Scott Helmer, IFS & Nick Ward, Rolls Royce | IFS World 2019

Scott Helmer, IFS & Nick Ward, Rolls Royce | IFS World 2019


(upbeat music)>>Narrator: Live from Boston,
Massachusetts, it’s the Cube. Covering IFS World Conference 2019. Brought to you by IFS.>>Welcome back to IFS World everybody. This is Dave Vellante with Paul Gillin and you’re watching the Cube, the leader in live tech coverage. We’re here from the Hynes Auditorium. Nick Ward is here, he’s the
head of OEM Digital Solutions for Rolls-Royce, and Scott Helmer, President of IFS Aerospace and Defense. Gentlemen, welcome to the
Cube, thanks for coming on.>>Thank you.
>>Thanks for having us.>>Dave: Scott, I want to start with you. We’ve heard a lot about
digital transformation, you guys are in the heart of that, defense and aerospace is
one of those industries that hasn’t been dramatically
disrupted, like you know, publishing, or you’re seeing
taxis is being disrupted. It’s a high risk business, it’s one that’s highly entrenched, but, it’s not safe from disruption. What are the major trends that
you’re seeing in your space? And sort of, paint a
picture for us if you would.>>That’s a very good
question, you’re right, the same level of disruption
related digital transformation has not yet come to
aerospace and defenses, it has come to some of the
other leading industries, but this is a, whether it’s
a line based operations, navel operations, or aircraft operations, this is an asset intensive industry. It’s characterized by a
very connected network of organizations, be they
manufacturers, operators, subsystem part suppliers,
or just maintainers, they stay connected throughout the asset life cycle in its entirety. IFS has a portfolio
capability, for a purpose, underpinning the critical
business processes of those organizations, that enables us to be the
digital thread through, continue the connection
of those organizations throughout that asset life cycle. If you will, that sees us fall, come to be at the heart of
asset life cycle management, and provides us with the opportunity to inform information
insights for our customers. Like, return on experience
data on aircraft engines, where an OEM like Rolls-Royce for example, can harvest that data
to analyze and reform it so those assets and ultimately optimize their after service offerings.>>Who are the customers, I mean there’s a limited number of companies
that make aircraft engines, so you don’t have a huge domain in numbers of those
kinds of companies, but, who are the customers? Your channel? Their partners? The supply chain network?>>Well the ecosystem is
actually large and extensive, there are very recognizable names, and it’s certainly an industry that’s characterized by significant growth. On the commercial side, MRO
is in the midst of a boom, and is likely to continue to grow or expected to continue to grow for at least another decade. And on the defense side, we see
military budgets continually or increasingly moving towards sustainment and servitization on a performance basis. So the number of organizations that are participating in that value chain, whether they are just the upstream OEMs, or I shouldn’t say just the upstream, but the upstream OEMs participate in the design and development, are moving into the
aftermarket sustainment and service support, parts
and subsystem supply, or ultimately third par
repair organizations. It’s actually quite an extensive network participating in that asset life cycle.>>Dave: So, Nick, you know
people hear of Rolls-Royce, they think, you know, the iconic brand, we’re going to talk about cars, but, talk about your role at Rolls-Royce and what’s going on in your business.>>So, my role, I lead
product management function, looking at digitally enabled services. So, for 20 years we’ve been running a service we call total care. Total care is like a fixed
dollar rate every time an aircraft flies, we’re paid
a dollar rate for it flying. What’s really great about that is, we’re incentivized as am OEM, exactly the same way as an
airline is incentivized; keep the aircraft flying. It earns revenue for the
airline, it earns revenue for us. And that revolutionized relationship between OEM and operator. So within my role, it’s about taking for a division we call intelligent engine. So an intelligent engine is recognizing the way that digital is starting to pervade the way we
think about services. So, we’ve talked about
the physical engine, you know the big, rotating
piece of metal that people see, the services that wrap around
that, and the digital brain that sits behind all of those services. That’s what we call an intelligent engine.>>Dave: Yeah, so, you
know, people sometimes think the mission critical piece of air travel is the reservation system, it’s not. It’s the maintenance
of the engines, right?>>Nick: It’s got to be available.>>Nick: It’s got to fly>>That is the mission
critical system, right? So you, I mean, look if you
don’t get your reservation, oh, well somebody else will get it, not the end of the world, but,
for the maintenance piece, that’s, you know, job one, right?>>Right, so, you know,
our fundamental mission is, every Rolls-Royce powered
aircraft flies on time, every time, all right? There’s no disruption, there’s no delay, that works for the
operator, for the airlines or the owner of the
aircraft, it works for us. And this is why the confluence of our incentives comes together,
and it really works well.>>Dave: So what role
has technology played in terms of evolving that experience? I mean, I’m sure, you know, years ago, it used to be a lot of
tribal knowledge, gut feel, Joe the mechanic really
knew his stuff, etc, etc. How has technology evolved
and changed your business?>>So, you have to go back
to the business model, right? So, technology should
follow the business model. The business model is
fundamental a risk transfer. So we take the risk of cost
fluctuation, availability, whatever it is, away from the airline, and we take it onto us as
the OEM, as Rolls-Royce So, to manage that risk, you’ve got to get really
good at forecasting. Forecasting becomes
your core skill almost, because you’ve got to
understand all the risk drivers, understand how to optimize them, understand how to work around that in order to have successful business. And you can’t forecast without
data, without digital twins, without all the IOT and cloud, and all the enablers allow you to sort of new generations of capability.>>Dave: So you’re forecasting what, probability of a component failure, the life of a failure?
