Now that a description of BAE SYSTEMS has been presented, it is apt to describe how the EngD’s wider objectives fit into the overall company strategy. In order to describe this, the role of technology and research is first explained, followed by a look at the Advanced Technology Centre – Sowerby, where most of BAE SYSTEMS’ research and development is carried out.
3.1 Changes in Emphasis and Strategy
Given the history of BAE SYSTEMS detailed in Section 2.2, is it understandable that the company’s business model is rooted in history. BAE SYSTEMS has large shipyards and aircraft production facilities. Given the long lead-times of such projects, discussed in detail in Appendix A, the company’s routes to market are platforms that stretch decades ahead.
Eurofighter, Type 45 destroyers, and other major programmes are destined to be up to 12 years in design, up to 15 in production and supported for around 20 years in operation . This is not to say that the company is geared solely to cope with long lead-time projects; it also has a number of very agile, systems-oriented businesses but historically a fair proportion of the company’s revenue is attributed to ambitious manufacturing activities.
What is interesting is that the systems-oriented business, despite its good financial grounding, is placed in the ‘lower value-added’ area of the food chain from the intellectual property (IPR) standpoint . As a result, BAE SYSTEMS is valued in the marketplace as an engineering company with a manufacturing bias, not as a systems company with an IPR bias.
The reality is different; the intellectual capital of BAE SYSTEMS is vested in the company’s systems integration capability; the knowledge of how systems fit together. Sir Richard Evans suggests that moving up the chain in the ‘intelligence-based’ future is where the company ought to aim. He says “taken to an extreme – instead of building Eurofighter we could be ‘Eurofighter.com’ – providing the whole complex front-end that integrates all the avionics and defence systems. The pilot could simply log onto an entire environment run by us. The aircraft itself could be built to our specification more or less anywhere.” 
Nowadays, it is as important to win the technology market as it is to win the product business. Technology provides and enhances the company’s intellectual capital, while product manufacturing can be, and increasingly is, outsourced. With this fact firmly in mind, one can examine the role that BAE SYSTEMS’ research centres play and how this fits into the global strategy of the organisation.
3.2 The Advanced Technology Centres and BAE SYSTEMS
BAE SYSTEMS is split into several categories or Business Units (BUs) such as Eurofighter, Nimrod and Future Carrier. Larger units such as Avionics that encompass the work carried out around the company also exist. Another aspect of the company is Joint Ventures (JV) where BAE SYSTEMS is a 50% stakeholder in a project. Finally, there are other companies and industries in which BAE SYSTEMS is a minority shareholder. An example of that is the 20% stake in the recently formed Airbus company.1 Figure 3.2:1 below illustrates the makeup of the company .
The Advanced Technology Centres (ATCs) provide a research and technology acquisition service to the whole of BAE SYSTEMS. The ATC organisation has been established within the engineering function2 to provide BAE SYSTEMS with a world-class research capability to meet the company’s current and future business aspirations. The organisation’s research capabilities comprise of:
- The former MES Research Centres at Great Baddow, Towcester and Borehamwood;
- The former BAe Sowerby Research Centre at Filton.
The Advanced Technology Centres are tasked with providing a major contribution to the long-term technology requirements of BAE SYSTEMS, supplementing the individual research activities of the Business Units and Programmes. ATC Sowerby (which is the focus of this section) is based in Bristol in a well-equipped, purpose-built facility, staffed by some 170 highly qualified scientists and engineers. The mission of ATC Sowerby is:
To facilitate access by the BAE SYSTEMS Companies to appropriate emerging technologies for their business success and to provide a resource of expertise in support of the BAE SYSTEMS Companies’ business operations.
This is to be achieved by fostering a culture of quality and continuous improvement in all aspects of the business and implementing a system that meets the needs of ISO 9001. It is intended that this will lead to the fulfilment of ATC Sowerby:
To produce world class research and technology critical to BAE SYSTEMS’ success.
BAE SYSTEMS has three major goals:
- Growing profit out of business;
- Developing areas that are seen as long-term strategic growth;
- Have the ability to negotiate from strength.
The first goal simply translates as being more efficient, and squeezing more profits out of company operations by reducing production costs, lead-time and unnecessary overheads.
