TOP 100

Top 100: Inside BAE's commercial tech strategy

BAE Systems Inc. -- the British defense giant’s U.S. subsidiary often referred to internally as “Inc.” -- is far from the only large government contractor to rewire its services business to go beyond the traditional definition of what federal technology systems integrator has been.

Take for instance the moves BAE has made in the arena of commercial cloud technologies as those tools make their way into federal agencies’ IT environments. For instance, Dell is one of many industry partners that BAE’s U.S. intelligence and security business has linked up with. The goal is to leverage the best ofthe commercial and government-focused worlds.

BAE’s so-called “I&S” business does not just limit its collaborations to the big names, however. As the pyramid of innovation keeps flipping to hubs like Silicon Valley and others, I&S has also embraced a broader technology scouting function to cast its net wide across the venture capital- and startup-dominated ecosystem and see what can be of use by federal customers.

BAE is ranked No. 22 on the 2019 Top 100 with $1.7 billion in prime contract obligations.

“Some SIs still think you can compete with that investment model, and I can tell you the dollars going into certain categories like cloud are bigger than the market caps of the SIs, you’re not going to outrun those economics,” said Peder Jungck, vice president and general manager of intelligence solutions for BAE Systems Inc.

The shift does not leave integrators such as BAE on the sidelines. Far from it. As Jungck said commercial tech companies are “going to do the raw innovation of the core” offering that can make for an “80 percent solution.”

Integrators then come in for the final 20 percent to take the technology, and layer other offerings on top of it to fulfill government requirements before rolling that bundled solution out for an agency.

In Jungck’s eyes, the concept plays out by answering these questions: “How do you take those that are relevant to the mission of the customer in our market?... How do I pick through all the best ones on behalf of our customer where we are deeply entrenched with that?”

“The government wants you to go help them lead it out (and) figure out how to make that environment,” Jungck added. “We can work in that piece within the SI role to where I kind of act as an augmented sales engineer at times.”

I&S also taps heavily into the corporation’s new FAST Labs organization that works to research and advance new technologies in collaboration with venture capital firms, commercial startups and research universities.

FAST Labs was publicized in April by long-time defense market watcher and industry consultant Loren Thompson in an article for Forbes. Thompson described FAST Labs as a much different kind of research-and-development hub than the famed Lockheed Martin Skunk Works and Boeing HorizonX organizations precisely because of those partnerships.

“The five areas that FAST Labs has got core competency in: advanced electronics, autonomy, cyber, electronic warfare, and sensors and processing,” said Jerry Wohletz, vice president and general manager of FAST Labs.

“Customers are now trying to accelerate time to market, and instead of having to go and find a way to get there, we can play in and basically help dovetail and accelerate it,” Jungck said. “As they want to get all the way to usage, I see my business as the in-between and that’s part of the role we’ve done with the FAST Labs side.”

Back to the partnership aspect of I&S, that also gives the business the chance to see up-close what Jungck called the “hard problems” defense and national security agencies particularly face. Especially including those in artificial intelligence as hot as that tech domain has recently become.

For as much data commercial enterprises consume and manage, what the government takes in and handles is multiplied by much more. 

“This not about taking commercial and just driving it for our mission, but somebody truly has to invent it because it’s a military mission that must be done,” Jungck said. “We’re able to expose (customers) to it, and rapidly within weeks we’re able to go ‘Oh, now I get what I’ve got, now I have access to data sets, now we can go solve that.’

“That’s where time-to-need is shortened by 70-to-80 percent… and that’s some of the benefit we can offer to customers,” he added. “That’s what makes it an enduring relationship as opposed to being just another go-to-market partner.”

Both the partnership and FAST Labs angle help illustrate how the market’s mindset change has played out at one of the largest defense companies in BAE. There is also how the I&S business has structured itself internally as a business unit to pursue systems integration and modernization contracts coming out of agencies.

Jungck said the company has put “more technical leadership in place” across the company’s businesses over the past five years including I&S, or what he also characterized as “CTO-like folks” to steer the business of how BAE adopts to the changing technological landscape.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at rwilkers@washingtontechnology.com. Follow him on Twitter: @rosswilkers. Also find and connect with him on LinkedIn.

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