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Throughout its more than 40-year history, Embraer has been involved in all aspects of aviation including design, development, manufacturing, sales and technical support for commercial, agricultural and executive aviation. In addition, Embraer also offers integrated solutions for defense and security, and is the market leader for commercial jets with up to 120 seats.
In pursuit of financial efficiency, Embraer determined that its IT operating costs and ERP software maintenance budget consumed 70 percent of the total IT budget. This was not acceptable to CIO Alexandre Baulé, because it represented a severe limitation to the investments he could make in innovation.
“Nearly three quarters of our IT budget was devoted simply to keeping things running, but at the same time we were experiencing a huge pressure for innovation and growth,” says Baulé. “And because of the worldwide recession over the past few years, increasing the overall IT budget was not really an option.”
At the same time, Embraer was under pressure from SAP to upgrade. But according to Baulé, “The upgrade would have been a multimillion-dollar project for us, aside from the disruption in operations. And we could not figure out a return on investment for this whole effort. So we had to move in another direction. We had to figure out how to turn the situation around, and we ended up investigating Rimini Street.”
In 2011 Embraer moved from SAP to Rimini Street for support of its SAP system to achieve better value and improve the level of service received. As a result, Embraer immediately reduced its annual SAP maintenance fees by 50 percent.
The business environment in Brazil is very challenging, and because Embraer, unlike most Brazilian companies, is a major exporter, it faces special regulatory hurdles. Embraer’s SAP system is highly customized to accommodate many specific aerospace and defense requirements, as well as Brazilian tax specifics and the Public Digital Bookkeeping System (SPED). Baulé says, “Those customizations were the key source of our maintenance and support problems, and they were not covered under our maintenance contract with SAP.”
Rimini Street’s standard service program includes, at no extra charge, support for customized code as well as complete tax, legal and regulatory updates for the many countries in which Embraer operates. To ensure timely and accurate updates, Rimini Street’s tax, legal and regulatory team works directly with government organizations and thousands of additional sources to identify, analyze and deliver updates for nearly 200 countries. Each update Rimini Street delivers is tailored for Embraer’s specific SAP R/3 4.7 implementation and environment — unlike vendor compliance updates, which arrive in undifferentiated bundles that take time and expensive resources to sort out and apply.
To ensure Embraer’s legal and accounting compliance, to date Rimini Street has spent the equivalent of 30 man-months, saved Embraer five migrations, and completed 72 localization projects, resulting in significant savings for the company.
“The government changes tax rules, export and import rules, and accounting rules quite often — it’s a very unstable environment,” comments Baulé. “Rimini Street’s process of providing us with timely, complete tax, legal and regulatory updates has been coping with that difficult environment beautifully. More and more, our internal teams are confident in relying on Rimini Street’s advice and support.”
Since switching annual support from SAP to Rimini Street, Embraer has also benefitted from maximizing the return on investment for its SAP software and continuing to evolve and advance the scope, scale and use of its enterprise software to achieve its business objectives — while running its mature, stable release into the foreseeable future without required upgrades.
Furthermore, Embraer has been able to significantly add to its overall savings through Rimini Street’s more efficient, personalized support program by cutting additional, unnecessary expensive support and maintenance costs associated with the traditional software vendor support model.
“Our original target was to achieve 25 percent total savings in our IT budget,” says Baulé. “We surpassed that, saving 30 percent. So now our percentage ratio of IT maintenance costs to innovative projects, which formerly was 70/30, is 50/50. And we envision opportunities to go even further than that, putting even more money into innovation, reversing the original ratio to 30/70. But even our current level of savings is a breakthrough for us — it’s saved us enough resources to cope with some of our serious challenges over the past two years.”
In the two years since Embraer switched to Rimini Street Support, Rimini Street has successfully resolved nearly 200 cases for the aerospace giant, including several P1 production critical issues. “The move to Rimini Street for enterprise software support provided immediate cost savings along with better service, which is a rare and excellent combination,” continues Baulé. “We are very satisfied with the level of support we receive from Rimini Street.”
“The goal was a 30-percent reduction in our ERP maintenance costs. Thanks to Rimini Street we achieved more than 50 percent.”