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MANAGING CHANGE AND INNOVATIONS

AIR ASTANA. ERP IMPLEMENTATION

What is Organizational Change?


organizational change is the movement of an organization from its current state to some future and hopefully more effective state. Pierce, Gardener and Dunham, 2002

First-order/Second-order changes
First-order change - adjustment in system, processes, or structures, but it does not involve fundamental change in strategy, core values, or corporate identity. Second-order change - transformational, radical, and fundamentally alters the organization at its core.

Hybrid types of change


Sociotechnical changes - changes in people and technology Technostructural changes - concurrent changes in organizational technology and structure

Resistance to change
Fear of failure Creatures of habit No obvious need Loss of control Concern about support system Unwillingness to learn Fear that the new way may not be better Fear of the unknown Fear of personal impact

Pressures for change


Environmental Fashion pressure Mandated pressure Geopolitical pressure Hyper competition Reputation and credibility Organizational Growth pressure Integration and collaboration Identity pressure New broom pressure Power and political pressure

Strategies for successful implementation


Project championship Training Communication of system features and benefits Communication of new business processes and organizational structure Rewards and incentives

AIR ASTANA
National airline Established in 2001 First flight- 15th May, 2002- Almaty-Astana Operates domestically/ internationally Shareholders: - Samuryk-Kazyna51% - BAE Systems PLC- 49%

Domestic routes

International routes

Mission
We will provide profitable domestic and international air services to the highest standards of air safety and customer service, in order to serve and compliment the needs of the Republic of Kazakhstan.

ERP-system
ERP system is a set of business applications or modules, which links various business units of an organization such as financial, accounting, manufacturing, and human resources into a tightly integrated single system with a common platform for flow of information across the entire business.

President of Air Astana about ERP


necessary step for further development of the company When the company was at the initial stage of development and was not so big, it was enough for the company to use less complex operational system (OS). Now as the company become bigger and increased its operations the collaboration between the departments become more complex

Peter Foster

Why do we need ERP?


Staff: 3500 employees In 2010 served 2.35 millionpassengers Fleet of 26 Western aircrafts Further expand the fleet up to 34 aircraft by 2016 and up to 43 aircraft by 2020

ERP-implementation
2007- Top-management began to think of the ERP-system 2009- study of available solutions 2009- Tender to choose the provider of ERP-system Winner- BAS- KZ companyplatinum partner of Oracle

System implementation framework

Objectives of ERP implementation


Integrated system Collaborating all functional operations Increase the level of effectiveness, performance, production Improve availability and accuracy of management data Comply with Samuryk-Kazyna directions and principles of corporate management Improvement of operational clearness, control and forecasting Eliminate current systems limitations (in-use systems)

Actions before implementation


2007-2008 study of in-use processes and reorganization 2009 investigation of available solutions January-February, 2010- Tender March, 2010- project introduction

Stages of implementation

ERP implementation
Completion in 9 month Project team- Air Astana & BAS members Meetings with the President of Airline and Vice President of IT department were held on Fridays every week At the end of implementation process the specialists of Oracle audited the project, as it was contacted by Air Astana at the beginning of the project

It was not the introduction of the ERP-system from the ground up, but replacing of the existing fragmented system to a new and modern system, the project was a complex integration of different parts of the IS, which previously operated in the airline. Valerii Lanovenko, Head of the Oracle CIS

Key principles in implementation process

Concentrate on leading experience Completely involve end-users and interested parties Balanced integration and settings Be ready for changes in current business processes

Success factors
Top management support Business case Change management Project management Training

Oracle methods
Focus on best practice Participation of top-management Training technique -education at an early stage -colleague training

Effective communication
Competent projects team work, proper planning and adaptation to unexpected situations, a clear definition of roles, responsibilities and objectives were the guarantee that the large-scale project was implemented in nine months. Mutual understanding between business users and implementing team has played a key role along with the support of topmanagement of all three parties. Medet Rakhimbayev, Chairman of the Board of Directors of BAS

Problems
No communication among workers ex: any problem, direct call to IT department Difficult to shift to new system ex: previously- Excel

Risk factors in ERP-system

Strategies for controlling risk factors in enterprise-wide/ERP projects

ERP in Kazakhstan
First implementation of the system was projected in 2006 in Exploration&Production Kaz Munai Gaz Top companies: -Kazakhstan National Bank -KazakTeleCom -Kazkahstan Temir Zholy -Astana Finance and others

Fashion pressure-Technological pressure

Internal pressures
The need for integration and collaboration Growing number of passengers Increase in flight routes Staff expansion

Power pressure
The idea of implementing ERPsystem first came from shareholder Samruk-Kazyna as Peter Foster noted in his speech to mass media

Organization Development (OD)


problem identification consultation with an OD practitioner data gathering and problem diagnosis feedback joint problem diagnosis joint action planning change actions further data gathering

OD intervention process

Successful implementation is first of all a professional team, which participated in the project. We constantly invest in training our staff. Oksana Borisova, executive director of BAS Given the high level of complexity, the project in Air Astana is an example of successful implementation of ERP-system, not only in CIS, but also in the world. Valeriy Lanovenko, Head of the Oracle CIS

It's not the strongest of the species that survives, nor the most intelligent, but the one most responsiveto change Charles Darwin

Thank you