Understanding the Open Business Model The value proposition

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

Do. D and OA • Do. D has 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 Unlocking Potential 2

Do. D 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 Unlocking Potential Source: Center for Responsive Politics, www. opensecrets. org 3

Learning from Industry • Do. D 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 Unlocking Potential 4

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 Unlocking Potential 5

Auto Industry Examples • Renault • Volkswagen • General Motors Unlocking Potential 6

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

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 Wards. Auto, Oct 28, 2013 Source: http: //wardsauto. com/vehicles-amp-technology/big-rewards-hurdles-seen-next-gen-flexible-vehicle-architectures Unlocking Potential 8

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/EMAIL 01/911099979/can-a-new-corporate-culture-save-gener Unlocking Potential 9

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 Unlocking Potential 10

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 Unlocking Potential 11