The world market of IT for a MIC

2014 - 2015

Contrary to popular belief, global military expenses are small and make an insignificant part of world economy. Moreover, now they are reduced. According to SIPRI in 2013 global military expenses made $1.7 trillion, and in 2015 — $1.6 trillion. For comparison, GDP of USA alone is $17 trillion.

The political crisis, imposition of sanctions concerning Russia and increase of military rhetoric led to growth of military budgets in some countries. However in most the states military budgets are reduced. Among large players an exception are China and Russia which are going to increase military expenses. China in 2014 increased the defense budget by 12.2% in comparison with 2013 Russia is going to increase expenses on 30%, the truth against the background of recession actual growth can be lower. However on a global scale these changes are insignificant. It is connected with the fact that only six countries create 60% of defense expenditures of the planet. At the same time 35% are the share of the USA which reduces expenditure for defense according to the program of reducing government spending adopted in 2011. In Great Britain the zero growth of defense expenditures in 2015-2020, in France — reduction more than for 7% by 2019 is expected (at least the government had such intentions before terrorist attacks).

IT market and MIC

Global market of IT is much more military and by 2019, according to different analytical firms, will grow by 2.5-3%. Global expenditure for IT - twice more military also make about $3.5 trillion in 2015 (according to Gartner). IT sector relies generally on the civil market in which only devices make more than $650 billion.

In IT for a MIC of the developed countries the steady trend of attraction of experience of the commercial sector, including the IT solutions increasing production efficiency is observed. Commercial structures also look for cost reduction methods on development and production of military products whereas earlier lean production in a MIC was a minor task.

Serious changes happen in a chain concept-development-production. The traditional scheme assumes: obtaining technical specifications, the general design of products from the customer (usually Defense Ministry) with the subsequent competition of business companies for the most effective implementation of a request. However development of the advanced systems, such as F-35 fighter and FCS program and also military conflicts of the last two decades showed that the traditional scheme of work of a MIC is not able to satisfy requests of military. The tightened development terms, an overexpenditure of means and unfitness of the new equipment in the conditions of quickly changing threats — key motives for search of new schemes.

The Defense Ministries of the developed countries look for new schemes, in particular use crowdsourcing more and more widely. Crowdsourcing is applied to search of the directions of development of the advanced defense systems, for example, as in a case with multifunction robots of the tender DARPA Robotics Challenge. For implementation of crowdsourcing specialized government institutions are created. So, in the USA in October, 2015 the laboratory of crowdsourcing of LINC based on the CTTSO program is created.

The last well proved in search of technical solutions for quickly changing asymmetric conflicts. Now development of new solutions and directions of crowdsourcing in the field of defense is perspective. First of all it belongs to generation of the ideas and information analysis. Also venture capitalists of Silicon Valley already began to invest in the companies which use crowdsourcing for the benefit of cyber security. It is absolutely new business model which uses a resource of "free hackers" for testing of security systems. Crowdsourcing is used also for development of modules of a specialized software.

Technologies of virtual training — a considerable part of defense expenditures on IT

Unlike, for example, China, Russia, India, in such countries as the USA, Great Britain, France, Canada is not present the state MIC as such in the form of the state corporations and holdings integrating hundreds of state enterprises. The leading role is played by business companies for which defense products often are a part of diversification. In such companies the share of commercial IT solutions and outsourcing is big. Also in the developed countries the Defense Ministries transfer more and more processes of ensuring activity of troops to outsourcing. The example is the Canadian SAE company which trains military pilots for marines of the USA. Expensive exercise machines are purchased with funds of the Pentagon, but the private company services them. Learning process is carried out on military base of Christie in Texas, and the Pentagon pays $3.5 million for the nine-months contract. In Brunei CAE owns 60% of the similar center for training of civil and military pilots.

It is possible to note that reduction of military expenses of the majority of the countries increases demand for virtual technologies of training. This market violently develops and will quickly grow in the next decades.

Global military expenditure are small, but the amounts of separate contracts break records. For example the Pentagon will pay Leidos Inc companies for support of the medical EHR database. to $9 billion within 18 years (the contract is signed in July, 2015)

One more important difference of the market of a MIC of the developed countries are very large investments into new IT solutions for military medicine. In particular, the U.S. Government is going to spend $25 billion for a new information system of health care for the military personnel (cloud databases, telemedicine, etc.). Work is expected at least a decade, it will be more expensive, than development of any sample of military equipment, even such expensive as the atomic submarine. At the same time in IT for military medicine contracts receive private companies, and the health care system passes to outsourcing.

