Defense Industry

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The Challenge

The defense industry spends hundreds of billions of dollar every year on weaponry, machines, hardware systems and sensors. Yet much of the data this hardware creates is siloed and fragmented, making it exponentially more difficult to create innovative software and context-sensitive applications.

The now famous JEDI contract from the DoD will spend billions of dollars on cloud services. Unfortunately, JEDI misses a key aspect of AWS or Google Cloud’s business model: these businesses enable and monetize the creation of third-party apps that are using the data stored in the cloud. Just like Salesforce’s App Exchange, which lets third-party developers create apps for business customers that store their CRM data in Salesforce, AWS enables third-party apps to be sold to business customers purchasing cloud storage. This business model is called a development platform. The economics of platform businesses enable cloud storage to be sold at razor-thin margins because the profit center lies in the purchase of third-party apps in the AWS Marketplace.

Currently, the DoD is overpaying for cloud services and not getting any of the real benefit: the development platform with a network of third-party app developers.

The Solution

In order to acquire an ecosystem of third-party software developers, the platform needs to expose API’s that enable developers to create software that can be monetized. There are two main types of apps: 1) apps that optimize and analyze data and 2) apps that control the operation of machines or vehicles.

The defense department needs to centralize the data repository into the cloud AND standardize API’s across different types of machines and vehicles. This shift won’t happen immediately, so low-hanging fruit should be identified as areas of interest for developers and end-users. End-users could be troops on the ground, analysts, central command and a variety of other roles.

Additionally, the DoD needs to structure the business model so that departments can purchase apps on an individual basis, enabling a market-based economy of app development to be created and nurtured. As opposed to an RFP being created for each software tool that is needed, the platform approach enables the ecosystem of app developers to identify the greatest needs of the defense department and, if correct, be rewarded for that investment. Departments or individuals in the defense department can vote with their wallets on which software serves their greatest needs.

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