We’ve written a couple of blogs lately about the importance of aftermarket strategy in a recession, so I’m glad to point to an article that validates what we’ve been saying, “Survival Strategies for Aftermarket Vendors in a Recessionary Economy,” published by a Frost and Sullivan analyst.

Analyst Ratika Garg writes that growth in the North American automotive aftermarket will be flat this year, but “an upside of the recession for the automotive aftermarket is that vehicle owners now prefer to keep their cars longer rather than spending a large amount on the purchase of a new car. Hence, as the vehicle age increases, it drives aftermarket repair revenues.” Garg cautions, however, that OEMs and distributors must be vigilant about finding ways to reduce costs and remain competitive. The article lists several recommendations but I’ll focus on two that resonate with Enigma.

1) Leverage Technology to Enhance Productivity
Yes, investing now in aftermarket technology prepares you for the inevitable upturn in the economy. Garg suggests that investing in inventory management is a key area; I respectfully add that it’s just as important to invest in parts catalog technology that ensures dealers/customers are ordering the correct parts to begin with. After all, the easiest way to eliminate shipping and stocking fees for mis-ordered parts is to eliminate mis-orders. Another advantage is reducing the cost of creating, publishing and distributing your parts and service information. There’s just no need to waste money by outsourcing your parts catalog. Also, OEMs can increase aftermarket share by making it easy for dealers and distributors to identify the customer’s problem, locate and order parts, and perform the required service, all using one interface that is integrated with the dealer management solution. After all, if it isn’t easy for dealers/customers to find and purchase your parts, they will look elsewhere.

2) Instill Brand Loyalty for Your Aftermarket Products at the Influencer Level
“Technicians play a significant role in influencing the purchase decisions of vehicle owners. According to Industrial Marketing Research, nearly 29 percent of parts installed in the aftermarket are sourced through dealer channels simply because of the perception that OE parts have a better fit than aftermarket parts.”

In this section of the article, Garg seems to be advising vendors who compete against the OEMs (presumably auto parts stores like O-Reilly, Autozone, Advance Auto, and NAPA) to find ways to motivate technicians to buy generic aftermarket parts. But Enigma caters to OEMs, so our advice to OEMs is this; the service technicians in a dealer network are naturally friendly to OEMs—they are franchises after all—so if you expect your dealers to buy your parts, make it easy for them to do business with you. Deliver them updated parts and service information, and integrate your parts catalog with an order management system. This has two benefits: 1) it helps the dealers provide better customer service; 2) it helps dealers expand their wholesale business to compete with all those auto parts stores. It’s important to remember that the vast majority of purchasing decisions for aftermarket parts start in the service bay.

It’s good that an automotive analyst from Frost and Sullivan recognizes the importance of the aftermarket; it seldom gets attention like this, especially in the midst of all the news this year about OEM bankruptcies, dealership closings and cash for clunkers. The aftermarket is a crucial part of an OEM’s profit stream; under normal circumstances an automotive OEM gets less than 5% of corporate revenue from spare parts sales but those same sales provide more than 30% of corporate profits. If OEMs take the analysts’ advice, it just might help them on the road to recovering profits.

As I work with companies from many different industries, I’m always surprised by the number of organizations that have separate applications to manage and deliver their parts and service information. The service department often operates very independently from the parts department; the two departments use different applications to handle their (apparently) unique situations, with little or no technology overlap (except perhaps for the company’s ERP system). The reason seems obvious; the parts department sells parts, the service department “sells” service information.

But lately I see more and more companies looking for ways to integrate the two divisions; they want to cross-link the data so that their customers can order parts and make repairs more efficiently. Is this an industry trend or just an anomaly? Why the sudden interest in an integrated approach?

Here’s why:

1. Time is money, so there’s great value in being able to link a fault (or problem) directly to the correct service part. Technicians spend a substantial amount of time identifying the cause of a problem. Then they must research the service manual and latest service bulletins to figure out how to fix it. Then they go through a similar process to identify the correct part. And sometimes they go to yet another application to order the part! When a dealer parts manager has to assemble a proposal or bid package containing part drawings, part pricing, equipment specifications, marketing materials and training information, the fewer the applications (to interact with), the better. More and more companies want an integrated electronic parts catalog that makes it easy for service technicians at dealers and distributors to do their jobs. Our customers see a direct correlation between an easy to use, integrated parts catalog and increased aftermarket parts sales. Our customers also want to ensure that service is being performed efficiently and consistently. They want a one-stop-shop where dealers/customers can access ALL product information.
2. Reducing the administrative costs of developing and updating parts catalogs can dramatically improve your aftermarket operations. Keep in mind that it costs money and time to install and manage separate applications (one for parts and one for service); it is also a logistical headache to keep the two applications in synch whenever parts or service information is updated. The IT footprint of a single integrated application, consisting of both service and parts documentation, is much smaller, and more cost-effective.

Is there true value in integrating and delivering parts and service information as a single application? Yes. By combining parts and service information, OEMs can reduce IT costs, increase revenues and improve the profitability of their aftermarket operations. Bridging the service and parts silos is a trend that’s here to stay.

