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Connecting Flights

Grupo Aeroméxico uses Oracle cloud technology to streamline 26 companies.

by Aaron Lazenby

August 2015

Over a 17-year career at Grupo Aeroméxico, while working his way up to chief information officer, Benjamin Hernandez had a front-row seat to its continuous expansion. Currently, 26 companies make up Grupo Aeroméxico, including Aeroméxico (Mexico’s largest airline), Aeroméxico Connect (a regional carrier), Aeroméxico Servicios (ground handling), Aeroméxico Cargo, and Aeroméxico Capacitación (training center).

Snapshot

    Grupo Aeroméxico

    Headquarters: Mexico City, Mexico

    Industry: Travel and transportation

    Employees: 13,745

    Revenue: US$3.1 billion in 2014

    Oracle products and services: Oracle E-Business Suite; Oracle Managed Cloud Services; Oracle Financials Managed Cloud Service; Oracle iProcurement Managed Cloud Service; Oracle Purchasing Managed Cloud Service; Oracle Inventory Management Managed Cloud Service; Oracle Human Resources Managed Cloud Service; Oracle iRecruitment Managed Cloud Service; Oracle Payroll Managed Cloud Service; Oracle Hyperion Financial Management Plus Managed Cloud Service; Oracle Database, Enterprise Edition Managed Cloud Service; Oracle Enterprise Governance, Risk, and Compliance Manager Managed Cloud Service; Oracle User Productivity Kit Professional; Oracle Consulting

Benjamin Hernandez

CIO

Length of tenure: 17 years

Education: Master’s degree in computer science, Kharkiv Polytechnic Institute

Personal quote/mantra: “Las Tecnologías de Información son un medio para hacer que las organizaciones se hagan más eficientes y realicen sus objetivos y estrategias.” (“Information technology is a means to make organizations become more efficient and achieve their objectives and strategies.”)

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Serving as head of IT strategy puts Hernandez at the hub of the company’s efforts to adopt new technology and continuously transform the business. And with processes that run across many subsidiaries—not just flight scheduling, but crew management, fleet maintenance, and the other critical components of running an airline—he must view the entire business from multiple angles.

PA15-LeadStrat-pic

“We have initiatives that run across the whole business: to optimize resources, to increase revenue, to reduce cost, to make our employees more productive, to generate information to support the tactical and strategic decisions, and more,” says Hernandez.

Here, Hernandez talks to Profit about what it took to unify enterprise resource planning (ERP) across all of Grupo Aeroméxico’s companies, why it chose Oracle E-Business Suite on Oracle Managed Cloud Services, and which projects his department will take on next to help the business continue to soar.

Profit: What do the executives at Grupo Aeroméxico want to achieve to keep the company successful?

Hernandez: We want to continue being the leader in the domestic market and an important player in international markets. Also, we want to have a very good product—we have a modern fleet, the best schedules, and good service. We want a staff that understands passengers’ needs. We want to differentiate ourselves for the passenger experience.

When we talk about passenger experience, we need to understand the expectation for each type of passenger we serve today. What do they value? A business traveler is going to have very different expectations from customers heading to the beach in Cancún. For example, we target our frequent flyer program specifically to our business travelers.

A good customer experience means we understand the expectation of each segment, measure how well we are meeting those needs, and design or adjust our service accordingly. This is part of our culture.

Profit: How has Aeroméxico used enterprise IT to keep pace, given the company’s large size and expansion?

Hernandez: Heading into 2010 as the economy improved, we knew we needed to replace our systems. So we defined an IT roadmap with three phases.

We push a button, and we obtain the results for all the companies in one action. . . . there is a single, universal, unified truth.”

Phase one was about replacing all the front-office applications. We spent almost two years replacing our reservation, sales, and distribution systems and everything related to passengers—from schedule planning to reservations, kiosks, our website, our mobile site, and more.

Phase two was streamlining back-office ERP applications. We required a unique application for all the companies to standardize administrative processes, consolidate the financial results for all companies, control the operational cost, and provide information to analyze revenue and route profitability. Right now, we are in phase three, which is about replacing, optimizing, and integrating all systems that support operations and maintenance.

Profit: What are the challenges around IT consolidation for such a complex organization?

Hernandez: The first challenge was that we didn’t have a unified system for financials, human resources, or general accounting. So we knew we needed to introduce a new tool to align all these companies. But at the beginning, the leaders of these companies were concerned. The subsidiaries thought that their business was significantly different in comparison with the airline and that could generate problems for their operations.

So we had to get it right—and the project was intensive. We looked at the office process for each of our companies and developed process maps to understand the business at a fundamental level. Who was responsible for each step in our business processes? Once we had a deep understanding of these operations, we could begin implementation of the systems. From there, the challenge is to train people—and to get them to use the same new tools and follow the same new processes.

It took us a year to implement—and after several months of operating with the tool, we have feedback from users on how it works. They are telling us how to improve more of the operation, so we are analyzing and reviewing some definitions to bring new Oracle functionality, and making some exceptions where it is necessary for certain companies to meet labor union or government requirements.

Profit: Why did you decide to use Oracle for your ERP upgrade?

Hernandez: We evaluated both Oracle and SAP. We looked at functionality, methodological approach, compliance with Aeroméxico requirements, and price. We contacted several executives from other airlines about their back-end systems. For the evaluation and selection process, we assigned a committee to select the tool/application. The committee was composed of people from finance, human resources, payroll, supply chain, and IT. With KPMG’s help, that group conducted a very structured and transparent evaluation and selection process, and the decision was that Oracle is the best option for us.

Profit: What will you work on next?

Hernandez: Right now we are trying to reach the next step, which is to consolidate the activities of all our companies that share similar and repetitive processes. In November of 2014, we started building a shared services center for Grupo Aeroméxico.

Profit: You implemented Oracle E-Business Suite via Oracle Managed Cloud Services for your ERP system. Why did you deploy the suite this way?

Hernandez: Deploying on a managed cloud allowed us to simplify the implementation process. Infrastructure selection and provisioning adds time and complexity to the effort—to the point where that almost becomes a parallel project. Especially before the applications are implemented, it’s difficult to determine the required infrastructure to support the transactional volume. You don’t know how the system will perform, and how to increase the capacity in the future.

Oracle has implemented that same infrastructure for a lot of companies, so their specialists know very well how to determine the capacity plan for that infrastructure. More than that, if you realize that the service is not performing well enough, Oracle can immediately increase processing capacity, memory, and more.

So for me it was a good option to use Oracle Managed Cloud Services, because it reduced the risk. It also reduced complexity and the time it took to implement our new ERP system.

Profit: What are some of the benefits you’re realizing already?

Hernandez: The most important benefit is that we have a unified financial system. We no longer have any controls that live outside of the system—we have connected all our companies with a single platform. The same general ledger catalog structure is in place everywhere, and the information flows across the modules. Everything is there.

Second, the architecture, processes, and timing are the same for all the companies. We need to close the first week of every month. In the past, each company sent us spreadsheets in Excel, and we’d look at these results and try to reconcile them. When we handled finance this way, we’d have arguments about who had the best version of the truth. Today, nobody from any of our companies can say, “I don’t have that information.” We don’t have to worry if the information is accurate or up to date, either. We push a button, and we obtain the results for all the companies in one action. And that is the official information, because it was obtained from the official system. There is a single, universal, unified truth.

Action Items
  • 2014 Industry Award Recipient for Customer Value Leadership from Frost & Sullivan
  • Photography by Shutterstock