WASHINGTON — Over the last five years, demand for nontraditional training and simulation has skyrocketed — driven equally by shrinking defense budget and the growth of technological capabilities. Gene Colabatistto, who has headed Canada-based CAE's defense group since June 2012, discussed the state of the training and simulation world ahead of this year's I/ITSEC conference, which begins Nov. 30 in Orlando, Florida.

Q. In your opinion, where are the four US services in how they handle training simulation? Does one do it better than the others?

A. If you look at individual programs, and you say, "who are the absolute top-tier users or the most sophisticated?" you will definitely find examples [from all four]. Every service has what I will call the high points for sure. I think when you look at the enterprise level approach, the Air Force probably has the most complete vision about creating a virtual flag, or a virtual red flag. And they have made the biggest investment in what we call DMO, distributed mission operations. A lot of that investment is the network — the network and the bandwidth, the network operations center security operations. Around the world, this is the best in the world. They have a very sophisticated capability. Now it is a matter of taking all of these assets, the network simulator, the network and thinking about how best to use that.

Q. The "virtual flag" operation is the dream of simulation and training experts. How do governments get there?

A. One of the things I see in the future, and where we can really take advantage of gaming technology, is — one of the things that community does really well is the ability to set up ad hoc sessions. We have to do this in very prearranged fashion. It would be lovely if you were flying a fighter simulator and you were on a three-hour mission and your instructor says, you know what – "Your target is no longer valid. I am going to give you a new target," And makes the guy or gal sit there on their kneeboard, and redo their mission plan, and type it into the computer and do those things you have to do while you are trying to fly the airplane. And then realize, "I don’t have enough fuel. I got to hit the tanker." So you call back to the tactical control center and say, okay "I got this, this and this, and at this point I got to hit the tanker." And they go okayOK. And they call out on the network around the world to say, "There is a guy flying a tanker in Australia. — yYou want to merge with these guys and let’s go do a refueling mission on an ad hoc basis?" And we worked out a way to do that. This guy is flying in the middle of Australia and this guy is flying in the middle of Nevada. And we actually worked out a way where they can fly into [the same digital] space and merge.

Q. What are the challenges to making that happen?

A. The limiting factor will be, "wait a minute, these guys are on two different networks running two different levels of security and, you know, they are Australians. Especially in the IT world, there is this natural tendency not to let anybody touch your stuff. But I think there isare some lessons to be learned in the gaming community — I watch my son [start a game] and in three minutes he is with three other people doing all of this stuff, and it is very fluid and it creates a more immersive environment. The act of going through a mission plan, flying the airplane, listening to the radio — that is what we want to create for people.

Q. There has been reluctance in the past toward simulation. Is that changing?

A. I think what we will see – I have seen in the last year, people wondering if they can put more stuff in the simulator to commanders now saying you are going from 20 percent to 60 percent, directing [that change], because they are convinced, all in the last year or two. It has been somewhat of a seismic shift from what I have seen.

Q. Simulation and training firms have been leaning on the gaming industry in recent years. What are the challenges there?

A. I think on the surface, folks have tried to take technology almost directly and say, "There may be training value in this, but it is not directly transferable." The graphics are great, and it is very interactive and immersive, but the architecture of a computer game is much different. If I fly a helicopter and I am going in one direction and I want to turn around and go in another direction, my simulators have to accommodate that. Now, [the gaming industry] are really smart people and they know the way that people play their games, but you have, I will call it a limited [freedom]. Therefore they can take that smaller piece of ground and add a tremendous amount of resolution to it, but it is much more heavily constrained.

Our scenarios have to lend themselves even more to free play in certain dimensions, like geographic direction and things like that. And I can’t deliver something that is ten 10 city blocks. I have to deliver the whole country. It limits what you can do. I think the big payoff is more, when you look at the technology stack and the IT stack and the things that they do really well, like setting up and shutting down a session and doing that on an ad hoc basis, that can be very instructive to us.

Q. As impressive as simulators have become, where do limits still exist?

A. I think what it calls for is a comprehensive training-needs analysis. And you can find where the individual skills will fit and not fit. It is not easy. One place I think it really works is training staff. We can put everything from a squad leader to a division commander, and it is all on a screen, and we create the common operating picture. And stuff moves in real time. That is pretty valuable, too. Where it gets really hard is tactical engagements. If it is a four-man fire team or a six-man stack and you are going to bust into a building; part of the way you do simulations is you put them in a shoot house. Simulations don’t have to be computer screens. We simulate that and we put that in a shoot house with blanks and then live rounds. That plays a role, too.

The one thing that is hard for me to get my head around is taking a formation on open terrain. It is time, space and logistics, right? I think it would be cheaper to take a company and bring them out to the field and have them live in the mud and get up at 3:00 in the morning every day for three weeks straight and do those things, because there is such a big physical element to that. Like training a football team. Truck talks will only get you so far. Somewhere you got to go bang heads. I think when you get down to infantry formations, it becomes more like a football timeteam. You got to go get guys muddy and do all that stuff.

Q. Do you expect to see consolidation in the training and simulation industry, or is it niche enough that all the players can keep going as is?

A. I think we are going to see more mergers and acquisitions, some consolidation. Everybody is also doing portfolio shaping. You are going to see parts of companies move from one company to another as people are trying to shape their portfolios, and that is probably the biggest opportunity for companies. What really allows you to take advantage of these things financially is that you would run the same type of business. We would have instances where folks want to diversify. And they will take a hardware company and they buy a software company. It sounds great, but you got to realize there is probably no synergy there. You can't share sales forces, and you are attacking different parts of the market for a reason. So if diversification is your end game, don't expect that you are going to be able to collapse the organization.

I think you are going to see consolidation in general driven by portfolio shaping. I think you will see some companies trying to vertically integrate in order to be a full-services provider, and then you will see some divest themselves of pieces they don't need. There is no room to have businesses in your portfolio that aren't producing for you; they may be able to produce for someone else.

Email: amehta@defensenews.com

Twitter: @AaronMehta

Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.