Presenting Accellerated Business Transformation at Arlanda Airport A

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Presenting Accellerated Business Transformation at Arlanda Airport A case study of ”Raketen” Cap Gemini Ernst & Young 21. May, 2001

Contents • Arlanda (Raketen) Fact Sheet • Overview of the initial sales process • The First Phase (A&D): Completing the sale © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 2–

Arlanda (Raketen) Fact Sheet Arlanda Project Facts • Initial Sales Phase: Best Practice Characteristics • Approximately 1 year • A&D • Tendering for A&D and implementation phase completed before project start (sales phase): • Timeframe: 8 weeks (including set-up) • 8 -9 CGEY resources • SEK 2. 7 million • True CGEY team sell (delivery resources involved early) • Strong commitment from Director and Client Executive Team • Implementation (RD) phase: • No time-lag between A&D and Implementation phase • Timeframe: 2 years • +/- 15 CGEY resources • SEK 45 million (fixed) • SEK 35 million (performance based) • Convergent sale (Business & IT delivery components) © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 3–

Overview of the initial sales process

We used a five-step process to build the Arlanda sale 5 Steps Leads Generation First Phase (A&D) Building the Sale Results Delivery Completing the Sale Project The Sale Phases (5 Steps) Step 1 Intro Exec Discussion Step 2 Exec Working Session Step 3 Get VPs Onboard • Establish credibility • Summarise Last Meeting • • Identify Core Business Issue • Core Business Issue Detail Discussion Decision Maker Leadership • MD Leadership • Start to learn about organisation • CGE&Y Approach • Other Consultancy experience • Link with 3 rd Meeting • Link & Preparation for Right Next Steps • Link with 2 nd Meeting • Step 5 Pre A Introduces CGE&Y team (e. g. Lead) • Step 4 Authoriser Meeting Link with 4 th Meeting with Authoriser February - May 2000 April - June 2000 • Informing Authoriser • Pre Analysis Process • Link to Decision Process • Link to First Phase Opening July - December 2000 © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 5–

Each step of the initial sales process involved different stakeholders and activities Step 1 Intro Exec Discussion • Newly appointed Airport Director • Changing external environment: – Traffic growth • Reducing profitability: – Cost pressure – Loss of tax-free revenue Activities Stakeholders Step 2 Exec Working Session • One-to-one discussions to identify and clarify issues • Discussion of CGEY capabilities • Build credibility: – Reference to the SJ change programme – Refer to relevant CGEY industry experience • Arlanda Airport Director: – Kerstin Lindberg Göranson • CGEY Business Dev. Executive: – Erling Møller Larsen Step 3 Get VPs Onboard Step 4 Authoriser Meeting • Executive workshop: • CEO secures commitment in executive team: – Present CGEY Airport “point-ofview” – Present methodology and project outline – Create project logic - balanced scorecard framework • Arlanda Management Team • CGEY team: – Business Dev. Exec. – Content Expert – Potential A&D Lead • CEO gains backing of authoriser • Arlanda manages tendering process for A&D and RD: – CGEY coaches request for tender CGEY and Arlanda prepare A&D start-up: – Resourcing – Detailing project plan – CGEY presents and submits proposal • Arlanda Management Team and Authoriser • CGEY team: – Business Dev. Exec. – Potential A&D Lead – Potential RD Lead – Proposal Team © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 Step 5 Pre A • Arlanda Management & Project Mngr. • CGEY A&D team: – Business Dev. Exec. – A&D project mngt. – 6–

The initial discussions with the Airport Director uncovered a number of key challenges Key challenges • Need to further develop commercial activity and the revenue-earning potential of the airport • Need to streamline processes in order to increase efficiency and reduce costs substantially • Need to act as a professional owner of the on-going infrastructure projects to secure delivery on-time and on-cost • Need to develop the organisation – Entrepeneurial culture – Market- and customer orientation – Motivation and morale These represented the step 3 meeting input and provided the basis for further discussion and detailing of issues © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 7–

During step 3, we defined the project objective as creating a dynamic, customer-focused and high quality business Build a company focused on customers and business Achieve operational perfection that complies with safety standards Improve utilisation of offpeak capacity and capital effectiveness Increase revenue to improve profitability and control costs Increase provided value of the qualty of project execution Project Objectives Create a shared strategic focus med common goals throughout the organisation Improve customer and employee satisfaction Create a business idea and vision to secure a competitive positioning CGEY has the capability and tools to create the conditions to achieve these objectives in partnership with Arlanda © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 8–

