Setting a hybrid IT flight path to digital transformation
Main portrait photography: Yasu Nakaoka
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Setting a hybrid IT flight path to digital transformation

Kenny MacIver — September 2019
Strategically positioned to track the airline industry boom in Asia, aircraft maintenance company Lufthansa Technik Philippines is accelerating its digital transformation by blending private and public cloud services. Dr Roberto Asuncion, Vice President for Information Technology, charts the course.

The center of gravity for the global aviation industry is moving east. Figures from the International Air Transport Association (IATA) show demand for air travel in Asia Pacific growing by 8.5% in 2018, more than 2% faster than in Europe and 3.5% faster than in North America. That pattern is set to continue, with China due to overtake the US as the world’s number one source of passengers within five years.

The growth is creating huge potential for companies which provide airlines with maintenance, repair and overhaul (MRO) services, such as Lufthansa Technik Philippines, Inc. (LTP), a joint venture between Germany’s Lufthansa Technik AG and the Philippines’ MacroAsia Corporation. Founded in 2000 and with its main hub in Manila, LTP is well-positioned to ride a rising demand curve that is expected to be worth $30 billion by 2027 in the region according to industry analysts.

However, as Dr Roberto Asuncion, LTP’s VP of IT observes, the winners in that highly competitive field will be companies that aggressively exploit advanced technologies and services to dramatically optimize the efficiency of their operations, keep costs in check and automate processes.


Digital business agenda

That prospect has sent LTP on a digital transformation journey that encompasses the application of hybrid cloud and an array of digital innovations — from robotic process automation to AI and predictive analytics.

But the primary goal is hyper-efficiency. MRO is largely driven by aircraft turnaround times, highlights Asuncion. “Each day a plane is on the ground, the airline is not making money on it. So we want to do the repair or maintenance in the quickest time possible — always, of course, in line with set production and regulatory standards.” he says.

“Today aviation MRO is still a labor-intensive activity and a very highly regulated one, which can make digital transformation very challenging. What we are pushing for now — supported by our parent company in Germany — is to use all these available technologies to improve efficiency,” he says.  

“What we really want is to drive a new digital culture.” 

LTP started on that digital transformation journey just over two years ago, largely on the initiative of the IT organization. But the driving force behind that has been shifting to the business, Asuncion says.

“Digital transformation is not really an IT project. It has to come from the business and that really requires an internal mindset change. In the past, when you attached ‘digital’ to any initiative, business would always see it as IT’s job to deliver on it and any related issues as something IT needs to solve. So the challenge on the digital transformation journey is to shape the mindset of everybody, to ready them to accept different technologies, to embrace new ways of doing things, new ways of thinking. Not just senior management but right across the 3,200-employee organization. What we really want is to drive a new digital culture.”
Multiple drivers
LTP’s digital transformation journey is being driven by the need to stay ahead of the competition. “There is fierce MRO industry competition in Asia and significant disruption driven by new technology,” says Asuncion. Indeed, some airlines even see advances in technology as the means by which they can take the MRO function in-house. “So our choice of technology — and technology partners — to drive the business is very important. We want to be the industry leader, capable of exploiting new business-advancing technology better than any other organization — not just in Asia but in the world.”


New approaches on how the IT organization delivers its services are helping to fuel those ambitions.

In 2018, LTP rethought its traditional model for running all its own technology infrastructure and development in-house, instead choosing to work with hosting and managed-services companies to create a hybrid IT model that blends private and public cloud services with existing systems. The goal was not just greater efficiency and reliablity but also to free up resources in the IT group to concentrate on exploiting the array of emerging new technologies. “The thinking was that we needed to be more strategic,” says Asuncion. “We were concerned we wouldn’t keep pace with the potential for new technologies if we were so busy doing our own daily operational IT.”

The new strategic approach involved partnering with global IT company Fujitsu for infrastructure and platform services. From an on-premise private cloud, Fujitsu now manages a platform that hosts LTP’s main e-MRO system from specialist software company TRAX and core SAP applications, providing those as a hosted service. Fujitsu also provides LTP with off-site disaster recovery capabilities for its TRAX system through an Oracle Public Cloud for DR platform in the US.

