Why Aerospace, Aviation, and Defense Are Stuck in the Digital Stone Age—And How It Can Recover

This article was published on LinkedIn in February 2025.

I ran a few surveys over the past few weeks on IT and contract management maturity in aerospace, aviation, and defense. The results? Most of us around the world are still managing our daily activities with nearly 40 years old technology: Excel, email, and Windows Explorer (and if you’re ‘lucky’: Sharepoint which just turned 24 years old—so the digital bronze age). Shocking—but not surprising.

Aerospace, aviation, and defense (AA&D) are at the cutting edge of advanced engineering, delivering cutting-edge innovations like supersonic jets, reusable rockets, and advanced military systems. But when it comes to digital transformation— SaaS solutions, AI, blockchain— and automating business, contract management, procurement, supply chain management, or other operational processes, our industry is stuck in the digital stone age.

This paradox raises critical questions: Why does a field defined by technical brilliance struggle with operational and process digitization? And how can it bridge this gap to unlock productivity and resilience?

While other sectors leverage AI and automation to streamline processes, many of us seem to be still buried in spreadsheets, obsolete on-premises applications, lost email chains, manual workflows, and legacy (outdated) ERP systems. And it’s no wonder we struggle with inefficiencies in sales, procurement, contract lifecycle management (CLM), finance, and supply chain operations. And moreover, it is making attracting young talent more difficult: the next generation of employees—Millennials and Gen Z—don’t want to work with ‘Grandpa’s tools’.

Despite having some of the most skilled engineers in the world, AA&D companies struggle with digital transformation. Why? A mix of security concerns, low digital awareness among executives, IT departments stuck in legacy mode and still deploying outdated IT strategies, organizational resistance to change, and a deeply ingrained “not invented here” and “if it ain’t broke, don’t fix it” mentality.

This isn’t about blaming anyone. Most of us weren’t trained in AI, automation, or blockchain. Our expertise lies in engineering, manufacturing, program management, sales, contracts, procurement, and operations. Digital transformation simply wasn’t on the radar when we built our careers. Also, we cannot blame the people working in IT. They are often the first to see the opportunities of modernizing their environment. But are held back. Which makes retaining IT talent more difficult.

With everything happening now with AI, blockchain, and other advanced technology all this needs to change. This isn’t just an IT problem—it’s a strategic leadership failure. Leaving IT decisions solely to IT departments, without executive-level strategic oversight, guarantees stagnation. Digital transformation is not just about buying tools; it’s about understanding and changing how the business operates—and that starts at the top.

If we don’t modernize, we risk falling behind—not just in technology, but in competitiveness and profitability—and won’t just struggle with inefficiency—we’ll struggle to attract talent, retain customers, and compete in a world that’s moving much faster than we are.

So, why is AA&D struggling with digital transformation?

1. Security Constraints and Regulatory Barriers: The Built-In Excuse for Inaction

Yes, aerospace, aviation, and defense deal with classified data, ITAR (International Traffic in Arms Regulations)/EAR (Export Administration Regulations) compliance (and their international equivalents in other countries), and complex procurement rules and standards (FAA and equivalents) designed to safeguard national security, intellectual property, and safety. Yes, SaaS and cloud-based AI introduce security considerations.

One of the biggest roadblocks is the industry’s strict regulatory and security environment. Aerospace, aviation, and defense contracts involve highly classified information, export control laws, like ITAR /EAR compliance, and defense procurement rules (FAR—Federal Acquisition Regulation, DFARS—Defense Federal Acquisition Regulation Supplement) and their EU nations/UK and other country equivalents that require airtight security. These rules create barriers to adopting cloud-based SaaS tools, which may involve data storage or exchange in or between foreign jurisdictions or through third-party infrastructure. Compliance often prioritizes caution over innovation, leading to reliance on—often obsolescent—legacy systems.

This makes Software-as-a-Service (SaaS) adoption and cloud-based AI and blockchain solutions problematic—but as we will see below—not impossible.

Many AA&D firms still believe they have no choice but to stick with ‘on-premise’ (in-house) IT solutions, limiting their ability to leverage cutting-edge automation tools. Cloud-based SAAS and AI can be made secure when implemented correctly—but many executives default to “no cloud” without considering hybrid models that balance security with agility. Hybrid models exist. Not everything needs to be in the cloud, but rejecting all SaaS and AI solutions outright puts us at a disadvantage.

