Closing Bell - Manifest Space: Space Enterprise with Accenture's Paul Thomas & John Schmidt 7/20/23

Episode Date: July 20, 2023

Accenture, a Fortune 500 IT service and consulting company's new thesis is that every business will be a space business. Morgan speaks with Paul Thomas Space Innovation & Technology and Aerospace & Defense Senior Managing Director John Schmidt to discuss the monitoring methane emissions for utilities, quantum computing from the cosmos, and more.

Accenture is a Fortune 500 services and consulting company. It helps organizations improve operations and implement strategies to grow businesses, with a big focus on using tech to do so. Accenture releases an annual technology vision and just recently announced a $3 billion investment in artificial intelligence over the next three years. With a workforce of 732,000 operating across 120 countries, the firm is on the front lines of new trends and is paid to identify and implement the innovations that are changing industries. Which is why Accenture's take on space is significant. And I'll just say within the next 10 years, we think every business is going to be a space business.

And what does that mean? Well, in our definition, that means that every business is going to do some element of either research, development, manufacturing, or providing service to their customers using space-based assets. And we feel like that is something where Accenture can play a very unique role. It's all about data, capturing it, secure transmission, computing and processing, and ultimately distribution. Paul Thomas is the Managing Director Leading Space Innovation and Technology, and John Schmidt is Senior Managing Director of Aerospace and Defense globally at Accenture. On this episode, we talk the business cases for space, which range from monitoring methane emissions for utilities to quantum computing from the cosmos.

I'm Morgan Brennan, and this is Manifest Space. Paul and John, thank you so much for joining me today. It's great to have you on the podcast. Thanks, Morgan. It's good to be here with you. Pleasure to be here. So the last time you and I sat down and spoke, you told me a little bit about Accenture's role when it comes to the space sector and investing in space and consulting for space. So I think maybe let's start at the beginning. Let's start at a little bit of background in terms of Accenture's role in the sector. Maybe let's start at the beginning, as you said, Morgan,

and I'll go back to what we do here at Accenture. And every year at the beginning of the calendar year, we release what we call our technology vision. And this is actually a piece of ongoing research throughout the year that we snap a line and we release what we think is happening in technology with major trends, how they're impacting industries across all the industries we serve. And to go back 10 years ago, we came up with a pretty bold statement that said, we believed every business was going to be a digital business. We actually reorganized our own company around serving digital technologies into clients, which we then disbanded a few years ago because we realized that that prediction actually already come true. It's hard to find anybody who would disagree that every business today relies on digital technologies,

whether it comes to doing research and development, manufacturing, distribution, logistics, or even providing products or services or companies. And so as we're releasing this year's technology vision, we're looking at what we see a trend around technology and technology in a broader sense. Instead of thinking of information technology or even operational technology,

kind of data and technologies that are being used in manufacturing, assembly, logistics, and then looking at science technology, we're looking at that as a holistic technology revolution and something that's been ongoing. And frankly, you mentioned AI and Gen AI is one example of this ongoing technology revolution. And when we look at science technology, that actually includes earth and space, which brought us to another thought that as we look forward, and I'll just say within the next 10 years, we think every business is going to be a space business.

And what does that mean? Well, in our definition, that means that every business is going to do some element of either research, development, manufacturing, or providing service to their customers using space-based apps. And we feel like that is something where Accenture can play a very unique role. If you combine what we do in our core, which is all about how we capture data, how we process at the edge, how we securely transmit that data, in this case from space to

earth, how we then process and use cloud computing technologies, and then ultimately distribute that data to an end user or a customer, that's right in our core, right in our wheelhouse. And when we combine that with what we have here on earth, in terms of our ecosystems and our experience working with others across ecosystems to accomplish things on behalf of clients, we think we have a unique opportunity to operate in this environment. And in fact, that's what Paul is really leading for us in the space area and developing those ecosystems and bring them to life with our clients. Yeah, thanks, John. Yeah, I mean, I think just to add to that, you know, the tech vision is something, you know, really, I mean, it's something your listeners should hopefully read. So our CTO, Paul Doherty, does that every year.

