of expertise.
How has that changed the nature of partnerships with other companies?
You definitely do see increases in teaming. As that opportunity for system integration has grown, the leading integrators need a broader skill set in their companies. Instead of a few hardware and software engineers, now you need people who understand the military domain – industry has taken on some of that government role requiring an understanding of the nature of operations. Industry is now working with the military to develop a concept for the future deployment of a solution. Then we’re analyzing requirements, doing the design, development, testing and deployment. While we’re doing that, we’re sourcing all these off-the-shelf components. As a result, leading integrators require a much richer global supply chain management skill set and excellent contracting skills within the broader team. And, of course, in a country like Canada with a strong regional benefits program, you’ve also got demands to ensure you’re spreading out work to subcontractors in all the right regions as you partner with Industry Canada to meet their needs.
Very few can do all of the items I just listed. As a result, firms end up in a network of relationships where there are a few strong system integrators and a number of technology providers. We now see a constant mix of relationships as system integrators seek technologies and technology providers look for a system integrator to help channel their technologies into a solution. That’s an international phenomenon.
How has the shift for technology-driven solutions, rather than platforms, affected the sector?
As technology advances at the current pace, it becomes obsolete in a shorter period of time than the platform does. As a result, within the life of any given platform, the technologies resident on it have to be updated and enhanced throughout the life of that platform. This affects the solutions we provide as integrators. We’re now looking for the architecture, especially with electronics, that will be open and upgradable – it is going to be able to receive technology insertions efficiently throughout the lifecycle of that platform. It changes your approach but it means a richer environment for technology integration, which in a sub-domain like C4ISR [command, control, communications, computers, intelligence, surveillance and reconnaissance] is critical. With the range of sensors and intelligence and reconnaissance systems on both manned and unmanned platforms – that networked-centric aspect of the current day military – you need to ensure the solutions you’ve integrated can receive the latest sensor or data fusion concepts or common operating picture solution throughout the life of the system.
What is the most challenging thing customers are asking of you?
As the role of the system integrator increases, we’ve changed the relationship between the departments of defence and the industrial team. The number one thing affecting this is the requirement of the industrial team to take on more of the risk in the project. And that’s not just in the design and delivery of the solution; that’s in the full through-life support of that solution. We’ll now get contracts not just to conceive, design and deliver an integrated system, but also to support that system for 20 years. And we’re seeing things like performance-based, long-term support requirements whereby the industrial team is responsible for the continual performance of that system. Fifteen years ago, that risk would have resided with the government. Industry is ready, willing and able to take on this through life system integration challenge, however, there is a constant discussion about where is risk going to reside in the contracting model with the defence customer. You’re seeing procurement models that are increasingly trying to ensure that more risk is shifted on the industrial team.
In addition, because industry is helping conceive future operational concepts for the system, a firm may start into the relationship with a defence customer with less of the exact solution conceived. In the past, the customer’s engineers detailed everything. Now, we’ll work together to develop the requirements, come up with a design and look at the integration of components into that solution. The dynamic a number of countries are struggling with right now – and it will take a few more years to figure this out fully – is what contracting models are best to facilitate a very tight collaboration between the industry team and the government, while at the same time placing risk where it can best be managed in a commercially viable manner within that relationship?
How have recent operational requirements, and the high tempo of operations, changed what customers are seeking?
Defence departments, or governments in general, are trying to be more efficient and that causes pressure on timelines. As you mention, though, operational requirements and the tempo of those operations can cause weapon systems to be needed quickly. So in an environment where there is already that background pressure for efficiency, when you hit situations where a solution is needed immediately, you will see different procurement models being used – such as sole source urgent procurements of off-the-shelf items. In these situations, when an existing, full solution already exists, the initial role of the system integrator can be significantly reduced. However, there is still system integration needed to integrate that existing solution into the operational concept of the forces, and then to provide through-life support to manage the technology insertions that will be required.
Are solutions being introduced less complete?
Sometimes operational tempo will cause us to release a system more incrementally. Instead of taking a number of years to develop the full solution and deliver a full turnkey item, an incremental model will cause a team to release more and more capability in the solution every couple of years. That’s something that we’re seeing more often, especially on something like a C4ISR solution, to adapt to operational requirements. But you have to make sure the procurement and contracting model supports that kind of activity.
Given the nature of coalition operations with an increasing range of players, how large a challenge is data fusion so that all can operate collaboratively and access critical information where necessary?