>>Nick: Yeah How long it takes to
bring stuff back online?>>We forecast really on
three different levels. So we do an engine forecast,
which is looking at the health of the life of
the components in the engine, looking for any reasons why the engine might be forced off the wing. We’re looking at a fleet
level, so we’re looking at all of the things that
might affect the global fleet, in terms of maintenance
demands, need for overhaul, all of those sort of things,
and we forecast that out, after 30 years, really accurately. As an engine leaves the
factory, we know pretty much, within 90 something percent, everything that engine is going to require from a maintenance point
of view 30 years out. And then at a network
level, we’re forecasting the capacity demand that
we then need to meet, within our maintenance shops globally.>>Dave: Well it’s obviously,
Paul, been progressing, right? We used to fly with very common, four engine planes
>>aircrafts, yeah. across the pond, right? Now, two engines, in fact
you don’t want to fly in the four engine planes anymore. Two engine more reliable.>>You’ve been at Rolls-Royce
for over 15 years. What have you seen as a
result of all this technology, predictive maintenance technology, what impact has that had
on equipment reliability, on life cycle, on fuel efficiency?>>Huge, huge. I think if you don’t have the data, and you don’t have the digital twin kind of capability behind you, you have to treat every engine like it’s the worst engine in the fleet. Because you don’t have
the data to tell you that it isn’t, right? So, everything is treated
extremely, extreme conservatism. If you have the data,
and you have the models, and you have everything else surround you, you treat engines individuals. They have individual histories,
individual configuration, individual experiences. Because they’re individuals, you tailor your maintenance intervention to keep that engine
flying as long as you can, and you don’t have to be as conservative. You can weed that conservatism
out of the process. And that means, it stays on
wing, 40/ 50 percent longer, it’s flying for the airline
that much longer, revenues, passengers are flying,
there’s less disruption.>>Dave: So what do you,
what are you doing with IFS? What’s the role over there?
>>So,>>So, because we’ve created
this intelligent engine, kind of next generationally
forward in that capability, we need data. So we have a program we call the Blue Data Thread. The Blue Data Tread is
a global initiative that we’re rolling through all of
our 200 plus airline customers. How do we form a win win
transaction with the airlines? Give us better data, we’ll
make smarter decisions, you’ll see less disruption,
more availability, and we’ll share our data
back with you as an operator. So this is a very simple, very
nice, cashless transaction. So with Maintenix, because we
share a number of customers, you know, Scott has got a
number airline customers, big airline customers who are operating the Maintenix system, what we do together is we form
a plug-in, it’s like for us, we can go to an airline and we can say, “you have total care inside,” to borrow an Intel phrase, right?>>Dave: Yeah, right.>>So you can plug into the
Rolls-Royce services seamlessly, automated, the data can
flow, very little burden referred onto the IT group of the airline, the data flows into our
organization, we do what we do, and we can push our data again back into the airline systems, with updated maintenance.>>Scott: To inform their availability. So the key to that
value chain is obviously that common customer base,
but critical to the work that Rolls-Royce does is
the accuracy and reliability of the data they get to
inform their own performance analysis and maintenance
availability information, and the IFS maintenance
install base leverages a very rich data from
the return on experience of those engine utilization
that Nick is able to use as part of the Blue Data Thread offering back to their customers, and
together we’re able to deliver unprecedented levels of
value to airline customers and optimizing the
availability of their assets.>>Paul: And Nick, have you, are you finding new ways
to monetize this data beyond just improving
the customer experience and bond with your customers? Are there new revenue avenues for you?>>So, I think within this is
absolutely key that everybody, within this transaction,
recognizes this is not a revenue opportunity for Rolls-Royce, this is a cashless transaction. Because there’s a lot of sensitivity, the data belongs to
the airline. All right? So, you have to be very clear
and open that data is driving Rolls-Royce to make internal improvements, so we will save a little
bit on our bottom line, of delivering the services
they’ve already bought, in order to get better
outcomes of those services.>>Dave: So it’s a little like>>They’ve already bought the service,>>It’s a win win>>we’re making it better.>>There’s a little bit of
like security in that sense, you know, of the bad guys
are tryin’a get there, so, the good guys share data.>>Nick: Right.>>It’s a cashless transaction
and everybody, you know, wins.>>Nick: We believe is
