“ALTAY continues its transformation non-stop and will become a company that ranks one step below the prime contractors in the pyramid of the defence and aerospace sector.”
ALTAY Information Technologies, Defense and Industrial Trade Inc. (ALTAY) closed a year that was marked by corporate transformation as well as significant developments in its projects and products. For IDEF 2019, ALTAY prepares to make an appearance in front of the sector not only as a company boasting 62 years of experience and history, but also as one that keeps up with change through continuous transformation. We had the opportunity to discuss with Baki Şensoy, CEO of ALTAY, his assessments for 2018, as well as his expectations for 2019.
MSI TDR Mr. Şensoy, could you first give us a general assessment of 2018 from ALTAY’s standpoint?
Baki Şensoy: ALTAY is a deeply-rooted company that was established in 1957, and one that is successful in adapting to changing conditions and seizing opportunities. What has allowed the company to successfully carry on its operations to this day, with solids steps, is its ability to keep up with change.
In this context, 2018 was a year of restructuring for ALTAY. At the start of 2018, both the Chairman of the Board and I, as the CEO, were of the opinion that ALTAY needed to restructure and transform, and it is in this direction that we intensified our efforts.
In the last three months of 2017, which was the period when I joined ALTAY, I had the opportunity to make various evaluations and assessments about the company. During this process, I focused on uncovering the areas of opportunity that lied in wait for us. I tried to grasp the experiences brought by ALTAY’s deeply-rooted heritage, while also examining in detail what we could do by drawing on my years of experiences. Towards the end of the year, we had slowly started to flesh out the answer to the question “What can we add, over and above ALTAY’s depth of experience and ongoing activities?” We immediately began to implement our short-term goals that were embedded within the answer to this question – and got successful results.
Our targets didn’t just include the work that needed to be done outside the company, as we realised that there were important opportunities within the company as well. In this process, we happened to discover various talents among some of our colleagues. We saw that when we gave them new responsibilities, in a managerial sense, this had a multiplier effect on our affairs outside the company. We quickly took advantage of these kinds of opportunity and from the first months of 2018 started to see their positive impacts.
Throughout 2018, we made organisational changes; reviewing our technical staff, their way of working and our relationship with our customers. We have achieved all of this following in-depth evaluations and analyses, by verifying every step and by including new added value-generating ideas.
We have also undergone an important restructuring in terms of human resources, establishing the Directorate of Human Resources and Innovation. In our area of activity, we consider the concepts of human resources and innovation to be intertwined. When you look at things solely from a human resources perspective, you tend to see employees merely as individuals who are tasked with doing a particular job; however, these same individuals can also have an innovative side to them. They might have a range of ideas and opinions beyond the sphere of their work. So, when you look at them exclusively from a task-based perspective, you tend to overlook their innovative side and the different ideas they have. This is why we have done something to which the sector is not really accustomed – that is, we joined our human resources division and our innovation division under the same roof. We will be seeing the positive effects of this new structure more clearly in 2019.
One of the main focuses, or aims, of our transformation process in 2018 was to gain new customers. To this end, we carried out serious and well-planned efforts and soon got results. Of course, our colleagues who manage our external relations, acting as the company’s interface, had a great deal of work to take on in this process. But I see that they’ve covered significant ground. We have started to work with customers we had not worked with before and have earned their trust.
Another point we emphasised in 2018 was working in a more cost-effective manner. Besides, this is what the current situation in the country dictated us to do. Our country has to manage its resources efficiently, and the products and services we offer can also be seen as a kind of resource. Our company is doing its part in this respect. We spent a while considering how we could better manage our resources, how we could make our projects more cost-effective, and how we could make repeatable processes more functional, and got positive results.
In terms of our projects and gaining new business, 2018 has also been a successful year. There were a number of job opportunities we had hoped to acquire – and acquire them we did. There were some which did not conclude favourably, and we will be looking at these again in 2019. We will continue to lay our claims for them.
Baki Şensoy: As part of the Tactical Data Link Management Project, which is led by the Presidency of Defence Industries (SSB) with HAVELSAN as the prime contractor, we are in the process of developing the “Network Planning, Network Design and Network Simulation Instrument”. We have made tremendous progress in this project. Overcoming technical challenges, we have essentially completed the integration phase, and are basically ready to appear before the end user. We have come to the stage where we will likely see even faster progress in the project. We have already formed our project team and reinforced our expertise in this field. The project also proved one where we made use of new software technologies.
The “Mobilisation and Resource Planning System (SEKAPS)” project, in which we are a subcontractor of Türksat, is making progress in its second stage. As a reminder, this is a project that has the National Security Council as its end user. We have also started to design new capabilities to meet additional requirements. These systems will be commissioned, starting from 2019.