We then translated the key project objectives into tangible goals and implications Þ Quality business plan (airplane och commercial), performance management och tracking • Improve commercial revenue by 25% in 2 years and 100% in 4 years Þ Optimal use of assets and infrastructure • Arlanda runs and develops the Airport to become a profitable unit • Improve use of infrastructure by 10% (off-peak) Þ ”Profitability culture” - coordination between business and individual goals • Arlanda offers high quality services to its customers (airlines, passengers, vistors, . . . ) Þ Customer focus within all units and functions Þ Customer focused design of processes and procedures • Arlanda’s employees are motivated and proud to represent the business Þ Create credibility and build capability • Arlanda uses its available financial resources effectively ÞQuality planning and priotisation of development projects • Increase customer satisfaction index from 10 to 70 within 2 years ÞOrganisation with a clear understanding of roles and repsonsibilities • Improve employee satisfaction index on employee motivation from 25% to 70% within 2 years • To be defined ÞProfessional implementation of projects © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 9–

And identified the key improvement areas relating to each project objective Financial Strategic and Market Need to better exploit the revenue potenial: • Commercial opportunities • Cost reduction • Kostnadssänkning • Develop the pricing models vs. the airlines Create the appropriate investment capacity and quality Need to improve the management systems: • Opportunities to continually track and manage results at all organisational levels Lack of shared goals: • Need to co-ordinate business and individual goals Insufficiant strategic thinking: • Proactively define goals and realise plans Improve forecasts and seek volume growth: • Improve capacity and quality forecasts as basis for increased volume Operational People Improve prioritisation of project definition and delivery: • Seek effectiveness by balancing time and value • Adopt project lifecycle principles and deliver to plan and quality • Become more proactive in future planning Bli mer proaktiv i framtida planering Reallocation of resources: • Ensure that the ressource allocation is effective and needs based Need to close the capability gap: • Reduce the gap between internal and external view of performance Need to change cultural mindset towards profitability: • Lack of holistic business understanding • Need to build customer and market focus (beyond safety) Increase trust in colleagues competence and knowledge This provided the basis for tailoring the initial project design further © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 10 –

The Arlanda change programme was then proposed as two distinct phases using a true partnering approach December 2000 February 2001 Phase II Analysis and Design • • Implementation phase Mapping of processes Estimation of improvement potential Develop a Business Case Plan the implementation phases Create organisational involvement Create a basis for sustainable results Coordination with other ongoing initiatives • • • Implementation through partnering Realisation of measurable results Capability transfer Organisational involvement and participation Continual measurement of improvements Create lasting results But realisation of the delivery phase depended on a successful A&D execution to pass the February decision point © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 11 –

We identified five CSFs for successful conversion from A&D to the implementation phase ¨ Effectively manage momentum through Christmas break ¨ Never discuss ”if” there will be an implementation - but rather ”how” and ”what” it looks like ¨ Create visible involvement and mobilisation of demotivated organisation ¨ Continue involvement of Bus. Dev. Exec. to leverage relationship ¨ Aim to have business case to justify RD prepositioning of SEK 15 - 25 million These were closely managed throughout the A&D © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 12 –

The first phase (A&D): Completing the sale

The analysis and design phase (A&D) was structured to conduct a holistic business review in 8 weeks 5 Steps Leads Generation W. 0 W. 1 First Phase (A&D) Building the Sale W. 2 Results Delivery Completing the Sale 20/12 -8/1 W. 3 Implementation Project W. 4 W. 5 W. 6 W. 7 W. 8 Vision and Objectives Commercial activities Interviews • Group Onboarding/ Training Planning and information gathering Christmas Holiday • Focus Passengers and Freight Phase 2 planning Plane/Aircraft activities Support functions IT och information channels People and capabilities Financial analysis Fin. Potential Business case Mobilisation & Communication Project Management, 8. 1 Update 1 22. 1 Update 2 © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 5. 2 Update 3 19. 2 Update 4 – 14 –

