We're discussing digital transformation and servitization in the jet engine industry
with Russell Masters, Vice President of Digital Services at Rolls-Royce.
Hi, Michael. It's fantastic to be here. Thank you for inviting me and thank you for including me.
I'm so glad that we can connect. It's just brilliant to be involved.
Well, I must say, of course, Rolls-Royce is an iconic British brand. Tell us about Rolls-Royce
and tell us about the work that you do. Yeah, thank you for that. I mean
you're right. We are a British institution, but we're part of an amazing industry. I'm sure most
of your audience will know that whilst we started in the automotive industry, actually now we're
designers and manufacturers of gas turbines and power solutions for a whole range of applications.
I work for our civil aerospace business. I spend all of my life thinking about
aircraft, powering flights. But also, importantly, we provide services and so we're here to provide
power systems and services that support all of our airline customers around the world.
It's brilliant fun to be part of this amazing company and to be involved in digital services.
Certainly, people who watch CXOTalk are frequent travelers and we all care about the part of an
airplane that makes it move safely through the air. Tell us about jet engines and give us an
overview of Rolls-Royce's work with jet engines. Historically, we think about that as
an industrial and manufacturing activity. But as the aviation industry has grown and as customers
demand and rely on air travel more and more, it's become an increasingly digital organization in
a digital industry. I'm really happy every day to be part of leading the digital organization
that supports Rolls-Royce aircraft in service. We've got two things that we do in my part of the
company. Firstly, we manage all of the analytics and the applications that we use to deliver
information and insight, both to our teams and to our customers, as they
operate their fleet safely around the world. Then the other part of the job is to actually
deliver digital services that all of our customers use as part of managing their fleets.
That ranges from tracking assets in real-time to understand their health and how they're operating
to tracking the life that they've used and when they'll need maintenance, and forward forecasting
all of the activity that we need to keep every single one of those assets flying around the world
safely, efficiently, and as reliably as possible. It's a huge privilege to be part of this
organization and to lead an incredible team that do some amazing stuff every day.
Give us a sense of the kind of complexity that's involved with the manufacturing, the maintenance,
and the digital analytics around jet engines. It's huge. Just to get one of these really
complicated pieces of turbine machinery designed and developed requires huge amounts of data.
It requires huge amounts of testing and collaboration across a supply chain and a
manufacturing base that produces tens of thousands of parts at different places around the world.
In the very early stages of a jet engine's life, we're using digital technology to test,
to simulate, to measure, and manage how that design is going to come together and how we think
it's going to perform in the real world. Then, of course, that's just the beginning of the journey
because a new aircraft, a new engine enters into service, that asset is going to be with our
customers for anywhere up to 25 or 30 years. All the way through that really long period of time,
it's going to need to perform flawlessly. Most of our assets will be on wing for
five to six years at any one time. It might accumulate 20,000 or 30,000 hours of flying before
we do any kind of heavy maintenance. Yet, every day, it's taking off, moving hundreds of people
and thousands of tons of cargo around the world. Tracking those assets, understanding how each
and every one of those thousands of parts are working together,
understanding the health of the asset, and then being able to plan, predict, and take action to
keep it flying as long and as efficiently as possible is really, really important.
In fact, then Rolls-Royce is actually involved on an ongoing
basis with the operation of these engines. Yeah, absolutely, and we've moved more from a
manufacturer of equipment to being a provider of long-term services. Now, it's very much the
case that every single one of our customers has the option to not only buy Rolls-Royce powered
aircraft but also take a whole range of supporting services, which will help them manage those assets
throughout the life both in terms of how well they perform, the maintenance that they undertake,
making sure that they're covered should anything untoward or any unforeseen
events happen, and also helping them to manage them in the most efficient and sustainable way.
All right. Let's talk about the technology components that make this happen. Give us an
overview of your platform and the data components. We have a raft of products that we use to do that.
We created what we call our Blue Data Thread service. Through that, we're able to connect
to the aircraft performance and engineering data we need to drive our care services.
We do that through a number of methods, some of which is direct with us and some
with service providers. All that data comes into our analytical platform,
so our intelligent engine platform, which is cloud-capable and upon which we run a number of
Rolls-Royce specific applications that we use to both model aspects of performance and asset
behavior and service, but also to forward forecast maintenance and other actions that we need.