And this year there's a focus around, you know, identity, around data, around generalizing AI. So obviously, Gen AI and, you know, AI associated things is really important and relevant. And we have a fourth element, which is our forever frontier this year. So forever frontier, as John said, that's our science tech area. So that's where we're looking at new technologies around bio innovation, around material sciences and energy innovation and around space technology. And so I have the pleasure of leading our space technology group for Accenture globally and working alongside John and the team. And, you know, I think one thing that's really, I guess,

puts Accenture in a really good place here in terms of thinking about that space technology and how it applies is actually, you know, we've been working in the aerospace and defense industry for what, over four decades now. So, you know, we're working with clients that are building things that are going into space and going into the sky and flying. We're helping them, you know, doing all sorts of things in the core wheelhouses, as John said, of what Accenture does. So we're already embedded within the industry. You know, we're working with clients around innovating new technologies and have done pretty much all through our existence. You know, I sit in our technology innovation division and tech innovation is all about bringing new technologies to figure out how do we leverage them? How do we harness them? How do we how do we help them help our clients and help industries understand how to leverage those technologies to do things better,

to do things more sustainably, to do things more efficiently, et cetera. And so not only do we have that, I guess, that heritage within the aerospace and defence industry, but we're also working with clients today that are thinking about space and ones that aren't even thinking about it yet. And I think that's the key component here. When John said, you know, we think every company will be a space company at some point in the very near future.

That's true. And I think part of our role is helping businesses understand that and understand the potential. And therefore, in understanding it, you know, what does it mean for them and how can they leverage it to, to, for good. There is so much to impact in what both of you just said. I guess to work my way backward, when you're talking to or working with companies that either understand the role that space could play or companies that, that don't yet know, I mean,

what, what does that conversation look like? And when you talk about leveraging these emerging technologies, what does that entail? I mean, space is obviously, by its very nature, very big, right? So kind of the potential here of what we can do and the impact of space, if you think about the potential of space, plus then the application to potentially every industry on the planet, is huge.

So, you know, the first thing is that we're looking at as well, then that application to potentially every industry on the planet is huge. So, you know, first thing is that we're looking at as well, what are the key areas that we're focusing on and the key kind of use cases and applications that we think, you know, where we can add value. So we've kind of divided, you know, what we're looking at space in terms of three areas. So we have Earth to Space, Space to Earth and Space and Beyond. And so for us, Earth to Space is really that first component where we're already working with the existing industry and helping them look at even leveraging even newer technologies to do things differently. So, for instance, looking at next generation computing, so quantum computing, for example, to help optimize some of their algorithms, optimize simulations that they're doing, potentially even in factories, in warehouses, for example. We're looking at how we can leverage technologies such as metaverse technologies.

So think of not just blockchain and DLT, but Web3, things like XR, AR, VR, and how we can bring that to the industry to do things differently or more innovatively. So those are a few things. We're also looking at space-based research and development. industry to do things differently or more innovatively. So those are a few things. We're also looking at space based research and development. So again, as we've got more companies building capabilities to get things into space and through experiments in space, how can we help companies and products companies to look at that? And what does that mean for them?

So I think that's one angle. The other angle is the one I was alluding to before around some of that USP around Accenture and what we do. You know, we're talking to, you know, a large amount of companies on the planet and we're working with them today. And so we're in a position where we can understand a lot of what those companies need, you know, what things they could benefit from with new technologies. So when we look at, you know, Earth observation technology as an example, remote sensing, you know, some of the connectivity, you know, that's coming from new satellite networks like Starlink, for example, how we can harness that and understand how to build use cases and applications

specific for some of those industries to help them solve some of the problems they have today. So it's kind of looking at the technology in a broad sense, but then understanding very specific use cases and implementations that can benefit certain industries and players with the problems that they have. So it's about bringing value today, really. You know, it's interesting to be talking about things like quantum, about metaverse, because I feel like these are technologies, you know, AR, VR, like these are technologies we've talked about for a while, but haven't like seen fully realized yet. And it sounds like you're on the front lines of actually seeing them put to use in a real world scenario and like a first use case scenario that they're very much moving ahead.

And I just wonder what that means in terms of the industries that are early adopters of all these technologies, because obviously there's the aerospace and defense companies themselves. But then where are some of the industries where you see, you know, these these space based technologies get adopted first? That's a really good question. I'm glad we went there because I think that's the message here. You know, aerospace and defense is, you know, where we've worked a lot over the last 30 years, as Paul said, maybe in 40 years in the earth to space. But what we're seeing now is the growth is really in space based services. So space to earth. And in fact, one of the reports I was reading recently said that they estimated to be a trillion dollar economy by 2040. Right. So it's and it's growing at an increasingly fast rate. And so it's becoming the place to be. And that's where we think these businesses across every industry are going to be impacted.

