The Uptime Blog
Boeing and Airbus are fierce competitors; it’s a well-documented fact. What’s not well-documented is their competition with the rest of the aviation industry. Boeing and Airbus compete on the following fronts: with each other, for big deals; with smaller OEMs, for smaller deals; with PMA manufacturers, for spare parts; with 3rd party MRO shops, for maintenance/repair business; with their own airline customers, for maintenance/repair business; with independent software vendors (ISVs), for the technology that drives MRO and parts decisions. Boeing and Airbus apparently compete with (almost) everybody in the aviation ecosystem.
Why do I bring this up? Because once you look past the quality of their airplanes, their products are just not that good. Certainly most airlines know more about what it takes to keep these airframes flying than the OEM does. Most airlines know more about what they need out of their IT systems than the OEM does as well. But the OEM marketing messages make it sound like they can solve any airline problem and their sales force makes offers that the airlines “can’t refuse.” Just remember, caveat emptor (buyer beware).
What’s becoming more clear is that Boeing and Airbus have done a masterful job of hiding their true objectives, which seem to be aimed at limiting access to aircraft maintenance manuals (AMM), illustrated parts catalogs (IPC) and other critical information…unless the airlines agree to use the OEM’s proprietary MRO and tech pubs solutions. Contrary to their public affirmations about being good corporate citizens, they appear to have no interest in cooperating on initiatives with vendors, customers or standards bodies (like ATA). I’ve now had several conversations with ISVs that tried to partner with the OEMs to improve operations at joint airline customers however, the OEMs told the ISVs…no. (I’m being polite about the “tone” of the OEMs’ rejection.)
This mimics what was said at Aviation Week’s MRO Americas 2011 Conference. During this event there were a number of senior airline executives publically expressing their displeasure over the tactics employed by Boeing and Airbus. (Here is a link to our blog about that conference.) Many IT vendors, including some of the largest in the world, also voiced complaints about the challenges of working with the OEMs. The OEM policies make it difficult for airlines to deploy fully-integrated solutions. Without the ability to integrate each IT component (i.e., MRO, ERP, SCM, ECM, tech pubs, configuration management, etc.) and make them readily accessible (to engineering, planning, logistics, hangar/line mechanics, etc.) the airlines cannot drive down costs and increase uptime. (Here’s a blog about Gartner’s report on KAL’s integrated system and a report on KAL’s presentation at an Aircraft Commerce event.)
Last spring I met with a senior ATA executive to discuss the OEM role in maintenance IT systems. Once we examined the OEM strategy from several perspectives—maintenance schedules, service revenue, parts selection/sales, inventory management—this ATA executive began to understand why many ISVs view Boeing and Airbus as competitors.
The competitive situation with the OEMs was highlighted in a recent article from MRO Global magazine (p. 12), “…it is hard to see the aftermarket remaining independent of the OEMs and this will lead to lack of data and choice for the operators on a scale not imaginable just ten years ago. Once the OEMs control the data then there is no going back.” The article continues (p. 14), “[Ronald Schaeuffele, CEO of Swiss Aviation Software] adds: ‘When Airbus delivers a new aircraft, the documents delivered with the aircraft – including the component list of the aircraft – are completely different from those Boeing delivers. The two manufacturers don’t seem to communicate on this issue; they don’t seem to be preoccupied with the data format of information they provide.’”
Contrary to this quote (above) Enigma’s experience indicates that the OEMs are very preoccupied with data formats, management and control. In fact, the negative impacts of the OEM strategy were highlighted at a SAP user group meeting for airlines (SUGAIR) back in 2010 (as reported in this blog). Clearly the OEMs know that aircraft MRO data is the key to increasing their aftermarket revenues. If OEMs control the data and IT systems used by the airline, they can lock-in parts and service business and set whatever price they desire. And while regulations require this same MRO data be provided to airlines so they can use it independently, the OEMs seem to be looking for ways to avoid this responsibility.
