[MUSIC] Hello, in today's video, I would like to talk about digital transformation and what digital transformation means for the aerospace industry, and in particular for Airbus Defence and Space. My name is Peter Weckesser, I'm the digital transformation officer of Airbus Defence and Space. Digitalization is a term that we hear very often and widely today. And actually what's called digital transformation is from my viewpoint the biggest transformative event that we have seen in industrial history. And I would like to explain why I think that this is the case. Actually digital transformation is a transformation that happens in any industry. It will impact or has impacted every company in these industries. And it will also impact every individual working in these companies, no matter in which function you work in these companies. I would like to give you a couple of examples why I believe this is so transformative. Other transformations have happened in manufacturing or in the office space, but digital transformation changes everything and it happens everywhere. Some examples that everybody knows is, for example, the digital transformation of retail or of entertainment. If you look at retail today, the whole ecosystem of retail has completely been transformed by companies like Amazon within a very short time frame of ten years. And this is not only impacting all the companies who are active in the retail value chain, but it has significantly changed the consumer behavior and probably will also continue to do so. The same is true actually for entertainment. If we look at the transformation phase from, well, digital media, from CD-ROMs, DVDs, to downloading digital content, to now streaming digital content. This is also transformation that has not only changed the ecosystem, has changed the customer behavior and the way how we consume digital media. And of course, it has also changed completely the landscape of companies participating in that. Now, these are two examples which are early adopters of digital transformation. I firmly believe that this digital transformation will take place in every industry and in every company. So I encourage everybody to embrace digital transformation. After the introduction to digital transformation in general, I would now like to talk about what does digital transformation mean in particular to Airbus Defence and Space. If we talk about digital transformation in Airbus Defence and Space, we usually look at two dimensions of digital transformation. One dimension is where we ask ourselves the questions, how do we get significantly better at what we do today? And what do we do? We design, we build, and then we help our customers to operate extremely complex products like aircraft, like satellites, and many other really cool things. The challenge in these products is that they have an extremely long life cycle of up to 50 years from the first idea for that product, the design, manufacturing phase. And then we have an extremely long operations phase of these products. The digital transformation in this core process, which we call product life cycle management, is really answering the question. How do we produce, develop the next product in half the time, half the cost, and at a significantly higher level of quality than the last product that we introduced into the market? And this is a question where we need to work on continuous process improvement. And some of these process improvements are pretty significant improvements. Because we will not write libraries of specifications anymore and then develop against these specifications. But we completely change our processes starting from model-based systems engineering approach, going into concurrent engineering of the various engineering disciplines, mechanical engineering, electrical engineering, software engineering. We will, in the future, more and more validate and certify our products in the virtual world. So that includes, of course, all virtual testing simulations, before we build the first real product. And actually what we do for the product, the virtual development of a product, is true also for the design and creation of our manufacturing equipment. This will also be done completely in the virtual world. It will be simulated, and the manufacturing process is also completely digital process in the creation phase. So at the end, we create digital models, three digital models, which we also call digital twins. A digital twin of the product, a digital twin of the manufacturing equipment, and a digital twin of the manufacturing process. Once we've created these digital twins, we have simulated all this, done a lot of certification also in the virtual world, we are really at the point where we built up our manufacturing equipment and finally manufacture the product. But this is not the end of the digital journey. Once we transfer the product or sell the product to our customer, of course, the most significant part of the life cycle of this product starts. The customer starts to operate the product, the product starts to create lots of data through that life cycle, which we feed back into our digital model. So we close the the digital loop from the real product to the digital model, compare the behavior of the real product in operation with all of our simulation. Which helps us to predict potential errors in the product, or even improve our digital models to design even better product in the next phase. This process is pretty disruptive already for us as an organization because it totally changes the way we operate. It changes the way how we work together between various engineering disciplines, it very much changes the way how we cooperate between engineering and manufacturing. And it very much changes the way how we work together between our customers who operate the products and various internal departments in Airbus, like engineering manufacturing and services. This will also have an impact on our organizational seller in the future that needs to be adapted towards these new business processes. And all this is being done following these principles that are introduced early, where we ask ourself the question, how do we get to market faster? How do we get to market with an even higher quality and a better cost position? Now, this is the right side