Other highly regulated industries—banking, pharma, government—already handle sensitive data in cloud environments and are now adopting AI and blockchain. Why can’t our industry?

Yes, on-premises AI is an option, but it’s suboptimal. Running AI models in-house still requires high capital investment, specialized labor (which, as I explained above and in this article on talent shortage in our industry, is hard to find), and continuous updates—all of which are bottlenecks in an already resource-strapped industry. The industry already struggles with a talent shortage—so who’s maintaining these systems? Without a clear AI strategy, companies risk building expensive solutions they can’t maintain or scale.

Even when AI and automation could reduce administrative overhead and optimize procurement, companies hesitate to implement them due to compliance concerns. This is understandable: a single security lapse could lead to fines, contract losses, or national security risks.

However, the real issue isn’t security—it’s a lack of structured decision-making about digital transformation.

2. Low Digital Awareness at the Executive Level Is a Bigger Problem Than Outdated IT

IT is not a strategy. Digital maturity needs executive ownership. AA&D executives are experts and grew up in engineering, manufacturing, and program management, but not IT. Many are not digitally fluent. They understand jet engines and defense systems inside out—but when it comes to AI, automation, and concepts like digital contract management, they’re often out of their depth. This leads to two problems:

• A lack of understanding of how AI and automation could streamline processes in operations (e.g. procurement, supply chains) and business (e.g. contract management, finance).
• A focus on traditional, proven methods rather than the adoption of emerging technologies.

Digital transformation is often considered a cost center rather than an investment in long-term efficiency.

The result?

• Underinvestment in digital transformation—because they don’t fully grasp its strategic impact.
• Overreliance on IT departments—which may lack the business perspective to prioritize transformation.
• Missed opportunities for efficiency gains in contract management, supply chain, and sales processes.

While AI could automate contract compliance, reduce risk, and optimize supply chain operations, executives frequently prioritize immediate operational needs over long-term IT innovation.

AI and automation aren’t just IT tools—they’re business transformation enablers. If executives don’t take ownership of digital strategy, nothing will change.

3. Leaving all to the IT Departments Stuck in Legacy Mode: The Silent Productivity Killer

Most aerospace, aviation, and defense IT departments were built to maintain stability, not drive transformation.  Many AA&D IT departments are risk-averse and slow to modernize.

So, when digital transformation comes up, they delegate it entirely to IT departments. That’s a mistake.

Many aerospace executives defer IT decisions to IT departments. That makes sense—on the surface. However, IT teams are designed to maintain stability, not drive business transformation.

Here’s what often happens when digital transformation is left entirely to IT:

• Security concerns lead to rejecting all SAAS and cloud solutions instead of exploring secure hybrid models.
• Old systems get patched instead of replaced, prolonging inefficiencies.
• Lack of expertise in AI-driven sales and contract automation, procurement, and supply chain optimization, leads to outsourcing IT to parties. That can work—but only if your internal teams deeply understand your business and digital technologies. Digital transformation without internal expertise = failure.
• AI and automation are seen as “tech projects” instead of strategic business enablers.

Unlike in other tech-driven industries, IT in aerospace, aviation, and defense is often viewed as a support function rather than a driver of innovation.

This results in:

• Resistance to cloud computing and SaaS platforms due to cybersecurity concerns.
• Lack of investment in upskilling IT teams to implement AI-driven platforms, like contract lifecycle management (CLM) or procurement automation.
• Continued reliance on outdated enterprise resource planning (ERP) and management systems that are slow, inefficient, patched instead of modernized, and difficult to integrate with AI tools.

Many aerospace and defense companies still rely on:

• Obsolete database systems that are no longer supported, making integration with AI and automation nearly impossible.
• Legacy ERP and contract management tools that were “custom-built” 20 years ago and are now rigid, expensive to maintain, and slow to adapt.
• Manual processes and workarounds because teams don’t trust existing IT systems to handle complex workflows efficiently.

Why? “Because that’s how it’s always been done.” The result? Data silos, inefficiencies, and wasted time.

The mindset shift required to implement cutting-edge digital tools simply isn’t happening fast enough.

IT teams are not the right group to own digital transformation alone—because transformation is about business, not just technology.

