Interview: Darren Larkins - CEO, SSI

SSI CEO Darren Larkins, together with President & CTO Denis Morais, acquired ownership of the shipbuilding software development company from founder Rolf Oetter effective March 1, 2018. The two longtime employees have been managing SSI for the past seven years and have been entrenched in all aspects of the company’s day-to-day operations for even longer. Larkins, SSI’s fifth employee in 1999, said that through the years he and Morais have done “pretty much everything that SSI does at some point.” He added, “This gives us the unique ability to address the customers’ requirements to a greater degree than potentially larger companies where the management has no direct engagement with the customer or hasn’t lived through the day-to-day of the customers and worked with them.”

Maritime Reporter & Engineering News recently visited Larkins at SSI’s Victoria, B.C. office where the new co-owner brought us up to speed on the company’s advanced technologies and how SSI is helping shipbuilders to embrace them.

Shipbuilding has been difficult of late. When you look at the market, what do you see?
We haven’t had a lot of presence in some of the major Asian markets which to a degree have been hit fairly substantially by the downturn. Our success has been fairly diverse into naval, luxury, some commercial – a lot of things like fast ferries, aluminum shipbuilding and so on. We’ve had, to use a financial metaphor, a diverse portfolio of customers and that has helped us. We’ve actually been doing really well over the last couple years because the naval segment, especially in the U.S., has been on a bit of an uptick, and the other segments we’ve been in haven’t been hit too much. But absolutely, the commercial market in Asia specifically has been very depressed. I think it is going to turn around slowly, but not in the next few years, or to the levels it was at a few years ago. I just don’t see that happening.

You mentioned naval shipbuilding. Where else are you looking for opportunities?
In Australia, similar to the success we’ve had here in Canada. There are a number of Canadian Navy and Coast Guard programs that have been awarded or are ongoing for the next 30-40 years, and we’ve been very successful with all of the noncombat packages and all of the work being done at Seaspan - Vancouver Shipyards and so on. These sort of investments in shipbuilding technology and shipbuilding capability might not exist without that local investment. Rather than going offshore and buying a design from an established shipbuilder in Europe or Asia, they’re investing locally. That sort of thing is also happening in Australia. We’ve had a lot of success in the past in Australia so we have a good base there to leverage with a lot of the current aluminum shipbuilders as well as BAE Australia. There’s a lot of good work going on there.

Japan is actually another market where we see some things going on. They obviously were hit by the depressed shipbuilding market as much as some of the others, but at the same time, their quality and the ability to build more complex ships has kept them afloat. Naval fits really well into that. That’s somewhere we’re looking as well.

Defense or naval shipbuilding around the world, whether it be in places in eastern Europe like Turkey, doesn’t generally have the same level of volatility as some of the other sectors. Wherever naval shipbuilding is happening is where we have our eye – on that particular segment. There’s some other things we’re looking at as well.

How has SSI helped to forward the digitalization trend in the maritime sector?
A number of things in terms of new products – I say new, but we’ve been working on this for years now. In the past, and even in many shipyards today, there’s a lot of technology or digitalization, if you will, going on within design and engineering, but in an isolated sort of way. But the connections outside of those departments into the rest of the shipyard are still quite often paper drawings, maybe electronic 2D drawings, but the buck stops there in terms of progressing that. We’re trying to convince many shipyards to take it one step further and integrate all of the rest of the shipyard processes and departments – and I say integrate, but really seamlessly make them part of the design engineering process so information, awareness of change, even driving production machines automatically based on approved changes within engineering and our Enterprise technology platform is essentially that. It’s not software that an individual user sits down in front of and sees, it’s software that allows our design engineering solutions to be connected into the rest of the shipyard such that information is simply available at their fingertips when they need it. That’s a big thing for us is, whether you call it democratization of technology or empowering users, it’s the ability for normal people to be able to have whatever they need to be able to do their job at their fingertips rather than going hunt and find it, or having to ask somebody to simply reference a 2D drawing that doesn’t give them all the information they need because going and trying to get a 3D model with detailed information just isn’t available. If you have that ability you’re pretty much guaranteed that the information is not out of date, that it’s an approved revision. That goes to the second point: we’re dedicated to creating software that is easier to use. It’s software that does not require a degree in using the software to get things done. You simply need to know shipbuilding and know a little bit about some of the products and technology. That’s where the democratization comes in. If you want to be able to interrogate the 3D model and get a piece of information, you shouldn’t have had to go through a two-month training course on how to use the software. It should be ready, right there, when you need it. And all of our technology is intended to be very easy to pick up and use.