Where necessary is the key word. As part of the change in operational requirements, we now have multinational operations with multiple agencies, and domestic operations with multiple agencies in an environment where the defence department is usually in support of other agencies, not in the lead. From a system integrator perspective, you need to understand not just the military’s operations and tactics and doctrine, you have to be robust enough to do that across multiple agencies. The technology solutions have to be adaptable so that the defence department can sustain its state-of-the-art technology base, and to connect with the digital technology base of other government agencies. The demand has been gradually increasing over the last five years, but over the past 24 to 36 months, we have made a solid step forward in our capability to integrate systems in a manner that can provide collaborative environments in a secure manner. We can share what needs to be shared, but protect what others do not need access to.
What skill sets would you instantly hire if they walked in the door?
The one skill set we would not hesitate to scoop-up is senior defence systems engineers. That’s a common global shortage. Because of the shift from government to industry, there is definitely steady competition for those engineers. Close to that, however, are project managers with experience in complex defence systems integration. The nature of collaboration with government now, the relationship is not just with your defence department customer; it’s with Public Works and Industry Canada, among others, so people who are capable of complex program management are a near second to those systems engineers.
Does the sector face a problem with pending retirements and loss of corporate knowledge?
Not so much the retirements. On the government side, I think you’ll see retirement issues because they did thin personnel worldwide in the ‘90s and have only recently started to rehire. On the industrial side, we’ve built up a solid system integration capability. Our focus is on how to develop that next generation of staff to build upon our current base. How do we bring in the next generation of skill sets?
Is industry working collaboratively on this?
I have not seen any industry collaboration there – different companies have their own programs to do that. We have programs, and we are starting new programs to convert different types of engineers, maybe software, into full systems engineers.
Is it a challenge to keep new talent in Canada?
We can hold the talent in Canada. We don’t see any kind of a brain drain. A lot of defence systems have security requirements so you are going to want residents of your country with the appropriate clearances working on integration programs. As a result, you don’t get a lot of international movement. The challenge for Canada is to ensure that there is a steady stream of system integration opportunities to employ people so we can sustain our workforce on significant programs.
How has the International Traffic in Arms Regulations affected project management?
As an international procedure related to using U.S.-based technologies, ITAR is something we absolutely have to be able to manage. Though there are programs that do not have any ITAR-controlled goods, the U.S. is half the global defence market, so the odds are if you’re a leading system integrator you’re going to have programs that have ITAR-controlled goods. Again, that’s another skill set you have to have as an integrator: solid ITAR management. There is an opportunity, however, for Canadians. On the international market, we’re starting to see countries ask for ITAR-free technologies. And as a Canadian system integrator, we often have technologies that are ITAR-free because they came out of a Canadian program, which can give us an advantage on select international competitions.
What are the biggest challenges facing mission systems integrators?
I think that the biggest challenge is the sustainment of that breadth of skill sets we’ve discussed: operational domain expertise, programmatic expertise, the full breadth of engineering expertise, global supply chain, contract management, ITAR management. The challenge is to hire, develop and shape that skill set, and to also constantly monitor the market for that sequence of programs that are going to require a systems integration skill set so that you can sustain that valuable work force.
Does Canada have an adequate defence industrial policy for system integrators?
We certainly don’t have a small “p” policy or a defined approach to system integration in Canada. Decisions are program-by-program based. In addition, we don’t have a defined procurement road map for defence, where you can see the programs and what year they might occur. As a result, it is a challenge to see the opportunity road map. With other nations, it’s not better or worse, it’s just different. But some do have a bit more predictability in their procurement road maps.
Is industry involved early enough in the process?
With system integration, the earlier you can have that dialogue with the customer, the better. Again, that leads back to procurement models. How can we best improve the relationship so that we can accelerate collaboration?
Are system integrators from other regions beginning to challenge North America with that kind of project management capability?
For system integration to be really effective, it usually needs to be local. It’s actually difficult for someone from another country to come into Canada and operate as an integrator due to the extensive skill set that is required, and the customer domain knowledge required. If we deploy to another country, we’ll often team with a local system integrator because they’re going to have that local military operational knowledge. However, foreign technology providers looking to partner to get their solutions into Canada often approach us as the local system integrator. We get more calls to talk about that then we did 10 years ago.
Looking ahead, where is innovation in this sector most needed?
Technically, in those architectural skill sets – architectures that are going to be the glue across existing off-the-shelf components, that provide the flexibility to allow upgrades constantly over time, to sustain a state-of-the-art technology base. There’s also a need for persistent innovation in information security management within those architectures. We constantly have to assure the integrity of information that we’re now flowing over a more flexible solution. Supply chain management is another area that requires constant innovation. You might not think of it off the top of your head but it is actually critical. Because we’re integrating off-the-shelf technologies, we have to innovate to globally source and import technologies all the time. That’s tricky. And finally, from a commercial perspective, continued innovation is required in contracting models, to get that balance of risk/reward in the relation between the government and industry on complex system integration programs.
An interview with Mike Greenley