The 2012 ATA E-Business Forum was held in Phoenix this week and drew in almost 300 attendees consisting of airlines, OEMs/vendors, and technology providers. Phoenix was a great location with perfect weather and the topics being discussed—tablets, specs, 3D and RFID—were for the most part well-presented. The two most popular topics seemed to be: tablet opportunities in aviation maintenance; and the continuing conflict between S1000D and every other data spec.

Consistent with every aviation event this year there was a lot of talk about tablets. To listen to the technology providers, tablets represent a tidal wave of opportunity and airlines need to either buy their products to catch the ride of a lifetime or be lost under the crushing power of ridicule by being labeled old-fashioned.

Needless to say, talking to the airline attendees about the opportunity for tablets yielded a different story. Once you dig into the details you realize that each airline faces multiple potential issues/concerns including:

•    IT support of multiple tablet brands (especially for BYOD)
•    Security of airline and personal data that resides on the tablet
•    Data synchronization and update schedules (revisions vary by content type)
•    Digital signatures (most airlines aren’t yet authorized)
•    Suspicion from maintenance unions (is this a ploy for more work with less pay/fewer mechanics)

According to the airline executives I spoke to, there’s a lot of interest in tablets but how soon they’ll be willing to implement is an open question.

Enigma delivered a presentation called “Tablets on the Tarmac – More Than Mobility” that introduced a benefit that’s been largely overlooked and offers significant ROI for maintenance executives.

The other hot topic was the slow-motion collision that’s unfolding between the S1000D standard and every other data standard used for aviation maintenance and operations. Most presentations were promoting S1000D and vendors were promising to convert an airline’s legacy SGML data into the latest version with low-cost and high accuracy. (Notably lacking was any discussion about converting PDF into usable XML.)  In fact, one vendor tried to explain that they were “transforming” old data into new formats vs. “converting” old data into new formats. Despite this vendor’s best efforts, most in the audience were left asking, “You’re changing the data, which causes concerns about speed, quality and consistency, so who cares what you call it?”

Enigma also delivered a presentation called “When Standards Collide – A Unified MRO Process Across S1000D, iSpec2200 and PDF” that described challenges and offered solutions for working with multiple standards within a single MRO technical library. Many attendees claimed this presentation helped them understand why OEMs refuse to comply with standards and what airlines should do about it – STOP complaining about the lack of compliance and START owning the solution.

Based on attendee participation and detailed subject matter this was one of the better ATA E-Business Forums of the past several years. However, the ratio of airlines to vendors/suppliers is still somewhat disappointing. It may indicate that many airlines still don’t understand that controlling their data is critical to controlling their future. Since technical content is part of every MRO decision, and MRO is the second largest cost center in an airline, it’s time for airlines to get serious about managing the MRO technical library without relying on the OEMs.

In sales, there are two ways to increase revenue — Find new customers or generate more business with existing customers.

Both have merit but according to Inc. Magazine, “Acquiring new customers is expensive (five to ten times the cost of retaining an existing one), and the average spend of a repeat customer is a whopping 67 percent more than a new one.”

The responsibility for new customer acquisition typically rests with the sales and marketing team selling the new equipment, whether that is medical device equipment, cars or construction equipment. They seek out new connections to turn into customers, and hopefully into long-term accounts.  The parts and/or service department however, plays a center-stage role in driving more business with existing customers. They must develop customer loyalty, ensuring a positive aftermarket experience and manage repeat business after the initial (new customer) equipment sale is made. It’s a natural alignment of responsibility.

This is great news for parts managers. It means they can concentrate on generating outstanding results from repeat customer business over the life of the complex equipment (ie. CT scan machine, mini-van or skid steer loader). The success of earning additional revenue from existing customers really comes down to how well parts and service managers are able to execute on their efforts to deliver great service to the installed base.
We’ve found that there are two tools in the service and parts manager’s arsenal that help them get the job done: The cross sell and the up sell.

The cross sell. With the cross sell technique, parts and service reps suggest related services or products that complement the work that the customer is having performed. For instance if a customer’s backhoe is having hydraulic work done, the service and parts manager could recommend new cylinder seals, new hoses and a hydraulic pump overhaul – services that would extend the uptime of the equipment and improve performance.