Chances of the Russian solutions in the world market of IT for a MIC

According to the Russian experts, modern domestic IT products do not concede to foreign analogs, but the market of the Russian IT for a MIC is limited.

The chief of the department of information technologies of United Instrument Manufacturing Corporation (UIMC) Vitaly Sazonov considers that a priority of the created IT solutions in a MIC — providing with the latest and protected product domestic market. At the same time, the share of foreign solutions in the field of software for the industry (PLM, CAD, CAM, CAE) should decrease from present nearly 90% to 50-60%.

"During creation of products for the Russian defense enterprises, we should be guided by world practices. Therefore many technologies created by a MIC do not concede on characteristics to foreign analogs. For example, together with Avicomp Services company - developer of the systems of intelligent data analysis – a MIC developed the linguistic Ontosminer processor which is a basis for creation of complex systems of text monitoring and intelligent data analysis. The software product which is based on the last developments in the field of machine learning and Big Data technologies allows the feel computer morphology, a language syntax, "understand" semantics of separate words and the text in general. As an experiment the test version of the program for universities and research establishments is already open in the free mode. Specialists of Central Research Institute EISU, entering "MIC", create the working prototype of a software package allowing to integrate data from diverse ACS in the unified base and to use the data provided in a uniform format at the solution of applied tasks of the analysis, modeling, processing and information storage".

As for international market, according to Sazonov, today great interest of foreign customers, in particular Republic of Belarus, causes the GIS "Horizon" — the platform for creation of cartographic services with a possibility of interactive drawing a situation.

"One of main advantages of the GIS "Horizon" is the guaranteed lack of program tabs. Foreign analogs for correct functioning should keep in contact with servers of some foreign companies. At the same time data exchange protocols make pass of any information open for the basic servers located out of the territory of the Russian Federation. Respectively, owners of these servers have a theoretical opportunity to interfere illegally with actions of the operators using a foreign geographic information system. For example, such widespread, as ArcGIS. Besides, great interest from the countries of Africa and Latin America causes the military ACS developed by a MIC in customers. A system is already delivered to the CIS countries. It allows to integrate staff, the equipment, means of investigation, targeting and defeat into a single information network", - Sazonov concludes.

The chief executive of ARPP "Domestic Software" Evgenia Vasilenko, also considers that the Russian software products, successful in the world market, already are and there is a potential that such products became more. However, according to her, it is impossible to require solutions, "the developed countries which are not inferior on characteristics to samples" and to set a task of copying of the software.

"It is necessary to understand real tasks of the customer, to create and develop software, being guided by them", - Vasilenko says.

Alexey Sabanov, PhD in Technological Sciences, the associate professor of MSTU of N.E. Bauman, the deputy CEO of Aladdin R.D. company, the member of Expert advice of the State Duma Committee on security and anti-corruption, reminds that our former fellow citizens work, and not on the last roles, practically in all leading companies.

"We will have enough hardworking and inquisitive brains and here still. Only it is necessary to understand that from low start, and here and there almost from scratch to world "records" a way always slow and complete of infernal work, creative search, take-off and falling. Today among the IT companies abroad units Russian, and in narrow segments of the market successfully compete. To create an IT extraordinary, direct support of the state (it can frighten off or discourage creative persons), and ability of the state not to disturb is often necessary not so much. We do not have this yet", - Sabanov considers

According to the CEO of RT-Inform Kamil Gazizov, the Russian companies have the good potential for creation of competitive solutions.

"In particular, big examination is acquired in information security field. Some Russian companies in this sphere are known at the international level", - Gazizov reminds.

The president/chairman of the board of directors, CDC Group (the Center of Corporate Developments) Hussein of Az dawn notes that there are already Russian systems which are not conceding on characteristics to samples of the developed countries:

"For example, our mobile solutions lines the OPTIMUM Automated Control Systems for Mobile Processes (ACSMP) are recognized world-best. It both OPTIMUM of GIS, and OPTIMUM Mobile Monitoring and Services. The product "Development Tool of Mobile Solutions Technology Platform of OPTIMUM" (the international abbreviation of OPTIMUMMobileSDK) has no analogs in the world for today. All this dual-use technologies. As for foreign partners in the field of developments for a MIC, the principle of urgent expediency and modularity should work. So it is necessary to take those technology blocks which are absent which long to create, but which are necessary right now. I think our developments wait and are ready to buy in BRICS, in some former Soviet republics and also in Indonesia (and it is more than 250 million population), in Vietnam, in Africa, Latin America, in the Middle East. Generally the countries with the population more than 4 billion people are potential consumers of certain Russian IT export technologies for a MIC. The main thing is effective to use this opportunity".