The second goal, to develop areas that are seen as long-term strategic growth, is less clear. As discussed in Section 2.5, the general trend in US and therefore the UK and European military is to reduce the number of deaths and injuries in front line warfare – after Vietnam and other high death-toll conflicts, citizens no longer want to see young troops coming home in body bags (this is known as the “CNN factor”). Furthermore, aircraft development and production (and hence purchase costs) are becoming increasingly expensive. It is possible that the soaring development and production costs would mean that the entire yearly UK defence budget would be spent on acquiring just one stealth capable system. As a result, it seems that after two more major aircraft developments (JSF and to some extent FOAS3), things may slow down. The long-term strategic growth in the defence market is therefore seen as the development of capabilities that can fulfil government defence requirements. Furthermore, advanced information systems used in the command and planning of theatre conflicts, such as C&C centres are also seen as a strong growth area. BAE SYSTEMS is also breaking into new markets such as the development of a new naval military ship, called Future Carrier as well as land based vehicles and systems. This distinguishes BAE SYSTEMS from its US competitors .
The final goal is a product of the volatile and consolidating aerospace market. As mentioned in Section 2.4, the possibility exists of a trans-Atlantic merger occurring in the future, or of further mergers within Europe. This factor must become part of the company’s business strategy. By having the ability to negotiate from strength or by possessing major bargaining chips, BAE SYSTEMS ought to have a good starting position when take-overs and mergers are mentioned. This is an important factor, as US mergers have achieved, to date, very poor integration exemplified by the Boeing and MacDonald Douglas merger (one sided to the point that it was a Boeing takeover in all but name). This lack of integration could prove highly damaging to BAE SYSTEMS, should it suffer the same fate.
Historically, the most profitable areas of the company are Military Aircraft, Avionics, Electronics and Airbus (commercial aircraft). However if, as anticipated, the world defence requirement for military aircraft (and hence their avionics and electronics) reduces, steps have to be taken now to break into new potential markets, as well as developing new company strengths outside the aircraft market to reduce the chances of a take-over.
Hence, to fulfil the three major growth areas, BAE SYSTEMS has taken the following steps:
- Developing technologies and methodologies to reduce the cost base;
- Gaining technology for new business;
- Developing world-leading technology.
These three steps respectively coincide with the three main goals of the company. An example of this in action is that BAE SYSTEMS is the only company that is still producing a V/STOL aircraft. This proved to be a major element in partnership with Lockheed Martin in the JSF development, where V/STOL is a key requirement in the performance specifications.
ATC Sowerby focuses on increasing the capabilities on the three fronts discussed above, and accepts or rejects contracts on this basis. The ATCs acquired with MES were set up more as a contract based research organisation. All the ATCs will now be functioning on a single basis, with more emphasis placed on the Sowerby business model. It can thus be stated that the work done at Sowerby and the other three ATCs all contribute to the three major goals of BAE SYSTEMS.
Solving issues of increasing complexity in the organisation and BAE SYSTEMS’ products, which is the main focus of this research, is primarily tasked to ATC Sowerby and more specifically the Advanced Information Processing (AIP) department, as detailed in Section 3.3.
3.3 ATC Sowerby’s Research into Complex Systems
Section 3.2 discussed the general aims and goals of the Advanced Technology Centres in relation to BAE SYSTEMS’ business plans and strategy. Concentrating more on project relevant issues, Sowerby is looking at the impact of increasingly large and distributed entities interacting – from decision making in the actual company itself (a heightened issue after the British Aerospace and MES merger), to complex manufacturing processes and the increasing levels of interactions within commercial products. This requires an understanding of emergence, complexity and self-organisation, concepts that are usually implemented commercially by using ‘agents’. The concept of agents is explored in depth in Chapter 5, although the definition of the term in Section 1.1 will suffice for the coming sections.
