By Wudineh Zenebe, Addis Fortune
ADDIS ABABA, ETHIOPIA – The management of the Ethiopian Airlines (Ethiopian) is in the process of acquiring a state-of-the-art information technology (IT) system, at a budgeted cost of 30 million dollars, reliable sources disclosed to Fortune.
The new system, dubbed master systems integration services, is required to automate the airlines’ operations in its finance, human resources, supply chain management, data warehousing, and corporate portal areas.
“The airlines’ operation has reached a stage where it can no longer run without such a system,” Kemeredin Bederu, vice president for IT Division, told Fortune.
Although the national carrier has an existing IT system, it is not deemed sufficient for its growing operations, said industry sources. Ethiopian has achieved what it sought in its “Vision 2010,” a strategic plan that sets targets on revenues and passenger numbers:It has already generated the one billion dollars revenues one and half years ahead of the scheduled time, and the number of passengers have exceeded the two billion mark espoused in the strategic plan. Its profit from operations in the past Ethiopian fiscal year was over 50 million dollars, reliable sources disclosed.
And the number of fleets it has under operation has grown from 11 to 27; additional Dreamliner aircrafts, Boeing’s highly sophisticated planes, are expected to be delivered next year. These are the type of aircrafts that are fully linked to an IT system on the ground, where technicians can identify any malfunction while they are in flight, and resume maintenance immediately after they land.
“This will substantially reduce the time the aircraft would stay on the ground,” Kemeredin said.
These are the backdrops that prompted the airline to spend close to 300 million Br in acquiring a new IT system, according to industry experts. In fact, no other domestic company is prepared to spend such an amount in automating its operations. Not even the nation’s biggest financial institution, Commercial Bank of Ethiopia (CBE), comes close to this; the bank’s plans to invest four times lower (70 million Br) to acquire an IT system from foreign firms in its desire to launch an electronic card payment system.
“[The] Ethiopian Airlines’ philosophy will be to adopt a new airline best practice business process as enabled by the supplied system,” the national carrier said, inviting international firms to bid for the contract.
The successful bidder will have to develop an IT solution that will also integrate the company’s current system, according to the tender announcement issued in the state-owned English daily, The Ethiopian Herald, in September 2008.
“It’ll have to transform our operations,” Girma Wake, CEO, told Fortune.
Ethiopian will become the first airline in sub-Saharan Africa to acquire such a vast technological system, according to Zemedeneh Negatu, manager partner of Ernst & Young, the American consultancy firm hired to advise the company on this project in April 2008.
It will not be alone; SATYAM, an Indian company specialized in IT, has also been subcontracted for consultancy by the national carrier in its effort to buy the new technology.