Alexandre Baulé, CIO at Embraer, outlines how the Brazilian aircraft maker has rethought its business applications strategy, blending new cloud apps with on-premise IT to deliver a more responsive, efficient set of core technology services.
Like many multinationals, aircraft manufacturer Empresa Brasileira de Aeronáutica (Embraer) has a long history with SAP’s ERP software. A decade and a half ago the $6 billion Brazilian company bet heavily on a company-wide SAP R/3 implementation to underpin all of its core business applications, customizing the ERP suite extensively to meet regulatory and business-specific requirements.
But, as Embraer's chief information officer Alexandre Baulé highlights, the twin business pressures for digital transformation and the need for IT to be more integrated with — and responsive to — business users’ requirements have forced a major shift in IT strategy away from centralized application towards a more diverse software portfolio that mixes on-premise and cloud applications. The upshot has been a freeing up of a much larger share of the IT budget for innovation.
“Embraer placed its bets on a centralized ERP platform that was meant to solve all of its [process] problems,” says Baulé. At its peak, the complexity and cost of maintaining and upgrading that system were consuming 70% of the IT budget, meaning the IT group was unable to keep pace with the business’s fast-evolving demands. “The chief priorities were to create a plan that both digitally transformed the company and also established a new strategic planning process,” he says.
Strategic application rethink
For that strategic overhaul of systems, Baulé introduced a road map that set out how the functional scope of the R/3 platform would be reduced, enabling individual business units to get access to best-of-breed applications and services that would keep customization to an absolute minimum.
That meant looking to the cloud for key applications services. Customer relationship management is now provided by Salesforce.com while HR is handled through SAP’s cloud-based human capital management platform, SuccessFactors. Supply chain management runs on a hybrid of in-house and specialized applications designed to handle the complexity of the company's unique processes. And to support product lifecycle management, Embraer uses PTC Windchill.
At the same time, the company has chosen to retain core standard ERP modules on SAP. After a rebidding process the German software giant was chosen to continue supplying solutions for critical areas such as finance, accounting and tax. That re-implementation process of the SAP suite worldwide is now about 60% complete, says Baulé.Regulation is an inescapable factor here that the CIO and his team have to work with when adopting more modern approaches. For example, the company's data centers have been updated to support hybrid cloud capabilities, but this had to be done in line with regulatory requirements that extend from security and identity management to the provision of global access. “The level of regulation in our industry is comparable to that seen in banking," Baulé says.Force for innovationSuch a major re-architecting of the applications infrastructure is designed to ensure IT is more responsive to business change and supportive of innovation. Although Embraer has a strategic planning process that looks out 25 years, with new aircraft models taking an average of seven years to go from design to commercial launch, Baulé stresses that the company is very much focused on innovation. “We don't want to be the biggest aircraft maker [Boeing and Airbus are much larger and Learjet maker Bombardier is a similar size] but we want to be the best in the sector. So constant innovation is key to that goal — IT’s role is to support that and keep us ahead of the pack,” the CIO says. Examples of that innovation include the cutting-edge use of virtual reality (VR). At its Virtual Reality Center aircraft are designed, modelled, virtually manufactured, flown and maintained before a single piece of metal is cut or a test flight has left the ground. This allows for much faster product cycles (it’s E-Jet family are now on a two-year cycle), as well as the introduction of products to the market at a more mature stage."Before we produce the first piece of an airplane, a digital twin of it already exists that has already been manufactured and has flown for many hours, with many problems already discovered and fixed while everything is in the realm of bits and bytes," he adds. Cloud services have also been key in driving business innovation. “Using software-as-a-service platforms has been a great way to harness innovation without having the cost associated to creating and maintaining internal IT systems,” the CIO points out. He gives the example of Embraer's growing use of Salesforce’s development platform Force.com for the development of specific business applications that can be seamlessly integrated with the firm’s core platforms. Baulé points out that the use of an enterprise service bus to tie together all of its platforms has also been instrumental in enabling the IT department to support innovation. Internet of aviationTwo other areas that have disruptive potential for the aerospace industry, says Baulé, are the Internet of Things and big data analytics. “To ensure a plane is ready to fly, without problems and as cost-effectively as possible, there is a huge network of support services that have to be perfectly orchestrated. Such processes need to be run with extraordinary efficiency and that can only be accomplished through the application of digital technologies: the ability to use sensors to understand what is happening to every aspect of the aircraft and then trigger actions across your entire [supply chain and support] network synchronously," Baulé says. 3D printing also has an important role to play here. To maximize flying hours, the aerospace industry today has to hold huge quantities of spare parts in stock at airports around the world and train local staff on how to fit them. Baulé highlights how 3D printing could be used to produce parts on demand, with virtual and augmented reality used to educate ground staff and help them to fit parts. "Reducing inventory on the entire supply chain reduces the aircraft's design, test, manufacturing and operations costs. By intensively using digital technologies and engineering we have drastically reduced product development cycles," the CIO says.According to the executive, another big mind-set change introduced since his arrival was to get the in-house IT team to become more deeply engaged with the business. “We need diligent, prudent, expert professionals who know what to promise and are actually able to deliver,” says Baulé. Conscious of the potential for the business to initiate its own technology programs when the IT function fails to meet its needs, Embraer’s IT organization has adopted a federated model, with IT accountable to each business area. This, according to Baulé, has changed professional attitudes within IT, as well as the department’s responsiveness. “We now have a virtuous circle whereby the business areas clearly understand the role of IT, trust we will do our job and see us as a partner to leverage business objectives,” the CIO explains. The paramount challenge: “To be able to rapidly create solutions using digital technologies that are innovative and add value, supporting — alongside Embraer business executives —increased revenue and profitability. The goal cannot be anything less than that.”
|Alexandre Baulé, CIO of Embraer|