In 2018 we have continued to carry out the maintenance and management of the Ministry of National Defence Information System (MIS), which we initially developed as a prime contractor, and which entered into use in 2009. The enactment of the bill on paid military service in Turkey in 2018 obliged us to work at an even higher pace. Our team worked 24 hours – even during the Eid al-Adha (Feast of the Sacrifice) holiday – and the system was ready soon after the motion was passed. Hearing praise from Ministry of National Defence officials for accomplishing certainly made us feel proud. Ever since the system has been commissioned, it is always ALTAY that has won the tenders for its maintenance and management. We won the 2019 tender as well. We presume that we will have important tasks to assume in 2019 concerning the new conscription system. We have already begun to thoroughly evaluate what we can do in this regard.
In the meantime, the projects we are conducting for ASELSAN and ROKETSAN as their subcontractors have continued through 2018. We also passed an inspection and review by the Turkish Aerospace Industries and have started to discuss tangible projects with them.
On the civilian side, we have completed work on software that tracks stock market registration procedures, which is of critical importance for the management of commodity exchanges, and administers the flow of data; the system has already been commissioned on the first day of 2019. Apart from minor problems that we resolved through quick intervention, the system was successfully commissioned. We expected this process to be completed without any major hitches or issues, and we were delighted to see our expectations fulfilled. Right now, our team continues to provide real time support for the system, and to note down user requests for future versions.
Another project for public institutions in which we have reached an important stage is the Industry Information System. The analyses we conducted for the project have been reviewed by the relevant parties, which helped confirm once again that we are on the right track. The system we will develop for this project will fulfil a critical function, by allowing information from all segments of production to be viewed and evaluated by the relevant state agencies.
MSI TDR In addition to its projects, we see that ALTAY also aims to stand out with its products. What kind of developments have you witnessed in 2018 regarding your products?
Baki Şensoy: We have rolled out the first version of our Smart Production Management system. As part of this project, in which we aim to lay out an effective solution for Industry 4.0 applications, we are working on the development of a Smart Product Monitoring Software. This system has two elements. The first has to do with inter-machine communication, a subject on which we are working on with a solution partner. The second is the physical monitoring of products on the production line. The products can be carried in a plastic box, or with special equipment, as we monitor them. We are working with yet another solution partner for the monitoring of these elements. In 2019, we will focus not just on making this product more widespread, but also on adding new capabilities to our product.
We have a separate team working on projects and products that fall into the Digital Transformation category, as we call it. Our Smart Production Management system is also under this team’s responsibility. Our team focuses on responding to the needs of enterprises that wish to compete their digital transformation. OSTİM, in particular, seems to be interested in this work of ours. We will carry out various studies during 2019 that involve OSTİM management and the OSTİM Technical University and lay the foundations of a structure that will culminate is product family.
One of the products we are working on is a software package meant for the management of resources at a national level. This is not a product destined for disaster or resource management in the narrow sense, as it will be more integrative software, which looks at national level needs from a wider perspective. We are actually preparing this product for a business opportunity abroad as well. We have already reached a certain stage with this product, and will continue working on it in 2019.
All the items I have mentioned so far are products destined for end users. And when you look at the breakdown of systems, we have also started to roll out products that are components for larger systems. For example, we have offered the SSB a product, which they are able to use in their tactical data links. In this product we are planning to use our data link experience, so as to make network planning smarter, and to introduce an artificial intelligence aspect.
MSI TDR How has 2018 been in terms of exports?
Baki Şensoy: For us, exports are the continuation of the journey we began in 2004, when we made Turkey’s first software export in the field of defence. Moving forward, we want to make solid strides in this area. There are a number of specific projects we are working on, and in 2019, we want to move on the from the stage where we are following them to the stage where we are actually inking the signatures for a contract. We are seeing substantial support from the SSB in our endeavours.
In 2018, some of the systems exported by prime contractor companies also included our products, meaning that we exported indirectly. For 2019, our objective is to engage in exports directly. There are certain opportunities we are pursuing especially in the fields of simulation and training, and have already taken a tangible step in one of them.
MSI TDR Has there been any developments in 2018 with regards to ALTAY’s activities in the area of representation?
