Rolls-Royce: Embracing IoT on a wing and a prayer
Rolls-Royce is investing in IoT technology to stay at the forefront of innovation in the aerospace industry.
“If you want to become a millionaire, start with a billion dollars and launch a new airline”. Richard Branson, Founder Virgin Group 
The airline industry is renowned for its low margins and fierce competition. As one of the largest jet engine manufactures, Rolls-Royce is investing aggressively in Internet of Things (IoT) technology (technology connecting physical objects to the internet) to deliver its cost sensitive customers industry leading services.
Learning to fly
Beginning as a London based car manufacturer in the early 1900’s, Rolls-Royce quickly gained notoriety after launching Silver Ghost, a motor vehicle hailed as the “best in the world” . World War 1 saw demand for both cars and planes prompting the company to leverage its engineering capabilities to design its first aero engine – The Eagle .
Fast forward to 2016, Rolls-Royce now operates as two separate entities:
- Rolls-Royce Motor Cars; and
- Rolls-Royce Holdings – containing aviation, land and sea propulsion solutions.
Consistent with the company’s original value proposition, the Rolls-Royce aviation division has a strong track record of manufacturing the highest quality engines and being on the forefront of technology innovation and digitization.
Fasten your seat-belts
The aviation industry has traditionally been one of low margins . This is largely due to airlines facing:
- Large upfront investment;
- High ongoing operating and maintenance costs;
- Strong inter-airline competition; and
- Price sensitive customers.
As a result of these factors, airlines are continually looking for ways to lower their costs…….Enter Rolls-Royce.
Rolls-Royce has helped reduce its customers cost base by engineering increasingly efficient engines. However, designers are constantly challenged by the limitations of physics and realized efficiencies are becoming increasingly marginal. Additionally, design modifications are often quickly replicated by competitors rendering any competitive advantage enjoyed by Rolls-Royce, short-lived . This has prompted Rolls-Royce to reconsider how it serves customers and how it delivers this service.
We have take-off
In April 2016, Rolls-Royce announced a partnership with Microsoft Corp. Tom Palmer, Senior Vice President Rolls-Royce, confirmed the company’s intent when stating “our customers (airlines) are looking for ways to leverage the digital landscape to increase efficiency and improve their operations. By working with Microsoft we can really transform our digital services, supporting customers right across engine-related aircraft operations to make a real difference to performance.”  This is to be achieved through industry leading aerospace engineering, cloud computing, advanced analytics and IoT .
Rolls-Royce has begun to employ Microsofts’ Azure IoT Suite (cloud computing platform) and Cortana Intelligence Suite (data analytics package) to incite improvements in two ways.
Predictive / Preventative Maintenance
With IoT technology allowing Rolls-Royce engineers to track and analyze engine performance mid-flight, the company is better placed to identify underperforming components. This allows the team to implement proactive maintenance strategies (replacing underperforming components), not only reducing the frequency of unexpected / severe faults but also improving engine efficiency and lowering fuel consumption . It is estimated a 1% reduction in fuel usage translates to US$250,000/plane/year . Applying this to Delta’s current fleet of 830 planes sees a potential saving of ~US$210M per year . Predicative maintenance also has the added benefit of allowing Rolls-Royce to carry lower inventory.
Understanding best practice flying
The way pilots fly has a direct bearing on fuel consumption. IoT technology allows Rolls-Royce to identify best practice and share this information with airlines. By comparing new data against old, the company will help airlines isolate which factors (e.g. flight path, weather, discretionary fuel usage) have the biggest influence on performance and cost .
Because IoT technology is changing the way Rolls-Royce serves its customers, the company’s earning potential is also changing. The abovementioned services have been packed into what is being termed the Rolls-Royce “TotalCare” program which sees the company earn revenue when aircraft fly as opposed to only when engines are serviced .
