Modernizing Defense Supply Chains

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How to enhance and empower defense ERP and legacy systems

Harry Macleod is the Director of Defense Leaders. David Stephens is EVP/GM, Global Defense, at One Network Enterprises. The interview was recorded at Future Land Forces 2024.

Harry Macleod 

David, as we move from just in time to stockpiles, the need for clear inventory management in a joint and allied domain is critical. There are several programs looking to address this issue, and I’m pleased to welcome the executive vice president and general manager of One Network Enterprises, David Stevens, Welcome David. Can I start by asking, we’ve heard a lot about digitization this week. What should organizations be looking to do to start that process?

David Stephens 

I think organizations are in different phases of their evolution. Some are still using paper. Some are a little bit more modern, using spreadsheets, and some have implemented enterprise systems.

A lot of them are not happy about it.

I think the fundamental issue with the landscape today is that the systems today just aren’t equipped to handle a full digitization and a modernization effort, because of the way they’re integrated, the way they’re deployed. My recommendation to all organizations, small, medium and large, is do a little bit of homework. Talk to some of your mission partners, talk to some providers of capabilities. Have them show you what they can do. Don’t just believe the paper, the marketing material that they give to you. See it, and see if that is good enough for you.

Harry Macleod 

But what about those countries with legacy systems that might be almost impossible to get out of sometimes? Can they bring that along that journey with them?

David Stephens 

They certainly can. I mean, we’ve learned that from a lot of our customers, and because of that, we created a architectural environment called, “Embrace, enhance and replace.”

Think about this. You have a legacy environment, you want to maximize the benefit of that, and you’ve got money invested in it, plus a lot of people don’t want to get rid of it. So the idea would be, bring a solution in that can embrace that legacy environment. Technical folks would call it, integrate into that, and then when you embrace that, you can start enhancing the business process.

A lot of these legacy systems do not talk to one another, so you have an environment where you’re in a seat, they call it a swivel chair approach, where I’ve got one piece of information, say, inventory management, asset management. They’ll enter asset data into one system, turn around and enter location into another system, turn around to enter financial into yet another system, etc.

On top of that, you’ve got to learn three systems. You’ve got data entry problems. It is a problem.

Now once I’ve embraced that system and process, I can now enhance it, and I can eliminate the swivel chair.

Think about the effectiveness and the productivity increases, because now I’m just looking at one system, but yet I’m getting all those functions.

On top of that, these systems can be very costly, very expensive to maintain. So, now you have the option of replacing those systems, if you choose, but you don’t have to. The benefit is that some of these legacy systems, as far as their cost and sustainment, they can be replaced for less than what you’re paying for sustainment today, making this superior solution essentially a self-funding solution.

Harry Macleod 

So, there’s quite a lot of enterprise resource planning tools out there already. We’ve talked about Oracle this week and a bit about SAP as well. What is One Network doing that is different? What are you bringing to the customer?

David Stephens 

When you look at traditional ERPs, whether it be SAP, whether it be Oracle, or whatever, they were built to manage within the four walls of a business, they were also built to manage from the management strategic level. What they haven’t done is they haven’t said, “Okay, how do I embrace the entire supply chain?”

Think of a supply chain, it’s really a network, it’s not a chain, it’s a network. Militaries have mission partners. They have an industrial base that supplies, goods, capabilities, all kinds of classes of supplies to them. Then they’re going to go into multi-domain operations. The whole idea of militaries is, “I want to make sure the tactical war fighter has what they need to give the defense that we’re asking them to give or ward off.”

But these ERPs and a lot of these other systems used today, just aren’t meant to go through down to that level. Military logistics is a multi-tier business. It’s a multi-party, multi-tier business, and runs well on what I would call a network approach.

What that means is having all of all of my logistics functions, whether it be supply, maintenance, transportation, all on one platform. It means being able to send and receive information throughout the military space, down to the tactical level, because it’s a multi-echelon business. And so, that every level can not only see what they need, they can get what they need to get and communicate.

The other weakness, I think, of existing systems, is that they don’t work in what I’ll call contested environments. Military does not have the luxury of sitting on their living room sofa watching cable TV, having high speed internet. When you’re out at a forward deployed location, you’re not always guaranteed bandwidth, you’re not always guaranteed connectivity. So the idea of, how can I push capability out to them so that they can do what they need to do, from a logistics perspective, see what they need to see, be able to move it in a disconnected mode, so it doesn’t matter if I don’t have any kind of connectivity. Then when I do get to an area where I can connect, I can sync up with the enterprise. And you can do that either from handheld tablets or what we call deployed servers, which would give you that capability at a longer period of time.

So, from our perspective, we see that inability to operated in disconnected and degraded environments as a big weakness in these ERP systems.

We’ve come up with the architecture and the capability to fill those gaps and extend operations through these disconnected scenarios.

