The impact of cloud computing on the defence industry
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loud computing’s importance has grown significantly in recent years. It has enabled the use of shared IT infrastructure and services to create a flexible, scalable, and on-demand IT environment. In the aerospace, defence, and security (ADS) sector, cloud migration provides companies and militaries with demand flexibility, allowing them to use as much computing capacity as required. This enables aerospace and defence players to innovate without a large upfront cost, allowing them to keep up with their sector’s developments while streamlining the overhead costs of their operations.
The matrix below details the areas in cloud computing where aerospace, defence, and security (ADS) companies should focus their time and resources. We suggest that large ADS players invest in technologies shaded in green, explore the prospect of investing in technologies shaded in yellow, and ignore areas shaded in red.
Cloud technology is fast becoming ubiquitous, so the graphic below indicates that all ADS players should invest in at least some parts of the cloud value chain. The sector’s largest companies and prime contractors should consider investing in almost all parts of the cloud value chain as companies such as Boeing, Raytheon Technologies, and Northrop Grumman continue to develop their information services business units.
This allows them to invest in cloud technology within their own business while offering cloud services to other companies in the sector.
Meanwhile, smaller companies such as subcontractors, suppliers, and end-users (such as militaries) should invest in cloud technology for their own operations. However, these companies should seek partnerships with technology vendors for the cloud services aspect of the value chain due to typically having fewer resources to allocate to this.
As a result, COTS technology companies should invest across the entirety of the cloud value chain, as players such as AWS and Microsoft have achieved considerable market share by providing cloud services to companies operating in the ADS sector. Meanwhile, end users such as militaries should invest across almost all of the cloud value chain, except for hybrid cloud and cloud brokerage.
Source: GlobalData Thematic Intelligence
How cloud computing helps resolve the challenge of competing budgets
Cloud computing will allow companies operating in the ADS sector to create a flexible, scalable, and on-demand IT environment.
In some respects, using cloud computing technology allows for more efficient use of resources as companies switch from a capital expenditure to a revenue expenditure form of investment. Spreading the cost of IT resource consumption rather than facing a high up-front cost will benefit ADS players with tight budgets, from smaller companies to larger organisations.
In addition, cloud computing will also facilitate ADS companies’ broader digitalisation, which could offer financial savings by increasing operational efficiency. Cloud computing technology offers a way to manage increasingly large volumes of data, representing an advantage for all players in the sector.
For example, drawing insights from large datasets allows companies and militaries to identify inefficiencies in their operations and supply chains.
However, although cloud technology offers cost advantages in these two aspects, cloud migration and integration with existing systems can be significant expenses for ADS players. For example, the sensitive nature of ADS companies’ data has tended to create siloes. While this increases security, it can make cloud migration a costly process.
Miners must ensure that they are increasing productivity by adopting the latest technology. Mechanization and monitoring are supporting improvements in productivity and lowering cost per unit output.
There is increasing upward pressure on costs to mining firms. Several factors have spurred this, including declining commodity prices, longer hail distances, falling ore grades, and rising material and labor costs.
More disparate ore deposits are pushing mining into remote locations and developing nations. This gives rise to greater challenges in operating an efficient supply chain.
Safety and sustainability
Given the worldwide shift to sustainability in the last few years, mining has come under increasing scrutiny for its damaging environmental practices. In addition, safety has become a concern. Mining firms must take more responsibility for ensuring that workers are properly protected on-site by taking active steps to avoid accidents and actively monitoring safety.
There is pressure on mining firms to continuously identify viable new mines. This is made more difficult by an environment of declining ore grades. Furthermore, there are rising development costs and more remote deposits.
COVID-19 has posed a massive threat to the mining industry. The main fear is that there could be an outbreak at a mine, which would force operations to a halt, impacting both costs and productivity greatly. This has led to operational challenges, including continuous testing of staff and reducing capacity at mines to enforce social distancing.
Source: GlobalData Thematic Intelligence
How cloud computing helps resolve the challenge of Covid-19
Despite rising immunisation rates, Covid-19 remains a sprawling issue that will continue to impact all sectors for some time, and the defence sector is no exception.
Cloud computing played a vital role during the onset of the Covid-19 pandemic as companies across a wide range of sectors rapidly adjusted their IT resources to remote working. The ADS sector started building its cloud computing infrastructure almost a decade ago, with the US Armed Forces leading this modernisation effort.
As a result, the industry was well positioned with geographically distributed but secure networks when the pandemic first broke out. However, further investment and refinement of cloud technology will boost ADS players’ resilience in the face of potential pandemic resurgences.
How cloud computing helps resolve the challenge of data deluge
Information has always been and will continue to be at the centre of warfare. Modern warfare is increasingly information-based, and soldiers and decision-makers need a continual flow of up-to-date information to make decisions quickly.
Developments in sensor technology are supporting the emergence of the Internet of Military Things (IoMT). The Internet of Things (IoT) describes using connected sensors and actuators to control and monitor the environment, the things that move within it, and the people that act within it. The IoMT uses multiple sensors deployed across various domains to acquire full situational awareness and control over diverse conflict zones and battle areas.
As a result, timely access to actionable insights is becoming a point of differentiation between defence players, and cloud technology provides a means to distribute this information rapidly.
In non-conflict environments, cloud technology such as infrastructure-as-a-service allows companies to upscale their computing power rapidly. This allows players such as commercial aerospace companies to create new aircraft designs by conducting processes such as computational fluid dynamics on a third party’s servers.
As a result, cloud technology allows aerospace companies to draw insights from big data without investing heavily in IT infrastructure.
How cloud computing helps resolve the challenge of ESG
Although environmental sustainability in the ADS sector might be expected to apply only to industry players rather than the end-user, this is increasingly not the case. Many modern militaries now have sustainability strategies.
Only a few years ago, these merely encompassed defence estate sustainability. Today, they have become far more holistic, considering significant elements of the non-combat force and the entire end-to-end procurement cycle, including the disposal of assets.
Similarly, the commercial aviation industry is increasingly under pressure to decarbonise, with the International Civil Aviation Organisation asserting that the sector must reach net zero by 2050.
The use of cloud technology can allow ADS companies to reduce their environmental footprint by consolidating their IT resources, including servers, storage, and networking resources, into large data centres.
For example, AWS estimates that its facilities are 3.6 times more efficient than US enterprise data centres and five times more efficient than typical EU enterprise infrastructure. Although data centres still require large amounts of energy in terms of electricity provision and cooling, the centralisation of IT resource consumption facilitates using renewable energy.
Leading cloud providers such as AWS plan to make their operations 100% renewable by 2025, while companies such as Microsoft are looking to mitigate cooling requirements by experimenting with underwater data centres.
How cloud computing helps resolve the challenge of geopolitics
The ADS sector faces intensifying geopolitical tensions caused by the Russia-Ukraine conflict. Due to the sectors’ heavy involvement with militaries, companies operating in the ADS sector will likely become subject to an increasing number of cyberattacks.
Although there are risks associated with moving away from a private on-premises cloud, this migration capitalises on the technological capability of specialist companies. As a result, this is a comparatively safer situation than smaller companies trying to maintain the cybersecurity of on-premises servers with limited financial resources.
However, physical security will also threaten third-party data centres. As a result, companies offering IaaS must comply with extensive physical security measures to prevent data loss or theft.
GlobalData, the leading provider of industry intelligence, provided the underlying data, research, and analysis used to produce this article.
GlobalData’s Thematic Intelligence uses proprietary data, research, and analysis to provide a forward-looking perspective on the key themes that will shape the future of the world’s largest industries and the organisations within them.