The shipbuilding industry can be conservative, reluctant to change. What are some of the hurdles you’ve faced and how have you overcome them?
Slowly, I’d say. Conservative: I think that’s not necessarily a negative description. I think pragmatic. The types of sales we do is not a typical sales job that you might see in other industries. We have to walk customers through how what we do is going to improve what they do in some way. So, it’s not simply a matter of knowing the latest buzzwords or having sexy videos on the internet. Each one of us, the management team and even our product owners have spent time in the shipyards, and our sales people are engineers or naval architects and so on, so people that really understand the business that the customers are involved in. And I think that’s the only way – I wouldn’t even say overcome it – but to recognize shipyards aren’t going to invest in something that they don’t feel is a low risk of disruption in terms of their current project. Because not only are they conservative, shipyards are very much focused on the current project and even the current block within the current project in terms of cutting steel and meeting payment milestones and those sorts of things, so they’re very reluctant to take on new risk. I think the biggest way to do that is to show them that you understand exactly what their pain is and what their risks are and the challenges to overcome. We’ve done that by working quite often with people/partners in the individual regions. Our senior partner for Europe, for example, has had 40 years of experience in naval architecture design, he owned a design company, he knows the shipbuilding industry in and out, rather than a typical CAD/CAM reseller that is good at sales of technology but really not that great at understanding the customers’ challenge. A key to the shipbuilding industry is to be part of the shipbuilding industry not an outside technology provider that doesn’t understand what’s going on day to day.

What’s new from SSI in the last 6-12 months, and what can we expect to see in 2018?
Our focus has largely been on the EnterprisePlatform technology. We continuously evolve even the core ShipConstructor products. We’ve had several releases; our 2018 R2 product came out maybe four months ago, and in the next few months we have our 2019 product coming out. And the focus in all of that has been more on that whole digitalization and EnterprisePlatform concept, making information available. We’re advancing the core toolsets based on specific user requirements, but nothing groundbreaking in terms of those areas. We have a fairly broad portfolio of products already that answer a lot of the needs our customers have, so now we’re helping them communicate internally with the rest of the shipyard. The EnterprisePlatform is where a lot of the innovation is happening.

In terms of the product, the 2019 version is our big release for 2018. A lot of that is focused on the SSI EnterprisePlatform and updates to our MarineDrafting technology, which is the ability to create 2D representative drawings from the 3D model. That’s been a big push for us over the last few years as well, making that product really work for the shipbuilding industry and the specific needs of different markets. For example, Japan is a focus for us. They are very heavily dependent on 2D still, so finding a way to get them to adopt 3D, like our modeling technologies, but still be able to get the type of 2D drawings they need out of it. So, we’re focusing quite a bit on our MarineDrafting product as well.

You mentioned earlier your diverse customer portfolio. What’s hot at the moment? Where are you looking?
Naval shipbuilding, again. The U.S. has always been a strong market for us and naval shipbuilding in the U.S. is on a bit of a tear, as well as here in Canada.

But other than that, we think Japan is ripe for opportunity, specifically for us because, like I said, they’re focused on a lot of 2D processes and 2D workflows. And our connection with AutoCAD and Autodesk technology – because those have typically been the go-to tool for 2D drawings and 2D technology – so we think we can offer them a bridge between 2D and 3D. They know they want to go to a 3D paradigm, they know they want to change their processes, but everything they do is so heavily entrenched. And it’s not just their shipyards. Their supply chain, the people delivering drawings to them have a strictly 2D process. We’re looking at being able to basically create a bridge between what they do traditionally and to be able to move into some of the newer technologies out there. It’s something they know they need to do; they need to move not just to 3D technologies, but once you move to 3D things like PLM, which is basically the ability to manage in a very reputable, process-driven, information-driven way all the activities in the shipyard, you need to move to some of the newer technologies like 3D, like product models, to be able to make that next transition. They know where they need to go, and we think we can offer them a step between where they are and getting there, rather than requiring them to completely disrupt everything that they’ve always been doing and are really good at and have built a differentiator of quality around their processes and the way they do things. We think that’s a hot market for us in particular.

