Flights of fancy based on unrealistic expectations often end up in a crash landing. The operator of Munich Airport, Flughafen München GmbH, (FMG) has done well to avoid this experience. The company, which runs Germany’s second largest airport, trusts in integrated and flexible enterprise planning with SAP Business Intelligence (SAP BI), which is based on hard facts: How have passenger volumes, sales, and revenue developed? How high is the energy consumption per passenger, and what costs are generated if new employees are hired in baggage handling? Planning data such as this is the basis for expanding the airport to meet requirements, and to strengthen the importance of Munich for international air traffic. At the moment, the airport, which more than 24 million travelers pass through each year, is at number 8 in Europe, and 33 in the world.
FMG, which is financed by the state of Bavaria, the Federal Republic of Germany, and the City of Munich, achieved sales of 623 million euros in 2003, and employed around 4,500 people. The company has to finance the expansion of the airport from its own profits, and without the help of public funds. SAP BI is helping the company to deploy its financial resources effectively and profitably. FMG uses the solution to plan and record complex processes relating to the operating of both terminals, and the effects on the company. The planning process is clear, and the data is verifiable and consistent. The solution provides information on who entered what data, and who still needs to provide information. Using information from central controlling, such as data on general inflation rates, cost targets, or sales forecasts, all cost centers can conduct their planning on a uniform basis. The planned values are more reliable than in the past, leading to acceptance within the company and increasing their benefit as a controlling instrument.
The business units are more tightly integrated in the planning process. For example, special functions show department managers what costs are generated for their area if they take on new employees. As the business units automatically send detailed data to central controlling, business managers quickly receive the necessary planning figures, which can then be coordinated at an early stage. Unrealistic planning assumptions and requests are therefore revealed as such before planning has been completed, and blanket reductions are thus a thing of the past. SAP BI also improves data interchange and communication on a common basis between the areas that, as profit centers, have a business relationship with each other as a result of intercompany billing. The planning process is much shorter than in the past, because planning data is available more quickly, and can be used immediately in reports.
Seamless integration for reliable planning
Before the implementation of SAP BI, FMG carried out its planning using several non-integrated applications. As a result, the company did not have a standardized set of data that all those responsible for planning could use. The primary task of central controlling was to draw together the individual plans. This largely manual process was not just time-intensive, but also susceptible to errors. Another disadvantage: the results of planning could only be presented once all planning work had been completed. The late offsetting of costs and revenue, in particular, made efficient planning difficult, and at business unit level even impossible. In addition, the heterogeneous applications provided no support for implementing strategy aims, because they did not enable targets for individual planning units, such as cost centers, to be mapped.
In its search for an integrated planning solution, FMG looked into applications from a number of vendors. The company elected to use SAP BI because the solution offered the required functionality with a good price/performance ratio, and could be easily integrated into the company’s SAP landscape. This guarantees a consistent data basis – the prerequisite for effective planning – with minimal interface maintenance. For FMG, integration is a key argument – after all, three quarters of its planning data comes from SAP applications, the rest from non-SAP systems. FMG has been working with SAP R/3 since 1993, for example for financial accounting, controlling, sales and distribution, materials management, plant maintenance, and investment management, as well as various SAP custom developments that support air traffic accounting, for example.
Full speed ahead for business content
With the implementation of SAP BI, FMB profited from the business content that SAP also provides. While the company modified the predefined processes, it was able to use large parts of them in order to quickly build the data warehouse structures, in particular. Nine months after the project started, the enterprise-wide short-term planning went into productive operation in July 2002. The 200 or so users are finding it very easy to work with the solution. The general opinion is that it is practically self-explanatory and easy to use, because of the user-friendly planning folders and other features. One important advantage is that comments can be entered for planned values, so thanks to this function, fewer queries are necessary.
In 2003, investment planning, personnel planning, and medium-term planning were implemented to supplement the short-term planning including profit and loss calculation. Since then, long-term planning has been added as well. A further milestone was the environmental protection information system, which FMG implemented at the end of 2003 with SAP BI. The company uses this solution to gather environmentally relevant information from a number of different sources and evaluate this in order to determine areas in which energy can be saved. The system also helps to calculate the nighttime flight noise based on current flight data. In 2004, FMG is planning to improve the strategic controlling of the business units with a balanced scorecard approach. This breaks the strategy down to operational unit level, and provides measurement items that can be used to determine how far targets have been achieved. Overall, FMG wants to expand SAP’s Data Warehouse into a management information system that also manages all data relating to aviation business.
Return on investment of 182 percent
FMG uses SAP BI to collect a wide variety of data from the whole company, and as a result, is able to react more quickly and effectively to market changes. This improves the controlling options for complex and asset-intensive airport business.
The investment in the integrated planning solution has also paid off from a financial perspective. FMG achieved a return on investment of 182 % with SAP BI in a five-year period. The amortization period is 35 months, and the net present value is around 900,000 euros, taking account of an internal rate of interest of 7.5 percent. The value contributions calculated using the net present value are due primarily to optimized reporting functions and the consistent and rapid monthly and annual planning.