The up sell. With the up sell technique, parts and service reps may suggest upgrades or more expensive items to complete the service transaction. Using the same backhoe example, the parts and service rep may suggest top of the line synthetic oil instead of standard or upgraded hydraulic cylinders, stainless steel hoses and a new hydraulic pump following an inspection showing cracks or wear.

A robust parts catalog like Enigma’s InService EPC supports the cross sell and up sell efforts of a parts and service department by putting all product and related information in one place, a knowledge library.  A core element of InService EPC, the knowledge library delivers all product data such as parts catalogs, maintenance manuals, technical specifications, warranty information, and sales collateral.

InService EPC makes it easy to identify parts, make recommended service suggestions, easily look up and recommend part assemblies or group kits, all with the click of a mouse. InService EPC gives parts and service staff access to the information they need, when they need it to cross sell, up sell, and better service their customers for all types of parts and service work so each interaction is a chance to increase revenue and improve customer satisfaction.

The 4th Asia Pacific Airline & Aerospace MRO & Operations IT Conference, organized by Aircraft Commerce, took place in Bangkok, Thailand this week.

Attending the conference were mid-to high-level managers from airlines and MROs in Asia with about 30 solution vendors vying for their attention (and future IT budgets). Conspicuous in their absence were delegates from the largest airlines in the continent – the Chinese – but this did not seem to impact the lively atmosphere in both the conference rooms and the exhibition space.

The mobility “buzz” dominated the conference proceedings, with EFBs (Electronic Flight Bags) leading the pack. I counted no less than six presentations with the words “EFB” or “iPad” appearing in the speaker summary notes. The proponents of mobile solutions also made sure they were creating a parallel “buzz” on the LinkedIn group “Aviation Service Lifecycle Management” by commenting to each other about the greatness of mobility in the cockpit. Given all this background noise, a visitor from Mars sitting in the conference ballroom would surely have reached the conclusion that the aviation industry is obsessed with one topic only: how to put iPads in the hands of pilots, and fast.

But if one were to turn from this hypothetical Martian in the conference room to an even more hypothetical fly on the wall in the exhibition room, the conclusion would have been markedly different.

When the managers and executives of the airlines actually sat down for serious discussions with each other and with the IT vendors, the issues that came up were very far from the “sexy” image of pilots in crisp uniforms holding an iPad in one hand and navigating the airplane with the other. The issues discussed were, alas, more mundane and down-to-earth: how to make maintenance mechanics more efficient, how to reduce unnecessary overhead in maintenance operations and how to make the multiple MRO IT systems work together in an integrated environment. As one sober industry executive put it recently: “The iPad is a basic, consumer product with limited built-in connectivity and content upload capability. It was never designed to be used in an aircraft environment and is not manufactured with aircraft-grade components. It is a consumer device, not an aircraft device”.

So it was encouraging to see IT and M&E managers sitting down for serious evaluation of the solutions available on the market. The hard times that have been hitting this industry for the past few years have helped introduce some rationalization in the airlines’ approach to MRO IT solutions. We no longer see extreme approaches to IT projects, with some airlines embarking on ambitious, all-encompassing, paradigm-shifting, multi-million dollar projects, with other airlines sitting on the sidelines and doing nothing for fear of change. It seems the approach today is more focused on achieving tangible results for a reasonable investment.

A welcome new vendor on the exhibition floor this year was Enigma’s partner, Oracle, offering their cMRO solution. Mr. Sook Hyun Cho, leader of the MRO ERP project at Korean Air gave a keynote case study presentation of the implementation of cMRO and Enigma’s InService MRO at the airline’s M&E organization, a project that went live almost two years ago. Mr. Cho highlighted the tight integration between the Oracle and Enigma systems, enabling KAL engineers to generate thousands of job cards daily. He stated KAL has met its project goals and can already boast efficiency improvements in MRO operations.

Kudos to Aircraft Commerce for organizing another successful Asia Pacific event.