Fortunately, Enigma can cope with almost any data format, regardless of how bad the OEMs try to make it. While we would prefer clean standardized data, it appears that’s not part of the plan at Boeing and Airbus. As a result, airlines that recognize the value of MRO information—for providing competitive advantage around cost, service and asset utilization—are actively seeking out tools like Enigma as a key enabler of their strategic plans.
Unless car dealers pay an extra $1,200/year, Reynolds & Reynolds will hold their data hostage. Reynolds makes dealer management systems (DMS); a DMS helps dealers manage customers, parts inventory and service schedules. Dealers often allow trusted vendors and automotive OEMs to access the data within their DMS. They do this to simplify part sales using various online marketplaces and to accelerate sales reporting back to the OEM. (Dealers get incentive payments from OEMs when they “wholesale” parts.)
In a story from Automotive News, Reynolds admits they’re restricting the dealer’s strategic partners from accessing the DMS data. “Reynolds said data security is the reason that it has begun prohibiting third-party vendors from directly accessing the DMS of its dealer customers unless they have been certified by Reynolds. Without Reynolds certification, a third-party vendor can take as much or as little data from a dealer's DMS as the vendor chooses, without any way of verifying what was taken, [Reynolds spokesman Tom] Schwartz said. Reynolds refuses to allow that to protect consumers. ‘The data belongs to the dealers. We all agree on that,’ Schwartz said. ‘But we can't have people rooting around in a dealer's DMS. That creates a liability.’”
In other words, Reynolds is claiming to protect the dealers from themselves. This sounds similar to Big Brother from the book Nineteen Eighty-Four and raises the question, isn’t it up to the dealer to evaluate things like risk and liability? As one customer was quoted as saying, “It’s my data and our server.”
However, Reynolds does offer a solution. They’re willing to sell dealers an add-on software module, for $100/month, to ensure the security of the DMS data when accessed by an outside vendor. Reading the story carefully, it seems the real issue is that Reynolds doesn’t want companies that use competing products (specifically those from their direct competitor, ADP) to be able to access the data stored inside the dealer’s DMS. Reynolds wants to play a role in any parts or service transactions, so they’re squeezing their customers to get a piece of the action.
Why do I bring this up? Because dealers (and OEMs and vendors) can’t maximize profits unless software products exchange data seamlessly. For example, integrating an electronic parts catalog (EPC) with a DMS allows the dealer’s service advisors to quickly identify required parts and procedures, determine inventory availability and issue a repair order (RO). However, without integration the service advisor will be required to use multiple systems, which is inefficient and error prone.
The thing is, if Reynolds would make it easier (not harder) to extract relevant information from the DMS, they would build stronger relationships with customers, rather than alienating them. According to this article, for one dealership “the crackdown is the final straw in his decision to change DMS vendors when his five-year Reynolds contract runs out in a year.” Clearly this can’t be considered a “win” for Reynolds. For companies like Reynolds, limiting access to data may seem like a profitable strategy but it carries long-term risks that outweigh any short-term gains.
Making dealers pay a fee to let others access their data is basically holding their business hostage. Regardless of the “higher purpose” (in this case, security) no dealer should allow a self-proclaimed Big Brother to dictate what they do with their own data. As Reynolds and the dealers fight for the right to control data access, let’s hope the true reason for integration—efficiency, consistency, quality, cost—doesn’t get lost in the fray.
According to a recent Aberdeen Group blog post, “Warranty and Contract Management 2011 – The Customer is the Key to Increased Revenue,” their research shows that nearly half (43%) of service organizations surveyed said that their top goal for 2011 was to increase revenue, rather than to decrease costs. The blog also notes, “Instead of being focused solely on cost containment, service organizations have looked to customer satisfaction as a key factor to the success of the business …”
For many OEMs, their field service teams are busy fixing products that are under warranty. But what happens when the warranty expires? Unfortunately, customers often switch to third parties to have machines repaired or parts replaced. Since post-warranty service agreements can cement customer relationships and lock in service and parts revenue, OEMs must figure out ways to maintain their customers and get a bigger piece of the aftermarket pie.