The Sky’s the Limit
Although Rolls-Royce has taken some great strides towards securing its place as one of the world’s leading aero engine manufacturers, competition is hot! Rival manufacturers (e.g. General Electric and Pratt Whitney) are also investing heavily in IoT. For Rolls-Royce to stay relevant the company should focus on the following:
- Data analytics of engine performance could also be shared with plane body manufacturers (e.g. Boeing, Airbus) to improve plane design / aerodynamics.
- Develop best in-class IoT capabilities – IoT capability is still new, partnerships with leading tech-companies need to be collaborative and progressive.
- Investigate the potential of mid-air feedback to pilots who are aren’t optimizing engine performance.
Not only has Rolls Royce been an early adopter of IoT technology but strategic partnerships with tech-firms such as Microsoft have placed the company in a good position to stay on the forefront of IoT advancement and continue to deliver real value for its customers.
Word Count 784 (excluding references)
 Brainy Quotes, (2001). Richard Branson Quotes. [online] Available at: http://www.brainyquote.com/quotes/quotes/r/richardbra452106.html [Accessed 11/09/16]
 Rolls-Royce history timeline, (2016). Rolls-Royce.[online] Available at: http://www.rolls-royce.com/about/our-story/rolls-royce-history-timeline.aspx [Accessed 11/14/16]
 Why airlines make such meagre profits, (2014). [online] Available at: http://www.economist.com/blogs/economist-explains/2014/02/economist-explains-5 [Accessed 11/13/16]
 How Rolls-Royce maintains jet engines with IoT, (2016). [online] Available at: https://www.rtinsights.com/rolls-royce-jet-engine-maintenance-iot/ [Accessed 11/14/16]
 Floyd, S (2016). Rolls-Royce intelligent jet engine steals the show at Hannover Messe. [online] Available at: https://enterprise.microsoft.com/en-us/industries/hospitality-and-transportation/rolls-royce-intelligent-jet-engine-steals-the-show-at-hannover-messe-2016/ [Accessed 11/14/16]
 Rolls-Royce takes TotalCare digital with Microsoft and Singapore Airlines, (2016). [online] Available at: http://www.rolls-royce.com/media/press-releases/yr-2016/11-07-2016-rr-takes-totalcare-digital-with-microsoft-and-singapore-airlines.aspx [Accessed 11/14/16]
 Microsoft and Rolls-Royce collaborate to offer advanced operational intelligence to airlines, (2016). [online] Available at: https://news.microsoft.com/2016/04/24/microsoft-and-rolls-royce-collaborate-to-offer-advanced-operational-intelligence-to-airlines/#sm.0000cfu636fkbdsuv821t8y1uscx7 [Accessed 11/14/16]
 Robinson, D (2016). Rolls-Royce to use Microsoft IoT and analytics tools for jet engine predictive maintenance. [online] Available at: http://www.v3.co.uk/v3-uk/news/2464481/rolls-royce-to-use-microsoft-iot-and-analytics-tools-for-jet-engine-predictive-maintenance [Accessed 11/14/16]
 Aircraft Fleet, (2016). [online] Available at: http://www.delta.com/content/www/en_US/about-delta/corporate-information/aircraft-fleet.html [Accessed 11/18/16]
Student comments on Rolls-Royce: Embracing IoT on a wing and a prayer
Great article, Mitch. You do a good job providing background on Rolls Royce and the greater airline industry in the respect to how IoT technologies can improve their business performance. One question I had involved security: in your research were you able to learn anything about how businesses like Rolls Royce and Microsoft plan to overcome the security challenges posed by network connecting flight systems? I have to imagine that the FAA would not allow IoT systems to be used on flights unless systems were in place to prevent hacking or interference by nefarious groups.
Great article, Mitch! I find this subject very fascinating- especially the idea of using technology to achieve real time feedback on flight efficiency. One of your recommendations was for RR to, “investigate the potential of mid-air feedback to pilots who are aren’t optimizing engine performance.” With a 1% reduction in fuel usage leading to $250,000/plane/year, this technology could prove to be very impactful on an airline’s bottom line. United Airlines for example has a fleet size of 724. That 1% reduction in fuel usage would lead to $181 million in savings/year. Mid-air feedback would be very helpful to pilots, but I also believe that airlines would want to incentivize captains to fly their planes more efficiently. I wonder of the negative implications for optimal engine and fuel usage- could it cause flight times to be longer, impeding on the customer experience? If so, airlines may have issues justifying some of these new initiatives.