And maybe just to rattle off a couple of examples that we're working with and seeing right now. In fact, one of them you had on one of your podcasts, Morgan, I think it was talking about what Deere is trying to do using space based assets. But you can look at energy companies that are looking at how they use space basedbased assets to help them, you know, to monitor methane and other emissions. You can look at, you know, agribusiness companies that are looking at space-based assets to identify where they might have challenges with water or with pest control or weed control or things of that nature. I mean, we're seeing use cases with relating to, you know, public safety and, you know and wildfire and wildfire management. So there's a lot of different things going on. And then, in fact, the other one that's quite interesting is what I guess we'll call

difference analysis. And this is where things like AI come into play, where they're able to capture data. And let's just use a retailer, capture data for that retailer and looking at the number of cars that are in the parking lots around that retail location, comparing that to the number of cars around the competing locations, and looking at that trending over time, day to day, previous year, previous week, and be able to come up with some insights on where they might have opportunities to increase their flow, their traffic flow vis-a-vis that competition.

Paul, you might have a few others that you might throw in there as well. Yeah, I mean, I think that's a good list of examples of things that we're doing. I mean, I think the methane one is a real one. And that's one of the ones that we can actually publicly talk about with the partners. I mean, we did that with Microsoft and with Duke Energy. And that's looking at methane leak detection. I think one of the things that becomes a bit difficult for us sometimes, Morgan, is that we're quite often the secret source behind things. So so quite often we're allowed to speak publicly about some of the great things that we do. But, you know, looking at how we use Earth observation technology for helping to monitor, to manage, to protect fragile ecosystems, you know, like rainforests, like mangroves, you know, underwater coral reefs, you know, things like that. So these are projects that we're doing today and we're working with

clients on today. Looking at, you know, as John said, things around agriculture. So helping with, you know, farming, helping with diseases, with crop infestations, looking at sort of biodiversity and even, you know, using acoustics there and ground-based systems as well. And natural disasters. I mean, John mentioned, you know, wildfires, but, you know, using acoustics there and ground based systems as well. And natural disasters. I mean, John mentioned, you know, wildfires. But, you know, we're actually working with and helping our public services clients, you know, exploring how they can use this type of technology combined with other data sources to help, you know, monitor and help avoid in certain cases and then help manage different types of disasters, whether that's wildfires or flooding or earthquakes, et cetera. The potential is huge.

And, you know, that's just talking about Earth observation. I mean, there's obviously other capabilities too. I mean, very recently, I think we published a report on some work we've been doing with QSecure, which is enabling the first multi-orbit secure data transmissions that are secure from quantum hacking. So basically crypto agile, we call it. And that's where we've enabled communications of data

from the ground into LEO and then from LEO into GEO. And that's, I think, the first time that that's been done. And if you think about more and more assets going into space and more companies, industries, countries relying on space and space information, the security of that data is going to be paramount as well. So we think that's also a really important area to be thinking about, too. How big is the space economy opportunity? What do you think about it in terms of growing here over the next decade?

And what does that mean in terms of the business proposition for Accenture? Well, I think, I mean, the business is really, it's young, right? So, I mean, the space industry has been around for a long time and you've heard folks talk about, you know, the old space economy and the new space economy and, you know, it's all the space economy, really. I think for what we're doing

and how we're seeing this growing now, we're entering a new age, right, where this is building an industry now beyond the traditional players and one where, you know, I guess guess companies that you wouldn't have naturally thought of as being interested or using space technology. I'm looking at it now and they will in the future. So the potential really, as we said, is that every company will be a space company at some point, which doesn't mean they're going to be launching rockets and satellites themselves. But it means they'll be using some of the data, you know, and harnessing some of that information from space, you know, in some of their daily operations.

And we do think that's true. So the potential there is, you know, it is big. You know, John mentioned the numbers in terms of the space economy. If you think then that every industry is going to learn the different ways to harness it as well, that means that there's a lot of potential there too. So we think this is, you know, it's growing. I don't think we can share the numbers. We think that means for Accenture, but it's definitely an area that we're, you know, we're doubling down in and hence why, you know,

myself and the team exist in terms of looking at how we leverage that space innovation and how we bring that to our clients. And, you know, I think a key, you know, additional component of that is really building those ecosystems and those partnerships. You know, I don't think we've talked about that much yet, but that's a key component for us is this isn't a solo game for Accenture. This is where we're working with, you know, the industry players. We're working with the established space players and we're working with the startups and building relationships, building partnerships and investing at times in some of these companies along the way.

Yeah. And maybe we can pick it up from there, John, because I mean, there's the consulting aspect of it and working so closely with companies in terms of adopting these new technologies, but there's also the investing piece of it too. You know, I talked about kind of how some of this stuff is just in Accenture's core, when it comes to capturing data, edge computing, all that kind of stuff. The other element of this is in ecosystems and how we work with ecosystem partners. And some of those partners are, you know, Microsoft that we just mentioned on the Duke Energy example. But there's others that are actually in space. And so the real kind of play here.

