Strategy in action - Leveraging a global capability in security

Business Portfolio Actions addressed:

BAE Systems has identified the security market as an evolving and growing business opportunity that continues to benefit from increasing government attention. While the security market covers a broad range of sectors, the Group’s focus is on information and intelligence. The Group established a strategic objective for 2008 of ‘establishing security businesses in its home markets’. In parallel with organic investment, the acquisition of Detica in 2008 accelerated implementation of its strategy to address these opportunities.

The digital revolution – the widespread diffusion of telecommunications and computer technology – has driven exceptional economic and social development. A decade ago very little was digital, now the vast majority of information is digitised and volumes are growing at an exponential rate. The growth of the internet, which has stimulated this explosion, now makes it impossible to conceive of a modern economy operating without it. However, the digital revolution is both exploited by, and vulnerable to, terrorists and criminals who have increased their threat potential through this new environment.

The Group expects the historically fragmented security sector to consolidate and grow as customers’ requirements evolve around more integrated information intelligence solutions. The combination of Detica’s well-established customer relationships and technical capabilities and BAE Systems’ system integration capabilities will result in a depth of financial and technical capability to address growth opportunities and better serve customers in this area.

Governments, the military, financial institutions and private businesses amass a great deal of information about their customers, products, research and financial status, and protection of this confidential information is key to their sustainability. The Group provides innovative thinking and solutions in the area of information exploitation to create actionable intelligence.

Detica works with the UK government in areas such as counter-terrorism, serious and organised crime, identity management, and immigration and border control. Clients include agencies within intelligence and defence sectors as well as the Department for Transport, the Metropolitan Police and HM Revenue and Customs. Much of our work in this market is at the heart of our clients’ mission, and focuses on large scale data integration and the application of advanced analytical techniques. With larger and longer-term delivery contracts becoming increasingly important, the Group expects to benefit from the UK government’s increasing focus on intelligence, security and resilience.

The Group’s broad geographic footprint provides substantial opportunities to grow its security business across its other home markets. In particular, existing activities and structures in the US provide a platform to apply Detica’s capabilities into the US homeland security market.

With terrorism remaining a mainstream political issue which continues to affect governments and the public, it is anticipated that there will be a requirement for protection strategies in counter-terrorism, border controls and critical national infrastructure which will need collaboration across agencies and government departments. The growth of identity theft has accelerated the development of new approaches to identifying and combating increasingly complex forms of internal and external fraud.

With relationships at the heart of the security community in both the UK and the US, BAE Systems is now in a position to utilise its capabilities in the security sector across the Atlantic and in our other home markets. Detica has previously benefited from contracts such as the UK/US collaborative Joint Narcotics Analysis Centre and from the award of a contract for the Detica NetReveal^® software from the US Internal Revenue Service.