IT made a significant contribution to BAA achieving a 30 per cent reduction in operating expenses in 2008 to 2009, and the airport operator hopes to achieve "substantially increased reductions" this year.
The company is aiming to reduce its operating expenses by £114 million in the five-year period to April 2013.
“We are absolutely on track to achieve the goal,” Sarah Venning, head of IT for Central Services at BAA, told CIO sister title ComputerworldUK.
Key to BAA’s cost-cutting strategy is the use of a new Oracle Enterprise Requirements Planning solution, a technology originally acquired when the company took over JD Edwards. BAA is currently tendering for a systems integrator, which it hopes to sign up in May to enable delivery of the new Oracle ERP from March 2011.
BAA has since January of this year run a "vanilla" implementation of Oracle's 12.1 ERP solution using Oracle’s On Demand service, hosted in Texas. The company signed a one-year software as a service contract and will decide whether or not to continue with the hosted system or move it on-premise in a few months’ time.
"All options are open to us, but our experience [of Oracle On Demand] has been very positive," said Venning.
BAA currently has a legacy Oracle ERP system in place, but opted to replace it with another solution from Oracle because it allowed for "the most straightforward implementation", and because the company already had internal Oracle expertise. SAP and Microsoft Dynamics were among the other "usual suspects" that the airline operator looked at when considering its ERP options.
Jacqui Peadon, programme director for the Back Office Implementation Programme (BOIP) at BAA, said: "[With Oracle] we are looking at a significant rationalisation of systems and reduction of applications."
The existing Oracle solution required replacement because it is "very customised", which makes it difficult and costly to maintain. Meanwhile, Venning said that it would be easier and cheaper to make upgrades in the new version.
"It [Oracle 12.1] will help us improve business controls for management and decision-making, such as controls around procurement and financial decision making.
"Implementing vanilla, will enable us to simplify our [fairly complex] organisation [structure] and achieve the cost reductions that come with that. It will also enable us to have single source reporting, which will enable business decisions around core fundamental business information," said Venning.
BAA plans to expand the "Oracle footprint" throughout the company, which Venning said will include back office systems such as HR, finance and supply chain.
"We are building a new backbone for the back office of BAA and hope to deliver cost savings with core benefits," said Venning.
In terms of BAA’s overal IT overhaul programme, Venning said: "We are making great progress. We are building some really strong relationships across the business and IT is now viewed as a fundamental part of the business."
BAA has initiated a number of IT programmes in the last six months, such as a £30 million network integration framework deal for network services at Terminal 2 of Heathrow, an electronic border gates rollout and a system to provide a real time view of its processes and resources at Heathrow airport.