Recent global trends such as rising fuel prices and new regulations on carbon emissions present particular challenges for the airline industry. And these external factors have a dramatic impact on the bottom line: The International Air Transport Association predicts a 46% decrease in world airline profits for 2011, mainly due to a spike in the price of oil.
To remain competitive and cut costs, airlines must run efficiently, and not only when it comes to carbon emissions. Companies must also be able to make the right business decisions quickly, respond to customer demands, retain loyal customers, and streamline maintenance and repair management.
The SAP for Transportation & Logistics solution portfolio for airlines supports these core business processes primarily with SAP ERP and Customer Relationship Management (CRM) applications. Planned innovations should further enable airlines to meet industry-specific needs.
In this article, we provide you with an overview of the current functions of SAP for Transportation & Logistics for airlines and a preview of the planned innovations.
Structure of SAP for Transportation & Logistics for Airlines
The SAP for Transportation & Logistics solution portfolio for airlines organizes the industry’s core business processes into four main categories: Finance and analysis; maintenance, repair, and overhaul; sales and marketing; and human resources. The solution portfolio provides the necessary technical support to carry out these processes, integrating add-on functionality delivered by SAP partners where necessary. Here we provide an overview of the solutions currently available for airlines.
Finance and Analysis
Managing risk and complying with regulatory mandates, such as global trade regulations, are essential requirements for airlines. Revenue management and insight into route profitability help companies reduce costs.
- Financial and operational performance: The SAP ERP application provides airlines with the financial insight to effectively distribute resources, improve financial planning, manage performance, and control corporate spending.
- Revenue Management: Lufthansa Systems AG, an SAP partner, enables industry-specific revenue accounting. It is based on the SAP NetWeaver technology platform and is well-integrated with the ERP application.
- Risk and compliance: With SAP, airlines can ensure that they meet global trade regulations and avoid financial and operational risks.
- Route profitability: SAP BusinessObjects provides a template for profitability analysis that helps airlines determine the profitability of a route within a given time period, compare the profitability of various routes, and decide whether to add, change, or eliminate routes. The template is industry-specific and can analyze data from both SAP applications and external sources.
Airlines must frequently check equipment for safety and carry out service and repairs efficiently. New environmental regulations make tracking carbon emissions and improving sustainability a priority.
- Maintenance, repair, and overhaul (MRO): The SAP ERP application, combined with the iMRO add-on from SAP and HCL AXON, enables airlines to optimize the availability of aircraft by coordinating flight schedules with regular equipment maintenance. Collaboration with suppliers and support for inventory management further reduce aircraft downtime.
- Sustainability and carbon management: The SAP Carbon Impact solution enables companies to measure carbon emissions and other environmental impacts and helps them identify ways to reduce costs by saving energy. Airlines are better able to keep up with ever-changing regulations on carbon emissions.
Sales and Marketing
Airlines need to focus on managing customer relationships. Insight into sales and marketing helps companies retain loyal customers and gain new ones.
- Loyalty management: By offering loyalty programs, companies can build long-term relationships with customers. The SAP CRM application includes a component that helps manage membership, incentives, and rules for such programs. Airlines can offer points or miles to repeat customers, and customers can redeem rewards, such as free or discounted flights, through a web site or call center.
- Sales force management: A well-organized sales workforce is better able to find new ways to speed up buying decisions and improve productivity.
- Sales and marketing analytics: With accurate insight into customer behavior and sales data, companies can determine the effectiveness of marketing campaigns and sales processes and also make predictions based on factual information.
- E-commerce: By putting their entire sales process online, companies reduce the cost of sales and reach more customers.
- Marketing campaign management: Companies are able to plan, develop, and execute marketing activities from one platform, which helps marketing teams gain complete business and customer insights.
Human resource management helps airlines perform essential workforce tasks, develop and retain talent, and match employees to the right job.
- HR and payroll: SAP streamlines HR data management by consolidating all workforce-related processes on one platform.
- Talent management and workforce scheduling: The SAP ERP Human Capital Management solution helps companies support employees at every stage: from recruitment through training, development, and retention.
Next Page: Innovations for Finance and Maintenance
Innovations for SAP for Transportation & Logistics for Airlines
The airline industry can expect to benefit from various innovations planned for the SAP for Transportation & Logistics solution portfolio. Some of these innovations are already implemented, such as the enhancements to iMRO, the maintenance solution for airlines; others are still in the planning stages. Read on to learn about the innovations in more detail.
Innovations for Finance and Analysis
SAP BusinessObjects EPM supports profitability analysis for airlines and now interfaces better with SAP BusinessObjects Business Intelligence. Thanks to the recent SAP BusinessObjects 4.0 release, analytic capabilities are also more tightly integrated with SAP Business Suite, including ERP and CRM applications, and SAP NetWeaver technology platform.
Future enhancements planned for SAP BusinessObjects EPM solutions include new software that will link multiple EPM applications and functions, such as planning, profitability and strategy management, and risk control.
Other innovations in the pipeline include an in-memory suite for EPM, which is expected to deliver new levels of performance for core business processes and risk-adjusted performance management. In the future, SAP will evaluate new deployment options, such as an on-demand delivery model.
The latest release of SAP BusinessObjects Risk Management offers companies increased insight into potential risks, from identification to analysis to response. Risk management includes scenario-based risk planning to prevent potential risks and pre-defined Key Risk Indicators to continuously monitor risk.
Innovations for Maintenance
Enhancements for iMRO – the maintenance, repair, and overhaul solution delivered by SAP partner HCL AXON – include a fleet management portal, tracking of non-routine maintenance requests, service-oriented architecture-enabled MRO for line maintenance, and improved logistics distribution.
A new Maintenance Resource Planning Portal for iMRO is in the pipeline. The portal should improve maintenance scheduling and is expected to provide better forecasting and planning of materials through integration with MCA, an SAP partner. Further functionality is expected to include the ability to run simulations and to access variable views and time units in the portal.
SAP now includes SPEC 2000, a set of standards and virtual marketplace developed by the airline industry, in its solution portfolio for airlines. These standards define the formats, data structure and rules for exchanging electronic purchase orders, requests for quotes, shipping messages, invoices, repair orders, and warranty claims. The virtual marketplace allows industry trading partners to display and find information on parts, pricing, repair, and availability.
SAP Carbon Impact OnDemand is now integrated with Sentilla Energy Management solution, which provides concrete measurements of software energy consumption, server utilization, and application performance.
Next Page: Innovations for Sales and Marketing
Innovations for Sales and Marketing
Improvements to the Loyalty Management solution are part of the SAP CRM 7.0 Enhancement Package 1 (EhP1), which is currently in ramp-up. Companies should be able to run more complex loyalty programs and should experience greater control over rules and rewards.
In addition, the loyalty program is now better integrated with financials, which will reduce management costs and administrative errors. Companies can support the program through a call center or web site, offering customers greater transparency of the reward system.
SAP CRM 7.0 EhP1 also delivers Real-Time Offer Management (RTOM), a new component for CRM. RTOM enables inbound marketing, a type of marketing in which the customer initiates interactions, by browsing a company’s website or contacting the call center for a service request, for example. In these situations, RTOM software suggests relevant offers that the customer is likely to accept based on past history and real-time context.
Enhancements for general sales and marketing functions are also part of EhP1 for SAP CRM 7.0, including dashboards to facilitate sales analytics. The dashboards are supported by SAP BusinessObjects and deliver insight into various sales functions, for example: sales cycles, sales rep performance, customer behavior, and the impact of marketing on the pipeline.