To succeed, executives don’t need to become IT experts—but they do need to understand what’s happening in AI, automation, and blockchain. Companies should invest in training key employees—not just IT teams, but also contract managers, procurement professionals, and finance leaders—on how automation, AI, and blockchain can improve their work. If we don’t build digital expertise internally, we’ll keep outsourcing to people who don’t understand our business—and keep failing.

Executives and business leaders who see AI and automation as business enablers must take charge, define the goals, and let IT implement them—not the other way around.

This is not about adding another responsibility to their already full plates. It’s about ensuring leadership teams have the right knowledge to make informed decisions. Executives are often aware that IT systems are outdated, but modernizing them feels overwhelming. That’s why digital transformation must be approached step by step.

4. Risk-Averse Culture, Organizational Resistance and Siloed Operations

The high stakes of AAD projects—where failures can cost lives or compromise national security—foster a culture of risk mitigation. Engineers and managers prioritize proven, deterministic processes over experimental technologies like AI, which are perceived as “black boxes.” This mindset trickles down to processes like commercial and contract management, where manual reviews and paper-based systems persist due to familiarity.

Organizations are structured in rigid silos—procurement, legal, contract management, and finance often operate independently. These silos create barriers to AI adoption because automation requires integrated, cross-functional workflows. Data required for AI-driven insights or blockchain-enabled transparency remains fragmented across departments. AI-driven contract management, for example, needs seamless collaboration between legal, sales, and supply chain teams.

Without strong leadership driving digital transformation, resistance from middle management slows adoption. Employees who have spent decades managing contracts manually may fear job loss or struggle to trust AI-driven decision-making.

5. Investment Priorities and Budget Constraints

Despite multi-billion-dollar contracts, many AA&D firms operate under strict budget constraints, especially when defense spending shifts due to political changes. Investments tend to favor R&D for next-generation aircraft, weapons systems, or space programs rather than business process automation.

Even when executives see the value in automation, they prioritize hardware and engineering advancements over back-office efficiency. Yet, inefficiencies in contract lifecycle management, procurement, and compliance cost millions annually—leaving money on the table. Procurement processes are slow and bureaucratic, discouraging investment in agile SaaS or AI tools.

6. The ‘If It Ain’t Broke, Don’t Fix It’ Mentality and The Illusion of “We’ll Digitize Everything at Once”

AA&D is an industry built on reliability. When you’re making fighter jets or commercial aircraft, risks must be minimized. That mindset extends to business processes—many executives believe that if contracts are being signed and deliveries are happening, there’s no urgent need to change the system.

But this reliance on outdated methods is holding the industry back. Competitors in tech, finance, and even automotive have embraced AI-driven analytics, automated contract review, and blockchain for supply chain security—improving speed, accuracy, and compliance.

Another reason AA&D companies get stuck? They see digital transformation as an all-or-nothing approach.

They assume it requires:

• A massive IT overhaul (too costly, too risky).
• A multi-year implementation (too slow, too complicated).
• Replacing everything at once (which guarantees failure).

This mindset leads to paralysis. Instead of modernizing step by step, we do nothing.

Trying to jump straight to full automation without maturing step-by-step leads to failure. IT maturity is a progression, not a switch you flip overnight.

7. Complex Supply Chains and Contract Structures

Industry supply chains span thousands of specialized vendors, governments, and international partners. Contracts often involve bespoke terms, classified data, and multi-year timelines, making standardization—a prerequisite for SaaS or blockchain adoption—exceptionally difficult.

Aviation and Leasing Companies Face the Same Challenges

And by the way, it’s not just aerospace manufacturers or defense contractors—aviation leasing companies, MRO (maintenance, repair, and overhaul) providers, and commercial aviation suppliers all struggle with the same inefficiencies.

• Aircraft leasing contracts are still managed with spreadsheets and manual tracking. AI-powered CLM could improve lease compliance and financial risk management.
• MRO operations suffer from parts shortages and inefficient procurement. AI-driven supply chain analytics could predict maintenance needs and optimize inventory.
• Sales and customer engagement in aviation are outdated. Automated CRM and AI-powered pricing models could accelerate deal-making.

Strategic IT = Business transformation, not just tech upgrades

AA&D executives must stop thinking of IT as just another cost center. The companies that win in the next decade will be the ones that treat IT as a strategic enabler—not just a support function. AI, automation, and SaaS solutions are not “IT projects”—they are core to business transformation.

What does this mean for leaders?

