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Understanding the Open Business Model: Learning from Industry for Government Benefits

Explore the value proposition of the open business model in the government sector and learn from successful industry practices. Discover how investing in initial product-line architecture can lead to cost reductions and increased efficiency.

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Understanding the Open Business Model: Learning from Industry for Government Benefits

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  1. Understanding the Open Business ModelThe value proposition for the government – Learning from industry CAPT Paul VanBenthem, Deputy, Navy Open Architecture Implementation, DASN (RDT&E) The views presented are those of the presenter and do not necessarily represent the views of DoD or its Components. DISTRIBUTION STATEMENT A. Approved for public release.

  2. DoD and OA • DoDhas long strived to gain benefits from Open Systems Architecture (OSA) approaches • by acquiring data rights and; • contracting with industry to define an open system • Typically resulted in a vendor-specific product line or platform-unique architecture

  3. DoD Impediments to Transformation • Political contributions help shape policy • Secure defense contracts/earmarks and influence defense budget to make contracts more likely • Over $27 million during 2012 campaign cycle • Biggest contributors: L-M, Boeing, GD, NG, UT, Raytheon • $132 million lobbying dollars spent in 2012 • Biggest spenders: Boeing, UT, L-M • Acquisition legislative and policy constraints • Stovepipes • Funding • Program Source: Center for Responsive Politics, www.opensecrets.org

  4. Learning from Industry • DoD can learn from commercial industry's playbook • leverage their “lessons learned” based on product-line success • Industry has proven that investment in initial product-line architecture reaps system life cycle cost reductions due to: • integration • Planning for obsolescence • technical refresh • common components and software across platforms

  5. Typical Industry Standard Practices • Multi-use – multiple levels • Architecture • Hardware modules and structures • Software • Common core components • Design • Standardized interfaces • Require use of standard interfaces between modules • Multiple vendors able to produce modules meeting form/fit/function requirements

  6. Auto Industry Examples • Renault • Volkswagen • General Motors

  7. Renault • “Automakers rapidly are moving toward a new era in vehicle architectures that promises lower costs, turn-on-a-dime manufacturing and shorter product-development lead times” (WardsAuto, Oct 28, 2013) Renault CMF architecture concept Source: http://wardsauto.com/vehicles-amp-technology/big-rewards-hurdles-seen-next-gen-flexible-vehicle-architectures

  8. Volkswagen • MQB architecture to underpin 39+/- models covering eight size and market segments • Allows for quicker product development as future vehicles are derived from the existing platform Photo courtesy WardsAuto, Oct 28, 2013 Source: http://wardsauto.com/vehicles-amp-technology/big-rewards-hurdles-seen-next-gen-flexible-vehicle-architectures

  9. GM Transformation • GM’s bankruptcy inspired radical change • GM CEO Fritz Henderson: four core values • customer/product focus • Speed • risk-taking • accountability • Operating model team • overhauled the company’s bureaucracy • dismantled GM’s bureaucratic “matrix” structure • Culture transformation team • implemented the new cultural values in the workforce • Layers of bureaucracy removed Source: http://www.crainsdetroit.com/article/20091109/EMAIL01/911099979/can-a-new-corporate-culture-save-gener

  10. General Motors • Adopting a more flexible approach • mixes and matches modules across product portfolio • Modular architectures enable: • quick reaction to changes in consumer preferences • shorten vehicle development times • Reduce architectures from 30 in 2010 • to 17 in 2018, core platforms from 39% to 96% • to 99% on core architectures by 2020 • to 4 basic vehicle sets in 2025 • Consolidate lead engineering to one center • drive inefficiency out of product-development process Sources: http://wardsauto.com/management-amp-strategy/gm-vehicle-platform-consolidation-accelerating-product-chief-says http://wardsauto.com/auto-makers/gm-taking-new-approach-global-engineering-vehicle-architectures http://wardsauto.com/auto-makers/new-management-team-lifts-veil-gm-strategy

  11. Modular and Open Warship Vision • Efficient and frequent capability insertion and technology refresh to overcome obsolescence at the lowest possible cost • Greater mission adaptability and warfighting dominance via re-configuration • Increased efficiencies in ship design, construction, testing, sustainment, and disposal achieve affordable relevance over the lifecycle Flexible Ship = Platform + Payload + Growth Margin Top-level Objective: Affordable Relevance over the Life Cycle

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