OEMs that miss out on long-term service level agreements (SLAs) risk losing the following:
- Recurring service and parts revenue
- An important communication channel to customers
- Control of customer satisfaction and brand perception
Aftermarket parts and service represents the most profitable piece of an OEM’s business. Failing to lock-in this revenue stream can have significant consequences for OEMs. However, even in cases where the OEM can’t get an SLA signed with the customer there are things they can do to improve the aftermarket picture.
For OEMs, having clear channels of communication to their customers is critical. It is never enough to rely exclusively on a customer support center, especially since some customers will choose other aftermarket service providers. One of the best ways for OEMs to proactively keep in touch with customers is to distribute an online field service catalog that integrates with the customers’ IT systems and is affordable, easy to use and accurate.
To improve customer satisfaction and brand perception, OEMs must ensure equipment is properly maintained. This means providing accurate service and parts information to call center reps, field service technicians and in some cases third-party service providers. It sounds simple, but given that OEMs frequently modify prices and procedures it takes a sophisticated software application to assemble, manage and distribute the information so that it is always accurate and accessible.
OEMs that provide such an aftermarket solution empower their field service technicians (or owner/operators) to fix equipment more quickly and accurately, resulting in less equipment downtime. That leads to happier customers and better brand perception, as well as a greater share of post-warranty parts and service revenue.
Manufacturers (OEMs) often revise service and parts information for their products, and need to distribute those updates to their dealers, owner/operators or service organizations. Traditionally this has not been an easy process for the OEM's product support organization. On the other hand, product updates can be a burden on dealers, owner/operators and service organizations as well. A further complication for everyone is that revised information must be implemented in online and offline environments, since field service typically needs both. Therefore, OEMs, dealers, owner/operators and service organizations need fast, frequent updates of service and parts information that requires almost no effort.
Because of the difficulty in achieving this goal, most OEMs simply “republish” all of the service and parts information on a quarterly or bi-annual basis. This causes three problems:
- There may be a long delay between the time when new parts and procedures are approved and when they are received by the field.
- Critical information like recalls, service bulletins and sales promotions must be handled separately, and often they do not get integrated with the existing service and parts libraries. (i.e., information gets stored in multiple locations in the field.)
- Because there are large amounts of data, dealers, owner/operators and service organizations may delay installing the latest revisions into existing processes. (i.e., OEMs cannot be sure if, and when, updates are being put into practice.)
Another approach is to republish complete service and parts libraries more frequently (e.g., every day or every week). OEMs that use this approach require dedicated computing resources to execute this process and, even so, the burden on field organizations to inplement all this data will cause most of them to ignore many of the updates. Rather than re-send entire service and parts libraries, whether quarterly or weekly, most companies would prefer to send only the information that changed. The problem is that many OEMs cannot reliably identify and isolate every change to the service and parts content, so field organizations are left wondering if the new data is complete and accurate.
To address these issues, Enigma’s Revision Manager technology has been implemented as part of the InService EPC update process. With Revision Manager, Enigma does the work of identifying and isolating changes. It automatically generates an incremental update package of service and parts information that contains only the data that has been modified. Revision Manager compares the latest version of product information against the version that is currently deployed, and generates a list of differences. These differences are recorded in an XML file that specifies which objects (documents and images) are new, which were deleted and which were modified. In addition, the table of contents (or catalog “structure”) from the new update package is compared to the currently deployed catalog to ensure the updated catalog has the proper user interaction and workflow. In most cases, an incremental update of the service and parts catalog is built and ready for distribution in minutes.
InService EPC’s Catalog Manager then creates an update package that can be distributed to the Web and to the field, allowing those catalogs currently in use to be quickly revised so they reflect the latest product information. The result is smaller, faster and more accurate update packages that are easier to deploy and install.