Then, from that, we create actionable insight.
Those insights are consumed by a whole raft of service delivery teams across our organization,
each of those using a variety of digital tools and capabilities to do their bit of the job
really efficiently and really well. Then, of course, all of that
needs to be shared directly with our customers. It manifests itself in our customer portal and in
the more consumer digital experience that our customers use to access our products and services.
It sounds like data sharing in both directions is a fundamental aspect making this all possible.
Absolutely. Data sharing in an industrial setting is a really important
enabler to adding value and it's almost critical now. It's the lifeblood of industrial businesses
is being able to get at and exchange data. It's been a particular area that we've worked on
incredibly hard over the last few years. Fundamentally, a lot of this data belongs
to the customer. It's their asset. How they use it, how they operate it, is fundamental to them.
Our whole journey in data sharing, data service, and data exchange has been about creating these
trusted, neutral, very privacy-centric, two-way connections with our customers.
Their feedback is that they really like it and that it helps them to do a better job
and it helps us to do a better job for them. I'm very grateful to IFS because they're making
our conversation possible. I know that you work closely with IFS. Tell us about that relationship.
IFS is a fantastic company we've been working with for quite some time now. As we talked about
in the earlier part of this discussion, exchanging data is really important.
What we want to be able to do is do it in a completely secure and trustworthy way.
One of the ways to demonstrate that is to use proven partners who have got a really good track
record of data creation and data management. And so, we partner with people like IFS because that's
very much in the spirit of creating this trusted data exchange with our customers.
Partnering with IFS has been a fantastic experience. We've been able to accelerate
our journey along the data exchange, data sharing, and development, and we really enjoy
making use of IFS and others to help us build out this trusted data exchange.
IFS is a key part of your servitization journey. Yes and, as a provider of services, you have to
challenge yourself to think about where can you consume services and where can people do some of
these jobs better than you can. Given the choice between working with a really credible ecosystem
of providers like IFS and others or building this all yourself, it's very compelling to
be able to work with a group of partners who can help accelerate your time to market, can help you
achieve a better overall outcome, and do it in a way that's better for our end customers.
What kind of data are you collecting on these engines? As you're doing
the monitoring and you're this partner to the airlines, what are you looking at?
Every day, in every real-world situation, we're collecting data about how each flight
has performed. We're streaming that in real-time. We're analyzing sometimes quite small packets of
information using our current experience, engineering knowledge, and our analytics
capability to create lots of insight for actually relatively, in some cases, small amounts of data.
Every time an aircraft takes off, we collect snapshot data around how its pressures,
temperatures, speeds at the various rotating components within the engine,
more information about its control system and how it's performance, and all of that data is
brought back to us here. We process that and we can understand that both in real-time and on a
more periodic basis to understand how the engine is performing relative to how we'd expect.
From that, we can use that to detect situations and issues before they might happen.
How does all of this feed into the Rolls-Royce business model?
From the late '90s, we've been providing customers with long-term service agreements where,
instead of paying every time they have need of support, they pay an ongoing fee for
every time they fly. From that, we transfer a lot of the risk of managing the products,
managing the maintenance to ourselves and we take all that responsibility on behalf of the customer.
That's been transformational for us because what that's allowed us to do is to align our goals,
our objectives, and our incentives to that of the customer. The one thing that we always want to do
is we want the customer to fly on time whenever they need to. All of our service
provision is built around doing that. Russell, how is this servitization
approach different from the traditional, historical relationship between a jet
engine manufacturer and the airlines? Rolls-Royce took this whole servitization
of products into the aviation industry, and so total care was one of the first long-term
service agreements that you could use to manage your fleet of aircraft. It is a transformational
process going from being incentivized to provide a customer with parts when they need them
to thinking about how you could help that customer operate as efficiently as possible to fly
as often as they need to and make the asset completely available, it changes the mindset
that you have and it changes your thinking. It moves you to a mode of thinking about
the assets throughout its whole life instead of how it is now. It incentivizes you to improve the
product over time so it can be more reliable and it can perform in a more efficient way.
Product with service and enabled by digital technology is really the foundation of our
vision in this area. It's the vision that we like to refer to as the intelligent engine.
