Aeroflot will spend up to 648 million rubles for support of SAP

2019

Support of a SAP software in 2019

At the end of December, 2018 Aeroflot carried out uncontested purchase of services in support and development of the information management system on the basis of a SAP software.^[1] by Service provider is selected SAP CIS company.

Aeroflot bought services of support of a SAP software

Within the contract the contractor should accompany and develop the information management system of the largest Russian airline on the basis of the SAP software which is in commercial operation on end-to-end processes and also on infrastructure and basis of the information management system of SAP.

The perimeter of the project includes 21 processes:

• From purchase before payment,
• Inventory management,
• Contract management,
• Treasury,
• Accounting according to IFRS,
• Intra group calculations,
• Cost accounting,
• Budgeting,
• Operational personnel management processes,
• Corporate personnel management processes,
• Accounting,
• Accounting of non-current assets,
• Tax accounting,
• Quality management of a product,
• Transfer pricing,
• Maintenance of automatic synchronization of landscapes of all subsystems of SAP,
• Accounting of freight and mail transportation,
• Automation of internal audit,
• Management of politicians of access to SAP ERP,
• Monitoring of processes of closing of the accounting periods,
• Determination of limits on receivables of partners of Aeroflot.

All services should be provided from January 1 to December 31, 2019.

Estimated cost of works within the contract is 648 million rubles. This calculation of the price of services is not legally binding and, as stated in the agreement, is given for planning of the budget of the customer and resources of SAP. The specified amount is defined on the basis of information obtained by SAP from the customer and idea of SAP of the volume of services made according to the customer.

The actual cost of services can differ from approximate, but should not exceed it. The summary account with an actual amount for the provided services will be made out according to the spent time and resources of SAP. Services should be paid monthly.

In general the cost of all works consists of the cost of consulting services which approximately is 470 million rubles, and costs of services in software development – 70 million rubles. Over it the VAT of 20% is considered.

Predesign of cost of services is given in the table below.

At the same time, a set of the rendered services can be changed, and additional services can be provided on demand.

In 2018 similar services were excluding VAT estimated approximately at the same amount - 539.977 million rubles. Including VAT 18% the total cost was 637.2 million rubles.

2018

System implementation for tax monitoring

On October 18, 2018 the SAP CIS company sooshchit that Aeroflot became the participant of tax monitoring. According to the company, based on SAP solutions in the company a flexible system using which the Federal Tax Service (FTS) of Russia received online access to detailed interpretations of tax and accounting records and also the relevant data of an internal control system of airline is created. As a result in 1 half-year 2018 Aeroflot reduced costs for tax administration, and the number of the submitted paper documents by 7% decreased more than by 5 times.

The project "A data mart of PJSC Aeroflot for the purposes of tax monitoring" is implemented by specialists of SAP Digital Business Services. Now FTS within tax monitoring can check correctness of calculations and completeness of tax statements. Requirements of FTS, increase in document flow of the company in connection with growth of volumes of activity and also limitation of traditional forms of work with tax authority became premises of creation of a system in Aeroflot.

Implementation of the complete solution of SAP for tax monitoring will allow Aeroflot to reduce the volume and terms of tax audits, to cut down expenses on tax administration and also to reduce tax risks due to obtaining motivated opinions of tax authorities on difficult and atypical transactions.

Different storage systems of documents are united in uniform electronic archive. It allows to store and systematize data, to provide quick access to the necessary information. In the specialized system of tax monitoring employees of FTS can browse corresponding the scan images of primary accounting documents from electronic archive. Process of formation of tax statements became more perfect also. For transparent reflection of information from the accounting system of SAP ERP at the level of Data mart process of closing of the reporting and formation of tax declarations is changed. In the solution process of preparation, check and the publication of income taxes, the VAT, on the income of foreign persons, on property, 2-NDFL, 6-NDFL, etc. is organized.

We highly appreciated an opportunity to apply digital solutions for tax administration. As a result the company reduced costs and optimized labor costs. Besides, this project brought us reputation benefit. Irina Nikolaeva, chief accountant of PJSC Aeroflot

The project on implementation of the complete solution for tax monitoring, in our opinion – a logical step of Aeroflot on the way of creation of the digital enterprise for which premises were about to happen for a long time. Using SAP Aeroflot created full-fledged "workplace" for interaction with tax authorities which will help to simplify considerably process of checks and to bring him to the following level. Andrey Goryaynov, deputy of a general direktor of SAP CIS

Expansion of licensing SAP software

On June 29, 2018 it became known that the Aeroflot company will spend for software of the German company SAP in addition 815 million rubles. This money will go for acquisition of rights to use of software and technical support services of SAP Enterprise Support. Assignment to the Russian office of the foreign supplier SAP CIS happened without intermediaries — in a format of direct uncontested procurement.

The signed contract is formally calculated for a period of up to the end of 2050. Nevertheless, according to documentation on purchase it is possible to draw a conclusion that the technical support is bought only for 2.5 years. This term corresponds to the instruction on the fact that expenses on itself software within the above described lot make 494.3 million rubles, and expenses on support — 128.3 million rubles "annually".

