Enigma and Korean Air at MRO IT conference in Bangkok, Thailand
From left: Yeon-Kweon Lee, Deputy General Manager, Korean Air; Asher Gabbay, VP of EMEA & APAC, Enigma;
Sung-Yeon Park, Deputy General Manager, Korean Air

Last week I attended the Airline & Aerospace MRO & Operations IT Conference in Bangkok, organized by Aircraft Commerce magazine.

This show, which focuses on IT solutions for the airline MRO business, was held for the first time in Asia. (It’s been held in Europe for a few years now.) For the most part, airlines in Asia are growing faster than their counterparts in Europe and the US, and most are in dire need of IT solutions to support this growth. As a result, Aircraft Commerce magazine made a smart decision to add an Asian venue for this show. My impression is that the decision paid off. Throughout the two days of this event, attendance at sessions and exhibition floor “traffic” surpassed those of the European show (held last June in Frankfurt).

About twenty companies were present on the exhibition floor, primarily comprised of the “usual suspects”—mostly small- to mid-sized vendors. Conspicuously absent were the two “gorillas” of the MRO IT market: SAP and Oracle. In the future, if the show organizers wish this event to become significant for the industry, SAP and Oracle need to be there. This will attract bigger airlines and will highlight a critical decision facing many airlines and MROs: whether to choose an ERP-based MRO solution or a best-of-breed MRO solution?

This issue came up several times during the conference but the absence of the big ERP vendors made it a lopsided debate, with the niche MRO vendors continuously bashing SAP and Oracle. In most cases, the rhetoric was nothing more than preaching to the choir (i.e., competitors and small airlines that don’t think they can afford an ERP solution anyway).

One exception was a presentation by Bill Lewis, the former “interim CIO” of Abu Dhabi Aircraft Technologies (ADAT). Mr. Lewis spoke passionately about the “500-day journey” to implement Oracle cMRO at ADAT. His main message was that an ERP-based MRO implementation should not take years, as is the case at so many airlines. But when asked why ADAT chose Oracle and not SAP, Mr. Lewis had a strange response. According to him, cMRO is “five years away” from being a competitive alternative to SAP MRO, and that currently it only covers 60% of required MRO functionality (compared with 95% coverage by SAP/iMRO—the joint SAP/HCL-Axon solution). These comments seem somewhat disingenuous because cMRO is either a fit for ADAT or it isn’t, and since he was involved in the decision something seems amiss. Assuming ADAT selected a product that meets the needs of their business, it is impressive that it was implemented successfully in a year and a half, and Mr. Lewis should be congratulated. On the other hand, if ADAT selected a “half-baked” product that has many gaps, it leaves in question the IT leadership for this decision. I guess we’ll need to wait and see how the solution works after the scheduled “go live” later this year but either way, 500 days to implement a working ERP-based MRO system is impressive. Suspiciously so.

Mr. Lewis made one particularly interesting point. It seems that ADAT analyzed all the tasks performed by an MRO organization and broke them down to thousands of processes. What they discovered was that almost every single process has a “touch point” with a maintenance document—an OEM document, an ADAT document or a regulatory document. His conclusion was that no MRO IT implementation is complete without a “digital documentation” solution. A message Enigma has been speaking about for many years.

Another frequent topic during the conference was “the blame game.” It is standard procedure for some airline representatives to blame the IT vendor (or the system integrator) for project delays and unexpected additional costs. But more experienced (and perhaps more honest?) airlines admit that the blame for delays deserves to be shared. M&E departments are typically conservative—the result of regulatory oversight and the long tenure of many MRO engineers. Change is difficult for any organization, but resistance to new IT systems seems more prevalent in an MRO environment. Combine these factors with the general complexity of enterprise IT implementations and the classic issues will inevitably delay the roll-out: inability to properly define project scope and requirements; difficulty “drawing the line” on supposedly critical functionality (that can’t be disregarded); unwillingness to change old work methods; and unreasonable expectations from a “phase one” solution. To avoid these problems, airlines/MROs and technology providers/integrators must work together to keep the project on time and on target.

Starting next year, Aircraft Commerce plans to hold a show in the US as well. With global coverage, this can become the premier event for airlines seeking MRO IT solutions.

Service Transformation: that’s what Oracle calls its initiative to help manufacturing companies and maintenance providers improve their aftermarket sales and service business. There were more than 20 different sessions at OpenWorld 2009 that focused on the needs of, and opportunities for, manufacturers and service providers. Topics included: maintenance planning, maintenance execution, asset management, configuration control, knowledge management & retention, customer support, field service, advanced visualization, diagnostics & troubleshooting, spare parts planning, logistics, warranty, service contracts, demand planning, compliance and collaboration.

Clearly, Oracle recognizes the huge opportunity that exists for improving aftermarket processes. In every industry, companies are coming to the realization that they have been taking their aftermarket business for granted, allowing 3^rd parties to thrive in this lucrative space. These companies recognize that aftermarket growth, and the high-margins that go with it are critical to restoring profits. More than a short-term fix, a rejuvenated aftermarket will sustain these companies far into the future.

Oracle has articulated a strategy that is designed to capitalize on the unmet needs of the aftermarket, providing solutions that streamline business processes, accelerate parts and service decisions, and maximize equipment uptime and productivity.

For instance, Oracle presented an entire session on the topic of Service Transformation for Manufacturers. Within that session, numerous examples were cited of achieving increased part sales, decreased repair times, lower inventory requirements, and higher customer satisfaction. Even companies that implement only a portion of the Service Transformation footprint, which includes partner solutions like Enigma and Axeda, have realized significant gains.

