Agree with previous suggestions of him being our first choice right-back at the start of next season. Bailly's a bit raw and frantic (for lack of a better word) as a central defender right now; and his biggest flaws include positioning (which is why he often runs around to recover from a lapse in judgement), committing to the tackle too early (ball watching), and natural defensive awareness - most of which can be bothersome if he's playing in the heart of defense, and can be ironed out only with more experience. Him and Smalling would be an odd pairing in that they same the same kind of strengths - predicated on speed and natural athleticism, but also the same kind of weakness, because although Smalling has come up by leaps and bounds over the last 10 months, he's still not a natural organizer/ leader of the backline, or a composed presence on the ball from deep. Ideally - you'd like to have a good complementary set of features between your central defensive duo, with one being an astute reader of the game, and the other the 'muscle' to thwart more physical attackers.
But as the right-back, his ability to run with the ball, slide tackle, and be a quick outlet will come in handy vs wide attackers, and he'll increase the overall stature of the back four (which will be of great help against the more imposing Premier League teams). Plus, José has shown a tendency to field more balanced defenders on the right flank in recent seasons (Ivanović at Chelsea, Arbeloa at Real) - so Bailey might be in line with that. Put a hard working winger ahead of him, and the flank would be very well balanced, and help shut down one half of the opposition's wide attack - another feature of José's teams where one side of the field is more attacking than the other (like Di María, Arbeloa vs Ronaldo, Marcelo). With Martial and Shaw on the other side, having Bailly on the right would make a lot of sense.
Limited highlights, but this was one of his best games from last season (vs Real Madrid as a right-back when Villarreal won 1-0 at the Madrigal):
Played a big role in keeping Ronaldo at bay.