Baki Şensoy: Our activities in this area are continuing, while also undergoing a transformation of sorts. ALTAY has never sought to assume the role of a representative that merely circulates documents between two parties. From the outset, it has approached this subject with a philosophy of offering services. And today, our approach to service is evolving towards a more engineering-intensive character. We are getting to implement our engineering knowledge and capabilities in this area as well. There are many things in Turkey that can now be done through indigenous means, and to the solutions we offer while acting as representatives, we try to add components from Turkey. Our goal here is to attain more cost-effective solutions, and in this way enhance the added value we offer our customers. In addition, this also ensures we increase the indigenisation ratio.
Another goal we have on the representation side is to offer solutions to different markets. We have also started to work on this area.
MSI TDR ALTAY is also conducting important works in Turkey in the area of mine clearing. Could you tell us more about these works?
Baki Şensoy: We are working together with Denel MECHEM as part of the Eastern Borders Mine Clearing Project (DSMTP). To our knowledge, this project is the only one of its kind being carried out in Turkey. At the beginning, ALTAY’s tasks involved supporting and providing personnel to Denel MECHEM. We had worked before in Kuwait, and this experience reflected very positively on our work in Turkey. We are a team that constantly learns and develops. The point we have reached today allows us to generate more added value in the field of mine clearing. We have a separate directorate within our organisation that is dedicated to the subject of mines. There are also new projects in which we are planning to take part.
ALTAY Ready to Bring New Blood to the Sector
MSI TDR Over the course of 2018, what kind of changes have you witnessed in various indicators for ALTAY, such as its turnover and number of employees?
Baki Şensoy: Since we are dealing with long-term projects, sales figures can fluctuate from time to time. A figure that gives a hint about the future, and to which we attach great importance, is the backlog. This figure basically shapes your future, since it represents a form of commitment. And to meet these commitments on time, you have to take the necessary measures in advance.
Increasing your backlog requires you to work in two ways. You must conduct extensive business development activities externally, while internally, you must prepare for the future.
In 2018, we have increased our backlog by more than four-fold. Given the additional responsibilities this has brought, we had to raise the technical skills of our personnel, while also boosting their numbers. We handle our works and projects in an ecosystem and can form the project teams we require within this ecosystem. Therefore, despite the increase in our backlog, increasing our personnel number by 20 percent proved sufficient. Our team now numbers more than a 100.
Increase in personnel number is an important topic for ALTAY. This is because we do not recruit personnel on a project-basis. Here is what lies at essence of our human resources policy: People at ALTAY think long-term, and are able to work here until their retirement. Their job guarantee is their own managers; this is something managers have to strive for.
The total number of workers in our teams working in all of our projects is – if we also include our ecosystem – in the region of 170. In the short-term, we believe that our number of employees will fluctuate within the 100 to 150 band.
MSI TDR Within your turnover, what is the balance between defence and aerospace projects, on one hand, and public and civil projects, on the other hand?
Baki Şensoy: With the latest deals we have secured, I would say the balance has been nearly 50-50 in recent times. One of the important projects in this context is the Retail Information System (PERBİS), the contract for which was signed last year. We plan to make important progress in this project and to start implementation within 2019. Considering its scope, it has a very important place within our portfolio. It’s also very valuable for us from a technological point of view. For some time, we also get to apply new software technologies in the projects we carry out for public institutions. We have been very successfully at this and our technologies are continuing to mature.
One of the technologies I’m speaking of is the Kubernetes. This is a technology we have started to use at the same time as the rest of the world. When we started working on it, it had not yet been used in a large-scale project, such as the ones we are used to handling. To give you a brief summary of what this technology is all about: In the past, you had a person sitting in front of a computer, while the application ran on that computer environment. But later on, you had the emergence of networks. Applications can nowadays be use in a large variety of different hardware, whether it be servers, computers, tablets or phones. You have applications that run or provide services on each one of these types of hardware. The issue here is that you have to make these different hardware run coherently with each other, without no interruptions, so as to make their applications accessible to a countless number of users. There is no easy solution to this, and many solutions developed in the past have brought with them their own problems. But at this point, we hold a novel technology that resolves all of these past issues.
This technology is what puts ALTAY one step ahead in all of its projects. It enables us to contribute significant added value to our customers. We have already started to apply these technologies in our defence and aerospace projects.
MSI TDR Given the overall picture you have depicted up to now, how does ALTAY position itself within the sector? Does it aim to become the sort of company with a turnover within the $100 million turnover range that is situated right below the prime contractors within the sector, the absence of which is sorely felt in the sector?
