July 25, 2016
A request for proposal (RFP) from a Fortune 500 company would normally attract keen interest from Doug Stewart, the president of AircraftLogs, a scheduling and reporting software provider. But as he read one such recent document, he realized his firm could not submit a bid because the RFP process did not allow prospective bidders to have any conversations with the aviation personnel before submission of a full pricing proposal.
“Each flight department operates in a unique manner, with very different processes,” Stewart said. “We weren’t able to commit to fulfilling their unique needs without the flight department being fully engaged in the RFP process.”
Stewart’s experience underscores why aircraft operators are advised to clearly define their needs before buying software. Conducting a “gap analysis” can help them clarify how their existing software is lacking and how they hope to improve it.
“If you break down your business processes in selected areas today, that analysis will show you where you can improve in the future, and identify the gaps that you want to close,” Stewart said. “That helps you specify what you want your new software to accomplish.”
Making the Case
Aircraft operators have many compelling reasons to upgrade their software. They might want to give their pilots an easier way to find out when they’re flying on a particular day. Or they may want to ensure that business aircraft use is more closely monitored and precisely documented to maintain compliance with federal regulations.
Ryan DeMoor, senior financial analyst for aviation at Amway, said that when evaluating software, he considers whether a product would do what his flight department wants it to do, whether it would be worth the investment and whether the purchase would fit into his department’s budget.
While there are three main aviation software functions – flight scheduling, maintenance documentation and finance/tax reporting some companies may not need all three, according to Jed Wolcott, president of aviation accounting firm Wolcott & Associates and its software subsidiary Flight Tax Systems. “A single-aircraft flight department may not need the complexity of a sophisticated aircraft-scheduling system. The maintenance function may be handled by manufacturer-provided programs or by an aircraft management company. Don’t pay for software features that you don’t need.”
To convince a company’s leadership that the benefits of new software warrant the expense, an aircraft operator should formulate a specific justification or return on investment, said Nicole Gersper, director of client solutions at AircraftLogs. Examples she cited include “more efficient business processes,” “improved service to passengers” and enhanced data collection to enable “better decisions about optimization of the aircraft.”
A single-aircraft flight department may not need the complexity of a sophisticated aircraft-scheduling system… Don’t pay for software features that you don’t need.
– JED WOLCOTT, President, Wolcott & Associates
At the same time, picking software based on price alone is discouraged, as the product must be reliable and secure enough to handle sensitive data about the company and aircraft passengers. An operator could miss a critical piece if the only reason it bought the soft-ware was because it was 15 percent cheaper, DeMoor said.
Transitioning to new software can be disruptive, so the decision to proceed should not be made lightly. For instance, since a scheduling system is the lifeblood of a flight department, most companies are slow to change until they have developed an implementation plan. “You don’t want to struggle with flight logistics as a result of your system change,” Stewart explained. “You need to plan it carefully.”
Searching for Suitable Products
Once an aircraft operator figures out what it is looking for, it is time to scrutinize the available products.
When shopping for software, Joel Felker, director of aviation maintenance at CNL Financial Group and a member of NBAA’s Maintenance Committee, searches NBAA’s Air Mail forums for product ideas. He also asks similarly sized companies what they use. “It’s really word of mouth,” he said.
Felker analyzes whether a product would meet his requirements, including the number of people who would use it, whether it would function with his department’s standard operating procedures, and whether it would be easy to use. “I look for efficiency in software,” he said.
Felker contacts software manufacturers for more information and usually receives free demonstrations and price quotes from three or four companies. He picks the product that best meets his department’s needs.
Industry events and trade shows, such as those offered by NBAA, also provide opportunities to evaluate and compare software offerings. “Software sales and support personnel will be on hand to demonstrate software features and answer questions, and you will be able to ask questions that are specific to your company’s needs,” Wolcott said.
While some companies issue formal RFPs for software, most do so only when corporate policy requires it. With only a few software providers catering to the aviation industry, using a formal RFP “can seem like overkill” in certain situations, DeMoor said.
Aircraft operators, Stewart said, should “evaluate the products first, decide which one can fulfill their objectives and then negotiate separately with that particular vendor, because there aren’t that many choices for them to evaluate and the software products are all pretty different. Quite often, an RFP process can be restrictive if it does not provide room for discussion before pricing is required. A request for information (RFI) process can be more helpful, because it allows for discussion between the parties before finalizing project scope and cost.”
Stewart said the corporate IT department should be involved early enough in the process to ensure that the software and vendor meet corporate security requirements. “You don’t want to get too far down the [software purchasing] path without IT getting involved, because they can identify corporate IT requirements you might overlook, saving you time and effort in the long run,” he said.
You don’t want to get too far down the [software purchasing] path without IT getting involved, because they can identify corporate IT requirements you might overlook, saving you time and effort in the long run.
– DOUG STEWART President, AircraftLogs
Wolcott recommended organizing a team to evaluate software. The team could include representatives of the company’s accounting, flight, IT and tax departments, as well as outside accounting and legal experts.
“All potential users need to buy into a new system in order to make implementation a success,” Wolcott said. “Don’t let the flight department make the final decision on the software selection. The flight department may have little use for financial and tax information, but that data could be critical to the company’s accounting department or outside certified public accountants, especially in the case of a tax audit.”
Some aircraft operators may be tempted to develop their own software to save money or implement unique design features. But corporate IT departments often frown upon proprietary software. Aviation is so specialized and technical that it’s hard to make proprietary software work for a single operation.
“Most companies don’t do that,” Stewart said. “For example, our system has over $2.5 million of invested software development, and our competitors also have made significant investments. Not many companies will want to make that big of an investment in a special-purpose system, when they could use an existing, industry-tested product for a fraction of that cost.”
DeMoor considers software development to be beyond the capability of most aircraft operators. “It is practically impossible to be cost-effective building something from scratch, even for a department as large as ours,” said DeMoor, whose department has 13 business aircraft. He said it makes more sense to buy off-the-shelf software and work with the software provider to customize it.
But buying commercial software is not without challenges. Instead of meeting an operator’s needs in a single package, most providers take an a-la-carte approach, offering products that perform a single function, such as finance, inventory, legal/regulatory, maintenance, scheduling or tax. As a result, an operator may have to go through the time-consuming task of buying – and learning how to use – a wide range of products to perform all of its work.
“I wish there were more products out there that did all of those functions well in a single package,” DeMoor said. “Having a central source of data that touches all of those areas would solve a lot of problems.”
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Four Steps to Buying Aviation Software
- Clearly define needs before buying software by consulting with your IT department and conducting a “gap analysis” to clarify how your existing software is lacking and how you hope to improve it.
- Survey the market of available software and consider issuing a request for information (RFI) instead of a request for proposal, because an RFI permits discussion between the parties before finalizing project scope and cost.
- After deciding which software can best meet your needs, negotiate price and package details with the vendor.
- Develop a detailed implementation plan.
This article originally appeared in the July/August 2016 issue of Business Aviation Insider.
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