According to the commercial director of Informkontakt company Alexey Ivanov in spite of the fact that the Russian companies create the products which are not conceding software of the USA and Germany it is impossible to provide in the foreseeable future that [foreign, primas of TAdviser] the defense enterprise will buy, besides on taxpayers money, the Russian products.

"The question of an exit to international markets is extremely interesting. We are quite ready to implement the software in foreign defense industry, however it is impossible to provide in the foreseeable future that the defense enterprise will buy, besides on taxpayers money, the Russian products providing their main production process. Regardless of functionality, the price or other competitive advantages", - Ivanov says.

The CEO of Etton company Efim Klimov also believes that many Russian developers of the application software can become strong contenders to foreign developers in a number of the directions in the different industries including in a MIC.

"First of all it belongs to electronic document management systems, protection programs of data, analytical complexes of management to the enterprises, processing of Big Data. Here it is possible to carry and geographic information systems — they are provided today in the different industries", - the CEO of Etton tells.

Share of IT solutions in the cost of military products

The share of IT solutions in the cost of the western military products increases every year. In the developed countries the most part of cost of the military systems is made by the software. So, according to the American center AMRDEC, in 1997 45% of the price of a hi-tech military system, for example the fighter were the share of software. In 2010 this share grew to 66%, and in 2024 will make 88%. In 2040 on arms of U.S. Army the new generation of transport vehicles of vertical take-off according to the FVL program will arrive. In them the share of software will make up to 90% of the price of one aircraft.

Good example is the F-35 fighter. Development of 30 million code lines of software for the fighter lasts 14 years. Only in Lockheed Martin company more than 500 software engineers in shifts round the clock without days off work on writing and integration of software. However in spite of the fact that the project of creation of the fighter has the record budget of $1.5 trillion and about 130 thousand directly or indirectly busy employees, terms of delivery of a product in operation constantly break. Moreover, subcontractors and the international partners involve third-party programmers. Already there were doubts in security of software and for independent check it was necessary to create special laboratory SASL.

Software of F-35 too difficult for programmers of one large-scale space concern. The requirement to the new airplane very high, and it is impossible to do without cooperation of a great number of subcontractors. It is impossible to solve this problem within old schemes of work.

Most likely, F-35 — the last attempt to do the new "IT and dependent" technology by old methods. The integrated platforms using which different developers can work on a product in a unified environment are developed for the solution of this problem. In a MIC of the USA it is the developed architecture of ACVIP (Architecture Centric Virtual Integration Process): set of standard procedures, software, models and programming languages.

In Russia the similar platform is created by United Instrument Manufacturing Corporation (UIMC). According to Vitaly Sazonov, in the field of creation of product lifecycle management systems many powerful players in the Russian market, including a MIC are engaged in the solution of global tasks today. This task is especially relevant for corporation because tens of the different enterprises are integrated into its structure, everyone – with the approaches, practice, practices in the field of automation. Even within the same enterprise information systems with different architecture which badly correlate are often used. During creation of the same product there is a need of data transfer from one software environment in another that most often involves loss of information and time for broadcast of data.

"The herbarium project, in particular, is aimed at the solution of these problems. The single software platform Herbarium developed by corporation will allow to create the software solutions absolutely compatible with each other at stages of product lifecycle. This platform will replace a set of the versatile and self-written programs used at the enterprises of defense industry. Using ready modules of the software it will be possible, for example, the cycle of the works typical for design-technology preparation of any production stopped carrying out in mechanical engineering. This design of a product with creation of three-dimensional model, development of design documentation, design of processes of production of parts on machines with numerical control. Thus, the Russian industry including the defense industry, will difficult be left competitive without information support of all product lifecycle and also implementation of technology of digital production", - Sazonov tells.

For the last 20 years the role of space services in MIC products sharply grew. Wide circulation of key military technologies (GPS, satellite communication, DZZ) influences a MIC of the developed countries and the space service market in general. Information revolution led to distribution of outsourcing IT services in structure of the space market. In Russia the space industry on the contrary promptly becomes outdated and, unlike aviation, slowly implements the advanced IT solutions. Now Russia occupies 60% of global market of space carrier rockets, but at the same time only 1.2% of all world market of space services. As a result resource-intensive production of rockets brings only $3.6 billion whereas satellites and the accompanying space services of the global space market cost about $300 billion. Thus, industrial production of the hardware loses paramount value, and the services and systems providing information functionality of a product come out on top. On this background the predicted growth of a share of software in the final cost of a product looks natural. IT solutions in a MIC define product competitiveness today. It means fighting opportunities and survival for military equipment in the battlefield.