InformationWeek
Defining The Business Value Of Technology
By Richard Adhikari
Issue date: Sept. 9, 1996
he law of the jungle has always ruled in the aerospace/engineering industry: Bigger and stronger is better. But size and muscle alone are not enough in today's competitive market. Companies need something to give them an edge--and they're turning to information technology for that advantage.
Aerospace companies are being pressured to cut costs. They can no longe r bill clients on a "cost plus additional charges" basis--under which they add charges to make up for underbidding on contracts. In-creased scrutiny by customers has forced them to bid contracts on a fixed-price basis.
Meanwhile, demand is soft worldwide in the defense and commercial aircraft sectors, and clients are demanding direct access to aerospace companies' data so they can oversee projects more closely.
The result: Aerospace manufacturers are beginning to reengineer their processes to compete in markets beyond defense. "The day of the $300 hammer is over," says Michael Taffe, executive for IT at Textron Defense Systems in Wilmington, Mass., developer of real-time business controls, sensor-fused munitions, and precision approach and landing systems. "Industry members must run their businesses like commercial operations to succeed."
Aerospace companies are increasingly buying off-the-shelf software rather than developing programs in house because mo st new software incorporates best commercial practices. They're also moving rapidly toward the paperless office and consolidating computer systems or moving to client-server computing.
Another trend in the industry is to upgrade E-mail systems and networks. This lets corporations cut costs through electronic document- sharing and allows them to explore new avenues such as the Internet and intranets, set up virtual workgroups, and even use virtual reality as a business tool.
At the space and defense subsidiary of TRW Inc. in Redondo Beach, Calif., the philosophy is to buy off-the-shelf software and standardize on a few tools. "We don't want to be in the business of maintaining software in such a fast-changing mar- ket," says Janice Pulici, VP of enterprise information systems.
These ready-made packages also make it easier for TRW to team with partners and customers, something custom-written software doesn't allow. The packages let TRW use E-mail and the Internet and intranets to automate much of th e discussion and work on contracts, so there's less need for face-to-face meetings.
"You can set up a teaming arrangement and get away from the issues of time, geographic distance, and so on," Pulici says. "This also lets us compete globally."
High-Tech Cost-Cutting
TRW's aerospace subsidiary is cutting costs by trimming and automating support services, converting its library to a paperless system, and automating its production. Computer-aided design (CAD) drawings sent and received electronically have replaced sheaves of blueprints. Production data is handled by fully automated production data management (PDM) systems. TRW is also moving to object-oriented technology to further cut costs by reusing software.
PDM systems in particular are becoming increasingly important to the aerospace industry, says Scott Chizzo, senior research consultant at Benchmarking Partners Inc., a consulting firm in Cambridge, Mass. The systems store information about building materials and vendors, and other data needed in the production process.
Another acronym surfacing everywhere in the aerospace industry is ERP--enterprise resource planning. ERP software packages are the Swiss Army knives of manufacturing systems: They integrate all the things managers need, including manufacturing management, electronic data interchange, just-in-time planning, total quality management, and computer-integrated manufacturing.
"ERP is taking off in the aeronautical industry," says analyst Gisela Wilson of market research firm International Data Corp. in Framingham, Mass.
Textron had been running applications on a hodgepodge of standalone networks based on NCR Tower, Novell, Sun, Wang, and Xerox servers and an IBM 3090 mainframe. The applications did not share data, and much time had to be spent writing software translators.
Efficiency Is Profitable
Textron's Taffe moved all financial, procurement, and manufacturing data onto an Oracle database on four HP 9000s. Data is managed using Point.Man ERP fr
om Spectrum Associates. "Working on fixed-price contracts means we have to be very efficient, and you need tools like ERP to make a profit," he says.
But using these new client-server software packages is more complex than it looks. They constitute a new approach for corporations accustomed to mainframe-based legacy systems.
"You have to commit to a new business model and put in place the infrastructure to enable you to operate in the new way," says Joe Cleveland, president of enterprise information systems at Lockheed Martin Corp. in Orlando, Fla.
Companies can't simply revamp systems without looking at their networking and communications infrastructure. At commercial aircraft products supplier Eaton Corp., for example, Brian Bachman, senior VP of semiconductor and specialty systems, is integrating the procurement process with key suppliers worldwide as part of a plan to drive common processes across the corporation globally.
Mail Call
But to do that, a common messaging system is
required, and Eaton, like many other large corporations with a global presence, has a number of diverse E-mail systems throughout its subsidiaries. Thus, Bachman's primary task has been to revamp the corporate E-mail system.
Bachman is tying together the different systems by implementing Banyan StreetTalk as a standard mail directory. This lets users communicate directly without the need for gateways. The project is scheduled for completion by year's end.
Like Bachman, Lockheed Martin's Cleveland sees reengineering of the corporate communications infrastructure as key. Lockheed Martin's new communications system will work with the Internet, intranets, and electronic commerce, and will enable the company to set up vertical electronic workgroups with members from its various divisions and customers.
One example of the electronic workgroup in action is the F-22 project. This project is being worked on jointly by Lockheed Martin Tactical Aircraft Systems in Fort Worth, Texas, another Lockheed Martin f acility in Georgia, and Boeing Corp. in Seattle. The three organizations use a common configuration management solution, PCMS Dimensions from SQL Software, to manage different versions of product components and track changes in the process flow.
Separately, Lockheed Martin Tactical gives customers access to its information systems through the Internet, intranets, and World Wide Web browsers. "They don't want paper reports or batch reports. They want direct access," says Charles Curtis, director of information resource management.
Future Vision
Rockwell's space systems division in Downey, Calif., is no stranger to using commercially available CAD/CAM packages and E-mail, or moving to client-server. It's also using the Internet and intranets for internal and external links. But K.S. Radhakrishnan, director of information management, is looking to the future. Among his plans: implementing PC-based videoconferencing and overhauling workflow processes.
Rockwell's SSD has run pilot projects using Intel's ProShare videoconferencing products, and Radhakrishnan says the Rockwell division will "put more energy into those things" in the next year. Radhakrishnan also plans to integrate Step2000, a workflow automation package from MedPlus Inc., with Lotus Notes.
With all this advanced technology being used, can virtual reality be far behind? Hardly. Already, aerospace companies are taking the first tentative steps toward virtual reality.
At Northrop Grumman Corp. in Los Angeles, engineers take proposed drawings and turn them into animated renderings of products to provide to customers, says Jim McCann, VP of information services at the company's data systems and services division.
The TRW aerospace division creates computer-generated videos using data sourced directly from engineering workstations for presentations to customers, a tactic VP Pulici says has been "very effective competitively."
Meanwhile, Lockheed Martin is putting together a fully electronic product modeling and simulat ion capability. This will give the company a virtual reality-like approach to simulating product design and the manufacturing process. The tool will help avoid "a lot of the design problems you may not be able to find until you get on the shop floor," Curtis says. He expects to have it in use within three years.
Size still comes into play in the aerospace business, and companies are constantly looking for mergers and acquisitions to help bulk up.
A prime example is Lockheed, which merged with Martin Marietta in 1995 to form Lockheed Martin, then bought Loral Corp. in April to create what is by far the largest company in the industry.
Tassos Philippakos, a VP and senior aerospace defense analyst at Moody's Investor Services in New York, expects more such moves, including "some mega-mergers," possibly on a global basis. But IT is proving that the law of the jungle has a new twist: It's good to be big, but it's better to be big and have the skills and technologies needed to win.
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