Baki Şensoy: Before replying to your question, I first would like to explain how ALTAY perceives this need you mention. We believe that we should bring ourselves to a position of which we can be certain to fulfil. As someone who has worked in companies affiliated with the Turkish Armed Forces Foundation (TAFF) in the past, I can see that the SSB has touched on a very important point with regard to the structure of the sector. Over the years, the Turkish defence and aerospace sector has taken on work of constantly increasing complexity. While these were mainly handled by prime contractors, which mostly include the TAFF-affiliated companies, there has also been a sharing of work with the minor layers of the sector under the SSB’s leadership and offset practices. Many important solutions have been developed in this context, and the administrative burden of all these works has been shouldered by the prime contractors. On the other hand, as time has gone by, the scope of projects has become even larger, which has led to a new problem. Aside from the distribution of tasks, the issue is that bringing the products and services together that have been rolled out, and assembling them properly, has gradually begun to require more time and space.
At the same time, the sector has a significant work load under contractual agreement, which makes it essential to reduce the delivery timelines. That is because the systems we deliver no longer wait around in a barracks or base; they are used directly on the field. Turkey is a country that actively needs and uses advanced defence systems.
Our company believes in the need to distribute difficult tasks between several parties and to accelerate deliveries. To this end, and as hinted by the SSB, there is a need for a group of companies immediately below the prime contractors that can provide the subsystems and subcomponents of the final platforms. ALTAY aims to become one such company.
We are all motivated by the idea of attaining such a position and providing added value from that point, in the service of both the defence sector and Turkey. But we are also aware of the challenges this entails. The position we are aiming for is one that actually requires you to digest and internalise certain things before actually getting there. That is why we are confidently moving forward. This is part of the transformation I described to you earlier. In this process, we are planning to become more involve in certain areas, to form teams of exports, and to sit down together with stakeholders.
In fact, we have already started developing certain system solutions. For example, ALTAY is developing an Electronic Warfare Operator Training Simulator that simulates all electronic warfare devices, used by the Naval Forces Command, which can operate and be integrated with each other, and allows these simulations to be controlled. We are roughly halfway through this project, and everything is going forward very successfully.
We do not limit ourselves by saying “we will meet and work together with SME-level companies to offer solutions”. For example, in the integrated logistic system programme of the F-35, we are submitting a proposal under the coordination of the SSB, and our partner in this proposal is ASELSAN.
MSI TDR There is one point that caught my attention while listening your answer. You were able to describe, very clearly and concisely, the current stage of your project for the Electronic Warfare Operator Training Simulator. Being able to track the current stage of a project is something that the sector has always wanted to do, but never really achieved to the extent it wished. How has ALTAY managed to do this?
Baki Şensoy: In the process of corporate transformation I spoke about earlier, we’ve been able to implement some of the actions we’ve deemed necessary, or for which we thought “it would be better if we do things this way”. One such action was the live monitoring of projects on a weekly-basis. Here’s what’s involved: Every Friday, we draft a report that illustrates, from a managerial perspective, the general status of the project in figures and the areas of risk. We then take this report on Friday, read it with a calm and rested mind over the weekend, and focus on the areas that need to be addressed, starting Monday.
We have successfully built this system into ALTAY, as our corporate culture and the existing infrastructure were ready to accommodate such an approach. We initially developed a fairly straightforward reporting system, and eventually built on it. Thanks to the resulting system, we can assess the status of our project very clearly. Questions such as, “At which stage are we on this particular project? When are we to reach the next milestone? What risks may prevent us from reaching our targets?” can all be answered. This gives us ample opportunity to take the necessary measures.
MSI TDR Do you plan to share this experience with the rest of the sector?
Baki Şensoy: Actually, we already are. Wherever I go, I explain how we do this, and which framework we use. We’ve even learned that one leading company spent some time on this subject, but so far has failed to obtain the desired results. They were really impressed when I described the practice we have. Within the year, we plan to describe to them in detail how we do project tracking.
Even Greater Targets Set for 2019
MSI TDR How do you expect 2019 will pass for ALTAY?
Baki Şensoy: The year 2019 is, first and foremost, and IDEF year. IDEF is an event which gives us the opportunity to see and asses ourselves as the sector. How shall we present and explain ourselves at IDEF? Finding the answer to this question is a process that draws on our corporate past, knowledge and experience. We want to follow a focused approach in our IDEF booth. Right now, we are trying to select the five or six product we will put on display. We also want our projects to make an appearance there.
For us, 2019 will be a period of important trials, as well as a period during which we will see the outcomes of our projects that we believe will have significant impacts. Our products will be rolled out over the course of 2019. Overall, it will be an exciting year for us, and I see that my colleagues are really focused.
MSI TDR What type of developments do you expect for your projects in 2019?