Asuncion explains that those system are today on premise at LTP only because the company is unsure about the robustness of the Philippines internet infrastructure to support remote cloud service delivery. “If I was assured that we wouldn’t have any internet disruptions then I could make that move to the public cloud,” he says. “But right now we want to have something that we can actually touch if an issue arises and the guys from Fujitsu can jump in immediately.”

The advantages of the move extend beyond raising the LTP IT group’s ability to focus on strategic IT: it has also boosted system reliability.

“Since those two core systems have moved out, services have become more reliable. Previously, I would only have two or three people available to look after these big systems on a 24/7 basis with the possibility of something going wrong and paralysing our activity. Now we have a partner who has the resources and competencies — and the drive to improve. And instead of managing the applications day-to-day, our team now collaborates with Fujitsu to manage those core systems.”


Reliability is inseparable from the number one priority in aircraft MRO: safety. “For our main MRO system even an hour’s downtime is very serious because our mechanics and planners can lose sight of the whole picture of operations and production and then it becomes a safety issue. We want to make sure that the planes that we maintain and repair are given back to the airlines in a very safe condition, and reliability of IT is key to that,” he says.

The move to the platform- and infrastructure-as-a-service models is showing other gains. “We’ve been able to increase our service levels internally to 99.96% for the main MRO system,” says Asuncion.

The Fujitsu service also provides LTP with new levels of scalability and lower storage costs. “We have always had very expensive on-premise infrastructure and very expensive storage, especially when we needed to buy more capacity,” he says.
LTP is looking to blend its new private cloud with a set of public cloud applications it plans to use for less sensitive applications. “We want to move things slowly to the cloud. As we are in a highly regulated industry, we want to do it in a way that will secure the approval of the various regulatory agencies. It also means aligning ourselves with the head office strategy of Lufthansa Technik (the Lufthansa Group company that is majority owner of LTP).

“But there’s an ambition to use as much cloud as we can because we have already seen the benefits. The first experience we’ve had on the cloud is Microsoft with Azure and Office 365.  It’s just a lot more reliable than the on-premise situation that we had before because recovery depended on us getting hold of the right person and hoping they were up to speed with the problematic aspect of the technology.”

Asuncion says that the IT organization has also become more cost effective as a result of the move to managed services. “Aside from infrastructure and systems management, we no longer have to invest a lot in training our people to maintain those areas because we already have the assistance of our partners. This makes it possible for me to move people to other, more exciting line of work dealing with technologies involving analytics, artificial intelligence (AI) and the internet of things (IOT).”

Some staff who were previously working with the MRO system have been redeployed to robotics process automation (RPA) projects. “Part of the transformation is that we have new things to do. Day in and day out we always strive towards continuous improvement but there is also the innovation part, the creativity part. You can leapfrog everything by thinking about new ways of doing things, being more creative and introducing more innovative solutions. And a great example is how the adoption of managed services results in a move into RPA.”

LTP currently has developed several use cases for RPA. It has applied the technology in materials management, with further plans to deploy it to automate routine aspects of finance, HR and elsewhere.

Business pressure

The new digital culture is showing value to the business too.

“It’s always essential to ask yourself, ‘Why is this valuable to the business?’ when you’re getting into any new technology change. It’s really important we ask ourselves, ‘Why?’ and then the how, the what and the when come [easily].  For me it’s really closely tied to the business vision.”

And that vision is not without ambition. “LTP wants to become the MRO of first choice in Asia — and everybody in the company knows that from day one. So we are really focused on how we will be able to provide the appropriate technologies to support the vision.”

For Asuncion, there is a combination of technologies that is guaranteed to be an industry game-changer.

“Number one, the technologies that will impact our business will be in the area of predictive and analytics, especially with the application of AI/machine learning. These are the technologies that will help us most.”

He points to the Airbus A350, with its 200,000 on-board sensors, as redefining the shape of MRO. “The A350 is like one giant USB drive. You connect to it and it gives you the data that will drive things like AI-based predictive [maintenance].”

Certainly the pressure is on to make the right technology and partner choices — and make those a success. “Today, we have a lot of technologies available: if you choose correctly you can have a big impact on the future of the organization; if you miss on these things then it sets you back.”

First published September 2019
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