streamlining every aspect of operations to bring in efficiencies is a high priority. Improving management’s visibility to operational and business performance is imperative to achieve this and to this end reports that give a 360 degree view of the business are required. It was this objective that drove Jet Airways to conduct a business process re-engineering exercise and re-implement core back-end modules of SAP and extend its footprint simultaneously. Jet Airways caters to both domestic and international routes.
The main challenge lay in improving business visibility and reducing delays in MIS. Project E3 (it stands for Efficiency, Empowerment and Effectiveness) was executed to deliver information regarding the performance of all Routes/Flights flown by the Airline taking into account the revenues and various costs incurred to the top management. It works by intricately integrating critical information into Data Models from various core modules of SAP and an in-house developed module for Cost and Revenue Accounting System.
Integrating legacy apps
Jet Airways has an in-house applications module for Revenue Accounting System and Costing developed using FoxPro, which was outside the SAP environment. Related reports or MIS had to be manually fed into the SAP systems, which was integrated with FICO and Business Warehouse (BW) to generate MIS reports. R.N Moorthy, Senior General Manager-IT, Jet Airways said, “We had to cull out the data from our legacy applications feed it into R/3 and do budgeting to produce MIS reports. There was a lot of time delay in reconciling the data from disparate systems and it was error prone as it required manual intervention.” For example which routes are consistently doing badly in revenue generations vis-à-vis costs incurred in that sector, what are the reasons for the same—is the fare higher than that of the competition, or has the competition reduced the fare because of which there is a drop in revenue. A dip in revenue used to go unnoticed at times. He added, “The delay could be anywhere between a week to ten days after the closure of the week. Our people had to burn midnight oil to dig into the reports, it was taxing on our bottom line.”
Additionally business performance reports across locations in India particularly about its sales and marketing at key junctures were not known or were not available online to take decisions faster. Moorthy added, “We used to get reports in the form of hard copies from our customers—agents and franchisees. Drilling down reports was not possible. We could not ascertain why there is a downtrend in sales of agents, or the volume of the transactions, is the agent selling more economy class tickets than business class and the like.”
Integration of Plant Maintenance
Plant Maintenance involves ground support to the airline and sundry equipment are used such as trolleys, ladders, vehicles and more. There were a lot of inventories and consumables that were used for plant maintenance and this equipment required periodic checking, repair and maintenance. Moorthy added, “There were slippages in the maintenance and repair of equipment. Additionally chances were good that ground staff could be misusing resources namely gasoline. We wanted to track what the consumption patterns of gasoline in different vehicles that we use were and find out if a particular jeep was consuming more fuel than another one. These details were difficult to track down to the last level.”
Integrating HR with payroll
Again HR and payroll was running separately. Jet Airways used an in-house developed HR module which was not integrated with the payroll system, which required considerable data reconciliation and validation. Additionally the Crew Management Systems that used to track the number of hours put in by crews, the number of overtime hours etc were done manually leading to delay. It was difficult to get information on how much each department paid to its employees who put in overtime.
A better user experience
Jet Airways chose SAP R/3 for Finance and Material Management in 1999. In 2004-05 it migrated to mySAP 4.7 and decided to extend the SAP footprint into other areas. The airline wanted to extend the system’s footprint with additional modules such as HR, BW, Payroll, Plant Maintenance, Funds Management and the reimplementation of existing modules FI, CO, TR-TM, MM.
The decision to extend the SAP footprint, including adding airline-specific modules was based on the company’s comfort level with SAP as well as the ease of integration with other existing airline specific systems such as Flight Operations System and Crew Rostering System. All this resulted in a lowered TCO.
Through the re-implementation and extension of footprint, Jet Airways sought to eliminate duplication of efforts, attain better utilization of assets and achieve better control over costs. Through the route profitability model it hoped to get a better handle on flight level costs and hence improve route profitability.
The right plan and partner
Having laid down the objectives of the exercise clearly, the company needed to decide on the implementation partner. They decided on SAP, India for a number of reasons including the desire to forge a long term relationship with a competent partner who could provide strategic guidance, favorable value-cost and exposure to global business practices.
Significantly, stakeholders, COO & VP- Finance Controller contributed immensely to the business process change, benefiting the implementation and therefore the business.
The ASAP methodology was followed and the implementation was broken down into granular phases with clear milestones. The project was managed well owing to which the implementation was completed within the expected timeframe of six months. “Clarity of objectives and senior management’s support and oversight went a long way in ensuring the success of this initiative. Other important success factors were effective project management, quality of the implementation team and expertise of the implementation partners,” added Moorthy.
Key value propositions
* Building a business intelligence platform for the organization, giving it a single source of accurate management information
* Creating a Central Data Repository meeting different departments’ requirements, enabling meaningful analytics
* Provides a holistic view of business. It brings together departmental heads to use Business Intelligence for key decision-making and changes in business processes
* Comprehensive Analytical and Strategic reporting; performance tracking on a daily, weekly, monthly, quarterly, annual basis both at micro and macro level
* Sales: Jet Airways is now in a position to tackle its distributors with their data within a short period and can negotiate deals with them to generate additional revenue
* Marketing: The system enables the airline to take up new initiatives which are demographic-specific. An example is that the company has been able to develop good content for its Interactive In-flight Entertainment system
* Revenue Management: Weekly monitoring of revenue generation Point-of-sale wise
Benefits: Streamlined reporting and better decision support
This project has been crucial in delivering a mechanism to measure each flight’s performance and taking decisions, especially in the dynamically changing and challenging conditions of the Indian aviation industry.
In terms of strategic benefits, there were several the most noticeable being in the areas of Revenue Generation, Cost Savings, and Customer Experience.
Moorthy said, “The time required for Financial Closure was reduced by 50%. The MIS reports that used to take a week’s time after the closure of that week is now done in three days—the weekly and monthly MIS timelines reduced by 33%.
The implementation has resulted in smooth functioning of its operations, and aids in faster decision-making—today this tool is used in meeting rooms online by the management where facts and figures are discussed by screening the information as per requirements with various permutations and combinations, and not by using static reports as used to be the case.
This has helped the management take immediate corrective steps on any non-performing flight or non-performing revenue source as they have the ability to scrutinize data at a granular level. This has resulted in revenue generation, cost savings and therefore better operational efficiency in the airline business. Additionally this project has helped not only in marketing new schemes in select key areas to enhance revenues but also more importantly to check the effectiveness and also measuring them in monetary terms. This tool helps Jet Airways to react and decide faster with initiatives which are strategically aligned with its business objectives. It has given precise insight into untapped revenue generating markets.
Moorthy said, “40% of the airline costs which are incurred due to fuel and access fee to Airport Authorities are minutely tracked. This data is used for vendor reconciliation or for spotting anomalies. It has also proved useful in measuring the aircraft-wise performance in terms of direct cost incurred by the aircraft. Due to this project, we have realized time savings of up to 95% for management reporting on behalf of the IT, MIS and user’s time.”
The system being centralized and accessed by people from within India and abroad has made information available online and removed reconciliation time and efforts. “SAP has streamlined our back-office functions including Finance, HR & Payroll, Materials Management, Plant Maintenance and Ground Support Equipment and Maintenance leading to quantum improvements in both timeliness and accuracy,” said Moorthy.
author of this article : akhtar.pasha@expressindia.com
Source : http://www.expresscomputeronline.com/20080414/management01.shtml
