The aviation industry has embraced opportunities with technology and data to drive customer focused innovation over the last decade. The next phase of this trend is delivering genuine data-driven insights in finance and operational functions according to Kieran O’Brien and Brendan Crowley of KPMG in Ireland.
In recent years the aviation industry has used data to improve the customer experience, impacting on highly visible processes such as loyalty programs, targeted booking systems, automated check-ins and apps. These changes are all highly visible but back-office functions and strategic decision making offer the next round of innovation.
While customers may have benefitted, airlines and lessors are increasingly asking the question of themselves as to whether they are making the best use of data for their own decision making, profitability and cost control. Kieran O’Brien says that there are continuing challenges with siloed datasets, changing business plans and legacy technology. These factors have inhibited organisations in utilising data to drive performance and data-driven insights. Furthermore the capital intensive nature of the industry can swiftly punish poor decision making as evidenced by recent airline failures in both Europe and the United States.
Airlines and Lessors are increasingly focused on integrating their data-sets across Finance teams, Maintenance teams, Contracts Management teams and HR. Whilst the use of data warehouses and data lakes has increased, the key challenge is ensuring that you have the tools to provide the right insights and the ability to run scenarios and deep dive on questions.
In the Leasing Industry competition is forcing Lessors to be both innovative and strategic with how they structure their contracts, account for credit risk, manage their maintenance programs and make key trading decisions. While companies are getting to grips with data quality and integrity, there is still a distance to travel to utilise that data effectively for the C-suite. We have seen other industries utilize Enterprise Performance Management (“EPM”), not just to provide access to data but to provide real insight and the ability to run scenarios and push driver based planning into the hands of the C-Suite. This must be the next step for the aviation industry to fully utilise the power of data.
We examine below some of the trends shaping the Aviation Industry.
The aviation industry is making rapid strides with the digitalisation of its data.
Maintenance records, contract management and asset specifications are at the forefront of this revolution.
Kieran says that digitalisation is transforming operational efficiency from an art into a science.
Airline customers have seen huge benefits from getting access to real time information. Delta Airlines is continuing to position itself as an industry leader with innovative online baggage tracking software for customers. Aircraft tracking and customer relationship software are now the norm in the industry.
However back-office functions across many industries, including aviation, have still to realise the benefits from these innovations.
The opening up of datasets to management encourages them to frame their own questions and discover their own answers.
The IATA published a whitepaper in October 2018 entitled “Blockchain in aviation”, identifying 5 applications for the aviation industry as follows:
We are already seeing clients “dipping their toe” into blockchain solutions like Singapore’s frequent flyer program.
Kieran notes that while there continue to be some scepticism in the industry about the applications of blockchain, we continue to see the development of the technology and the emergence of specific Blockchain companies focused on aviation. To truly benefit from this technology quickly we will need consensus within the industry regarding data standards and consistency. Blockchain is encouraging executives to “think big” and that can only be a good thing. If a different technology can better solve the problem then this should be embraced.
As airlines, lessors and service providers grow in scale and the data available to inform their decisions becomes increasingly vast, executives are challenged with focusing their attentions on where it is most important.
Having distributed models, decision support tools and certification and procedural software streamlines administration activities for field users. It also provides real-time data to management in head office and avoids needless paperwork.
The aviation industry is a unique ecosystem of participants encompassing airports, regulators, airlines, manufacturers, lessors, MROs and numerous service providers.
Brendan argues that cost efficiency, safety and regulatory requirements are accelerating the trend towards sharing of digital records and that once this trend is established participants will be encouraged to conform, as with the upcoming GATS initiative, which KPMG has had the privilege of supporting on a number of fronts.
However there are challenges with the vision of a fully integrated ecosystem.
KPMG’s “Connected Enterprise” research with Forrester identified 8 capabilities that will improve organisational alignment and drive growth. The “Connected Enterprise” methodology, or a similar approach, allows organisations to assess their organisational and operational alignment in a clear and structured manner. Kieran notes that investing in the right areas is critical and honest structured self-assessments allow investment to be made where it has the most impact; from product and pricing and supply chain to technology architecture and advanced data and analytics.
Once companies have completed an assessment of their operational alignment, effective change management programmes can be implemented. Brendan notes that over the last decade many executives have chosen the right technology but adopted the wrong implementation model, frustrating their vision. For this reason KPMG’s “Powered Enterprise” suite of EPM transformational solutions combines technology with the processes, governance and best in class procedures to make the implementation a success. Companies should be honest with themselves regarding where their project management strengths lie.
3 key obstacles that impede the C-suite’s ability to achieve their vision: thinking big, planning small; inflexible solutions; the wrong technology.
Our experience has identified 3 key obstacles that impede the C-suite’s ability to achieve their vision.
Kieran defines a number of activities that all executives and CIO’s should be actively pursuing to ensure they take advantage of digital and technology change.
This article first appeared in the Airfinance Journal, and is reproduced here with their kind permission.