Integration From The Ground Up

• 04/21/1999

HP, Oracle And KPMG Take Flight To Guide Canada's Air Traffic.

In 1996, Transport Canada, transferred its AirNavigation Services to NAV CANADA. But the development of IT and business systems wasdifficult. "New employees" would not officially begin until they weretransferred in September 1997 from Transport Canada. Enter KPMG International.

Located in Ottawa, Ontario NAV CANADA adopted the air traffic control, flightinformation, weather briefings, airport advisory services and electronic aids tonavigation from Transport Canada on November 1, 1996. Plans to implement the transferbegan in March 1996 with a startup date initially scheduled for July. That afforded NAVCANADA's executives a few months to set up their company from scratch.

In its move from government to private sector, NAV CANADA had to implement a newpayroll, human resources information and financial management systems to reflect privatesector practices. And under the transfer guidelines, NAV CANADA was to fund its servicessolely through user fees charged to airlines and aircraft operators.

Consequently, the company also had to introduce and phase-in user fees for its AirNavigation Services (ANS). This required new sets of procedures and systems for customerbilling, revenue accounting and credit and collection of domestic and international usercharges.

Safety First

The company's new operating structure was developed to ensure that the country's ANSwould be better positioned to respond to the needs of users on a number of fronts,including training, new investment in technology, overall quality and efficiency. Toensure that safety was a part of the initial planning, an emphasis was placed on havingintelligent systems for decision-support, financial/accounting and business information.

Making the transition from a government department to a private-sector corporation withminimum disruption and constant attention to passenger safety was a challenge because itinvolved both information systems as well as employees; especially "new"employees who would not officially transfer from Transport Canada until September 1997.Consequently, during the six months prior to startup on November 1, 1996 their knowledgebase was not readily available.

So, KPMG International, hired to fill the void, managed the project and provideddirection and resources for developing new business systems for NAV CANADA. Acting as thesystems integrator, 20 KPMG consultants collaborated with an executive committee from NAVCANADA and a small transition team from Transport Canada.

Cleared For Takeoff

The first phase of integration was the resource management system. "This systemincluded the general ledger, accounts payable and purchasing areas of finance; a temporaryhuman resources system; a wide-area network; electronic mail; records management; assetmanagement; desktop infrastructure; user support organization and operational supportorganization," says Kathleen Byrne, VP of Enabling Technologies at KPMG. "ForNAV CANADA, this early step established an all-important basis for sound decision-makingthereafter."

At the heart of the company's first phase was the finance/human resources applicationsuite. First, however, KPMG and the executive committee had to decide what managementapplication system to run and what platform to use. While Transport Canada had run OracleApplications in a Digital VMS environment, managers at both companies calculated thatconverting data from a legacy system was not feasible in the time allowed forimplementation.

The technical- and financial-department personnel that would eventually transfer to NAVCANADA were already proficient with Oracle's architecture. Also, as part of the deal, thefederal government agreed to transfer certain license agreements to NAV CANADA. So,continuing with Oracle Applications proved to be the logical choice.

The next step was choosing a platform. To continue paying the cost of supporting amainframe-based operation was deemed unfeasible in the new pay-as-you-go environment, soconsideration was given to mid-tier UNIX platforms and a client-server architecture. HPwas eventually chosen because of capability, reliability, strength and price.

Migration Dedication

A HP 9000, Model T520 was initially dedicated to production, a K200 was dedicated toproduction support and a K450 was purchased for disaster recovery. After the firstmigration to a new version of Oracle, NAV CANADA chose to switch to a T-Class server fordisaster recovery purposes and Y2K, moving production processes to the Model K450.

KPMG and NAV CANADA also tapped HP sales engineering to play a role in capacityplanning. "We told HP what we were planning to run and what our volumetrics were.Then we asked what size machines were needed," explained Don Kelly, NationalOperations manager. "They came back with a platform configuration and after a closelook at their recommendation, we agreed that it was the right design. This extra stepprovided an added measure of confidence for safeguarding NAV CANADA's businessprocesses."

"You have to remember that a hallmark of this transition to private enterprise wasthat the legislation afforded our teams with an extremely small window in which to developsystems supporting internal NAV CANADA processes as well as the framework for flightinformation and air navigation services. Six months -- that was [it]," says JohnCrichton, NAV CANADA President and CEO.