And when Paul says secret sauce of Accenture is when a company comes to us and let's say it's an agribusiness company and says, hey, we have some thoughts about what we want to do in space, or by virtue, we come to them and say, hey, have you considered what you can be doing using space-based assets? We can then help them work across the space ecosystem, the companies that make the satellites and or the sensors, the companies that do the launch services, and be able to bring that together to help that agribusiness to be able to access space quickly and easily. Now, there's a lot to learn, and I think you know this probably better than most given your interest and commentary on the segment,

but there's a lot to learn if anybody just woke up one day and said, gee, I think I'd like to be able to do something from space. And so we're using the technology kind of core and capabilities that we bring. We're helping with some of the strategy around the value case that actually have been going into some of these areas in space. And then we're leveraging our ecosystems, both technology partners, as well as new partners in the space economy, to help them tap into what is really becoming,

and it's a fun segment because we use these things but a new frontier for our companies right so that's that's i think a little bit of the difference in kind of what we're doing here than what would be kind of what i'd consider traditional and that one trillion economy by 2040 i mean that's about 15 years away right it's it's coming fast and the growth rates are really incredible. So when we talked about like this ecosystem more broadly than John, and we talked about the investing piece specifically,

like how does Accenture decide where to make actual investments and essentially put skin in the game in this other way? Yeah, it's a great question. I'll start it and then I'll let Paul kind of move on. When we make investments in space, there's two different things. One are the ecosystem partners that we are developing partnerships with in the space economy. So there's that. And then there are places where we are making investments in some of these companies,

in the ones that we think are in critical areas of innovation, critical areas for the future growth of that $1 trillion company. And we do it with a thought towards where we can help them really accelerate what they're doing by virtue of the industry depth we bring to the table. That's not aerospace and defense industry depth per se, which is my role, of course, leading that global industry, but across all 19 global industries we serve and the multiple segments underneath those global industries that we serve. When we can bring that and help differentiate a company that has technology or capability that is at the front edge of what we believe is going to be the growth that's driving that $1 trillion economy, that's a place where we want to invest. But I don't know if you want to give a little more perspective on that as well.

No, I think that's spot on. And I think part of it is also leveraging that, as you said, the wider ecosystem, some of those established players that we have with some of these new companies and obviously we're evaluating all the time. We're scanning the market around different startups that are out there to see which are the ones that have some capabilities that would be good for what we're trying to do. But we're figuring out how do we actually package them up as actual solutions I mean a lot of the things to add real value involve combining different technologies and thinking

about how you do that in a way that makes sense you know do that optimally and then think about how does that then impact and integrate with existing you know systems and infrastructures which is which is again part of the magic that we do um so ecosystems are really important in terms of established ones and building new ones um and startups as you said is is is a place where we're looking at as well from from an investment perspective too i mean today we've we've made a few i guess what we call space tech specific investments i think the ones that we've talked about so far are um pixel space um which you know is a hyperspectral um imaging company based out of india um and we've talked about so far are Pixel Space, which we know is a hyperspectral imaging company based out of India. And we've invested in Spider Oak, you know, a satellite security company as well.

And then we're making partnerships with quite a few different players. There's more investments on the way, but I can't reveal anything yet, unfortunately, about any of those. But, you know, we're definitely investing in this area. That's a cliffhanger right there. Now, Accenture made a big $3 billion investment in AI specifically or focused around, you know, AI capabilities not that long ago. And, you know, just to sort of bring this full circle back to, you know, one of the earlier points that was made in this conversation was the capability around compute where space is concerned. And we hear a lot about what that need is going to look like as AI takes on a greater

and greater role in both business and enterprise and just, I guess, daily living writ large. How are you thinking about that? And how do those worlds collide? Well, it's a great question. So you picked up on our announcement. We are investing 3 billion in AI and really building out that practice, that business for us. And it's not the first time we've made a big bet and it won't be the last. And I'm very excited about what we're putting

in place right now. And when it comes to this area, I mean, just if I, at least from my perspective, and Paul, you may have a slightly different view. I sit back and I think about the data that's going to be captured to provide those space-based services. Again, I'm in the space-to-Earth realm here. I'm not in the space and beyond or even the Earth to space. It's going to be tremendous.

