JetBlue Airways, a fast-growing, low-cost airline based in New York, flies millions of passengers around the Americas and the Caribbean each year, and despite a particularly brutal winter this past season, the company continues to report profitable growth. Growth has been a trend since the airline’s inception more than 15 years ago, and over time, its legacy financial planning system began having difficulty supporting the dynamic nature of the business. The manual reporting and management processes were tedious for department heads and made it difficult for the finance team to project current and future financial performance in a rapid time frame.
“JetBlue set out to improve good thinking and enhance financial discipline with the desired outcome of increased visibility into our forecast, an enriched sense of ownership, and improved decision making among all departments,” says Tracy Lawlor, Vice President of Financial Planning & Analysis (FP&A) at JetBlue.
JetBlue set out to improve good thinking and enhance financial discipline with the desired outcome of increased visibility into our forecast, an enriched sense of ownership, and improved decision making among all departments.
— Tracy Lawlor, Vice President of Financial Planning & Analysis, JetBlue Airways
In August 2013, JetBlue began its search for a new system and set out to review best practices and talk to other companies. By January 2014, the company went live with an implementation of SAP Business Planning and Consolidation powered by SAP HANA after completing a successful project dubbed Runway18 — “18” standing for an 18-month rolling forecast and “Runway” being appropriate for JetBlue’s business. This project modernized the company’s financial processes and resulted in faster and more efficient financial planning.
“We couldn’t do any modeling in our previous software,” explains Julia Paslavska, Manager of FP&A for JetBlue. “When we wanted to know what impact a storm had, or if we needed to change our forecast, everything had to be done in spreadsheets and funneled through FP&A.
This process was very time consuming. The Finance team also had to upload quarterly updates manually in spreadsheets and then convert them to a format agreeable to the third-party financial software before the data could be inserted into the system. “But, a day after we uploaded the forecast into our system, it was outdated,” says Paslavska. “Our business changes all the time.”
JetBlue utilizes more than 330 cost centers, not to mention dozens of other financial line items — that’s a lot of rows to update by hand. “Every cost center makes forecast adjustments to multiple accounts, so by the end of the year, we had a massive file with all our forecast adjustments,” Paslavska explains.
When evaluating potential solutions for the upgrade, JetBlue’s consideration of SAP software was a natural progression; the airline implemented SAP ERP in January 2006 and was therefore familiar with SAP environments. “There were many solutions that we liked, but SAP Business Planning and Consolidation powered by SAP HANA integrated nicely with our SAP ERP system, so that was a big plus,” Paslavska says. “We already own a lot of SAP solutions, as well as Ariba and Concur, which were recently bought by SAP, so the integration just made sense for us.”
Budget Early and Often
To keep pace with its growth, JetBlue needed a powerful and dynamic tool to accommodate business users in finance. And by combining SAP Business Planning and Consolidation powered by SAP HANA with a new 18-month forecasting process, the business could address scale and sustainability.
“The previous process involved a lot of back and forth with our FP&A team, leadership, and business units, resulting in four to five revisions of the budget before the board approved it,” Paslavska says. “We didn’t always have detailed visibility into all the projects that were coming until business units submitted their financial plans in early September. With a five-year forecast, we know the main projects that everyone plans on doing; but if you have 330 cost centers that want to do a bunch of little projects for small amounts, those small amounts can aggregate to big amounts.”
The new 18-month rolling forecast smoothed out the planning process and engaged decision makers earlier. This not only helped with budget building but also accelerated the process when adjustments to the budget were needed. “We encourage our business users to maintain a realistic and accurate forecast,” says Paslavska. “Under the previous system, whenever they wanted to make a forecast adjustment, they had to communicate the adjustment to the FP&A analyst who owned the spreadsheet and consolidated all adjustments in one file.”
Working with the ever-growing spreadsheet had been a daunting task, not to mention the lack of visibility and ownership for reporting. “At JetBlue, we build our annual plan using the bottom-up approach, so it’s extremely important that all departments have a strong sense of ownership over their business areas — both operationally and financially,” she adds.
