Working in silos, especially in a large organization, can lead to a range of problems, from duplicated efforts to miscommunication and inefficiencies. One of the key issues that arise from working in silos is the creation of data silos, where information is compartmentalized within different departments and systems, making it difficult to access or share across the organization. This lack of data visibility hinders decision-making processes and prevents organizations from fully leveraging their data for strategic purposes.
For Lufthansa, one of the world’s most renowned airlines, the challenge of data silos was all too familiar. However, instead of succumbing to the status quo, Lufthansa embarked on a transformative journey to break down these silos and harness the power of unified data.
The Data Silos Challenge
Lufthansa faced significant challenges due to data silos. The airline’s data was scattered across 14 separate ERPs, making it difficult to gain a comprehensive view of procurement spend and operational insights. This fragmented approach hindered collaboration, decision-making, and the ability to optimize operations fully. Identifying cost-saving opportunities and understanding supplier relationships were challenging tasks, highlighting the urgent need for change.
The Journey Towards Transformation
Recognizing the need for change, Lufthansa set out to tackle the problem head-on. Partnering with industry leaders McKinsey and SAP, the airline embarked on a digital transformation journey aimed at achieving data unity and unlocking hidden insights within its vast troves of information.
Central to this transformation was the implementation of a custom-built solution developed in collaboration with McKinsey. The solution provided Lufthansa with a consolidated global view of procurement spend, enabling data-driven decision-making and fostering collaboration across the organization.
Lufthansa was able to overcome the challenges posed by data silos and gained:
Data Unity
By unifying procurement data from disparate ERP systems into a single, searchable source of truth, the airline gained unprecedented visibility into its spending patterns, supplier relationships, and operational efficiency.
Unlocking Hidden Insights
The airline delved deeper into its procurement data and uncovered valuable insights that were previously hidden beneath the surface. From identifying cost-saving opportunities to optimizing supplier relationships, digital transformation empowered Lufthansa to make smarter, more informed decisions that drove tangible results across the organization.
Fostering Collaboration and Innovation
Lufthansa was able to forge stronger partnerships with its suppliers, driving greater transparency and accountability throughout the procurement process. This collaborative approach not only improved reporting accuracy but also fostered better negotiation terms.
Enhanced Visibility
The platform offers detailed insights into Lufthansa’s carbon footprint across various categories, down to the consumption and invoice level. This level of granularity allows the airline to identify areas for improvement and implement sustainability initiatives effectively.
The Bottomline
Lufthansa stands as a shining example of how breaking down data silos can lead to tangible business outcomes. By embracing the power of unified data and advanced analytics, the airline optimized its operations and positioned itself for continued success in the competitive market.
While their approach involved a significant investment in custom-built software, it’s essential to note that this might not be the best path for every business. For many mid-market and enterprise companies, adopting out-of-the-box solutions with build-on customization ability can offer a more cost-effective and efficient alternative. These solutions can provide the necessary flexibility and functionality for seamless implementation, helping businesses achieve their digital transformation goals without the complexities and costs associated with custom development. Lufthansa’s story underscores the importance of choosing the right approach that aligns with your business needs and goals.
