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TOP 5 lessons for defence SMEs from leading experts

TOP 5 lessons for defence SMEs from leading experts

Leading defence and government experts unveiled the essential lessons for Australian defence SMEs at the inaugural Defence Connect AIC Summit this week.

Leading defence and government experts unveiled the essential lessons for Australian defence SMEs at the inaugural Defence Connect AIC Summit this week.

Navigating the defence industry ecosystem can be difficult at the best of times. It’s especially hard for SMEs managing the complexities of running a business while overcoming obstacles in the defence supply chain.

To help, this week Defence Connect launched its inaugural AIC Summit, bringing together key decision-makers from defence and primes to provide insight to those Australian businesses looking to break into the defence supply chain.

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Below, we provide the TOP five lessons for Australian defence businesses and SMEs from our government and defence panel.

Moderated by veteran journalist Stan Grant, this expert panel included:

  • Stephen Moore, first assistant secretary, Defence Industry Policy
  • Francesca Rush, chief counsel – Commercial; first assistant secretary – Australian Industry Capability, Australian Department of Defence
  • Major General Andrew Bottrell, head Land Systems
  • Rear Admiral Wendy Malcolm, head Maritime Systems
  1. Diversification

If the recent pandemic has taught businesses anything, it’s that global supply chains are more exposed to sudden and disruptive shocks than any time in recent history. As part of the Commonwealth’s push toward a sovereign defence industry, Defence has articulated that defence critical products must be controlled by sovereign companies.

However, Australia isn’t the only country looking to diversify and strengthen their defence supply chains to mitigate the threat of trade shocks.

Stephen Moore, first assistant secretary, Defence Industry Policy, explained that Australia’s allies are looking to diversify their trading partners for the procurement of military equipment, providing fertile business opportunities for Australian SMEs around the world.

“When we talk about diversification of supply chains, our partners are also thinking about the same thing,” Moore said at the Defence Connect AIC Summit.

“That presents opportunities potentially for Australian businesses as well, because there is a need no matter how sovereign your industry might be that diversification of supply chains is something that is recognised as good for supply chain security.”

If you’re an Australian defence SME, perhaps it’s time to start looking for partners around the world to provide Australia’s allies additional supply chain diversification and gain valuable business contracts.

  1. Re-evaluate your priorities

The “money” isn’t always in creating and producing groundbreaking innovations. Rather, it’s in keeping the ADF war ready.

Rear Admiral Wendy Malcolm, head of Maritime Systems in the ADF explained that defence businesses often get too focused on the “sexy” areas of defence innovation and forgo creating optimised solutions for the ADF’s sustainment programs.

“[Regarding the ANZAC Class] that’s a good example where people get very focused on the acquisition, and I said this to Phil [Tarrant] a couple of years ago, shipbuilding is sexy, but sustainment pays the bills,” RADM Malcolm explained to the Summit.

“I think it’s often about what comes as you go, you’re going to spend at least $2 for every $1 in sustainment versus acquisition, and we see those sorts of incentivisation that the enhanced AIC framework is doing is going to help companies … and it’s going to help build those supply chains.”

For those businesses focused on creating the new piece of technology, perhaps a small pivot to improving or sustaining current defence assets could kickstart your business.

  1. Getting cyber ready

To operate in the defence supply chain, businesses are going to face increasing cyber security requirements.

This comes as no surprise to many Defence Connect readers, but without robust and resilient cyber security protocols in place, businesses simply won’t even make it through the front door with Defence tenders.

Take last year’s Kaseya hack in the US for example. The single penetration resulted in downstream infections to almost 1,500 businesses. Such threats to businesses operating in Australia’s defence supply chain will not be tolerated by defence.

When asked about what additional regulatory burdens defence companies will face in the future, RADM Malcolm suggested that more “onerous” cyber protocols may be placed on companies. So, get in there early and build your cyber security capability!

