INF 443E CAT 2

IF/10/19
Kipkemboi Solomon Towett

Evolution of ERP at Kenya Airways (KQ)

Kenya Airways has undergone significant changes in its ERP system over the years to keep up with
the changing business landscape and technological advancements. Here is the overview of the
evolution of ERP at Kenya Airways:

1. Early Stages: In the early stages, Kenya Airways used basic legacy systems to manage its
core business functions, such as finance, procurement, and human resources. However, these
systems were limited in scope and did not provide real-time visibility into the company's
operations.
2. SAP Implementation: In 2006, Kenya Airways implemented an SAP ERP system to
streamline its business processes and improve operational efficiency. The SAP system
provided a comprehensive view of the company's operations and enabled better decision-
making. The system was integrated with other critical systems such as the airline's reservation
system, cargo management, and maintenance systems.
3. Upgrade to SAP S/4HANA: In 2018, Kenya Airways upgraded its SAP ERP system to SAP
S/4HANA, which is an intelligent ERP system that uses machine learning and artificial
intelligence to automate processes, provide real-time insights and enhance customer
experience. The new system has enabled Kenya Airways to improve operational efficiency,
reduce costs, and improve the overall customer experience.
4. Integration with other Systems: Over the years, Kenya Airways has also integrated its ERP
system with other critical systems such as the airline's reservation system, cargo management,
and maintenance systems. This integration has enabled Kenya Airways to streamline its
operations, improve efficiency, and provide a better customer experience.

Reasons for the ERP evolution at Kenya Airways

1. Growth: As the airline has grown and expanded its operations, its business processes have
become more complex. The ERP system has evolved to support the airline's growing
needs, including increased data storage and processing capabilities.
2. Technology advancements: Technology is constantly evolving, and new features and
functionalities are continually being added to ERP systems. Kenya Airways has updated
its ERP system to take advantage of the latest advancements in technology, such as cloud
computing and mobile applications.
3. Changing business needs: The airline industry is highly competitive, and Kenya Airways
has had to adapt to changing market conditions. The ERP system has evolved to support
the airline's changing business needs, such as the need to improve customer service,
increase operational efficiency, and reduce costs.
4. Regulatory compliance: As a publicly traded company, Kenya Airways must comply with
various regulations and reporting requirements. The ERP system has evolved to support
the airline's compliance efforts, such as providing real-time financial reporting and
improving data accuracy.
5. Integration with other systems: Kenya Airways uses a variety of systems to manage its
operations, such as airline reservation systems and cargo management systems. The ERP
system has evolved to integrate with these systems to provide a unified view of the
airline's operations and improve data sharing across different departments.
 Merits of evolution of the ERP

1. Improved Operational Efficiency: With the implementation of SAP ERP and the
subsequent upgrade to SAP S/4HANA, Kenya Airways has been able to streamline its
business processes and improve operational efficiency. The new systems have automated
many manual processes, reducing the risk of errors and improving the speed of
operations.
2. Real-time Visibility: The new ERP systems have provided Kenya Airways with real-
time visibility into its operations, allowing the company to monitor and manage its
business functions more effectively. This visibility has enabled the airline to make better-
informed decisions, respond to market changes quickly and provide a better customer
experience.
3. Enhanced Customer Experience: The integration of ERP systems with other critical
systems, such as the airline's reservation system, cargo management, and maintenance
systems, has enabled Kenya Airways to provide a better customer experience. With real-
time data and insights, the airline can make more informed decisions, respond to
customer needs more quickly, and provide a more personalized experience.
4. Improved Data Management: The ERP systems have enabled Kenya Airways to
centralize its data, making it easier to manage and analyze. With improved data
management, the airline can make better-informed decisions, identify trends and
opportunities, and optimize its operations.

5. Cost Reduction: The ERP systems have also enabled Kenya Airways to reduce costs by
automating many manual processes, reducing the need for manual labor, and improving
the efficiency of operations.

These advantages have enabled the airline to optimize its operations, respond to market changes more
quickly, and provide a better customer experience.

Risks encountered by Kenya Airways during transition

1. Technical Risks: This includes risks associated with software and hardware failures, data loss,
compatibility issues, and inadequate technical infrastructure.
2. Operational Risks: These include risks associated with the business processes that support the
ERP system, such as insufficient training of personnel, lack of standard operating procedures,
inadequate documentation, and inadequate resources.
3. Financial Risks: These include risks associated with the cost of the ERP implementation, such
as budget overruns, inadequate funding, and unexpected expenses.
4. Organizational Risks: These include risks associated with the impact of the ERP
implementation on the organization, such as resistance to change, inadequate communication,
lack of stakeholder buy-in, and insufficient governance.
5. Compliance Risks: These include risks associated with non-compliance with regulatory
requirements, such as data protection laws and industry standards.
6. Strategic Risks: These include risks associated with the impact of the ERP implementation on
the organization's strategic objectives, such as a lack of alignment with the organization's
goals, inadequate performance measurement, and insufficient risk management.
Challenges experienced by the airline during transition

Implementing and upgrading ERP systems can be a complex and challenging process, and Kenya
Airways was not immune to these challenges during its ERP transitions. Some of the challenges
experienced by Kenya Airways during ERP transitions include:

1. High Cost: ERP systems are expensive to implement and upgrade, and Kenya Airways had to
invest a significant amount of money to implement and upgrade its ERP systems. The high
cost of implementation and maintenance of these systems can strain a company's finances,
particularly if the implementation process is not well-planned.
2. Technical Challenges: ERP systems are complex and require specialized technical expertise
to implement and maintain. Kenya Airways faced technical challenges during its ERP
transitions, including system downtime, data migration issues, and software compatibility
issues. These challenges can lead to delays in implementation, increased costs, and reduced
system performance.
3. Resistance to Change: ERP transitions often require significant changes in business
processes and procedures, which can be challenging for employees to adapt to. Kenya
Airways experienced resistance to change during its ERP transitions, particularly from
employees who were accustomed to the old systems and processes. This resistance can lead to
delays in implementation and reduced employee productivity.
4. Data Quality Issues: ERP systems rely on accurate data to provide useful insights and
optimize business processes. During its ERP transitions, Kenya Airways faced data quality
issues, including duplicate data, missing data, and inconsistent data formats. These issues can
lead to inaccurate reporting, delays in decision-making, and reduced system performance.
5. Training: ERP systems require employees to have specialized knowledge and training to use
effectively. Kenya Airways faced challenges in providing comprehensive training to its
employees during its ERP transitions, leading to reduced employee productivity and increased
errors.

Addressing these challenges requires careful planning, effective communication, and specialized
expertise to ensure a successful ERP upgrade.
References

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Mladenova, T., 2020, October. Open-source ERP systems: an overview. In 2020 International
Conference Automatics and Informatics (ICAI) (pp. 1-6). IEEE.

Hairech, O.E. and Lyhyaoui, A., 2022. The New Generation of ERP in the Era of Artificial
Intelligence and Industry 4.0. In Advanced Intelligent Systems for Sustainable Development
(AI2SD’2020) Volume 1 (pp. 1086-1094). Cham: Springer International Publishing.

Katuu, S., 2020. Enterprise resource planning: past, present, and future. New Review of
Information Networking, 25(1), pp.37-46.