Russell, as I talk with experts on digital transformation, very often they say to me,
"Jet engines are an example of how transformation can change that relationship with the customer."
Just drill down even further. How do the different relationships that you've established
with your customer change your incentives to look at that customer more holistically
and become a partner in their operating outcomes as opposed to, "Well, we supply you the parts"?
If you're just selling someone a product or part, that's quite a transactional relationship. It
happens fairly quickly. It might happen a lot in a given year, but it's a kind of one-off thing.
In creating a long-term service and support agreement with a customer and providing
a long-term outcome-based service, you're committing to that customer for a long period
of time. Some of our relationships, much like our assets that can last 25 years in service,
some of our relationships are 25 years-plus. When you commit to a customer in that way,
it requires you to act in a different way. Every single one of my team and the colleagues that
I work with are tremendously committed to our customers. We know that we're an intrinsic part
of our customer's operation and we know they rely on us. That both makes the job enjoyable,
it makes it rewarding, but it also gives it a really important purpose.
That's why having a wealth of service offering and service experience and having the digital
capabilities and the analytical capability that we do gives us so many more tools and so many more
ways to support our customers. It's a massive enabler to helping live up to our commitments
and our promise that you only deliver when you create some sort of long-term service agreement.
A lot of what you've been describing involves change and transformation of one kind or another.
To what extent is culture change and managing this transformation a key part of what you're doing?
It's a huge part. Effectively, what we've got is we're a highly regulated,
safety-conscious industry. Safety always comes first for us and it's the most important thing.
To a certain extent, having stability, always doing things in a repeatable way is a
massive enabler to creating really safe, really reliable products. Alongside that,
though, we want to create new things and that means finding ways to innovate and iterate
quickly and then translate those back into a more production environment where there's a
production service or production application or as part of our engineering or other processes.
You have to learn to operate in these two different modes, so it presents a huge amount
of challenges. That's why pretty much all of us within Rolls-Royce now are going through
some sort of transformation, either organizational or personal level, because we're learning what it
takes to do these really fast, iterative projects, these more digitally enabled
propositions while still delivering the reliable service that our customers need.
How do you manage the tension between the need for safety, stability,
processes that don't change, on the one hand, against the need to innovate on the other hand?
One of the brilliant things about operating in a highly related environment, it gives you a
framework in which to operate. It gives you some really good, clear guidance on what you need to be
worthy. Ultimately, a lot of the time when we're developing new services, it's adding value in
and around the operation of the product, so that gives you some latitude in some areas to work in.
I think it's also fair to say what we've tried to do is create pockets of disruption within
our organization. Groups who don't have to worry about maybe setting stuff up in
a production way, don't have to worry about doing things the way we've always done it.
Within our organization, we have our R² Data Labs team. They provide a disruptive force
within the wider group. They're given the license and the remit and the freedom to try new things,
use new technologies, be less respectful of the norms. It requires you to operate with
two halves of your mind and it's certainly something that we think we do really well but
we're always learning how to do better. Russell, Rolls-Royce has traversed this
servitization journey. Can you share with us some lessons that you've learned that others might find
helpful as they go through this process? I've been in the company a while, but not
necessarily for the full extent of that journey, but I've learned a lot even during my time.
We should all face up to the fact that we are needing to be more digital
and more digitally aware. If you are in a team and you've got a day job, your responsibility,
you really need to think about how could this be more digital and how could I learn about
what the digital possibilities might be here? As leaders, it's no longer the case that we can
let the IT or the digital guy handle that and then just come and talk to them when it's done.
We have to educate ourselves more. We have to become more conversant in the language.
We don't have to be fully qualified enterprise architects or UX consultants, but we certainly
owe it to the rest of the organization and our teams to learn more about how these technologies
can affect and improve their lives and how we can exploit the opportunities.
I think it's remembering that customer, remembering where you're trying to get them to,
and becoming more conversant in the opportunities, the tools, and the technology that are available
to us. That's a great place to start. If you could do those two things,
you're on to a winner. Okay. Russell Masters,
Vice President of Digital Services at Rolls-Royce, thank you for taking time to speak with us today.
Thanks for including me. I've really enjoyed it and thank you for everybody watching.