National Academies Press: OpenBook

Airport Software Solutions and Services Sourcing (2022)

Chapter:Chapter 3 - Governance Structures

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Suggested Citation:"Chapter 3 - Governance Structures." National Academies of Sciences, Engineering, and Medicine. 2022. Airport Software Solutions and Services Sourcing. Washington, DC: The National Academies Press. doi: 10.17226/26735.
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Suggested Citation:"Chapter 3 - Governance Structures." National Academies of Sciences, Engineering, and Medicine. 2022. Airport Software Solutions and Services Sourcing. Washington, DC: The National Academies Press. doi: 10.17226/26735.
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Suggested Citation:"Chapter 3 - Governance Structures." National Academies of Sciences, Engineering, and Medicine. 2022. Airport Software Solutions and Services Sourcing. Washington, DC: The National Academies Press. doi: 10.17226/26735.
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Suggested Citation:"Chapter 3 - Governance Structures." National Academies of Sciences, Engineering, and Medicine. 2022. Airport Software Solutions and Services Sourcing. Washington, DC: The National Academies Press. doi: 10.17226/26735.
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Suggested Citation:"Chapter 3 - Governance Structures." National Academies of Sciences, Engineering, and Medicine. 2022. Airport Software Solutions and Services Sourcing. Washington, DC: The National Academies Press. doi: 10.17226/26735.

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12 Governance Structures Sovereign states enforce national regulatory rules and requirements for airspace and airports. Global organizations assist with interpretations of requirements. For example, the International Civil Aviation Organization (ICAO) supports diplomatic interactions and research to regulate air safety internationally (International Civil Aviation Organization, n.d.). Airports Council International (ACI), the “only global trade representative in the world’s airports,” represents the collective interests of airports to advance the aviation industry on a global scale (Airports Council International, n.d.). Adoption and implementation of ACI’’s insights reside with individual airports assembled under a governance structure. Governance structures, also referred to as airport sponsor organizations, capture ownership. The structure determines roles and responsibilities; it also has a direct bearing on financials. Three core forms of governance structure are captured in Table 3-1. Examples of each entity were added to the original table. Procurement and technology departments are often depicted in the functional organizational chart of the sponsoring agency. Quasi-governmental agency structures assume functional areas and reflect team-based organizational structures most reactive to innovative technology procurement processes. Airports with public agency governance structures sometimes fall victim to a rigid budget that is heavily monitored and controlled by laws and regulations carried by the public agency. Internationally, a vast majority of airports are governed by corporate governance structures. Customer-centric priorities that have the ability to increase revenue are what drive business decisions. Procurement processes incorporate technology for proactive decision-making and demonstrate system efficiencies. Airport Size An airport’s size is best grouped under the categories of primary and nonprimary. Size conven- tions for primary airports include large, medium, small, and nonhub airports “. . . receiving scheduled air carrier services with 10,000 or more enplaned passengers per year” (FAA 2020b), as illustrated by Figure  3-1. Nonprimary airports support general aviation aircraft and are grouped into national, regional, local, basic, and unclassified. Research for this synthesis confirmed that procurement processes correlated with the size of the airport. Larger airports required more resources, including personnel, time, and funding for procurement technology. Websites for larger primary and nonprimary airports were often more transparent regarding the procurement process. Frequency and innovation in technology procurement did not directly correlate to air- port size. Common synthesis themes prevailed. IT departmental integration in the airport C H A P T E R   3

