Case Study

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CASE STUDY
Aeronautica Civil: Achieving Competitive Advantage in a Noncompetitive Industry

As noted in the chapter, competitiveness in government agencies can sometimes be expressed as “competing against yourself.” Essentially, an organization sets goals that are significantly higher than current performance and puts processes and systems in place to meet those goals, thus effectively competing against its former performance. Aeronautica Civil (aerocivil.gov.co) is Colombia’s aircontrol agency. A divison of the Colombian Ministry of Transportation, Aeronautica Civil is responsible for overseeing and developing Colombia’s air transportation system, including 73 airports and 3,000 officers. The agency is responsible for efficiently managing the movement of more than 10 million passengers and 957,000 aircraft takeoffs and landings each year. In its review of computer systems for the Y2K problem, Aeronautica Civil became aware of significant deficiencies in the control of its financial operations. Billing was consistently in a three-month backlog, processing a customer statement took three days, bank accounts were being reconciled manually, and closing the monthly balance sheet was taking three months. Something needed to change, and the business drivers behind that change were:

_ Increase the company’s revenues and improve accounts receivable turnover. _ Prevent economic losses from bad debts plus generate and control revenue from other sources. _ Minimize resources wasted in responding to claims.

_ Allow for procurement controls and control of fixed assets.

After a three-month evaluation process of ERP vendors, Aeronautica Civil selected consultant J.D. Edwards to develop and implement a system that could address the problems in the agency’s financial operations and improve its performance. The system was successfully implemented in only nine months. Key fac tors in that implementation success were the full commitment of Aeronautica Civil’s executives toward the initiative and an implementation team that included some of the best professionals in each of the agency’s financial and administrative areas. Success was defined as meeting many of the goals defined for the project. In comparison, and in competition, with its former self, now billing is up-to-date, customer statements are processed in two minutes, bank accounts are reconciled automatically every day, and the balance sheet is closed by the twentieth of the following month.

More generally, these are the results: Management of accounts receivable and collections has been significantly improved. Managers have access to timely and reliable information for decision making. Decision-making and immediate response capabilities are more efficient, a critical factor in an air transport agency. Costs and execution times have been reduced. And operations and corruption control have been automated. Today the new, more competitive Aeronautica Civil projects “an image of continuous modernization, better service, efficiency, control, and transparency among its customers and other governmental entities. Aeronautica Civil has become a model government-owned company, and a prototpe of systematization for aeronautics companies in other countries” (J.D. Edwards, 2002c, p. 2). Aeronautica Civil is one of many examples of not-forprofit or government agencies who have implemented a strategic information system to become more competitive in an industry in which the normal rules of competition do not apply

Questions

1. Who is Aeronautica Civil competing against? What other approaches to measuring competitiveness can not-for-profit and government agencies use in measuring competitiveness? Aeronautica Civil is competing against air control agencies internationally, as well as other agencies within Colombia. Measurements of competitiveness include collection of outstanding debts, effectiveness of the systems employed, customer satisfaction, and achievement of goals like...
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