As you said, shipbuilding is not in a great state globally, so for us naval shipbuilding is an area where we haven’t seen that much of a downturn. In fact, the company has seen a lot of success in that area. But other than that, there’s no getting around the fact that the shipbuilding industry globally and some of the markets we looked at for growth maybe five years ago – like China, like Korea and so on – I wouldn’t say have dried up in terms of those opportunities, but everyone is even more cautions than they have been in the past.

The breadth of SSI’s offering is large, and I’d imagine some customers often don’t take full advantage of the products it offers. What is SSI doing to help ensure customers reap the maximum benefit?
That’s a great question, especially since we’re doing something I think is fairly unique in the shipbuilding industry; we’ve just recently launched an online learning platform called SSI Learning, and part of that is something called SSI MyLearning. It’s on-demand online training and education of our products and the capabilities in them. So rather than requiring the users to either go to one of our resellers or engage us to do high-cost training on site, or learning it themselves, and possibly not understating the full capabilities that they have in the software, we’re offering a very low-cost – it’s actually included for customers that have subscription, for the time being – access to our full training material, full curriculum certification in an online delivery mechanism. So, any user can go online and be certified on any one of our products in a matter of a couple days. That’s a big push for us because our software is a lot more capable than some people think it is. I think that’s typical of software, especially when you’ve been using it for five years, 10 years; you assume you know what it can do, and a lot the time you may not have had any training on the software or been formally exposed to what it can do. So, this is one of our answers to ensuring that the end users are educated in terms of what they have, and it removes all of the traditional barriers that shipyards would have around not wanting to take people offline when they’re working on active projects. It’s something that can be done by individuals in whatever time they have because of the way that it’s delivered. And it fits really well with markets where the cost of labor often doesn’t equate well with the cost of training from software companies.

If you’re paying a few thousand dollars a year for a skilled naval architect in Vietnam or countries like that, often paying an equivalent amount to have that person trained, the cost benefit is not necessarily there, but in an online delivery mode I think it makes a lot more sense for these shipyards. The reason I say it’s unique is because we take that approach where we want everything to be easy to use and not require an advanced degree in CAD, but simply require a good working knowledge of shipbuilding to be able to operate the software. We’re one of the few products that can deliver that sort of online, self-directed, self-guided training in all of our products. Like I said, as long as you understand shipbuilding, everything you’re exposed to in the training you can understand. You don’t need an additional set of context or rulebooks or core training on how to do 3D CAD. You’re simply doing shipbuilding in a virtual way.

How is SSI investing today?
We’ve grown and are still hiring more people in what a lot of people call a depressed shipbuilding market. Recently we’ve hired a number of new individuals mostly in product development. Again, we’re fairly lean on the sales side of the business because I think shipbuilders want to talk to people who understand how the products are going to solve their day-to-day challenges and issues. So, we invest a lot on the product development, R&D and technical sales, if you will. But those are people who truly understand how to use the software or have worked in the industry. We’ve hired a handful of people even in the last few months on our product development teams and are hiring more.

It shouldn’t be a surprise, but we believe in technology. We’re investing in a lot of infrastructure so that our employees have the best tools that they can possible have to do the things that they need to do: a lot of virtual infrastructure, virtual testing and automated testing infrastructure and so on.

We’ve also invested in direct offices in Dubai and in India because we see those as being markets where we want to directly engage with the customers, so we’ve hired teams there. Again, the majority of people we’ve hired are people with shipbuilding backgrounds, who’ve worked in the industry, who can take what they know and help other people implement their software.

(As published in the May 2018 edition of Maritime Reporter & Engineering News)