In the press service of Aeroflot the growing scopes of licensing of a SAP software for needs of the organization were explained with growth of the business, increase in volumes and the importance of information processed by the system of SAP and growth of integration data streams. At the same time are sure of the organization that special conditions which the airline received at SAP within the considered purchase allow not only to optimize considerably costs of the company for the software in the next three years, but also give the chance to provide with IT support growth of business of group.

The press service of Aeroflot also explained that as of June, 2018 in the company on a SAP software all key functional areas are automated: accounting and tax accounting, accounting of financial leasing, logistics and a warehouse, treasury, personnel management, legally significant document flow, contract management, budgeting, accounting of income on cargo transportation, management of internal audit, tax monitoring, procurement management, monitoring of closing of reporting periods, accounting of IFRS and financial consolidation.

Aeroflot noted that the system implemented in the company is integrated with all key information systems and IT solutions: AMOS, Sirax, systems of the production Sabre platform, SOFI, IBM FileNet, SITA CrewTablet, Champ, KASUD, Monitor of the head and other systems. Integration of the platform with production systems for obtaining the necessary production management reporting and analytics in real time is provided (the system of aggregation of production data of OPS BI).

Follows from the documents posted on the website of state procurements that Aeroflot to four software licenses SAP Data Services for integration, quality assurance, profiling of data and the analysis of the text buys in addition 18 more. To 9027 licenses for SAP Payroll Processing for payroll — 10 more. To 40 licenses for SAP Business Planning for planning and budgeting — eight more. To 40 licenses for SAP Intercompany for reconciliation of balance of the enterprise in real time — eight more.

To 37 software licenses SAP Financial Closing Cockpit for reduction of terms of closing of reporting periods it is bought in addition eight more. To 129 licenses SAP Treasury and Risk Management for treasurer calculations and risk management — 13 more. To 1468 licenses for SAP Extended Procurement for purchasing activity — 3800 more. To 51 licenses for SAP S/4HANA for advanced compliance reporting for verification of the reporting — 23 more. To 11 licenses for SAP Tax Compliance for automation of tax audits — four more.

Besides, Aeroflot did not locate earlier licenses to use of the platform for storage and data processing of SAP HANA (obviously, only the specific version) therefore purchases them in number of 251 pieces. Expenses on it of software the largest in purchase — 260 million rubles of the mentioned 494.3 million rubles^[2]

2017

The cost of service of ERP grew

On April 12, 2017 it became known of the annual costs of Aeroflot company which increased by 113 million rubles on technical support and development of the information management system by the company on the SAP platform. The contractor in this project (the airline appoints it without tender) the Russian representative office of SAP.

Aeroflot, (2015)

Technical support and development of the information management system of Aeroflot on the basis of a SAP software in 2017 will cost the Russian airline 566.4 million rubles. The similar contract in 2016 signed between Aeroflot and SAP CIS was for the amount of 453.1 million rub^[3].

On March 3, 2016 the airline announced that the automation system of a time recording and payroll calculation based on SAP HCM was added to the SAP solutions involved in the company (Human Capital Management is human capital management) for more than 19 thousand employees. However this project began in 2015 therefore the technical support of a system should be considered in the contract for 2016.

The agreement of the company with SAP CIS regarding maintenance and development of the information management system concerns the technical processes implemented on a SAP software. Among them:

• inventory management,
• treasury,
• accounting according to IFRS,
• contract management,
• intra group calculations,
• cost accounting,
• budgeting,
• operational and corporate management by personnel,
• accounting and tax accounting,
• accounting of non-current assets,
• quality management of a product,
• transfer pricing,
• access control,
• testing,
• accounting of freight and mail transportation.

The agreement considers "works on infrastructure of the information management system of SAP" which structure is not concretized in the published documents.

SAP Audit Management

"We became the first who implemented SAP Audit Management in Russia — Kirill Bogdanov, the deputy CEO of PJSC Aeroflot for information technologies emphasized. — Implementation of a new solution allows us to perform internal audit at qualitatively new level, does this process faster, transparent and effective".

"SAP Audit Management reduces operating costs of carrying out internal audit. Including it helps to conform to requirements of the Government of the Russian Federation for state companies on continuous annual decrease in operating costs of 10% — [Krasyukov Dmitry]], the deputy CEO of SAP CIS noted. – The project became one of the first SAP implementations of Audit Management in the world. A great job on expansion of its functionality which the development team of SAP and a project team of Aeroflot performed in close cooperation was done".

2016

Aeroflot transferred ERP systems to the SAP HANA platform

The SAP CIS company and Aeroflot, national airline of Russia, completed by August, 2016 the project on transition of SAP ERP to the SAP HANA platform for performance improvement of business processes. Aeroflot became the first Russian airline working at the hi-tech SAP HANA platform.

Fall forward of acceptance of management decisions on the basis of information from SAP ERP due to reduction of terms of accomplishment of transactions and reports became a key project objective. On average after transition to the SAP HANA platform their speed increased by 4.4 times.

