Amadeus Germany gains insight into changing markets in real time

IT service provider implements rolling forecasts with IBM Cognos TM1

Published on 08-Jul-2013

"Modernizing our systems has clearly changed the way our employees think. They are able to take advantage of opportunities and avoid risks much more quickly than before." - Daniela Link, Head of Finance Germany, Amadeus

Customer:
Amadeus Germany

Industry:
Computer Services, Travel & Transportation

Deployment country:
Germany

Solution:
BA - Business Analytics, BA - Performance Management

Overview

Founded in 1971, Amadeus Germany GmbH is Germany’s leading provider of IT solutions for the travel industry. It is the largest of the Amadeus Group’s 73 national subsidiaries, which provide sales, customer service and support for Amadeus customers worldwide.

Business need:
In the fast-paced travel industry, Amadeus Germany’s quarterly forecasts and annual planning processes were no longer adequate for immediately identifying risks and opportunities.

Solution:
Amadeus introduced rolling forecasts based on IBM® Cognos® TM1® Web. Planning data and reports are updated on a rolling basis, and key indicators and targets can be checked in real time.

Benefits:
Early warning system enables timely action. Increases personal accountability. Encourages dialogue between finance and the business. Makes forecasting cheaper, more accurate, and less labor-intensive.

Case Study

To read a German version of this case study, please click here.

Founded in 1971, Amadeus Germany GmbH is Germany’s leading provider of IT solutions for the travel industry. It is the largest of the Amadeus Group’s 73 national subsidiaries, which provide sales, customer service and support for Amadeus customers worldwide.

In Germany alone, the company has registered approximately 45,000 licenses for its modern, powerful Amadeus system, which is the largest distribution system for travel packages worldwide. Via the Amadeus platform, travel agents are able to book flights with over 400 airlines and 110,000 hotels. The solution, which allows all agents within the travel industry to collaborate with one another, is used by over 90,000 travel agencies worldwide.

Corporate planning at Amadeus is critical to ensure solid growth, profitability and management excellence. In the past, each summer the finance department would work together with other departments to generate a detailed plan of the cost centers and objectives for the following fiscal year. The core application at the time was IBM Cognos TM1, which had been in use since 1996 and which had proved a very satisfactory technical solution.

Over the course of time, however, there were many requests for the content of the plans to be improved. “By the beginning of the new fiscal year, the numbers that the managers had submitted in September for annual planning were out of date and no longer relevant,” stated Daniela Link, Head of Finance Germany at Amadeus. The problem was particularly significant because the travel industry is vulnerable to fluctuations in other markets and current events occurring in other parts of the world. If the economy is booming, then travel is up; if the economy is poor, then companies start cutting back on business trips. When an unfortunate incident occurs somewhere, or when the weather is bad, people travel less, and the result is a downturn in sales for the industry.

“Our ability to project our finances was limited by our rigid annual budget planning period and the fact that we only created three projections for the current fiscal year,” Link continues. “We had no early warning system, so we were not able to take action or adjust the budget quickly enough to make a difference.”

As a result, Amadeus’ increased focus on risk management has led to a paradigm shift in planning.

Rolling forecasting with IBM Cognos TM1 Web

In order to be able to plan and react more transparently, Amadeus enhanced its existing TM1 installation by implementing the IBM Cognos TM1 Web component and introducing rolling forecasting. Instead of planning just once a year, Amadeus now has the ability to plan on a rolling, as-needed basis.

Since this transformation took place, all of the organization’s divisions – from finance and human resources to sales and investments – have been directly integrated with the web system. Managers in specialist areas, project managers, and departmental and divisional managers now enter their planning numbers into the TM1 system independently, and modify them whenever projections and outlooks change.

Planners and managers always have direct access to all the figures, updated minute by minute, which helps them make ongoing evaluations for themselves. They now have time to decide on countermeasures, and are thus able to react quickly if something unexpected occurs, or if they want to take advantage of particular opportunities.

