Matt Medley, Global Industry Director, A&D, IFS, highlights the four key trends impacting the defense sector throughout 2024. As budgets increase and the spectrum of conflict scenarios widens, swarm drones take to our land, air, and sea and the double-edged AI sword adds cutting edges to cybersecurity.
Conflicts and geopolitical volatility show no sign of abating – that means defense budgets are set to increase, but where will the spend go?
The conflicts of 2023 have caused major disruptions to military supply chains, leading to increased inventory pressures, and inadequate resources for military forces in combat. It comes as no surprise that in 2024 defense budgets across the globe are set to increase—witness the UK defense budget set to increase by £5 billion and the U.S. defense budget which is set to increase by 3.2% from $816 billion in 2023 to $842 billion in 2024. As a result of this, the global defense market is expected to grow significantly, with a lot of the budget set to be focused on increasing production to help military forces regain control.
The Deloitte report on supply chain risk management identifies the real conundrum underlying the increase in defense budget on the manufacturing sector, too. Many A&D suppliers who produce specialized and complex equipment struggle to adapt quickly to changing demands. As many suppliers also operate in the commercial aerospace and defense sector, there is risk of spillover that can leave defense OEMs at risk of lacking critical resources in their operations. With rising budgets and increased procurement set to dominate the defense agenda throughout 2024,these are the four key areas I predict large portions of these increased budgets being spent on.
Prediction 1: The widening spectrum of conflict calls for military forces to improve Total Asset Readiness®
The last 12 months have given rise to a wider spectrum of conflict. For example, the combat between Ukraine and Russia shows traditional symmetric warfare features, while the conflict between Israel and Hamas presents a more asymmetric style of combat.
This difference has prompted defense ministries and departments to better prepare for a broader spectrum of eventualities—from natural disasters to full scale warfare.
A recent Global Security Review essay paints a powerful picture of the ongoing evolution of defense forces and the changing face of international conflict. It states that an “agile approach to hybrid warfare offers a promising framework for responding to these complex and evolving threats.” Indeed, with an increasing need for flexibility, adaptability and rapid-decision making, the impact of technology, and its developments will have a dramatic effect on future warfare.
These developments will apply to software infrastructure underpinning the military equipment supply chain, where disparate reporting mechanisms and software systems can be consolidated with an all-encompassing solution to track Total Asset Readiness—giving commanders a clear real-time view of the assets at their disposal.
As a result of this, we expect to see a 16.3% increase in total defense spending in the U.S. alone, with the IT spend in defense contractors rising from 3% of revenue up to around 5% of revenue as they invest heavily in AI and automation to optimize asset management.
Prediction 2: Recent conflicts highlight the lack of assets and inventories ‘at the ready’ – defense industrial bases must change
The conflict between Ukraine and Russia has highlighted a need to rethink Total Asset Readiness and improve the availability of resources to military forces in combat. This comes despite the mass investments made in ammunition and inventories by supporting countries. Current defense industrial bases (DIB) do not have the facilities to match the increase in recent demand as production rates were set up on non-large scale conflict replenishment. DIB expansion has never been so important!
This has been recognized by defense forces as for the first time ever, the U.S. DoD is set to release a defense industrial base policy in late 2023. The policy outlines four key focus areas: building a resilient supply chain, improving workforce readiness, increasing flexible acquisitions, and economic deterrence. The U.S. is not alone here. The U.K. military has also refreshed its defense strategy as it will reallocate £2.5billion to bolster the ammunition stockpiles as it aims to increase military power and agility.
New manufacturing principles are likely to play a key role. The U.S. Army is already looking at logistics and readiness as the service examines more opportunities to boost those operations by using advanced manufacturing technologies such as Additive Manufacturing and 3D printing technology to improve and sustain readiness.
As we move forward into 2024, and respond to U.S. DoD policy developments, I expect significant requirements will begin appearing over 50% of all new defense contracts. I also predict that allied nations will follow suit with their own directives, requiring DIB organizations to transparently demonstrate supply chain resilience for not only themselves, but their suppliers as well.
Prediction 3: The rise in low-cost ‘swarm’ drones as the use of autonomous vehicles adapts to 2024 land, sea, and air requirements
As evidenced by recent conflicts, drones will increasingly be used as part of the military’s arsenal in swarms. Drones can be produced quickly, cheaply and have a range of features ranging from carrying out surveillance missions in previously too dangerous areas, to even carrying out light attack missions without putting warfighters at risk. As a result, they are becoming more prominent in military fleets and adoption rates are rising.
Drones are also hugely desirable for defense forces as they can be deployed on air, land, and sea making them very versatile. For example, the development of drone carriers, such as the Royal Navy’s HMS Prince of Wales, are growing in number to facilitate the transfer of assets and supplies from different vessels without requiring any manned vehicles.
The U.S. DoD is also seeing the benefit of swarm drones, as seen when the Deputy Secretary of Defense Kathleen Hicks announced the ‘Replicator’ initiative at the 2023 Defense News Conference. The initiative aims to quickly build and field low-cost air, land, and sea drones, or All-Domain Attributable autonomy (ADA2), that are able to swarm hostile forces. The DoD aims to have these ready for deployment in the next 18-24 months. These ADA2 assets will help military forces overcome and overwhelm threats that are posed by large assets and use Artificial Intelligence to autonomously “swarm” enemy forces.
Effective equipment alternatives such as a drones will be the way forward in 2024 as military powers seek to keep costs low and maximize budgets ,while reimagining the concept of mass in the sea/air/land battlespace.
Prediction 4: The AI boom forces cybersecurity to up its game
The increase in use of autonomous vehicles and digital technologies comes with heightened vulnerabilities to cyberattacks across the military supply chain. As seen in a Deloitte report, “National security concerns elevate the importance of data security for defense manufacturers. They share and exchange covered defense information (CDI) and controlled unclassified information (CUI) on program specifications, technology, and equipment performance as they collaborate across research, design, development, and deployment of defense products.”
The AI boom has brought its own cyber threats, including AI-enabled hackers able to carry out cyberattacks faster and at a much larger scale with increased anonymity. As AI can accelerate malware and change codes, it has made it harder for cybersecurity infrastructure to detect threats.
However, using AI-enabled defense technology, cybersecurity can stay one step ahead of hackers by implementing machine learning (ML) to boost threat detection accuracy and quickly automate responses to cyberattacks.
It is increasingly important that organizations connected to the military supply chain have penetration-tested cybersecurity software that can react quickly to prevent data breaches. Many forces have already been deploying autonomous cyber defense tools with intelligent agents to monitor network activity and trigger immediate action when anomalous behavior is detected. Early malware detection, crucial for cyber risk mitigation, is considered a high-potential activity in which autonomous systems could excel in the future.
In the year ahead, I expect to see defense forces exponentially increasing their use of autonomous agents and specialized digital artifacts to enhance cyber defense, as seen with the Defense Information Systems Agency looking to immediately expand its use of AI-driven tools to automate penetration testing on defense networks.