Baki Şensoy: I would like to speak about our Testing Infrastructure and Automation Project, which I haven’t mentioned yet. We have received a request to develop a testing infrastructure both from a prime contractor and an SME-level company. We have worked in the past on testing solutions for Turkish Aerospace Industries, ROKETSAN and ASELSAN, gaining significant knowledge and experience in the process. We have a team with considerable expertise in this particular field, and have also developed a competent infrastructure that we have already put through its paces in this area, and which we have further strengthened with testing automation software. This software is the output of the R&D projects we have carried out in the past.
During product development, testing is perhaps the most time-consuming step for companies Software is like the mortar that binds together all of the system components; but due to this feature, its testing is generally left to the final stages of product development. Automating this step – especially as the systems to be tested become more complex – generates substantial added value.
Automation of testing software is a major area of opportunity for us, and we will be deploying this capability in different projects. One of these will be related to the testing of unmanned vehicles. We have previously carried out the testing of the ANKA flight control computer software for Turkish Aerospace Industries, and we will also be working on the testing of a command and control system.
In 2018, ROKETSAN chose us as one of its solution partners. In fact, we are the only software company ranking among ROKETSAN’s solution partners. Our products can currently be found in ROKETSAN systems, and these products have proven themselves amply during field tests. We expect these works to continue.
Our work is causing us to gravitate towards the field of simulation. To give you an example, we have developed for simulation environments the equivalents of the systems we devised for ROKETSAN. As the number of such examples increased, we began to gain more experience and to form our infrastructure for simulations. We envisage conducting new projects in this area. For example, there is presently a need for a simulator for shoulder-launched missile systems, and we have already got the ball rolling in this area. If there is a window of opportunity, we should like to advance in this area.
Baki Şensoy: As I mentioned earlier when speaking about the PERBİS, we attach great importance to the software technologies we developed for the civilian market and will continue to work on these technologies. The difference on the military side is that the technologies we are working on also have to function in the environmental conditions of the battlefield, while there are no such restrictions on the civilian side. This is why you can apply state of the art technology directly on the products. There are many software-related studies of which the defence sector is not yet aware, and we want to work in such areas and to come up with R&D projects for them. We intend to use their outputs in both our military and civilian projects.
Of course, one of the main constituents of our turnover is our human resources. The main criterion about human resources is time. We can allocate 5 to 10 percent of our time to R&D personnel. With the contribution of our Directorate of Human Resources and Innovation, we expect the time we allocate to R&D to become even more efficient in 2019.
MSI TDR What kind of changes do you envision in terms of personnel for 2019?
Baki Şensoy: For us, being efficient is crucial. We want to advance in a financially balanced manner. The effects of the economic fluctuations of 2018 can still be felt. On the other hand, we are also aware that we have backlog to deal with. Given this picture, we need to increase our number of personnel, but cautiously. We can expect a 10 to 20 percent increase over the year.
MSI TDR The Turkish Defence Sector Summit held in December discussed the situation in the sector as well as its problems. Could you share with our readers what your inferences were from the summit?
Baki Şensoy: It is a highly significant sign that the successes of the defence and aerospace sector and its problems are being addressed at such a high level. We are always pleased to hear about successes; but to become even better, we have to focus on the existing problems as well. We see that some of our problems are long-standing ones, while others have emerged only recently. For example, the problems at the level of materials and components continue as before. We are facing various restrictions, and encounter problems in the supply chain. The solution lies in indigenisation, and there is a sustained effort in this regard, something that we have seen at the summit.
But of course, the indigenisation of everything is not always possible, especially for economic reasons. At this point, building good relations with foreign parties to find solutions is not just an issue for the state or the SSB, but an issue for companies as well. Companies should think about what they could do in this regard, and this is what we have been discussing between ourselves and our teams operating in different areas.
At the summit, we have listened to the messages being given at the highest level. We also consider it very importance that the topic of human resources was also addressed. Human resources are just as important as material technologies.
I also think that the launch of the GÖKBEY demonstrated that Turkey now has all it takes to develop its own platforms. These days, Turkey can develop any type of platform that much is clear. From now on, we will be discussing what else we can do. The issue of time was not really discussed during the summit, but we consider it will be of immense benefit if project execution could be improved from a timing standpoint. We should discuss how we can accelerate the processes relating to the drafting and conclusion of contracts. In addition, having rapid logistic services is also an important point, and one which we believe should be discussed as well.
MSI TDR Is there anything else you would like to add?
Baki Şensoy: Last December, the Ministry of National Defence issued the List of Approved Suppliers of the General Directorate of Military Factories, and we were the only software company on that list. Our name will be considered whenever a need arises, which is something we consider to be highly significant. We are ready to provide added value to the Directorate of Military Factories as well.