“Modernizing our systems has clearly changed the way our employees think,” states Link. “They now see themselves as being part of a transparent process, and are constantly evaluating their figures – not just quarterly, but rather as part of an ongoing process. They are able to take advantage of opportunities and avoid risks much more quickly than before.”

The finance department compiles the figures into an internal report on the 20th of each month. Full data consistency is ensured because the numbers are automatically transferred from third-party systems.

Link comments: “Before Cognos TM1 Web was introduced, we were losing time and money. Because we had to spend so much time ensuring data consistency in the quarterly projection, there was little time left for data analysis, root-cause analysis, or for initiating countermeasures. Market opportunities that we could have taken advantage of – for example, by increasing budgets or making new investments – were more difficult to uncover.”

By using a rolling forecasting process with automated data transfer and monthly reporting, Amadeus has brought more transparency to each of its departments, and is now able to react more quickly to changes in the market.

Amadeus was able to extend its TM1 solution with the new web components relatively quickly and inexpensively, because TM1 had already been in use for several years. Users did not require any extended training on the Cognos TM1 Web interface.

The users are particularly pleased with the new comments function, because it allows for constant dialogue between the parties responsible. Digital collaboration makes it possible to understand the changes that a particular project participant has made to the figures at any point, and why. This allows the participants to focus their discussions on problems and discrepancies, making it possible to detect conflicts in consistency and targets at an early stage.

One-year conversion to continuous forecasting

The new rolling forecast and the associated shift in responsibilities required Amadeus’ staff to be educated and familiarized with the new system.

“Our employees were concerned that being responsible for their own planning data would mean additional workload,” recalls Link. However, within a short period of time, they realized that the exact opposite was true. “The increased transparency actually significantly lightened their everyday workload and supported them in making decisions. They appreciate the depth of information that Cognos TM1 provides, as well as the easier access: now they have can see up-to-date data at any time, without having to request it first.”

The transition to the new planning philosophy took a total of about one year.

Extending into Eastern Europe

Introducing a rolling forecast as an online process using IBM Cognos TM1 Web has enabled Amadeus to adapt more quickly to the fluid market conditions that are inherent in the travel industry. Whereas in the past, the company’s forecasts were only generated quarterly, today the automated data transfer supports continuous and constant dialogue between the finance department and the various organizational divisions. This allows staff to check at any time whether organizational divisions are on the right track to achieving company goals.

“These advantages have led us to implement Cognos TM1 Web in other Eastern European countries as well,” Link concludes.

From next year onwards, the company is planning to optimize strategic planning further by expanding the planning process to cover a three-year period.

About IBM Business Analytics

IBM Business Analytics software delivers data-driven insights that help organizations work smarter and outperform their peers. This comprehensive portfolio includes solutions for business intelligence, predictive analytics and decision management, performance management, and risk management.

Business Analytics solutions enable companies to identify and visualize trends and patterns in areas, such as customer analytics, that can have a profound effect on business performance. They can compare scenarios, anticipate potential threats and opportunities, better plan, budget and forecast resources, balance risks against expected returns and work to meet regulatory requirements. By making analytics widely available, organisations can align tactical and strategic decision-making to achieve business goals.

For more information

For further information please visit ibm.com/business-analytics

Products and services used

IBM products and services that were used in this case study.

Software:
Cognos TM1

Legal Information

© Copyright IBM Corporation 2013. IBM Deutschland GmbH, IBM-Allee 1, 71139 Ehningen, Deutschland. ibm.com/de. IBM Österreich, Obere Donaustrasse 95, 1020 Wien. ibm.com/at. IBM Schweiz, Vulkanstrasse 106, 8010 Zürich. ibm.com/ch. Produced in the United States of America. July 2013. IBM, the IBM logo, ibm.com, Cognos and TM1 are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at: www.ibm.com/legal/copytrade.shtml. This document is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided.