ACHIEVE PROGRAM EXCELLENCEConsolidate. Reuse. Automate. Control.

© 2012 Dassault Systèmes Achieve Program Excellence Whitepaper 2

Contents

3 Does Your Company Use the Right Instruments to Stay on Target in a Rapidly Changing Landscape?

3 Time for a New Approach

4 Declining Performance Trend

5 The Program Manager’s Role

6 An Integrated Project Architecture

6 The Complexity of Integrating the Global Supply Chain

8 A Competitive Advantage

9 The ENOVIA Program Management Solution

12 A New Way of Working

© 2012 Dassault Systèmes Achieve Program Excellence Whitepaper3

Aerospace and Defense companies devised the concept of program management more than 40 years ago as a means of controlling all the moving pieces—people, parts, equipment, etc.—involved in developing and delivering their products. The idea was to have a single organization that was solely responsible for ensuring that all project milestones were being completed on time and all products were being designed and manufactured according to the exact contract specifications.

The method proved so successful that program management soon became a core function in all types of enterprises. Automotive manufacturers, companies that design roads and bridges, firms that build residential and commercial structures, and many others, have adopted program management principles.

Time for a New ApproachThe business landscape has changed dramatically over the past four decades, however. And with the pace of that change now accelerating at an unprecedented rate, companies need to rethink their approach to program management.

Aerospace & Defense companies, especially, can no longer afford the traditional approach of viewing program management as a distinct, standalone function that oversees—but is not necessarily a part of—the rest of the business. Today’s A&D environment is characterized by globally dispersed supply chain partners teaming to build ever more complex products on constantly shrinking operating budgets and shorter development timelines.

To succeed in this environment, A&D companies must integrate strict program management principles into every phase of their operations. Achieving that level of integration will require A&D companies to do two things:

● Re-evaluate how they apply program management strategies—even those that are considered industry best practices—across their organizations; and

● Seek out and adopt information technology platforms that can help them transform program management from a distinct, standalone function into a true, enterprise-wide, fully integrated business process.

Does your company use the right instruments to stay on target in a rapidly changing landscape?The Aerospace and Defense (A&D) industry continues to undergo considerable change. A global economic crisis is forcing both private-sector businesses and government agencies to slash operating budgets—and this pressure is especially intense for the airlines and military organizations that form the core customer base for A&D companies.

With customer budgets expected to continue shrinking for the foreseeable future, A&D companies will have to find ways of lowering the cost of designing, building and servicing what are inherently extremely complex products.

This mandate was clear in a recent article written by Ashton Carter, U.S. Under Secretary of Defense for Technology, Acquisition & Logistics.

“We have set out to save at least $100 billion over five years in our purchasing of goods and services,” Carter wrote in the article, which appeared in The Wall Street Journal. He then outlined a five-point plan for achieving those savings, which includes making affordability just as important as high-performance when it comes to awarding contracts. In essence, the U.S. military will make its contract bidding process more competitive, with suppliers that can consistently achieve the best balance between a program’s performance and its overall cost likely to gain the greatest share of the Pentagon’s business going forward.

This sentiment has, by necessity, become prevalent throughout the global A&D customer community. As a result, A&D companies must start applying the same ingenuity they’ve historically applied to designing and building new products to devising new approaches to another discipline that’s crucial to their success: Program Management.

© 2012 Dassault Systèmes Achieve Program Excellence Whitepaper 4

Naturally, these delays are leading to major cost overruns, a fact that A&D manufacturers need to be especially mindful of as the industry continues to evolve. The days when A&D companies could simply submit change orders outlining the reasons for a cost overrun and expect a government agency to cover the cost are over.

As Under Secretary Carter noted in his Wall Street Journal article, today’s A&D customers can only afford to fund program activities that add real value—and cost overruns due to lax program management on the part of a contractor does not meet that criterion.

There is a way of ensuring that programs consistently meet the more stringent demands being imposed by customers, but it will require A&D companies to undergo the same type of paradigm shift that their customers already have made.

To satisfy the demands of today’s A&D customers—which means consistently striking the optimum balance between program cost and product performance—A&D companies must learn to regard program management as a core competency rather than an ancillary function. They also will have to view it from a global perspective, with the ultimate responsibility for achieving program success placed in an executive office akin to that of the chief financial officer (CFO).

This program management office will have a much broader set of duties and responsibilities than those bestowed on a CFO, however. Naturally, an executive-level program management office would be charged with ensuring that all programs meet specific financial goals established at the corporate level. But carrying out that mandate in the current business environment will require changing the way program managers historically have functioned.

Most A&D companies currently employ multiple program management strategies in various parts of their organizations. Many of those strategies—such as stage-gate and earned value management processes, the use of work breakdown structures, organizational breakdown structures, project planning, integrated master schedules, and various forms of risk management—have been deemed industry best practices.

In general, these strategies call for breaking large projects into smaller, more manageable work packages and sets of tasks, and then tracking the completion of those individual tasks to the successful completion of the larger job.

In the stage-gate approach, for instance, certain groups of tasks are designated to be performed in serial fashion, and a new set of tasks cannot be initiated until the one preceding it has been successfully completed and approved for passage through the project gate. Earned-value management works in similar fashion, but it also includes tracking of financial metrics for each work package in order to keep projects from exceeding their budgets.

These methods should, at least in theory, be ideal for managing the process of designing and building A&D products, which by nature is a long, highly complex—and extremely expensive—undertaking. As is often the case when theory meets reality, however, these program management best practices are not living up to expectations when it comes to helping A&D manufacturers meet their cost, schedule and product performance goals.

Declining Performance TrendThere is evidence that the rate at which A&D companies are missing meeting program cost and schedule goals is increasing—even as they strive to deploy new program management best practices.

More than 70 percent of projects that are expected to produce major weapons systems for the U.S. military currently are behind schedule, according to a recent study by the U.S. Government Accountability Office (GAO). Thirty five percent of those programs are one to four years behind schedule and 14 percent over four years behind schedule, the GAO reports.

© 2012 Dassault Systèmes Achieve Program Excellence Whitepaper5

The Program Manager’s RoleTo a large extent, program managers act as corporate disciplinarians. They’re constantly checking to see whether individual organizations—engineering, purchasing, production, etc.—are adhering to the designated schedules and budgets for the particular parts of a program that fall within their area of expertise. When an organization is found to be veering off track—either spending too much money or falling behind on the designated timeline—the program manager prods that group to take corrective action.

There is a reason this approach worked well enough to spread from Aerospace and Defense to numerous other industries, but its effectiveness has run its course. A new approach is needed for managing 21st century A&D programs.

Today’s A&D program managers cannot wait for individual organizations to veer off track and then force them to make corrections. They must be involved in the early stages of program planning, ensuring that all of the pieces are in place—across the entire enterprise—to keep programs from ever running off track.

In short, program managers must transform themselves from corporate disciplinarians into corporate facilitators. They must be able to see the big picture in terms of how all of the organizations within an enterprise interact to support a complex, decades-long program. And, more importantly, the program manager must be able to foster discussion, and elicit constant cooperation, among these various organizations—from the internal design engineering and purchasing departments to the supply chain partners who deliver individual components or build complete aircraft subsystems.

To accomplish this, the program manager obviously must be an expert communicator. However, even the best communicator will not get very far in trying to manage a massive A&D program without having easy and timely access to the right data.

In today’s world, a program manager needs immediate, real-time access to data about all aspects of a program. They also must be able to share any of that data—also in real-time—with anyone in the enterprise at any given time. That’s the only way to ensure an entire enterprise can engage in the type of meaningful collaboration necessary to keep A&D programs on track.

© 2012 Dassault Systèmes Achieve Program Excellence Whitepaper 6

While it’s true that A&D companies have struggled to master the concept of integrated program management, it’s not necessarily for lack of trying. The truth is A&D companies are operating in a market that is changing so dramatically—and so swiftly—that successful companies are constantly adjusting operations to keep pace.

For instance, when customers started insisting that A&D companies lower program costs, the top-tier contractors—starting with OEMs like Boeing and Airbus—responded by outsourcing larger portions of their programs to suppliers. Thus, instead of building individual components, suppliers are now designing and building large aircraft subsystems that are delivered to the prime contractor’s facility in time for final assembly of the entire aircraft. The idea is to reduce the time and cost of building these subsystems, leading to overall lower cost for the aircraft.