on the slide that you can see, and this is called incremental improvements. Incremental for us means that we do not change our business model, but we stay within the boundaries of our existing business model but try to get better on a daily basis. Now, this is the one dimension of digital transformation, that we optimize our processes end-to-end and support these processes with the best-in-class tools that allow us to build the digital twins, and then a product that behaves like the digital twin. On the other hand side, we also need to look at the second dimension of digital transformation, which is even more disruptive and which is really shown on the left side of this slide in the background. Here we have to ask ourselves the question, is our business model still sustainable? Or do we need to find new ways how to meet our customers expectations? Do we have to develop completely new value propositions? Do we have to take our products to market in a completely different way or address completely new customer groups? So this is even more challenging for all mature organizations like Airbus than the first dimensions because it requires much more and outside in thinking. And I would like to share a few examples where competitors are already disrupting our business model today, and also areas where we try in Airbus Defence and Space to disrupt our own business model. But you can see on the slide is an example of a competitor, SpaceX. SpaceX has kind of revolutionalized the launcher industry by creating a business model of reusable launchers. This is something where most expert believed for a long time that this is not financially sustainable. SpaceX has proven to all these experts that it is and that they can get into a much more competitive position with this approach. This is very disruptive, and Airbus is more reacting to this competitive threat. There are a couple of other areas where we believe that we can proactively drive this disruption, and I want to mention a couple of examples here. Airbus has been active in satellite imaging for a couple of decades already. And this is a business which was mostly created for government customers. And with our capabilities of about a dozen satellites that we have in orbit with very sophisticated imaging capabilities. We are deeply convinced, and we see that from the customer demand, that we can commercialize these capabilities also outside of our existing government business and going into many commercial areas, like retail, like insurances, like agriculture. And commercialize the capability to a totally different industry, which requires different technical systems, but also a different go to market approach. This is why we have created a start-up in Berlin that we call UP42, which uses these satellite imaging capabilities, but takes them to market in non-government, in a non-defense industry. Which also requires a completely different approach how to partner with an ecosystem that is being created. And of course, interacting with customers that we had never interacted before. This is, of course, an approach which completely creates a new business model and a completely new value stream and business stream for Airbus. Two other examples that I would like to mention. All the world is talking about journey to cloud and how the use of public cloud services significantly improves IT operations. Now, in our defense business, we have the same challenges to get more productive everyday. But for sovereignty reasons, we cannot use any of the public cloud solutions. This is why we have developed at Airbus a cloud, a private cloud platform, which we call Infinity, which very much is being operated like a public cloud. The commercial model is very similar like a public cloud, it's a consumption-based model, which we use internally to significantly improve how we provision IT services within Airbus Defence and Space. And we now see that this is also being asked for from our defense customers. But also more and more emergency responders and other critical industries are very much interested in using this cloud which meets all sovereignty criteria that we have in Europe. And lastly, mentioning one example where we also go into a completely different market, where we provide aircraft position information in order to optimize aircraft routing, aircraft separation to customers like airlines and air traffic control. Where we are going more into software or data as a service business compared to our classical business, which is selling large and complex AirSense. And AirSense is one of these static activity, which also was started two, three years ago and is already creating now significant revenue for Airbus. So if you look at this second dimension, I hopefully was able to show that this is not only that, or digital transformation is not only helping us to optimize and significantly get better in our established business model. But it also allows us to create new value streams, new revenue streams, and at the end of the day, new business models that augment our existing business by completely new value propositions. I would like to summarize, digital transformation is essential for the future of Airbus and, of course, also for all the other industry. So I would encourage everybody to fully embrace digital transformation and look at digital transformation as an opportunity. I also would like to point out that most people initially think digital transformation is about all these digital tools that we introduce. But this is only one aspect, and usually this is not the hardest aspect or challenge of digital transformation. Digital transformation is very much about how do we find new value streams? How do we create new revenue streams? How do we optimize existing business processes? How do we get significantly better at what we do? How do we embrace the change of way of working? How do we embrace the development of people? How do we upskill our organization? And all these, this whole package is really relevant on digital transformation and this is what needs to be tackled by any organization. This is my short introduction into digital transformation at Airbus Defence and Space. Thank you very much for your attention. And I wish you all the best for your digital transformation and diverse in the future. [MUSIC]