This A&D project had 4 key deliverables Stream Analysis Business Case Vision och mål Passagerar, frakt och Passagerar, flygaktiviteter • ------------------------ • ----------------- • ------------ • ----------------------------- • -------------------------- • ----------------- • ------------------------ • ---------------------- Målbild SEK Nyckeltal Förändring ROE Kassaflöde Medarbetare och kompetens + SEK Marginal Nuläge + % Stödfunktioner IT och informationskanaler Hur? • --------------- • ----------- Kvantifierbart Vision och mål Icke finansiella • --------------- Ej kvantifierbart Kommersiella affärer Finansiella Project Design for Delivery Projektstruktur Projektplan A mobilised organisation ready for change © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 15 –

It was managed through a simple structure with clear roles & responsibilities and a true client partnership approach Executive Steering Group Kerstin Lindberg Göransson Pererik Holmbom Olle Sundin Jussi Halonen Erling Møller Larsen (CGE&Y) Bo Erixon (CGE&Y) Bengt Holm Anders Nermo Per Edström Britt Marie Andersson Joakim Waxlax (CGE&Y) • Guides the change process • Forum that makes necessary decisions Project Management • Manages the project (strategically) Anders Almerud (Arlanda) Joakim Waxlax (CGE&Y) • Manages the project, day-to-day • Responsible for timely delivery and quality Team Management Kristine Kjelaas (CGE&Y) Vision & Objectives Commercial activities Anders Almerud (Arlanda) Eva Johannisson (CGE&Y) Patrik Winge (Arlanda) Christer Holst (Arlanda) Malou Olausson (CGE&Y) Passenger s & Freight Plane/ Aircraft activities Christina Karlsson (Arlanda) Marie Solberg (Arlanda) Christer Olsson (CGE&Y) Kalle Palmqvist (CGE&Y) Support Functions Eva Casterud (Arlanda) IT och information channels Jonas Grahm (CGE&Y) People & Capabilities Business case Anders Almerud (Arlanda) Anita Gleizde (CGE&Y) Mia Hedberger (Arlanda) • Conducts analysis within each stream • Involves the organisation • Identifies strategies and initiatives Mikael Hassel (Arlanda) Filip Truedsson (CGE&Y) © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 16 –

We used a “valley of death” approach to structure the A&D sales process. . . 1 The emotional cycle of change ”What your people say” • Project status • Focus Interview Feedback • High-level financial analysis • Next Steps/Way forward Uninformed Optimism : “Oh great, more consultants” • Project status • As-Is findings • ”Top Down” Business Case • Next Steps/Way Forward Commitment “This feels different - maybe something will actually happen” Denial 2 ”What is our starting point? ” 4 “This approach will work - we can all be heroes” Informed Pessimism : Resistance “It can’t be fixed, we tried it before , the problem is over there etc. ” “It’s worse than I thought and now everybody knows” ”How do we get there? ” “This is a new way of looking at the problem - I’m learning” • Phase 2 project design “We might need help but we can do this” Hopeful Realism Exploration • Project status Informed Optimism • Consolidated business case • Next Steps/Way Forward 3 ”Where do we want to be? ” “We found the root cause of the problem maybe they can help us with a solution” • Project status • Outline future state • ”Bottom-Up” benefits case • Next Steps/ Way Forward The A&D process is really about managing the political and emotional elements supported by the rational analysis © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 17 –

. . . using the well defined and proven A&D process to manage the project progression Planning Training FI’s 0 - 1 2 Week Pre A Mtg Updates Messages Analysis 3 Business Case 4 WSCC 1 6 PDW 2 “We know how big they are and what is causing them” “We already know what the issues are” “It’s different - people are involved” Activities 5 “‘We’ now includes your people” • Initial Hypotheses • Briefing pack • Storyboarding (U 3) • Onboarding • Message plan • Training • FIs & analysis • Update cycle (U 2) • Capacity plan • Planning • Analysis planning • Reviewing • Week 0 plan • Expectation Setting • Update cycle (U 1) • Editing • JTM Onboarding • Storyboarding (U 2) • Queue mgt. • Storyboarding (U 1) • WSC Pack • PDW Pack • Financial Analysis • FI planning 7 3 “Here’s why it’s worth your while to address them” Wrap Up 8 PDR F “Here’s a plan to address them that your people are excited about implementing - just sign here” • Deadline setting • Preparation • Logistics Project Design • Knowledge • B case quality check • Drive validation • Update cycle (U 3) & Final Present • Programme Design - (Get R&D lead!) • Analysis books • Tidy up • Expense rec. • Lessons learned • EPRs • Knowledge Capture capture plan • JTM interviews But the output was as always very client specific Source: Ian Burrell © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 18 –