Original Equipment Manufacturers (OEMs) and their dealers have long had the type of relationship that needed nurturing to thrive. Quite simply, it’s the nature of the business partnership as one organization builds equipment and the other sells and services it.

But maintaining those relationships is getting more challenging. Economic pressure on customers to get higher output and longer life out of their complex equipment has put a burden on OEMs and dealers for better equipment that’s easier to repair and cheaper to maintain.

The result has caused a fracture in the OEM/Dealer relationship. It has challenged dealer loyalty to the OEM’s parts and compromised service quality and efficiency. Ultimately OEMs are telling us that it’s costing them serious revenue. So how can an electronic parts catalog improve your OEM/Dealer relationship and ultimately business?  

One word: Control.

We’re not talking the kind of authoritarian control that makes dealers cringe at the mere thought of it. We’re referring to a well-planned, supportive program that makes it easier for dealers to do business with their OEM. Keep in mind that OEMs play a big role in helping service organizations perform to the highest standards. So, if you, as a manufacturer, control your dealer interaction – meaning access to service and parts information – then you can also control your products, protect sensitive product and customer information, influence dealer purchases and ultimately improve the working relationship with your dealer network.

Here’s how:

Processes – There are two types of electronic parts catalogs (EPCs) in the marketplace, those that support the original equipment manufacturer/dealer relationship and those that don’t. OEM-centered EPC software puts the control and interests of the manufacturer first while supporting a healthy interaction with dealers. For instance, OEMs that use Enigma InService EPC can manage their service and parts data in-house, making and distributing incremental updates as frequently as needed so dealers always support customers based on the most accurate information.

Outsourced electronic parts catalogs have a different approach. They don’t support the OEM/dealer relationship because they concentrate on the needs of dealers, ignoring the intellectual property rights of the OEM and minimizing the relationship between the dealer and the OEM. As such, the manufacturer becomes the generator of information, but loses control over publication, distribution, and usage. The outsource parts catalog vendor becomes the purveyor of the information – making money off the manufacturer’s data without regard for the manufacturer itself.

Products – Proprietary product, service and parts information has value.  Real value. OEM-centered EPC software allows manufacturers to manage and protect the use of their proprietary information.  When manufacturers choose instead to use an outsourced EPC, they are reliant on the vendor to maintain the security and quality of their data, however anytime proprietary information is shared with any vendor it puts your company’s product and customer information at risk. Since the EPC is the basis for all aftermarket parts and service decisions, outsourcing this data is a risky strategy.

Purchases – Every manufacturer wants to increase revenue through their dealers, especially in aftermarket parts where there is a growing opportunity for unrealized income. According to an SAP Whitepaper, “Best Practices in Complex Equipment Manufacturing, Sales and Service”, “With their spare parts business growing rapidly as a percentage of revenue, many complex product and equipment manufacturers have found their cost centers growing into larger and larger profit centers.”  That means that there’s money to be made (or lost) in aftermarket service and parts. Manufacturers need to control their dealer relationships to capitalize on that profit.

OEM-centered parts catalogs like InService EPC, helps dealers lookup service and parts information and then encourages direct purchase from the manufacturer by integrating with OEM online ordering systems.  On the other hand, outsourced EPCs allow and encourage dealers to search for the OEM part in the catalog and then cross reference the OEM part and price with alternate (knock-off) parts providers. Comparison shopping devalues the OEM part, undercuts the already established relationship between the OEM and Dealer and strangles a potential revenue stream for the OEM. Outsourced EPCs encourage dealers to purchase the parts from someone else!

There is no doubt that a parts catalog is a valuable tool for manufacturers and dealers alike. Ford introduced the “Ford Catalog Advantage” and quickly reduced the cost of delivering parts information to dealers and distributors, eliminated delays for implementing updated information, increased the accuracy of parts orders and improved service bay productivity at Ford dealerships.

The issue facing OEMs is whether they’ll choose to employ an EPC that helps or hurts their dealer relationship and ultimately their bottom line.