And a critical question we have, even today when we're using maybe terrestrial-based systems, is what data do we capture? Then from that data, what do we process at the edge before we decide what we're going to go and securely communicate or transport? And AI is a critical tool in doing that. Even today, it's going to be an even more critical tool tomorrow. I mean, the number of satellites that are going up, and each of which is there to do something, most of which are there to capture data, it's going to require AI solutions to be able to make it really work and make the information something we can even consume and use. I'll even use a terrestrial example, maybe not terrestrial example per se.

Aircraft today generate a tremendous amount of data. So each time a 787 flies from point A to point B, between the aircraft itself and the engines on it and some of the subsystems, the data created is tremendous. We're using less than 5% of that data today. We need tools like AI. We need tools like GenAI to really help us tap in to the information that's there to help us be able to learn how to do things more effectively, more efficiently, more sustainably. And it's going to be a critical enabler in this area as well. So when we look at, because you guys have a long-term view on all of this,

as you need to, just in terms of being able to, you know, we talk about investments and we talk about, you know, working so closely with companies about future capabilities. I mean, how does the sector evolve? And how are you thinking about it 10 years out, 15 years out, 20 years out?

Well, that's a good question. And we are taking a long-term view on this. That's why we're getting engaged. In fact, we've been working in space in kind of this realm for almost two years before we started going public with it and making this something that's going to be a much more public investment for Accenture. You know, I think when I looked at in the past, way back, we were doing the earth to space work and we were helping our clients be more effective in how they design or how they operate products, whether it be satellites or rockets and launch services, et cetera. And then we transitioned and moved into doing things that were more enabling our clients. And we were doing satellite operations for a client about eight years ago that was

capturing digital imagery and selling it to other providers. In terms of recently working with Egeos, which is a Italian space agency company, where we teamed up with them to really help them design, deploy their own scalable satellite data information and cloud platform to now thinking about the future. And if I go back out 10 years, you know, will would be operating as a service and be able to provide data as a service, whether it's methane detection for energy companies, or if it's looking for, you know, changes in how crops are developing out in the field and really be able to leverage what we do well, which is all the technology platforms and to be efficient and effective at driving down lean and bringing tools like AI, maybe tools like AR. I mean, you mentioned AR earlier and I was smiling because,

you know, in aerospace and defense, we've had AR around for decades. We used to call it a heads up display. You know, it came out decades ago. Now we're using it in manufacturing. We're using it in maintenance, repair and overhaul. I. And so these technologies do come and come into places where they are going to go to scale. And if I look again at the future of space, that's where I think I see it heading. And a role that companies like Accenture could be playing in supporting our clients as they're using this information to drive their core value with their customer set. Yeah, I would agree.

And I think that what I would hope is that in that period, 10 to 15 years, I mean, not only is Accenture seen globally as a core player and core part of that fabric of the space ecosystem, but also all the things that we're talking about today are things that are really mainstream and in production across multiple environments with multiple geographies and really being used in anger and in earnest. And the tensions then being turned on, I guess, the next iteration of space technologies.

I mean, we're just starting looking at space infrastructures. I mean, obviously, there's great companies out there like Sierra Space and Axiom that are looking at building those next generation space stations and enabling folks to live and work and explore in space with domiciled places. Right. You think about what we're looking at doing, you know, potentially with the moon and, you know, creating some sort of spaceport there and, you know, doing mining in space, for example, with solar power from space. I mean, there's so much potential that we're just at the tip of exploring right now. So I would hope that in 10 to 15 years, you know, those things have advanced and we're actually working on applications there live with clients, you know, doing things in, you know, in that portion of space. Anything else you guys want to note? I think if I had to just, you know,

maybe sum up, I mean, it's a really exciting space. I apologize to everybody who's listening. It's a very exciting time and exciting area for us to be involved in. I mean, the next generation computing technologies and space technologies, things that are going on in biotech, I mean, they're really driving a lot of progress in us understanding what we can be doing new, different and better to help human life here on Earth. And I think when I look at all the different innovation that comes through and where we are able to see potential, it's just a very exciting space to be in. You know, that blending together, as I said, of information technologies, operational technologies with science technologies is something that we really intend to be at the center of. And, you know, it to be at the center of. And, you know, it's going to be fun. I mean, the potential of space is immense.

The potential applications of space, you know, space technology on the planet, on industries, but also in terms of making the planet a better place, you know, helping it, you know, heal, you know, do things more sustainably is incredible. And I think we're just on the, you know, we're just starting to really explore that. So, you know, really, I'm super excited to be in this space working here where we do and really excited with what we can do and what companies can do when we're working together here. So, yeah, really fortunate and really happy to be here. That does it for this episode of Manifest Space.

Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.