The focus interviews identified a number of ”soft” improvement areas • The employees have an unclear view of the future – The organisation lacks a clear vision and strategy – Roles and responsibilities are unclear • Stream Analysis The organisation is frustrated: – We cannot complete the projects we have started – The organisation is tired of all operational savings whilst the business is bleeding – Communication between departments is poor and misinterpretatios are common • Leadership and management improvements are necessary – The leadership must become stronger and feedback provided more naturally – Goals and obkectives are unclear and there is a lack of follow-up and revised action • The improvement potential is large: – Most believe there is potential for 20 -50% improvement • The organisation believes it is the right time to start the change programme: – 96% say the time is right – 70% say they believe the chance of success is big or very big The organisation understood the need for change and has great expectations of the transformation programme © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 19 –

The stream analysis identified a range of tangible process and IT improvement opportunities • Lack of resources and competence to manage the commercial business – Insufficient availability of resources – Much historic baggage through old contracts – Rents and revenues vary a lot and are low compared to other large airports • Stream Analysis The main processes have many bottlenecks and opportunity areas: – Arlanda lacks knowledge and tools to control and manage the main processes – Arlanda lacks a business mindset and does not charge sufficiently for several services, ex. Ramp services, airplane parking and VIP/CIP services. • Purchasing represents the support areas with the greatest improvement potential: – – • Purchasing routines are not adhered to Invoicehandling costs are extremely high Roles and responsibilities for purchasing are unclear Lack of IT-system- and reporting tools Arlanda’s IT is uncoordinated and does not support the business: – There is suboptimisation within IT-investments due to lack of shared objectives and poor coopration The improvement potential requires a holistic implementation approach © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 20 –

The A&D also defined a future ambition for each of the improvement areas Objectives and Vision Passenger, freight and aircraft activities Commercial activities • Utveckla en tydlig målbild och väg framåt för organisationen att arbeta mot. • Implementera vision och strategiska mål. • Detaljera vision och mål i övergripande och avdelnings-specifika strategier. • Intäkter från butiker och restauranger ligger klart under internationellt nivå, och kan ökas. • Arlanda kan öka kontrollen av kärnprocesserna genom aktiv styrning och samarbete med partners. • Hyresnivå för kontorslokaler kan höjas. • • Intäkterna från parkeringen kan höjas genom en mer differentierad prissättning. Arlandas attraktivitet som flygplats kan ökas genom aktivt arbete med att sänka Minimum Connection Time. • En utveckling av verksamheten, bl a VIP och CIP-verksamheterna kan ge ytterligare intäkter. Support processes IT och information channels People • Inköpskostnaderna kan sänkas genom en förbättrad faktureringsprocess. • Ett aktivt engagemang från ledningen ger en förbättrad styrning och ledning av IT. • Klarare roller och ansvarsområden för alla medarbetare. • Fakturahanteringskostnaden kan sänkas. • • Ökad fokus på utveckling av medarbetare. • Förrådskostnader kan sänkas. Förbättra utvecklingsprocessen, från kravställning till uppföljning. • • Applikationer bör harmoniseras och integreras. Förbättrade beslutsprocesser inom alla delar av organisationen. The aim is to become more professional, commercial and manage the volume growth target without increasing cost and resourcing © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 21 –

The business case quantified an improvement potential of MSEK 198 - 282 Identified opportunities, MSEK Identified opportunities MSEK Low estimate High estimate Small or no implementationcosts 124 187 Some implementationcosts 74 95 198 282 Några kostnader Små eller ingen kostnader TOTAL Business Case Source: Opportunity charts © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 22 –