Deciding what to do when an OEM changes the maintenance procedures is a tremendous burden for many airlines. For most MRO modifications, choosing whether to adopt the new procedures is left up to the airline.

The industry hoped that by implementing XML/SGML documentation standards, smarter change management systems would emerge. And, with varying degrees of success, they have. (I’ve discussed this in a previous blog post, “Change Management for Aviation Data”.) But a lot of airline and OEM documentation exists in other formats, with PDF representing the largest share of this content. Unfortunately, PDF makes automated reconciliation more difficult than with XML. However, we find that with just a tiny bit of planning (and some smart software) there is no reason for PDF content to cause you trouble.

Many purists are quick to react to PDF content with condescending ‘legacy system’ labels. The normal response seems to be, “You’ve got PDF data? Too bad. You’ll have to deal with it manually until you replace the entire system with XML content.” As a software engineer, I understand the desire to deal with only one type of data, in a clean, structured format. But this idealism cannot withstand the realities of today’s industries, especially for airlines where the lifecycle of the equipment, and therefore the maintenance documentation, is very long.

Before describing how to implement change management on PDF content, let’s first recall the reasons change management is required: Airlines often modify the OEM maintenance manual to incorporate best practices, accomodate special needs, or include customized parts information. As a result, when an OEM revises the manual, airline personnel must:

1. Identify all the changes/conflicts between the OEM version and their own
2. Decide if the airline-generated content is still relevant in light of the OEM update
3. Choose whether to accept, reject, or edit the new OEM content
4. Then, and only then, distribute the updated airline content as the new version

In the days of paper-only distribution, change reconciliation was the #1 cause of delays in adopting new content, sometimes requiring more than 12 months to complete. Combining structured content, like XML, with Enigma 3C® Revision Manager has cut revision management from months to hours, by automatically incorporating changes wherever appropriate, and providing side-by-side comparisons for all potential conflicts. Conflict identification can occur at any level of granularity. (I.e., often a large task is split into many subtasks, and an OEM change to subtask 1 does not necessarily conflict with airline customizations on subtask 4.) When presenting the side-by-side comparison, areas of text that require review are highlighted and color-coded for fast comprehension and decision making.

Enigma’s intelligent revision management can also be applied to PDF content, allowing for granular comparison and update of PDF-based documentation. This means that PDF documents don’t need to be replaced wholesale; rather, specific PDF pages within larger documents can be reviewed and approved individually. When displaying conflicts, pages are still displayed side-by-side, with color-coded highlighting to guide the reviewer to each decision point. As PDF content often lacks metadata, we have also implemented smart file management for versioning and filename control, using Documentum® (or any popular document management system).

PDF content is viable and reliable for any maintenance environment—for airlines or any other industry. This is not to say that PDF is better than XML, which is an industry standard, but rather that PDF is more than a legacy format and should be treated as such. With the right software, reconciling changes in PDF maintenance content is a snap.

The other day, an editor for an aviation industry magazine asked me if Enigma could be deployed in a “Software as a Service” (SaaS) environment. The answer is, “Yes.” He then asked if any of our airline customers had SaaS deployments. The answer is, “No.” The next question was easy to anticipate, “Why not?”

I bring this up because SaaS is a popular IT topic everywhere, including the aviation community. What’s interesting is that our experience shows a disconnect between a vendor’s ability to support SaaS and a customer’s decision to use it. Over the past several years, every Enigma customer has asked about our ability to deploy in a SaaS environment. Yet even though we’re ready, time after time they’ve decided they’re not.

What holds companies back from SaaS? For most, there are operational challenges and business challenges. (This blog post will focus on operational challenges.) For airlines, the opportunity of SaaS is offset by a combination of fear, uncertainty and doubt (FUD). Airline operations are highly regulated and demonstrate a passionate concern for safety. Because the cost of maintenance mistakes can be so high, the airlines’ tolerance for risk is quite low. Therefore, when it comes to accessing maintenance information, ensuring accuracy and an audit trail is critical. Airlines need to track and control each piece of information used in the maintenance process. They must be able to name the source of all information, those with access to it, those who approved it, and those who used it. And they must guarantee that technicians can get to the data 24/7/365—with 99.99% availability (even when the network is down). Currently, most airlines believe a SaaS environment for service information puts a critical function outside their control, and it’s a risk they’d rather not take.

It’s not that aviation regulations prohibit SaaS deployments but that a SaaS environment is different from the norm. Because the regulations—and the regulators who enforce them—don’t anticipate SaaS, airlines that pursue such a strategy are faced with higher costs and longer delays in getting their maintenance IT systems approved.

It’s important to remember that airlines are responsible for all aspects of aircraft maintenance. Therefore, regulators don’t review and approve general software solutions they approve specific software implementations, on a per airline basis. From an operational standpoint, this approach ensures proper oversight. From a business standpoint, it increases costs and slows new technology.

So what does this mean for the future of SaaS implementations in highly regulated industries (like airlines)? It means that SaaS will probably be used in general business areas, like inventory and supply chain planning and analysis, long before it gets rolled out for maintenance operations, where safety trumps all other concerns.

Certainly a robust aircraft maintenance information delivery system can be implemented in a SaaS environment, but so far most airlines have been reluctant to be the first.