Optimizing operational efficiency with SAP

Japan Airlines Co., Ltd. (JAL), which was about to kick off the next phase in its digital transformation plans, faced a dilemma: put the brakes on innovation, or press ahead with its bold agenda?

JAL is on a mission to become the world’s favorite airline. To elevate itself above the competition in a crowded marketplace, the company designed a strategy with environmental, social, and governance (ESG) values at its core. As the first step toward its goal, the company pursued a far-reaching digital transformation.

Mr. Takafumi Asako, Manager, General Administration Systems, IT Planning & Promotion Department at JAL, recalls: “For many years, we have relied on SAP ERP applications to support our business. Then we were faced with EOS [end of service] on SAP ECC (for finance and accounting), SAP EC-CS (for consolidation) and Business Warehouse coming up in 2025. We needed to tackle the challenge of how to design a next-generation finance system, including whether to continue with SAP ERP with upgrades to S/4HANA.”   

At JAL, improving operational agility has long been a key focus. By replacing manual, paper-based processes with automated workflows in SAP® S/4HANA®, the company aimed to gain deeper insights into its financial performance to effectively navigate a challenging commercial environment.

As JAL prepared to spool up its transformation project, the pandemic brought the airline industry to a standstill. The company elected to forge ahead with its plans, on one condition. Mr. Asako explains: “We decided to continue our digital transformation initiative with this project, knowing that IBM was able to provide us with select people fully experienced in SAP S/4HANA migration.”

JAL engaged IBM Consulting® to help it build a new platform for insight, including new workflows aligned to its ESG commitments. The two companies have a long history of successful collaboration. In 2002, JAL chose IBM to deploy eJAL: a custom finance and accounting platform based on SAP solutions. For the primary infrastructure, the company adopted a hybrid cloud platform named CIEL/S based on Amazon Web Services (AWS).

“IBM has been a partner since we first implemented eJAL, and they have a deep understanding of our business,” comments Mr. Asako. “IBM Consulting delivered a well-balanced proposal, which was a decisive factor in our selection of IBM for this project.”

Through many discussions, JAL and IBM Consulting decided on a comprehensive upgrade of the eJAL platform to SAP S/4HANA to accelerate business processes and foster innovation. To align with its cloud-first strategy, JAL deployed the new system on SAP HANA Enterprise Cloud (HEC) with AWS, allowing the company to migrate from its SAP ECC/EC-CS applications.

Mr. Asako says: “We chose the cloud to reduce the need for maintenance and management, allowing us to assign our IT personnel to value-added activities. The cloud also makes it easier to elastically increase server resources during periods of high demand, and to recover our systems in the event of a disaster scenario. We selected SAP HEC with AWS because it works securely and seamlessly with CIEL/S, our internal hybrid cloud infrastructure.”

Guided by IBM, JAL selected SAP Analysis for Microsoft Office and SAP Analytics Cloud. The solutions formed a new financial reporting platform, offering JAL visibility of cross-company cash flow, costs, shared assets and more. Thanks to the new platform, JAL has eliminated manual, spreadsheet-based analytics processes, enhancing accuracy and speed in its planning and forecasting activities.

To overcome the challenges caused by national lockdowns and travel restrictions during the pandemic, IBM Consulting pioneered a 100% remote approach to the project. The remote approach yielded unexpected and exceptional benefits, as Mr. Asako explains: “With remote work, if a problem arises, the project members can immediately gather online and have intensive discussions. Maintaining close communication in this way is one of the reasons that the project went smoothly without delays.”

Thanks to IBM, JAL was up and running with its new eJAL system on schedule, enabling the company to start enjoying the benefits sooner. Ms. Miho Samizu, Vice President, ERP & Internal IT Systems Solutions, Business Solutions at JAL Infotec, comments: “Our eJAL system has many peripheral systems, and the teams responsible are distributed across JAL and JAL Infotec, which made it difficult to accommodate diverse business needs. But with the help of IBM Consulting, we listened carefully to our stakeholders throughout rehearsals and successfully addressed their concerns about the migration.”

Mr. Tomohiko Shimoda, Director, General Administration Systems, IT Planning & Promotion Department at JAL, adds: “Due to the COVID-19 pandemic, it was challenging to keep to the planned project schedule. So, it was very significant that we were able to complete the migration within the deadline. Our success with this project has been internalized as referenceable knowledge.”

Today, JAL has streamlined and optimized its mission-critical SAP solutions. Working with IBM, the company has reduced the number of SAP Add-Ons from 1,260 to 500. The company has also enabled new functionalities, including support for Bankers’ Automated Clearing System (BACS) payments for JAL employees based in the UK.

Since migrating eJAL to SAP HEC with AWS, JAL has benefited from a platform designed for high availability and consistently high performance, with support for exceptional service continuity for the company and its customers.

Mr. Asako says: “We were able to reduce the costs related to the operation and maintenance of the core system as expected. When the server load increased in some of our peripheral systems shortly after the migration, we temporarily added compute resources. After that, we were able to gradually reduce resources and shift to stable operation, which is another advantage of AWS.”

By moving to the cloud, the company has reduced the management burden on its IT teams. Mr. Hiroshi Takamura, EPR & Internal IT Systems Solutions at JAL Infotec, explains: “We asked IBM to customize the SAP S/4HANA front end, so it matched what we were used to, which enables us to work efficiently.”

As pandemic pressures recede, JAL is utilizing the new insights from eJAL to work to enhance service for its customers and drive efficiency. For example, the company is analyzing the cost per flight in greater detail than ever before, visualizing data and creating dashboards to enable data-driven decision-making in near real-time.

Mr. Shimoda continues: “Following the project with IBM, we were able to process not only monthly, but also quarterly and annual accounts without delay. The results we achieved were rated highly throughout the company.”

Mr. Asako concludes: “We are gradually making progress toward more complex and agile analysis. We are very satisfied with IBM, who provided the team and know-how that made our SAP S/4HANA project successful. We look forward to continuing to work with IBM to maximize the business value of our investment in SAP S/4HANA.”

Japan Airlines Co., Ltd. (JAL) (link resides outside of ibm.com) was founded in 1951 as the country’s first post-war private airline. Today, the company offers both passenger and cargo services. Headquartered in Tokyo, JAL employs more than 12,700 people and flies a total of 191 routes both domestically and internationally.