The Complexity of Integrating the Global Supply ChainIn many cases, this approach has indeed lowered program costs. In every case, however, it also added an additional layer of complexity to the job of managing a program. This is one reason why A&D executives now routinely cite the difficulty of integrating a global supply chain as one of their top business concerns.

This new dynamic requires the prime contractor to have intimate knowledge of all the parts, processes, and personnel its subcontractors rely on to design and build the various aircraft subsystems. That’s a monumental program management task, and one that becomes even more challenging when subcontractors are scattered across the globe, as they are with most A&D programs.

Hans-Henrich Altfeld, vice president of Airbus’ Center of Competence for Project & Program Management, talks of the need for this new way of thinking about program management in his book, Managing the Development of Highly Complex Products. The book focuses on the development of commercial aircraft, but as Altfeld notes, the same concepts should benefit any member of a multifunctional team involved in the development of modern aircraft. That would include all the individuals working in functional areas (e.g., engineering, manufacturing, procurement) that a program manager must bring together in order to ensure program success.

An Integrated Project ArchitectureAltfeld’s central premise is that successful management of programs dealing with complex products requires members of these various functional teams to work together in an integrated fashion. For that to happen, a company must build what Altfeld refers to as “an integrated project architecture”.

This architecture must include both the proper business processes and information technology tools to manage all aspects of a program—the product development, systems engineering and supply chain activities—from a central program management office.

Establishing such an integrated architecture is not a trivial task, but it’s one that A&D companies must undertake if they hope to survive in the current market.

“It should be clear that aircraft companies no longer compete only on technological grounds,” Altfeld writes in the preface to his book. “Instead, the mastering of integrated management practices has become a decisive factor for superior competitiveness.”

“Both Airbus and Boeing have invested heavily in training, staff development and tools to ensure integration,” Altfeld continues. “However, a lot remains to be done in this area. The recent delays in some bigger commercial aircraft development projects, generating substantial problems for the entire aviation sector, are more than proof of this.”

© 2012 Dassault Systèmes Achieve Program Excellence Whitepaper7

While these tools do an adequate job at managing segments of a program, they are not capable of supporting the integrated project architecture that’s necessary to manage today’s global A&D programs.

Consider niche program management applications created using desktop tools to organize project data. Most projects are still managed using desktop applications to simplify project scheduling. However, desktop applications limit the ability to share detailed project information and do not support true enterprise project collaboration.

Some niche project management vendors recently have introduced server versions of their products that allow for distributing schedules to multiple users. Still, there are major problems with the use of these systems in the A&D sector.

While 21st century A&D programs present a whole new set of challenges, these challenges are not insurmountable—if a company has the right tools and techniques to attack them. The program management best practices—such as stage-gate and EVM processes—that most A&D companies employ are a step in the right direction. The problem lies with the tools that companies are using to manage these processes.

Most program management tools currently deployed in the A&D sector are single-function, standalone applications used within a specific functional area, with little or no ability for sharing data with systems used in other areas. This makes it nearly impossible for an organization to manage programs from a global perspective.

Largely due to the industry’s history of doing the majority of its product development work in-house, most A&D companies still rely on information technology systems that were created to manage programs internally.

According to International Data Corporation, a leading information technology research and consulting firm, companies seeking to get a better handle on program management currently are relying primarily on two types of tools:

● Niche applications that are designed for managing only a specific functional area of the program; or

● Program management modules embedded in ERP suites.

© 2012 Dassault Systèmes Achieve Program Excellence Whitepaper 8

A Competitive AdvantageFirst, few A&D companies have upgraded from the desktop versions of niche program management applications, which means they are still unable to do any type of broad data distribution. Second, none of the niche project management applications allow for the bidirectional transfer of data between engineering and product lifecycle management systems that is essential to efficient product development.

The project management components of financial applications (ERP systems) do a better job of supporting processes like earned value management related to the cost of recurring manufacturing processes. However, ERP systems typically lack the ability to adequately track cost and performance issues related to non-recurring product development activities.

The inability to track product development activities is a direct consequence of the ERP system not being directly linked to engineering and product lifecycle management systems. This lack of easy access to product-related data prevents companies from being able to compile the information necessary to assess a program’s performance in real time. At best, these systems can provide a snapshot of which program tasks were completed weeks ago. That can put the company using such systems at a real disadvantage when a customer wants a program status update.