a market collaboration on data is got to be the way for forwards.>>Scott: Absolutely.>>Dave: Scott, could you double click on the ecosystem, A&D? Obviously different from the sort of core, traditional, you know ERP world.>>Scott: Sure.>>The importance of the ecosystem, maybe, what it looks like, describe the patterns.>>Scott: Now that’s an
insightful question, Dave. Certainly the partner ecosystem in aerospace and defenses
is somewhat differentiated, I don’t want to go so far
as to say that it’s unique, but it’s somewhat differentiated from core ERP as you duly noted. Partner, our four
purpose capability around the critical processes for
manufacturers, maintainers, and parts and subsystems
supply organizations, is all a potential and it’s a promise, but that value can only
be realized through the collaboration with
partners who do more in aerospace and defense
and just support delivery and implementation capability,
they provide value added services around business
processing re-engineering, change enablement, as
well as they’re partners in co-innovation as well. Certainly the collaboration
we have with Rolls-Royce is certainly a new level of
collaboration around innovation that hasn’t been seen before. So, those partners are
critical to our ability to deliver that value to our customers. Secondarily, we have, our partners are actually a route to market. In the traditional sense
of a referral system like you would see in core
ERP, but more importantly, as an indirect route to market as channels to their in customers,
almost ISVing our capability to support the delivery of
services to their customers.>>Dave: So it’s the
manufacturers of the planes, for example, it’s the airlines themselves,>>Scott: The operators.>>it’s the component manufacturer,
the engine manufacturer.>>Scott: It’s the maintainers,
so the MRO organizations that do the work around repair, and it’s the entire
ecosystem of organizations to support the supply chain. Our partners that are
both them themselves, as well as partners in delivering the capability to those organizations.>>Dave: And this data pipeline, throughout that value chain>>Digital thread.>>That you guys actually
have visibility on.>>Correct.>>That’s your value to the industry>>We have the opportunity
to play a vital role between, within that ecosystem and allowing and enabling the connectivity
of that network between the OAMs and their customers,
between the operators and their maintainers, for example. We’ve got a collaboration
with an airline right now where we’re going to connect them directly with the third party organizations that they rely on for
airframe repair, for example.>>Paul: I want to ask you
about the aerospace business. That used to be a very small market in terms of the number of customers. Now we’ve got SpaceX, we’ve got the private aerospace companies, we’ve got different countries now, India, China, getting involved. What impact is that
having on your business?>>Certainly, we’re seeing the emergal of spacial programs playing a, taking up a larger share of government or public sector budgets, and people are beginning to
think about how to leverage or harvest the value from utilization of those spacial assets. And again, our enabling
capability to be a collector of that data and supply it
back as an information insight, to those who are reliant on
the data that is collected, is a vital role that we
play in that ecosystem.>>Dave: So when you were describing the ecosystem value chain,
it sort of strikes me that there’s clearly a whole
lot of metrics going on. Are there new levers,
new metrics emerging? New levers that you can
pull to really drive a flywheel effect in the industry? What are the key performance indicators that you’re really trying
to optimize as an ecosystem?>>This is certainly an
industry that’s characterized as asset intensive, complex,
mobile, and in this case, complex and mobile are a pseydonym for very expensive assets. So everything around
availability, reliability, are all key drivers, or
key performance indicators, of our customer’s ability
to realize the value from those assets, and our
role in that is to provide them with the information insight, to be able to make optimal decisions to maximize that availability.>>Anything you’d add?>>I think in this day and age things like technical dispatchual
liability of engines is so high, high 99 sort of percentage.
You have to start focusing on things like the maintenance
cost to achieve that.>>Scott: Right>>So driving your maintenance costs down, but still retaining
really high availability, that becomes a really interesting balance. ’cause you could have 100% availability, but it’s going to cost a fortune. You don’t want that.>>Scott: Right, right.>>Dave: Well, gentlemen, thanks so much for coming on the Cube. Really fascinating discussion.>>Thank you.>>Great to have you.>>Thank you for having us.
>>Thanks so much.>>All right, you’re welcome. And keep it right there
everybody, Paul Gillin, Dave Vellante from IFS World in Boston. You’re watching the Cube. Be right back, right
after this short break. (upbeat music)

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