Also for Aeroflot it was crucial to increase stability and availability of systems in the period of peak loads (fast closing, end of reporting period), to optimize loading of processor capacities of the productive SAP ERP system and also to provide a possibility of parallel operation of a great number of users with the reports mentioning large volumes of data without deceleration of speed. And the disaster-proof system providing simultaneous access to more than 2500 employees became a project deliverable otkazo-. The solution created on the SAP HANA platform and a hardware and software system of HP has no analogs on scale, both in Russia, and in Europe. Its embodiment demanded joint work of specialists of SAP Digital Business Services, HP and Aeroflot which in the conditions of territorial remoteness of technology platforms managed to create and test additional non-standard scenarios and application servers in a short time, and finally successfully to carry out migration of the SAP ERP system on SAP HANA.

On project implementation on transition of SAP ERP to the SAP HANA platform 11 months were required. For confirmation of quality of migration specialists carried out three iterations of testing: functional, integration and also final "acceptance" testing within which correct work of all applications and consistency of data loading in a new system was confirmed. Thanks to joint efforts of a team of specialists, process of implementation was among best practices of SAP.

2012

Economy of Aeroflot after implementation of the ERP system of SAP already made about 25 million euros, the CEO of airline Vitaly Savelyev told journalists on October 3, 2012.

Project Progress

In addition to the "Automated Control System for Maintenance of Aircrafts" and "Planning and budgeting system" projects which are earlier adopted and implemented in Aeroflot the following projects and tasks based on SAP solutions were in addition initiated:

• automated control system for quality, security and risks;
• creation of the centralized database of the normative reference information and business processes;
• integration of the used applications of other suppliers with the ERP system of SAP;
• transition to the new version of SAP ERP 2005.

Due to the expansion of use of SAP products significant increase in amount of training of employees of Aeroflot in SAP products was made.

Effect from Implementation

Implementing solutions of SAP and ensuring complex integration of SAP with other information systems of Aeroflot allowed the company to receive qualitatively other tool for business and development of business processes, control of the existing technology transactions.

The first results of implementation and new horizons

The implemented ERP system from SAP  already saved to Aeroflot about 25 million euros, it to journalists was declared by the CEO of airline Vitaly Savelyev at a press conference in Moscow on October 3, 2012.

Assessment of the initial systems and choice of vendor  

According to Savelyev, SAP allowed to reduce number of the existing systems using which the company was controlled. "When we with a command came to the company, in it there were 180 working systems from different vendors. Gradually we reduced their number to 3, - Savelyev says. - For the first one and a half years of the project 9 ERP systems engines which replaced all that scrappy cover that was earlier were implemented".

Savelyev explained the choice of SAP with stradition and perspectives to be in line with world practices and trends. "So historically it developed that Aeroflot cooperated with SAP therefore we decided to rebuild a system on its base", - it continued. - If to look at the project, then it will turn out that Aeroflot implements SAP of nearly 10 years".

The first results

According to the chief financial officer of Aeroflot Shamil Kurmashov for the first half a year after implementation the company cut down the expenses on 10 million dollars. "If to estimate economy, then it made about 25 million euros, including about 10 million euros for inventory management, 3 million euros for accounting of finance, 5 million euros for personnel management. We detected about 2500 signed agreements under which we paid, and did not use services. The system of SAP helped to reveal all this", - Savelyev continued to tell. - In general a system pays off in three years".

In 18 months of implementation 11 projects, including automation of accounting and tax accounting, treasury, management accounting, International Financial Reporting Standards, budgetings, contract management, by purchases and stocks, maintenance and repair of aircrafts, personnel management and other were implemented. 

Plans of scaling

Vitaly Savelyev said that the company is going to broadcast the experience of implementation of the systems of SAP in the affiliated enterprises and the airline "Russia" will be the first company. However and about the budget it did not announce exact terms of the project.

"We estimate time and monetary expenditure now. Anyway the decision will be made by Board of Directors because SAP expensive pleasure", - Savelyev told. 

He specified that since a basic system is already implemented, the subsequent projects will be easier. "An implementation time should be real, I mean not 1.5 years and not 10 years, but average terms for similar projects"

According to plans of the company in the blizhayny future the following systems will be implemented:  corporate mobile platform SAP Afaria, SAP Unwired Platform; management system for politicians of access to SAP GRC; solution for environmental protection and energy saving of SAP EHSM+EC; SAP HANA; monitoring of a working environment of end users of SAP UEM.

Whether Technoserv Consulting working at subcontracting at SAP will be engaged in implementation it is not clear yet. 

Vitaly Savelyev hoped that projects will be started in 2013. At the same time he specified that all implementations will be gradual from the daughter to the daughter. He did not set the exact price of new projects, having said that "it will be precisely several tens of millions of euros".

2007

In 2007 in Aeroflot the final stage of implementation of ERP products of SAP producer was carried out.

Links

• Aeroflot implements new projects based on SAP solutions

Notes