At JetBlue, we build our annual plan using the bottom-up approach, so it’s extremely important that all departments have a strong sense of ownership over their business areas — both operationally and financially.
— Julia Paslavska, Manager of Financial Planning & Analysis, JetBlue Airways
That was a big driver for the implementation, according to Sid Dwivedi, IT Systems Manager at JetBlue. In addition to overseeing the SAP Business Planning and Consolidation powered by SAP HANA, SAP ERP Financials, and SAP Supply Chain Management (SAP SCM) applications within JetBlue, Dwivedi is a business user himself. “One of my responsibilities is working with IT leaders for our forecasts; they are now more actively able to ask me and other IT managers what our plans are for the next three to six months, and even our immediate plans, so they can go in and update the forecast as well,” he says. “As a manager, I have to be more accountable for my current planning, whereas in the past, these questions weren’t asked to the extent they are now, and it wasn’t as structured. The new application is going to help the FP&A team have more insightful data and more accurate numbers for the future.”
SAP Business Planning and Consolidation powered by SAP HANA has increased forecast visibility and enhanced ownership among the department heads and business users. All users have access to the same data at all times, and they can make their own updates and adjustments, which are then instantaneously available to the finance team. “The application houses all general ledger accounts and major statistical data, which allows for offline scenario analysis to be done in one place, without having to go to multiple systems and sources,” says Paslavska.
Another key benefit of the Runway18 project is the business leaders’ ability to see the budget and begin to plan a roadmap for their department much earlier in the process. “In Runway18, leaders are always planning for the next 18 months, so by September 2015, they will have been planning the following year for several months,” Paslavska continues. “Earlier and continuous planning enables leaders to discuss amongst themselves and their teams upcoming company initiatives much sooner than September. Also, it allows them to engage in tradeoff discussions based on a complete and meaningful picture. Most importantly, having insight into future months allows for more time to implement plans to mitigate risks.”
Reporting and Analytics
The new system has led to improved analytics — an ancillary benefit of the Runway18 project — and enables business users to query data quickly and calculate various metrics. Analytics is important in an evolving business like JetBlue’s, and in addition to the improved FP&A analytics, the company also rolled out SAP Business Warehouse (SAP BW) and SAP BusinessObjects business intelligence (BI) solutions to achieve better analytics across the enterprise.
“With SAP BusinessObjects BI solutions and SAP BW, end users can slice and dice data and also combine these solutions with other non-SAP data sources to perform better predictive analytics,” says Dwivedi.
On the supply chain side, JetBlue is continuously extracting content for vendor analytics for functions such as aircraft service providers. “We value our relationships with various business partners in the airline industry, so we are working with the SAP solutions to look at vendor-specific dashboards where we can more closely analyze expenditures by vendor,” says Dwivedi. “SAP BW will allow us to extract this data in a timely fashion and then we can create dashboards that take in the actual spend under management.”
With SAP BusinessObjects BI solutions and SAP BW, end users can slice and dice data and also combine these solutions with other non-SAP data sources to perform better predictive analytics.
— Sid Dwivedi, IT Systems Manager, JetBlue Airways
As business needs change constantly in the airline industry, it was important for JetBlue to have a dynamic solution like SAP Business Planning and Consolidation powered by SAP HANA that can cater to evolving needs. To get the most out of its investment, JetBlue has formed a Runway18 team that maintains and enhances the product daily.
“While our primary responsibility is to enhance the system from the technical side, we truly enjoy helping business units understand their forecasts better by helping them query historical data and create meaningful reports,” says Paslavska. “We’re always looking to improve the solution and the process, and we welcome all suggestions from our business users.”
Of course, changing the business users’ mindset is an ongoing project, according to Paslavska. “SAP Business Planning and Consolidation powered by SAP HANA is not just a new solution that enables users to own their forecasts; it’s a change in our planning and forecasting process,” she says. “It was a mindset change for users as they now own a live forecast they are responsible for, which needs to be up to date and accurate. We are extremely pleased with the change management we’ve seen thus far and are confident that the system and the process will only improve with maturity.”