Protocol | Enterprise

Rolls-Royce, hit hard by COVID-19, is embracing in-house AI

The engineering giant is one of many companies beefing up its efforts to develop technology internally.

Rolls-Royce workers.

Rolls-Royce has struggled amid the pandemic as orders for aircraft engines have fallen through the floor.

Photo: Rolls-Royce

The pandemic changed the rules for many corporations, requiring them to embrace new technology and cut costs at the same time. One answer to that paradox: in-house innovation.

That seems to be the case at Rolls-Royce, the $14 billion engineering giant that produces, among other things, engines for commercial aircraft. The company has had to implement tough austerity measures including 9,000 job losses this year after the bottom fell out of the aerospace market as a result of COVID-19 travel bans. But its R2 Data Labs, launched in 2017 to promote use of artificial intelligence and advanced analytics inside the company, still appears to be a priority.

R2 Data Labs is a cross-disciplinary team of roughly 300 employees, and only a few of its workers took voluntary buyouts during the cuts. Its leader, Caroline Gorski, told Protocol that the lab's mandate remains fourfold: make operations more efficient, accelerate the speed at which the company moves, help customers glean those same efficiencies in their own businesses and deliver new revenue for the enterprise.

While a small segment of the cohort sits in a central innovation unit, the bulk of the employees work within the individual business lines — a setup also in use by other companies as a way to encourage adoption of digital applications like AI among rank-and-file workers.

Among the projects of R2 Data Labs to-date is a set of natural language processing models that can analyze unstructured data, like 2D drawings, to help the company better manage the global risks in their supplier network. While Gorski declined to provide the specific amount of savings the application has led to, she noted that it had a "very significant impact" from a financial standpoint, as well as on sustainability efforts. It led to 40% fewer parts being shipped between continents and a 30% reduction in transportation costs.

Then there's Yocova, an in-house data-sharing platform launched in February that runs on Salesforce's Force.com and counts carriers like Singapore Airlines as users. While Rolls-Royce is still experimenting with a revenue model for the offering, it does get some portion of all the transactions that occur on the platform between companies and vendors. Rolls-Royce was also instrumental in launching Emergent Alliance, a consortium of over 50 organizations created to encourage the sharing of data to help mitigate the impact of COVID-19.

"The idea that any single player in the aviation sector is going to be able to eat all the data and own all the data, [that] is not going to be the argument that wins out," said Gorski.

Rolls-Royce isn't alone in its efforts. An estimated 76% of manufacturers say they increased their use of digital tools this year, according to a new survey of 1,154 senior executives released by Google Cloud earlier this month. One area of focus is supply chain operations: 95% of respondents to the Google survey said those operations were negatively impacted by COVID-19. Many of them will be looking to deploy advanced tech to head off similar problems in the future.

"We're expecting a massive uptick of automation and digitization," said Dominik Wee, Google Cloud's head of manufacturing.

But despite the enthusiasm among manufacturers and corporate America for new digital tools, the transition is difficult and many of the ongoing efforts have yet to produce any tangible benefit for enterprises. It's one reason why companies aren't yet ditching the bulk of their tech vendors. Rolls-Royce, for example, still works with over 750 external partners. It uses Google Cloud, but not as its primary provider for internet-enabled data storage.

One key hurdle organizations face is convincing their workforces to actually use the technology. It's why Microsoft, Amazon, PwC, and others are embarking on multibillion-dollar training programs to educate employees on AI and other tools. At Rolls-Royce, that cultural overhaul is spearheaded by Gorski's team, which has logged over 78,000 hours of training across the organization. And in May, the company made those educational materials available to the public.

"The transition towards a digital culture takes time," said Gorski.

Hirsh Chitkara
Hirsh Chitkara (@ChitkaraHirsh) is a researcher at Protocol, based out of New York City. Before joining Protocol, he worked for Business Insider Intelligence, where he wrote about Big Tech, telecoms, workplace privacy, smart cities, and geopolitics. He also worked on the Strategy & Analytics team at the Cleveland Indians.

The way we work has fundamentally changed. COVID-19 upended business dealings and office work processes, putting into hyperdrive a move towards digital collaboration platforms that allow teams to streamline processes and communicate from anywhere. According to the International Data Corporation, the revenue for worldwide collaboration applications increased 32.9 percent from 2019 to 2020, reaching $22.6 billion; it's expected to become a $50.7 billion industry by 2025.

"While consumers and early adopter businesses had widely embraced collaborative applications prior to the pandemic, the market saw five years' worth of new users in the first six months of 2020," said Wayne Kurtzman, research director of social and collaboration at IDC. "This has cemented collaboration, at least to some extent, for every business, large and small."

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Kate Silver

Kate Silver is an award-winning reporter and editor with 15-plus years of journalism experience. Based in Chicago, she specializes in feature and business reporting. Kate's reporting has appeared in the Washington Post, The Chicago Tribune, The Atlantic's CityLab, Atlas Obscura, The Telegraph and many other outlets.

Hirsh Chitkara
Hirsh Chitkara (@ChitkaraHirsh) is a researcher at Protocol, based out of New York City. Before joining Protocol, he worked for Business Insider Intelligence, where he wrote about Big Tech, telecoms, workplace privacy, smart cities, and geopolitics. He also worked on the Strategy & Analytics team at the Cleveland Indians.

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