“The increased requirements we’re seeing around cyber is a really good example. That’s not going away any time soon and we really are guided there by the experts in that space,” RADM Malcolm said.

“It’s a big cost impost on our companies … but we really have to do that because at the end of the day, we have to keep our assets and our information safe and secure, and we look to industry to support us in that way.

“I think there will be more onerous requirements particularly around IT security. We’re learning about that everyday so that’s something you can particularly help each other in.”

To make sure your business stays ahead of the pack, make sure to update your company’s renewed cyber security procedures now and don’t wait for more “onerous” Defence requirements to operate in the supply chain!

  1. Square away your administration

In a competitive market, not only do Australian defence businesses need to make sure to maintain compliance with the myriad of defence regulations – but they need to get the basics right!

According to the panel, it appears that some Australian defence businesses simply have not gotten the basics down pat and have suffered as a result.

Francesca Rush, chief counsel – Commercial and first assistant secretary – Australian Industry Capability, explained that even if a business has the most innovative concepts they simply will not win defence contracts unless they get the basics right such as security clearances for their staff and compliance with the defence industry security program.

“I think all the comments around capability development [are] absolutely cool but I might actually just point to some really basic things which in this environment have become much more of a focus for the department: security clearances. I know everyone hates them, I know, but that’s just such an important part of just getting defence ready,” Rush said at the Defence Connect AIC Summit.

“Another really important one is actually around people understand this, the defence industry security program, and making sure you are defence ready through that. Having really good quality assurance systems – like these are really basic business things but they are barriers to entry to the Department and certainly to any supply chain if you can’t get there. We are looking at how we make that easier for you.”

The lesson from Rush is simple – unless you “dot all the i's and cross all the t's” with basic administration, defence businesses will not be competitive with their peers!

  1. Navigating the system

One common theme across the “Getting Defence Ready” panel at the AIC Summit was the importance of employing staff who understand the defence ecosystem from the “inside”.

The defence ecosystem is incredibly difficult to navigate. Those businesses who are successful have onboarded staff who possess an institutional knowledge of defence, the tender process and who can “translate” subtleties and nuances in the defence market.

Simply: defence doesn’t look for the shiny new product. Defence looks for products that addresses their key requirements, and that are supported by a thorough understanding of defence. A defence “translator” helps achieve this.

Major General Andrew Bottrell, head Land Systems, explained that people who possess such intrinsic knowledge of defence work as a conduit to accurately address defence requirements and ensure that businesses align their productivity goals with defence needs.

“One of the opportunities, you know, having a level of familiarity with the ASDEFCON suite of contracts. Finding people who can help you translate. Translators and people who can understand (when I say translation, I mean who understand the system inside) the value of people who leave the system … not everyone does. That’s incredibly valuable,” MAJGEN Bottrell said.

However, not all defence companies have the privilege of being able to hire staff with extensive procurement and military expertise to “translate” the defence requirements and align productivity goals with defence needs. Rather, MAJGEN Bottrell encouraged businesses to communicate more with one another and offered the opportunity for defence businesses to contact him if they have a cutting-edge defence innovation.

“The channels are also there for them to approach. I’ve never said no to a meeting with a company. Sometimes they have to wait to get on the schedule, but I’ve never said no to meet with a company,” MAJGEN Bottrell said.

RADM Wendy Malcolm further suggested that companies contact their local ODIS office or defence representatives in order to accurately address Defence’s requirements.

“I also would encourage the SMEs from the point of view of finding somebody who can help you navigate the system, I’m never looking for a widget or something that’s shiny, I’m looking for a system that can be supported and understanding how you do that and how to get ready to do that is really important. ODIS will be able to help with that but get out there and get to learn who your primes are and your people who can help you in that way,” RADM Malcolm said.

Please join in the discussion in the comments section below to share your top tips for Australian defence businesses.

If you’d like to watch the full panel, you can find the full video of the Defence Connect AIC Summit here.

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