• Executives need to take ownership of digital strategy and transformation. If the CEO and CFO don’t drive transformation, it won’t happen.
• Digital maturity must evolve in steps. Start with contract and sales automation before tackling full AI-driven operations.
• AI needs structured data and process discipline. You can’t throw AI at bad processes and expect miracles. CLM and digital workflows must come first.
• On-premises AI is expensive and requires top-tier talent. Hybrid models are often a better investment.
• IT maturity and digital transformation must evolve in steps. You don’t jump from spreadsheets to AI overnight.

What Needs to Change? The Right Way to Modernize: Step-by-Step IT Maturity

We don’t need to replace everything overnight. Digital transformation works best in steps.

1. Incrementally Modernize the Infrastructure: starting with hybrid cloud solutions and using middleware to connect legacy systems with modern tools, working with pilot programs, for example, test AI and blockchain in low-risk areas (e.g., predictive maintenance, supply chain tracking) to demonstrate ROI.
2. Digital Upskilling: Train engineers in digital tools (e.g., contract lifecycle management platforms like Icertis) to bridge the gap between technical and operational expertise.
3. Start with Contract Lifecycle Management (CLM): AI-driven CLM doesn’t replace contracts—it enhances compliance, reduces risk, and automates and streamlines heavy administrative work. If you don’t fix CLM first, and your contracts are still managed in Windows Explorer, email and Excel, AI has no structured data to work with.
4. Automate the Sales Process. Aerospace and aviation sales cycles are painfully slow, manual (RFPs, pricing, and proposals), and inefficient. AI-assisted CRM, proposal automation, and pricing optimization speed up deal flow.
5. Optimize Visibility  and Streamline Procurement and Supply Chain Automation: AI can predict supply chain risks, optimize sourcing, and prevent post-signature execution value leakage in contracts and disputes. AI can stop it.
6. Enable Cross-Functional Integration. Breaking down silos between sales, contracts, legal, finance, procurement, and supply chain teams is key. AI and automation only work when data flows across functions and departments.
7. Advocate for Regulatory Evolution: Transformation isn’t a single IT project—it’s an ongoing journey toward higher digital maturity. Collaborate with policymakers to update frameworks that accommodate emerging tech. For example, the governments’ evolving stance on AI and blockchain could set a precedent. Leverage blockchain for auditable, secure contract management while ensuring compliance with data sovereignty laws.
8. Reallocate Budgets for Long-Term ROI: Shift from CapEx-heavy IT spending to OpEx models via SaaS subscriptions. Lobby governments to fund digital transformation as a strategic priority.

The Bottom Line: Adapt or Get Left Behind

While competitors in finance, healthcare, pharma, and even automotive move ahead with AI-driven automation, real-time supply chain analytics, and SaaS-based process management, AA&D remains stuck in legacy systems and outdated processes.

Our industry cannot afford to wait any longer. AI and automation won’t replace expertise—but they will replace companies that fail to modernize.

And let’s be honest: Millennials and Gen Z don’t want to work with outdated, user-unfriendly software. So we also have an issue in attracting and retaining talent.

• They expect intuitive, SaaS-based tools that streamline workflows.
• They don’t want to spend hours fighting with slow, clunky, outdated systems.
• If our tools feel 20 years behind, we’ll struggle to attract and retain top talent.

Modernizing IT isn’t just about efficiency—it’s about keeping our industry competitive for the next generation of leaders.

• Companies that treat IT as a strategic enabler will lead the industry in the next decade.
• Executives must drive digital strategy. IT should implement, but leadership must own the vision.
• AI still needs structured contract and process data. You can’t throw AI at bad processes and expect miracles.
• On-premises AI and apps are expensive and outdated. Hybrid and SaaS models are the future.

Digital transformation

The industries are at a turning point. Those who embrace AI-driven contract management, procurement automation, and digital transformation will gain a competitive edge. Those who don’t will find themselves bogged down by inefficiencies while their competitors move faster and smarter.

The AAD industry’s engineering talent is its greatest asset. By redirecting innovation efforts toward operational processes—and embracing partnerships, pilot projects, and regulatory advocacy—it can transform from a digital laggard to a leader. The stakes are high: Organizations that fail to adapt risk ceding ground to agile newcomers.

What’s your take? Are aerospace, aviation, and defense companies finally ready to embrace automation, or will legacy thinking keep them stuck? Is your organization ready to move beyond legacy thinking? Or will you wait until inefficiency costs you contracts, market share, and competitive advantage?