Summarising this is the list of trends, detailed in Section 2.7 envisaged to affect BAE SYSTEMS:
- The organisation itself;
- The products it manufactures;
- The logistics manufacturing and support structure;
These areas are being explicitly explored by Sowerby or explored in a generic manner by the Sowerby and the company as a whole. Based on this research, and the trends in industry discussed so far, a list of potential applications and real life applications that are seen by the company and/or this author as important are listed below:
- Organisations – the corporate machine and how it interacts as a centralised structure, with increasing outsourcing and large separate departments. Simulating what happens when a company merges and the effects of this are also of significant value;
- Design processes – the connectivity and flow of information, from CAD systems to material lists, and the use of agents acting as mediators to satisfy very different needs from the same component (e.g. aerodynamic vs. Structural);
- Simulation – battlefield digitisation and traditional combat training, using software agent technology to represent individual vehicles and troops in a simulation, communicating and reacting dynamically and realistically. This also extends to real implementations such as UAVs that could be based on agent technology;
- E-commerce – with the new joint venture of major aerospace companies linked to the Commerce One initiative, the buying and transfer of B2B information on-line can be directly linked to the requirements posed in the design process and agent roles as mediator and purchasers of goods and information within this network. See Appendix B for more information;
- Manufacturing processes – as outlined in the previous section, significant savings might be gained, in both time and complexity by using agent systems in the manufacturing environment.
- Asynchronous communications – as the aerospace industry increases in global consolidation and JVs, projects will span across many continents and time zones. Agent technology may be a solution to the asynchronous nature of project communication, and is being developed in academic sectors for distance group learning .
3.4 Chapter Discussion – Preparing for the Future
The ATCs, being at the forefront of research for the company are tasked with the unenviable role of exploring technology areas before commercial BUs even know that they may require such technologies. The ATCs have responded recently by placing the understanding and exploitation of agents and complexity as a significant research area – clearly the ATCs believe that this is a significant growth area and an enabler that spans BAE SYSTEMS’ three major goals.
This is understandable if we sum up the thesis up to this point. We have seen that the aerospace industry is poised to consolidate further and as discussed in this chapter, the technological capabilities of the industry leaders will play an important part as to how this almost inevitable consolidation pans out. Furthermore, we have seen that the defence industry, which leads technological innovation, is moving away from conventional methodologies to more abstract solutions. Finally, we have seen that the whole infrastructure around the aerospace industry and individual players such as BAE SYSTEMS is being overhauled to cope with increasing project complexity, ranging from the methods employed in the design phase through to third party procurement structures. Given this, it can be said with confidence that the exploration and understanding of these areas, in an in-depth and generic manner, will play a key part in BAE SYSTEMS’ future.
However, the areas listed above require a change in traditional engineering, and to some extent computing methodologies. The use of large distributed, asynchronous and possibly autonomous systems contradict, to varying extents, the traditional reductionist, clockwork-type thinking of the engineer. The understanding of emergence, self-organisation and complexity will play a crucial part in successfully implementing these systems in real-life situations. The need for a new approach and a look at these predominantly theoretical realms are examined in Chapter 4, with the engineer and commercial requirements firmly in mind.
Before moving on, one commercially crucial question remains unanswered – what quantitative role does this research field of emergence and agents have to play in the future of the company? A broad list of potential applications should be indicative of the wide-ranging effects that research in this area may hold for the company. However, another way of measuring the potential impact of an emerging technology is to examine the financial impact it may hold for the future. It must be stated that monetary factors are hard to quantify, due to the nature of research and the many facets of company operations that it could possibly affect, in the very long-term. In other words, speculative research may open the door to further possibilities and may help direct further research in agent technology, according to the outcomes of one project. Furthermore, commercial sensitivity precludes placing detailed information in the public domain.
What can be estimated is that out of BAE SYSTEMS’ current product sales (which amounted to around $12.95 billion in 2002 ) and profit portfolio, agent technology may potentially affect one quarter of these . This covers the commercial applications in distributed IT systems, from e-commerce to communication networks, which can be translated as cost savings and increased capabilities in manufacturing and management (faster, better, more efficient), as well as value added technology in existing and future products. However, to quantify the financial effect that a speculative research project may have on the company, at such an early stage and perhaps even later, is almost impossible.
- Unlike most minority holdings, BAE SYSTEMS does have a say in the new company’s operation, due to the formation of Airbus from various other companies, one of which is BAE SYSTEMS. [↩]
- Reporting to the Group Engineering Director, see Figure 3.2:1 [↩]
- FOAS is actually not simply an aircraft but an entire system of which the aircraft is just one component. This approach further strengthens the argument that manned aircraft are coming to end as defence moves towards network centric warfare. [↩]