Why is this relevant? Because so many companies already use Oracle products, it’s not very complicated for them to take the next steps to automate and improve their aftermarket business. The beauty of Oracle’s Service Transformation strategy is that it is flexible enough to be implemented all at once, or in pieces. Enigma is proud to be an Oracle Partner and pleased to be associated with the Service Transformation initiative. Clearly we are no longer the only vendor advocating for aftermarket excellence.

There’s an elephant hiding in the corner of every airline hangar that performs maintenance (or that manages a 3^rd party MRO). That elephant is the technical information from Boeing and Airbus—maintenance manuals, parts catalogs, service bulletins, etc. In the September 28 issue of AviationWeek, Robert Wall decided to shine a light on that elephant and what he said should interest everyone in the aviation community. According to Wall, “Industry officials fear manufacturers are looking to recapture more revenue through dubious practices. Already, there is concern about intellectual property for technical data on aircraft such as the Boeing 777, 747-8, and Airbus A350, says Lufthansa Technik CEO August Wilhelm Henningsen.” If OEMs make it difficult to use their technical information, through litigation, contractual limitations or expensive licensing then airline costs will rise—and so will passenger costs.

Is it ethical for an OEM to sell a product, and then require you to pay for the manuals that go with it? Last year we highlighted this topic twice: The Future of Airline MRO Technology and The Future of Airline MRO Technology – Part 2. The issue boils down to this; should OEMs be allowed to limit access—or charge outrageous fees—for maintenance information and recommendations? (We’re not talking about secret design data, just maintenance and safety info.) If this practice is allowed, then airlines that want to maintain their own airplanes will find it difficult to do so. (The reason airlines perform their own maintenance is because, after a few years of service, they know each airplane better than Boeing and Airbus.) In addition, if an airline wants to use a properly licensed 3^rd party MRO, that MRO will have more difficulty getting the proper maintenance information than the airline. An industry official quoted by Wall says, “…MRO businesses with a link to an airline can ensure that access to intellectual property is part of any aircraft purchase decision. However, he adds, independent MRO companies would not have that leverage.” This is true to a point; it may turn out that small airlines are a lot like MROs in that they don’t have the necessary pricing power to guarantee access to maintenance info.

Now that we can all see the elephant in the hangar—OEM data—it’s time to admit that Enigma can’t fix this problem; we can only offer a workaround. As aircraft owners, the OEMs must give airlines certain technical information. Even if they only give you PDF data, rather than the richer SGML/XML data they use for authoring documents, you should receive basic maintenance info. With that, regardless of the data format, Enigma InService Job Card Generator can help you automatically generate customized, step-by-step job cards that tell mechanics exactly what they need to do to fix the airplane. These job cards can be generated in minutes rather than months and can be immediately used in your own hangar—or to provide detailed instructions for a 3^rd party MRO.

It’s unfortunate that airlines are now in a situation where they must question whether OEM suppliers are truly their business partners. Long-held relationships come under tremendous strain when one partner starts to question the motives of the other. Suddenly business practices that had been accepted for years get re-interpreted through a strict legal lens and everyone starts to cover their own derriere. In times like this, it’s important for airlines to know that Enigma remains true, and is committed to your success in spite of questionable OEM tactics.

What’s the difference between shopping for service parts on the NAPA website and shopping for parts at an OEM website? Not much according to research by Carlisle & Co. Both web sites seem to be aimed at parts experts, who already know what they want. Contrast that to AutoZone, where the user experience is clean, crisp and efficient. (Comparing AutoZone, NAPA and GM, AutoZone is clearly the easiest website to figure out.)

Now I can already hear the complaints, saying that these web sites are aimed at different markets: AutoZone is for the do-it-yourselfer (DIY), NAPA is aimed at independent repair facilities (IRF) and GM is aimed at GM dealers. My answer to that, “So what?”

So what if dealers are forced (incentivized) to buy from OEMs and if IRFs (think they) know the parts they need and just want it cheap, is that any reason to make finding parts and service information tedious and slow? (Never mind NAPA’s blatant attempt to keep our interest through bright colors and racing blogs.) Most visitors to parts web sites just want a fast/easy way to find the right parts and information to make a repair.

So what did Carlisle have to say? “Now, go to the NAPA website and get ready to time travel back to Jobber World. It almost looks like it was designed in the 1950s…” and “NAPA is getting slammed for not evolving its channel…” Unfortunately, after slamming NAPA for being behind the times Carlisle offers some poor advice for OEMs: “Unless your dealer parts departments look like an AutoZone store (BTW, they don’t), don’t bother chasing them. Focus on dealer service retention and wholesale.” I take this comment to extend beyond the service desk per se and to include the parts website as well. (In the OEM world, the equivalent of a parts website for their customers is the online parts catalog, which is often only available to dealers/distributors.) Carlisle implies that dealers won’t care about the online service parts and information experience – the electronic parts catalog. However, our OEM customers have indicated that their dealers do care about these things; that’s why they’re our customers.

Carlisle’s blog almost implies that it’s OK for OEMs to get complacent while watching AutoZone take down NAPA because they’ll still have the dealers. But for how long? Eventually, these modern parts stores will move beyond the DIY market and start gunning for the dealer and wholesale business. And unless OEMs change their strategy these parts outlets are bound to make some inroads.

OEMs can improve dealer support and they can branch out to compete at the IRF and DIY level. Make it easy for people to find the parts and information they need to fix equipment and you will capture lost market share and position yourself for the next round of e-business. Our customers have proven it.