Live AVO, I feel like this type of technology could also prove to be a security risk. If RR and Microsoft were to develop this technology, I would imagine that a lot of thought would have to go into making sure the risk of hacking was completely mitigated. Your post encouraged me to do some additional reading on this subject. This article does a great job of explaining the risks of in flight hacking- http://www.express.co.uk/life-style/science-technology/495578/Holiday-jet-cyber-attacks. As a society, we must be cautious as we implement new technological advances that we aren’t opening up new vulnarabilities to our safety in the process.
Thanks for the great post, Mitch! I was surprised at how much money could be saved through the use of active, in-flight performance monitoring through the use of IoT components. In the Navy, preventative maintenance on machinery that operates in extreme conditions is absolutely vital. Preventative maintenance is solely based on historical engineering analysis and manual logs that are taken periodically-never on in-situ performance like the kind you mentioned in your post. The amount of monetary savings that are possible from this innovation is amazing and offers significant value to Rolls Royce customers. The amount of competition in this area of the business is exciting and offers great opportunities for the aerospace industry and its customers. Awesome post!
Thanks Mitch. This post brought me back to the good old days of interning on an engine platform for GE, and a lot of what you touch on is at the forefront of the industry’s mind. A 1% improvement in engine efficiency is massive (fluid dynamics sims on turbine blades often are targeting improvements on the 0.1% or 0.01% scale) so in my opinion, real-time feedback on efficient flying to pilots is the quickest win here. Raw fuel efficiency during a flight is dependent on many things that the pilot could conceivably control — rate of ascent, altitude, air speed, etc — so minor feedback on these points would allow active decision-making on fuel efficiency vs. something like faster travel to make up for a late departure. Additionally, the rules currently in place from the FAA and other regulatory bodies require certain flight patterns that exacerbate fuel inefficiency. The current gradual step-down in altitude on descent, for example, burns much more fuel than a long, slow, gradual descent would. With some rule changes, the pilot could have even more freedom on how the plane flies, and feedback would allow fuel savings to be realized. Good post!
Interesting stuff Mitch, I particularly enjoyed the storyline / context you gave us on this industry and Rolls-Royce. It’s amazing how a company’s public perception never really paints a full picture of what they do. Rolls-Royce is well known for their elegant and incredibly expensive cars, but underneath that there is an organization that builds all types of engines – with an exceptional engineering history and a focus on lowering costs through efficiency and innovation.
I think the focus on efficiency and energy consumption is a smart bet, because as you laid out the airlines are being squeezed from every angle and the competition is intense. As you mentioned, RR cloud computing and analytics baked into their engine offerings, RR has the potential for different types of revenue streams. Helping airlines with fuel consumption, predictive maintenance, and flying best practices will certainly give them an edge in such a competitive landscape. But I’m interested to see what kind of a financial impact they think this change in the business model will have.
I’d also be interested to know how this impacts the structure of their organization and their business focus. Will they start hiring whole new cohorts of employees (i.e. data scientists, cyber-security experts, energy specialists)? Additionally, will the extension of their business model have any effects on their engineering/manufacturing prowess? Clearly the moves they are making are necessary from a strategic standpoint, but can they execute them without deviating from what they do so well traditionally?
Great post! This got me excited. A few years ago, while at GE, I studied Rolls-Royce Servicization model. This essentially offers a product (jet engine) as a service (flying time). The TotalCare (“Power by the Hour”) offers complete engine and accessory replacement services for a fixed cost based on utilization for jet engines. This helped Rolls-Royce to minimize the risk of unplanned maintenance events for the customer. In return, Rolls-Royce and the customer share the risks and benefits by capitalizing on the core competencies of both companies.