So, NAV CANADA and KPMG's teams promoted the concept of "keep it simple and test,test and test again." The idea was to encourage a rapid implementation of a systemthat was exceptionally stable and reliable.

That philosophy helped to ensure an effective transfer of system operations such asconfiguration control and testing regimens from KPMG into the hands of NAV CANADA'scompany users in November. The team focused on putting in the application with nocustomizations, even changing and readapting company practices in a few cases, followed byvery thorough testing. "Keeping things simple in this fashion also allowedsubstantial flexibility for NAV CANADA's requirements and this proved to be extremelybeneficial in the long term," notes Byrne.

Sharing The Air

The company is now sharing its knowledge with other air navigation service providersand organizations around the world. Regarding the Y2K readiness of common air navigationinfrastructures, this includes the United States, the United Kingdom, Portugal, Icelandand others.

Oracle and the database applications suite supported and simplified the consolidationor integration of systems for inventory, asset management, accounts receivable and humanresources. As such, KPMG integrators created a consistent data architecture for NAV CANADAto use as the basis for driving its technology across the company, even as the market forits services expanded by more than 5%.

As data is generated, it must be accessible from many locations. For example, modelbudgets are created using the Oracles Financial Analyzer (OFA), a multi-dimensional, cubicdatabase. Once created, they're automatically linked to the financial management systemfor access by other users and company executives. Managers throughout the company can thencreate, manipulate and refine their own budgets. When each is finished, it automaticallybecomes part of the company's general ledger without imposing additional steps or delay, aprocess that gains productivity savings.

If managers need to model their expenditures against a new or proposed budget, OFAlinks back into the general ledger, extracts actual figures and allows managers to modelwhat they anticipate spending against what they have previously spent. In a diverseapplication world, that action ordinarily takes weeks, but at NAV CANADA it takes only afew hours.

The information team also coordinates various system resources, such as the trainingand testing environments and a production support environment which are also operated onHP 9000 Series D- and K-Class servers. Because NAV CANADA is running a highly integratedsystem, different company communities, ranging from asset management and revenuemanagement to financial reporting and human resources, are interested in using theseresources. "Combined with rigorous testing procedures, they're benefiting from anextremely stable production environment," noted Byrne (see Guarding Against FutureShock sidebar).

Understanding the principle that safety and efficiency are complementary has helpedsecure NAV CANADA's success. The company does not focus on profit making per se, ratherconcentrating on efficient and technologically sound operations to back up equally safeand effective air navigation services. Canadian air traffic may well exceed the 5% levelsthat the rest of the world anticipates and undoubtedly puts pressure on the capacity ofthe ANS.

It's a tremendous impetus for the innovative use of technologies and techniques toaccommodate our customers and the traveling public. Most recently, NAV CANADA has extendedthe benefits of its financial systems directly to its users. For example, pilots orairline controllers can work from NAV CANADA's Web site and use our Enroute and TerminalFee Calculator to estimate movement-based charges -- navigation services betweengeographic waypoints.

Down To Business

Management's intent with the financial applications is not only to help planes navigatesafely, but to ensure the reliability and capability of the minute-by-minute business dataprocesses of NAV CANADA and to make that data available to users on the company network atseveral hundred sites across Canada. This should succeed even as aircraft operationschange and data grows more complex. Currently, NAV CANADA supports nearly 800 accounts and220-250 concurrent daily users spread from as far as Gander, Newfoundland in the East toVancouver, British Colombia in the West.

During its first two years of operation, NAV CANADA invested more than $165 million ina program geared to improve safety and technology. "Safety in the skies is our firstpriority and it's our only product," says Crichton in a recent press release."Our not-for-profit mandate and our stakeholder-based structure, with TransportCanada acting as safety regulator, is a vast improvement on the old model in which thesafety regulator and provider were part of the same government department."

In this new business model, customers and investors are the same. This means thatcommercial and airline pilots sitting in an aircraft cockpit as customers are also sittingon the Board of Directors. During its first two years, NAV CANADA was able to operateCanada's ANS at less cost and with greater efficiency than achieved under directgovernment control. More importantly, because its user fee system is more broad-based thanthe old tax and its overhead costs are lower, NAV CANADA expects to save airlinesoperating to, from and within Canada more than $125 million in the year that began March1, 1999.

John Richer is NAV CANADA's Manager Service Delivery for ERP Systems.