Managing programs in that fashion is akin to flying an aircraft without proper instrumentation. A&D companies must navigate the digital age of business with tools that are optimized for helping them meet business objectives.

Like a pilot navigating with manual instruments, companies that continue using outdated technology are forfeiting a competitive advantage. A solution that offers the ability to access program performance in real time, and make quick course corrections, as necessary, provides this advantage, by allowing companies to avert program delays or other potential disasters.

Connecting Global Program CommunitiesCompanies that have deployed the ENOVIA Program Management Solution with its integrated program architecture have the ability to create and connect new global project management communities.

One organization created a Global Virtual Design Center so engineers all over the world—both those employed the company and their partners—to collaborate freely on product design. With this solution engineers are not hindered by obstacles such as different tool sets and time zones.

Another company deployed the solution with its supply chain for on-going formal collaboration sessions. Currently, the OEM works with seven of its supply chain partners to iron out program and compliance management issues.

Another company’s implementation involved its proposal process. The company enjoyed a seamless flow of data from all processes starting with the initial proposal to contract execution, product delivery and support.

© 2012 Dassault Systèmes Achieve Program Excellence Whitepaper9

The ENOVIA Program Management Solution provides this enterprise-wide view of program operations because it revolves around a central technology platform that connects to and supports all the backend applications a company uses to design, test, manufacture and service aircraft parts and subsystems.

While the dashboards provide high-level summary data on program status, they also allow users to drill down and get detailed information on any areas that may be showing a cause for concern. The system’s central database is structured in a way that allows users to create links between pieces of information that, on the surface, may not seem related.

For instance, information on project budgets could be linked to work breakdown structures to make it easier to access a program’s financial performance. Individual users from each functional area, when viewing data through a dashboard, also can go directly into the system containing data pertaining to their jobs, to input updated information and have that new information immediately appear on all other users’ dashboards.

The ENOVIA Program Management SolutionThe ENOVIA Program Management Solution from Dassault Systémes provides the right instrumentation to keep steering programs in the proper direction.

The instrumentation starts with a dashboard that presents program managers with a consolidated view of data from all pertinent sources, much like an aircraft’s flight control computer feeds data to a pilot’s heads-ups display. Other program team members have similar dashboards feeding them the exact information they need to perform their specific tasks.

These dashboards are effective program management tools because they pull information from a single, central data repository, which means all program team members are always viewing the most current data related to all program activities. That gives them the ability to make the right decisions nearly all of the time. The system also provides a powerful search technology that allows users to gain instant access to program information from multiple sources.

The ENOVIA Program Management Solution provides a single “Program Home” that integrates key business processes across functions and provides real-time flow of information.

“Program Home”

Contract Management Program Management Product Management Organization Structure

Contract 2009 Program ABC

Contract 2010

CLIN 101

CLIN 102

Proposal

Phase 3 MasterConfiguration

Item 654Business Unit 1

ConfigurationItem 655

Part 540-041

Part 540-042

ABC Dev.

ABC Deliv.

Task 1001

Part 3DGeometry

Part 3DGeometry

Serial Item 1

Serial Item 2

Task 1002

Task 10021

Task 10022

Task 10023

Task 10024

CLIN 103

CLIN 104

WBS 501

WBS 502

WBS 503

WBSE 503-1

WBSE 503-2

WBSE 503-1.1

WBSE 503-1.2

WBS 500

ABC 200 Product 1 ABC 200 Functional Company

Engineering Department

Designer Role

Skills

Tooling Department

Skills

Mfg planner

Figure 1. Program Home Diagram

© 2012 Dassault Systèmes Achieve Program Excellence Whitepaper 10

This ENOVIA Program Management solution enables a broad range of functions—from tracking and managing the business requirements associated with a program to identifying and managing program risks, issues and opportunities. It also has capabilities for creating and maintaining program plans and schedules, managing program resources, tracking financial information and instituting standard program controls mechanisms.

Because the system is tightly integrated with backend engineering applications, it has complete, real-time access to all of the company’s product-related information, which allows for thorough, accurate tracking and analysis of all program activities. For example, when the status of a product deliverable is changed to “complete” by the designer, the task is updated in real-time in the project schedule.