A lot of people have invested in these ERP systems, they’ve invested a lot of money. They’re not about to throw them out immediately. So what we do is integrate with those systems. Think of the “Embrace” concept. We can integrate with those and then provide that capability down to the retail level. So we’ve essentially taken their investment and extended it in a modernized way.

Harry Macleod 

Very interesting. So, what are some of the lessons people watching could take for their own militaries that you’ve seen during this transition for current customers?

David Stephens 

Yeah, I think you know, our experience has said that militaries and organizations want options. They don’t want things crammed down their throats. And, in a lot of these large implementations of these ERP systems, that’s exactly how they feel. I can’t tell you how many people we’ve talked to this week that said, “Yes, I had this system. I hated it.”

So they give some needed capability, as I mentioned, from the strategic level, from the leadership level, they work very well, because the system is an “inside the four walls” solution. But when you’re talking to the brigade, the company, the folks down in the operational and tactical levels, they’re saying, “Help me!”

So I think these militaries, number one, they want options. Number two, they want solutions that will scale. And, three, they want solutions that will grow with them as they go through this journey. They want a say in how this is deployed, they don’t want it simply because another country is doing it this way, or one other business is doing it a certain way. That doesn’t mean that I want to deploy it that way. They want options.

Also, they want solutions that aren’t going to create this big sustainment cost on the back end. It’s kind of like these promotional interest rates. “Yes, I’ll get you in.” But look what happens on the back end. Costs quickly add up and balloon, because you’ve got to maintain it. I’ve customized it. I’ve got all this cost involved, and you just can’t get away from it.

That’s why they’re looking for options to get away from the typical model and have a model that suits them both in their budget, because a lot of these countries do not have the budgets of some of the larger countries, and certainly no one has the budget of the United States. And they want systems that they can use, that can fit within their budget, do what is required, and grow in value over time.

Harry Macleod 

So, in fact you have almost an off-the-shelf product helping you in this regard, correct?

David Stephens 

Yes, but I think it’s a very special off-the-shelf product. I think lot of people will say, “Hey, I want turnkey solutions.” Sometimes that has a bad reputation, because “turnkey” means, “well it only works this way. You can use it all you want, as long as you use it this specific way.” That’s a problem.

We have this concept called “fit-for-purpose,” and “commercial-off-the-shelf” or COTS. What we can do is, because of the way we’re architected, we can deliver capabilities to you, and we can say, “Okay, here’s defense capabilities that are organically integrated. However we know that you want to use the business process in different ways, so we can configure that for you and still support the implementation as a commercial application.”

So really it’s a COTS/commercial-off-the-shelf. That means, you don’t create this long sustainment tail even with the integration layer.

And then we say, “We’re going to keep you in a never legacy environment.” And what that means is you’re not going to go out of date or run on an old version. We’re going to keep you current with the commercial product is evolving. You can choose to implement any commercial capability that we have, and we configure it for defense, but it’s up to you. You’re never going to be stagnant, and you’re never going to get stuck in this model that says, “Okay, if I want to upgrade, there’s all this rework for no gain.” Typical ERP systems create so much custom code, they’ll have to undo that custom code, put in new code, put in new software, redo the custom code, repay the big sustainment.

We’ve eliminated all that by having this “Never Legacy” commitment. You’ll never go legacy and always get modernizations.

Harry Macleod 

I wish that could be applied, say, quite a few of the programs being discussed here!

David Stephens

Exactly!

Harry Macleod 

So why don’t more people know about you in Europe?

David Stephens 

That’s a great question! We’re we’ve been in business since 2002 in the US, primarily a commercial company. Our defense business started in 2007 we’ve stuck to our business and the United States, we have a long list of customers within the US. DOD, we’ve had customers like the US Marine Corps that has been a customer since 2007. We manage their end to end. Ground munitions.

The Air Force has been a customer since around 2016. We manage their end-to-end munitions, all bombs and missiles, including maintenance of those missiles, no matter where they are.

We have a lot of programs that we’ve implemented within the US Department of Defense. We were a small company. So a small company being able to expand, you know, in an international presence was pretty difficult for us because we just didn’t have the resources to do that. We stuck to our knitting. We created a great product, and now we’re moving into international military space.

We have a lot of international commercial customers, but no real international defense customers. Because of what we do, we have this defense ecosystem. All of our defense customers, unlike these ERPs that are implemented by integrators, we bring all of our defense customers together, and they are able to share experiences. And if one defense organization has implemented something, we let another organization leverage that. We allow other Defense organizations to implement those capabilities in their implementation.  You don’t get that with the way traditional systems are deployed.

So to answer your question about One Network, we’re trying to get more well known. We think we’re the the best military enterprise logistics company and the least known. So we’re here at the this great conference, Future Land Forces, as a step for us to get to get more knowledge out of the military market.

Harry Macleod 

Well, David, we wish you the very best of luck and hope you have a good week here. Thank you very much for your time.