PwC advise Middle East states on make or buy defence technology question

02 August 2018 Authored by Consultancy-me.com

Defence spending is a big issue throughout the Middle East, especially when it comes to what the money is spent on. Governments across the volatile region have a particular necessity to provide security and ensure prosperity for all of the citizens within their jurisdictions. Thus, ensuring that everything is in order is of the upmost priority.

However, the question which is commonly raised is should governments ‘make or buy’ their military capabilities? And if a government chooses to buy them, then from where is the safest option? Governments throughout the Middle East must take the energy to secure the supply chain of their military imports to ensure ultimate freedom of response when it is necessary.

If governments decide to produce products within the country, then it’s another story. Exploiting one's own natural resources and building the human capital capabilities to produce the technology required in modern warfare can diminish the risk of a compromised ability to protect a nation's sovereignty.

A recent report by PwC has outlined how Middle Eastern nations should prioritise their defence technology ecosystems, but stresses that there is no one-size-fits-all answer. Creating total military freedom begins with understanding of what success looks like and working backwards to achieve it.

“The optimum strategy balances independent military capability with cost, while taking realistic account of factors such as the breadth and depth of the existing industrial base, the workforce available, the science and engineering research base, and the opportunities of the regional market place,” states the report.

For the consulting firm, this means that “Middle East nations should learn from, not directly imitate, solutions created by more industrially developed nations.” This translates to adapting a strategy to fit a country’s capabilities – existing and expected – and not the other way around.

An example which PwC points to is between manufacturing heavy vehicles and developing competence in systems management. Both will add to the national security paradigm and both are necessary. However, with exterior manufacturers already producing military vehicles at full capacity, the price and quality of the technology will be lower – at least for the immediate future – than trying to replicate the same vehicles.

PwC advise Middle Eastern governments to facilitate growing defence technology ecosystem

However, enhancing regional competence in “systems integration, research, development, test and analysis will have more strategic impact towards ensuring national security and resilience than competing head-on with established, over-capacity producers.”

“There may be no economic sense or defence necessity to own traditional, large-scale vehicle production facilities if those vehicles will remain readily available. But understanding and being able to modify sub-systems, networks and artificial intelligence may not only safeguard sovereignty but also provide leverage in an alliance and improved access to other technologies,” the report says.

Investing in skills then can utilise the technology that is bought and develop homegrown systems in smaller nations without a large manufacturing base. That being said, for countries with existing manufacturing industries, adapting the end product so it can fit into the defence paradigm may be a shorter, cheaper route than importing.

Whether it’s importing or manufacturing either products or knowledge in the defence field, PwC raises three important factors; which parts of the supply need to be ‘owned’ or controlled? What components and systems will be freely available on the market and therefore not need to be owned? And what knowledge and skills need to be embedded in the indigenous workforce to safeguard sovereignty?

Training personal to use the technology is, according to PwC, just as important as developing or receiving defence technology itself. “In all walks of life, it is observed that ‘good people’ will succeed even with poor tools but excellent tools do not always compensate for lack of skill.”

Developing one's own military defence capabilities relies on the foundations of building up the skill-sets to use the technology. “Long-established defence forces have developed their definitions of capability to include…integrated tactics, doctrine, logistics, information and other infrastructure”.

“Typically, personnel and training are broken out as separate components so that, if personnel and equipment define the maximum achievable capability, all the other components become efficiency factors,” the report states. Fostering an ecosystem where training the personnel is an inherent military objective in developing defence systems is seen by the firm as a prerequisite to achieving those preset achievable goals.

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