In addition the project will impact key measures in other quadrants of the Balanced Scorecard Ekonomi Business Case • --- Business Case 182 - 257 MSEK • --- Medarbetare • Share long-term absence (days per employee per year) • Share short-term absence (days per employee per year) • Manager index • Employee turnover, external (%) Nuläget Kunder 2002 17, 4 2002 • Cust. Sat. Index airlines Project RAKETEN • Cust. Sat. Index tenants • Cust. Sat. Index passenger 3, 3 • Cust. Sat. Index visitors 4, 9 Verksamhet A continual employee temperature check will provide an indication of how the employees perceive the project. The questionaire must be easy to complete and analyse. Nuläget • • • Capacity utilisation # of contracts with an SLA # of created standards # of deviation reports in FLORA/SARA % of purchases through agreements, ops # of contracts followed up, largest Nuläget 2002 0 0 75 25 These are long-term KPIs and not likely to be measurable impacted within the project timeframe 80 -90 200 These KPIs must be tracked throughout implementation © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 23 –

The project approach ensured broad involvement of Arlanda stakeholders throughout the project Stakeholder involvement • Project presentation as part of roadshow in December - approx. 350 participants. • Interviews with approximately 130 employees. • Regular updates with management team and unions. (Bi-weekly) • Ongoing meetings and project presentations: – The senior group of 40 has been informed twice. – Approximately 150 people have vistied the project room. – Newsletters have been distributed throughout the organisation • Project documents and presentations have been available on the Intranet. • Discussions and meetings with customers and business partners: – SAS – Handling company – Tenants A mobilised organisation ready for change This secured buy-in to the project initiative and thereby facilitates implementation © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 24 –

The transformation map structures Arlanda’s prioritised activities over a 5 year timeframe 2001 2002 Financial ABC-mindset implemented 2003 2004 2005 Management by 12 month forecasting Introduced correct product prices Very satisfied customers 12 month rolling forecast implemented Financial management implemented Balanced Scorecard management realised Quality standard implemented Life cycle thinking and investment management Parking completer Monitoring och validation of kunder All commercial contracts renegotiated Process oriented Satisfied organisation SLA´s with all customers of airport processes New taxfree agreements in place Customer strategy launched SLA´s for all contracts IT-organisation and roles implemented Change part of every day Cusotmer Clarify Arlanda’s role vs. passengers Arlandas vision and objectives Competence to meet new Arlanda Very satisfied employees Satisfied employees We are organised in accordance with Efficient management Quick win plan for our work practice of processes commercial gains launched Improved leadership Strategy and plan for Efficient purchasing commercial activities Kompetenser kartlagda Strategy and business model throughout organisation completed included Improved employee developed partnering strategy attitude Clear roles and Completed gap New organisation responsibilities Vision and goals analysis structure started communicated All understand why constant. Activities to improve Plan and process for change is needed leadership Measurement and launch of SLAs Efficient purchasing IT-strategy tracking process Shared evaluations Activities to develop organisation formulated established employees Operational Source: Projectanalysis CGE&Y, Workshop Feb. 15 2001 with vision development group. © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 People – 25 –

This provides the basis for the proposed and sold 2 -year implementation project Financial Vision communication Customer Operations Strategy and business model • Initial focus on quick hits and cash flow • Consulting heavy at start reducing over time • Three key milestones: Commercial activities and assets Parking Purchasing process Quick Hits Operational IT IM Strategi IT Strategy Main Principles People – Break even – 31. 12. 2001 – 1. 7. 2002 Processes, pricing and packaging Business managemnt, objectives and follow-up Organisational development Leadership and employee development & comoetence Continuity ”Benefits tracking” and follow-up Project Management, mobilisation and communication 2001 December 2001 Fix Arlanda New processes and organisation December 2002 July 2002 Secure continuity Project Design for Delivery © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 26 –

The implementation phase started on February 19 th and the sale was managed in paralell with the A&D closure Review Comments to contract submitted to CGE&Y First version of contract to IS and KLG Final version of contract Signing Start of implementation Monday 5. 2 Tuesday Wednesday Thursday 6. 2 7. 2 8. 2 Friday 9. 2 Monday 12. 2 Tuesday Wednesday Thursday 13. 2 14. 2 15. 2 Friday 16. 2 Monday 19. 2 Update 4 Agreement on principles Project Summary: • RAKETEN was well accepted in the organisation. • The implementation phase has a strong business case • The implementation plan is robust. • The project design enables a safe cash-flow development. © 2001 by Cap Gemini Ernst & Young. All rights reserved. Proprietary and Confidential. Uppdatering 1 projekt RAKETEN 8 januari, 2001 – 27 –

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