In late September, Aviation Week hosted an event in Miami called MRO IT. AvWeek claimed almost 400 people were in attendance (including exhibitors), but it didn’t feel that big. There were a lot of software vendors, a number of airlines and manufacturers, and quite a few consultants and analysts roaming the premises. (Like last year, it seemed that the software and consultant audience outnumbered the airlines and OEMs.) The presentations had some good content, but did not seem as deep or insightful as last year. On the positive side, the exhibit hall was more accessible which promoted conversations and demos.

The exhibitors represented a broad range of MRO(ish) technology vendors. PTC was a premier sponsor this year, which was curious because they seemed to be focused on pitching CAD/CAM and Arbortext. I talked to the guys manning their booth about aviation maintenance and repair but they seemed intent on steering the discussion back to technical authoring and leveraging whatever data the OEM was willing to share (which as we know isn’t much). It made me wonder if PTC was aware that airline engineers often modify the OEM’s parts and maintenance recommendations. They seemed unaware of the complexity of regulatory compliance, the challenge of aircraft effectivity, and the amount of non-OEM data that permeates every maintenance activity. Boeing had a significant presence in the demo area and was actively hyping their Edge offerings to anyone that would listen. Oracle was also well represented with their cMRO offering and the out-of-the-box integration to Enigma was viewed as a key differentiator by many attendees.

The conference presentations this year lacked the edginess of last year’s event. Last year Jim Keenan talked candidly about the challenges of integrating the United and Continental MRO systems. Also there had been a panel presentation about supporting legacy and next generation aircraft fleets, a panel presentation that challenged the wisdom of going “all S1000D”, and a closing keynote from Jim Whitehurst, CEO of Red Hat (formerly COO of Delta) about technology adoption and aviation.

In comparison, this year’s theme seemed to be all-iPad all-the-time combined with talks about the technology and security procedures needed to make it all work—on the ground and on an airplane. There were however a few presentations that got the audience thinking about how best to support mechanics and technicians.

Eash Sundaram, EVP & CIO of JetBlue delivered an informative opening keynote, highlighting the importance and opportunity of technology in the cockpit, the passenger compartment, and MRO/ operations. In his (somewhat ironic) words, technology implementation in MRO is all about “improving the most regulated organization in a deregulated industry.”

FedEx and UPS both highlighted their desire to get paper out of MRO but that caused Air Canada to ask a contrarian question, “Why?” Air Canada then went on to say that sometimes a piece of paper is the perfect content delivery tool.

A speaker from the FAA gave a presentation that reminded the audience how they create technology regulations and who/what is involved in getting certified. Basically the FAA said they were trying to write broad specs that govern outcomes, thereby allowing airlines and MROs flexibility regarding how those outcomes are achieved. The FAA leaves much of the certification decision in the hands of local inspectors to interpret the regulations to determine if a technology implementation is allowable and safe.

With regard to the usage of iPads, while a lot of conference attendees were carrying them around, many of the airlines said they were waiting for a Microsoft solution that would be better suited to highly regulated industries—offering faster adoption, more API’s and customization, and better data partitioning and security. (iPads were viewed as being too consumer oriented and insecure with regard to controlling the UI and data access.)

The best presentation of the conference however was by Alan Butterfield, VP Maintenance & Engineering for Air Canada. He delivered a straightforward, no-nonsense talk about how Air Canada is transforming the maintenance and engineering (M&E) department. Air Canada has budgeted $54M to do the task and not a penny more—if some functionality is missing after all the money is spent…oh well. (Alan said that keeps the go-live team focused on critical items.) For implementation they chose to follow the Spec 2000 standard because (even if it isn’t perfect) without strict data definitions even small deviations could slow down the project with endless debates. Another key to Air Canada’s M&E process is a rigid focus on what needs to be done, how it's done and why it's done, without ever defining which job function does it. Alan has been adamant about this distinction, even with the unionized workforce. And after much debate, and some concessions, Alan got the union to agree to the model in way that is a win-win for Air Canada and their aviation maintenance technicians (AMTs).

Aviation Week’s MRO IT conference was good but not great. I think it will be a better event next year drawing a larger audience and hopefully more thought-provoking presentations when it gets integrated with the larger MRO events (MRO Americas, Europe, Asia and Middle East).