Enigma InService EPC’s Revision Manager and Catalog Manager technologies help OEMs ensure that dealers, owner/operators and field service organizations always have the latest service and parts information. OEMs no longer need to wrestle with decisions about how often they should update technical content because InService EPC removes virtually all of the previous effort to revise a service and parts catalog.
For more information, download our fact sheet on “Keeping Service and Parts Catalogs Current.”
In late October, Aviation Week hosted an event in Chicago called MRO IT. I saw about 150 people in the opening keynote speech, with the audience consisting of software vendors, airlines, manufacturers, consultants and analysts. (It looked like the software and consultant audience outnumbered the airlines and OEMs but I may be mistaken.) In some ways this event felt like the game “musical chairs,” where a few people in the audience would walk to the front of the room to give a presentation, and when they were done they would sit down and the cycle would repeat. One issue that may have limited attendance was the timing; AvWeek scheduled MRO IT during the same week that Aircraft Commerce held a similar event in Singapore. For anyone already committed to the Singapore show, that made travel logistics difficult. (I only met one person who attended both.)
Jim Keenan, SVP of United Technical Operations delivered a strong opening keynote address. United is currently focused on getting their single operator certificate (SOC) and integrating systems, processes and labor forces. He laid out a general plan for United covering 2011-2015, aimed at overcoming fragmented data, systems and processes that still exist within (and between) United and Continental. One area where he has concerns is preserving/supporting United’s 3rd party MRO business. Speaking in general terms, Keenan estimates there is $45B in annual waste within the MRO industry. (This was just an estimate, not a scientific analysis.) Furthermore, he estimates that 50% of the waste is due to processes, and 50% is due to systems and data. Fixing a $45B problem requires some creative thinking and powerful software (and Enigma has both).
There were a number of other interesting and thought-provoking presentations, but the one that generated the most discussion and comments was a panel of airline execs titled, “Enterprise Content Management: Planning for the Future while Supporting the Past.” The panel had representatives from American Airlines, FedEx Express and United Airlines. They discussed many topics, from the persistence of PDF, to breaking the paper paradigm (i.e., “pages”), to more flexible data formats, to end users needing a consistent UI (workflow and experience). One panelist pointed out that to reduce IT costs airlines must have systems that support multiple data formats and specs. Another suggested that PDF is used because it can be viewed on any device, but also noted that PDF is difficult to leverage within the maintenance and IT environment (for add-on value).
However, the topic that drew the greatest response from the audience and panelists was S1000D. According to one speaker, to really improve the MRO IT environment—now and in the future—it is critical to separate the debate about S1000D into its component parts. The first and most important issue is to get all technical content into XML format (i.e., no SGML, no PDF, etc.). Once the data is in XML, the panelists felt airlines are smart enough figure out the integrations they want/need to extract value. They felt that compliance with S1000D is a secondary issue that must be examined on a case-by-case basis—tied to business value—and that for a large number of use cases converting to S1000D cannot be cost-justified. (i.e., for the cost involved there’s simply not enough value.) Given that over half the MRO IT audience appeared to be in the business of converting airlines to S1000D, these comments made a lot of people unhappy.
To address this topic head-on, for ECM the only way to plan for the future while supporting the past is to provide tools that do both. Enigma InService MRO works really well with iSpec 2200, S1000D or just about any other standardized or customized spec you may choose to employ. Airlines and MRO shops around the world have selected Enigma because it supports the past and the future, allowing them to control their own destiny rather than having it forced upon them by an aircraft or engine OEM or software vendor. The debate that MRO IT raised regarding S1000D wasn’t so much about whether the spec was good or bad, it was about asking the real-world questions of how much data should be converted, by whom, when, where and why? Data that conforms to S1000D is a good thing, but if airlines and MROs aren’t careful they could spend a lot of money and yet gain very little.