In addition to managing data from a company’s own backend systems, the ENOVIA Program Management solution can accept data from supply chain partners’ systems or stored in some other program management system, such as a niche program management application or a program management module in an ERP system. It federates the data for storage and management in its central database.

This integration of data from multiple sources - other systems and the extended enterprise - enables meaningful, real-time collaboration among all program stakeholders, from the Original Equipment Manufacturer (OEM) to multiple tiers of partners and suppliers. In essence, it provides the complete global view of a program that’s necessary for success in today’s A&D environment.

Proposal Management:Increase Efficiency, Boost ProfitsCompanies that have deployed the ENOVIA Program Management Solution report gaining a competitive advantage because of easy access to critical information needed when bidding on new contracts.

Companies tap into the central data repository and quickly determine whether they have the resources—such as engineering talent, manufacturing expertise and production capacity—to complete a program according the potential new customer’s required schedule. In making that assessment, the companies can also assess the potential risks associated with a new program and decide if it even makes economic sense to submit a bid.

Once a company wins a contract, all data related to that bid can be stored securely in the ENOVIA database, making it available for easy access and reuse for bidding on future programs.

With the ENOVIA Program Management Solution some companies report increased efficiency which allows them to increase the number of programs they can bid on—and successfully manage—in a given year, resulting in more revenue and higher profit margins compared to their previous project management tools. This type of efficiency is especially critical for companies engaged in programs that invoke financial penalties for late delivery. For companies supplying military aircraft, this scenario is only going to become more common—with the consequences becoming more severe—as budget crises force governments to cut overall spending.

© 2012 Dassault Systèmes Achieve Program Excellence Whitepaper11

The ENOVIA Program Management solution eliminates those issues by creating a single place for all program participants to access the exact data they need to see at any point in time.

Ultimately, companies that use the ENOVIA Program Management Solution discover abilities they never imagined possible, such as the ability to:

● Automatically collect and summarize important program data;

● Navigate through the system to find detailed information that reveals the source of any problem;

● Use predefined templates to save time and leverage corporate standards and best practices; and

● Generate real-time performance metrics.

These companies are discovering that having ready access to accurate, real-time data allows them to make better program management decisions in much less time—and for a lower overall cost—than they ever have before. The ability to make real time decisions enable companies to stay on target and ahead of the competition.

A New Way of WorkingHaving a system that functions within the PLM domain promotes better communication—and better understanding—across an entire program team. It also lays the groundwork for a smooth progression through the typical stages involved in completing an A&D project.

The solution enables a company to create a whole new way of working. Companies that rely on other program management solutions typically find themselves scrambling just to hold program reviews, (e.g., Preliminary Design Reviews and Critical Design Reviews) because of the time involved in collecting the necessary data. These companies also lack the means to conduct on-the-spot program reviews required to meet today’s stringent program performance standards. It has become increasingly common, for instance, for government agencies to demand that contractors submit to full program audits without any prior notice. A company that needs several weeks, or even a few days, to collect program data has no chance of complying with such requirements.

Contract line items, CDRL/SDRL, WBS elements, tasks, deliverables, skills...

Real time monitoring of program activities with cross-functional process integrationprovides the right information at the right time to the right people.

PROGRAM BACKBONE

Contracts / Requirements

Program Metrics 3D Dashboards Risks and Opportunities Management

Program Planning & Controls Program Deliverables Resources Management

© 2012 Dassault Systèmes Achieve Program Excellence Whitepaper 12

In Summary

The ENOVIA Program Management solution can help companies that adopt this approach to reliably perform the plans they proposed and meet their design, cost and schedule targets through adoption of new practices in four key areas:

● Consolidate all program data in one central data repository to use institutional knowledge and improve design analysis and decision support;

● Reuse data between organizations to avoid duplicate effort and misunderstandings. Navigate and retrieve information in an intuitive and reliable manner

● Automate real time reporting of key data to assess program performance with the best level of confidence. Deep-dive on demand on detailed information for further analysis ; and

● Control programs with real-time risks and opportunities analysis. Report detailed and verifiable information in an intuitive context to be in the best position to take the right decisions

Consolidate all program information

Reuse data between organizations

Automate real-time reporting of key data

Control programs with real-time data to take the right decisions

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