User-experience is now taking over the defense market

July 22, 2019

A new breed of disruptors emerge in the defense industry. They are considered disruptive due to their new value proposition in comparison to traditional industries, like Thales. But where do they come from, and how are they penetrating the defense market?

The rise of digital platforms

It is no longer a secret that the rise of digital platforms will empower the military, enabling better continuity of operations and bringing new ‘combat readiness levels’ to armed forces for lower prices. For the governments, this is a welcome alternative dealing with constrained defense budgets. Digital platforms are already a commodity in the commercial market. For example, Microsoft no longer produces Office software, but Office in the cloud, a taxi is no longer ordered by phone call, but through a cloud service and watching a video is now on demand at home. These platform providers have benefits that reach from financial (15% more profit according to Gartner), customer intimacy, improved product development, and many more. One important driver (among others) in all those platforms is the use of data and intelligence to improve continuously the user experience.

Now these user-experience digital platforms are also entering the defense markets. In fact, this new breed has already got impact on the Thales business. For example, an important player is Amazon Web Services. What used to be a company only focusing on the commercial market, is now a disruptor of Thales Alenia Airspace in the satellite business with their own built satellites connected to their platform. Amazon offers an improved user experience by letting customers pay for services on demand and per instance, whereas Thales is offering per monthly bandwidth (whether the customer makes use of it or not). A user enhancement that is disruptive for the traditional business. And this is not just a single example on its own. Amazon also built a new mobile hardware cloud server for military vehicles. Creating services for the forces, either connected or stand alone.

Defense digitalization

The governments are foreseeing a shift in the future from traditional working processes, to operations and level of services with a deep impact on delivering military capabilities. A shift from the need of technology, to the need of a function. Especially when that function is continuously improved or monitored for maintenance. However, there are several roadblocks slowing down defense digitalization. This is due to the overall lack of security around defense systems and the availability of data from end-users. Of course, security is a crucial point when talking about the defense industry. Security from where a large spectrum of threats and concerns holds military authorities from moving forward, right from ensuring data integrity, its protection, to where it is hosted.

Digital Competence Centers

Thales will therefore have competition of these new breed disruptors in the less critical/commercial market areas on the short term. For the long term, where security is playing an important role, Thales must relay focus towards securely use of data from users to enhance user experience. For that reason the board of Thalesgroup in Paris have taken action by creating the Digital Factory in Paris, Montreal and Singapore. Here knowledge and expertise is built up how to commence with the new way of doing business. From this Digital Factory knowledge on technology, customer experiences, new initiatives and much more will be brought to each nation in so called ‘Digital Competence Centers’. Thales NL is currently developing one as well to create new business initiatives focusing on user experience, while still designing high tech systems with high end security to keep that competitive edge to remain a serious player in the defense market.

By Mike Balm, Digital Transformation Champion at Thales Nederland