Governance Structures 13 planning, procurement processes, and proactive attempts to resolve knowledge gaps in technology procurement allowed for increased frequency and innovation in technology procurement. Airport Activity Airports fall into four categories: commercial service, cargo service, reliever, and general avia- tion (Flight Literacy, n.d.). The 2021–2025 NPIAS published on September 30, 2020, contains nearly 3,304 existing and 6 new airports that fall into the categories of commercial service air- ports, reliever airports, and selected publicly owned general aviation airports. Characteristics of airports by summarized activity are included in Table 3-2. Figure 3-2 illustrates volume of airport activity by NPIAS size category. Procurement processes correlate with airport activity, which is affected by airport size. A larger volume of activity at an airport could have an impact on its technology procurement, depending on the sophistication of the procurement process. For example, procurement could require more personnel to process requests. Governance Structure Public agency Quasi-governmental agency Corporation Owners Taxpayers Taxpayers Shareholders Management County board/city council Commissioners Corporate officers Taxation Authority Minimally used Seldom used None U.S. Commonality Most common Common Uncommon Examples State, county, municipality, government agency Ports and airport authorities Private owners Source: Mead & Hunt, n.d. Table 3-1. Core forms of governance structures. Figure 3-1. Size conventions and breakout of airports in NPIAS 2021–2025 (Source: FAA 2020b).

14 Airport Software Solutions and Services Sourcing Figure 3-2. Volume of airport activity by size (Source: FAA 2020b). Commercial Service Airports Provide at least 2,500 passenger enplanements; publicly owned Cargo Service Airports Provide transportation services and air transportation of cargo only, with a total annual landed weight of more than 100 million pounds Reliever Airport Relieve congestion at commercial service airports General Aviation Provide 2,500 or more passenger enplanements annually and receive scheduled airline service; privately owned for public use Source: FAA 2020b. Table 3-2. Airport activity by category. The complexity of technology procurement also increases relative to airport activity levels. For example, there may be a need for more procurement software licenses, more time to imple- ment procurement solutions, and more training for technology end-users. The survey included a question about whether airport governance, size, and activity influ- enced technology procurement; 95% of the respondents said yes. Interviews providing insights into this response are discussed in Chapter 2. Third-Party Integration Airports and their governance structures can use external resources to help them source software solutions and services. Cooperative purchasing programs, value-added resellers, consultants, and Application Programming Interface (API) integration can all help to modern- ize and simplify the buying and selling experience. Cooperative Purchasing Programs Cooperative purchasing programs allow different entities to share procurement contracts. Competitive solicitations follow procurement regulations to acquire products and services,

Governance Structures 15 including technology tools. Eligible entities can purchase from these contracts at any time and for any reason. The contracts are focused on protecting the entities’ interests through favorable terms and conditions in the areas of price, quality, reliability, warranties, and services. Sourcewell (previously known as the National Joint Powers Alliance or NJPA) is a govern- ment agency receiving federal funding. It extends cooperative purchasing and other services to more than 50,000 government entities and nonprofit organizations (Sourcewell, n.d.). The U.S. General Services Administration (GSA) Cooperative Purchasing program offers scheduled contracts for approved industry partners (U.S. GSA, n.d.). Software, hardware, and professional IT services are among several options offered. Entities eligible to use GSA Coopera- tive Purchasing include state, local, and tribal governments. Cooperative purchasing is also offered by private, nonprofit, and not-for-profit organizations. Business models incorporate administrative fees to fund operations and reimburse approved costs incurred by sourcing teams. Such fees can include membership dues. Value-Added Reseller (VAR) Value-added resellers buy products or services, add features or services to them, and then sell the bundled solution. For example, Transoft Solutions, Inc., creates highly specialized software for aviation, civil infrastructure, and transportation professionals. VARs are positioned on mul- tiple continents for a more customer-centric experience. Consultants Consultants provide expert and professional advice and feedback to help advance technol- ogy procurement processes (Figure 3-3). An unbiased, global perspective external to the daily environment can result in strategies to address human dynamics or in technology designed to solve a problem or integrate existing capabilities. The International Civil Aviation Organization (ICAO) is a specialized agency of the United Nations based in Canada. Its primary function is to “maintain an administrative and expert bureaucracy supporting diplomatic interactions, and to research new air transport policy and standardization innovations” (ICAO, n.d.). The Procurement Section focuses on investigating sources of supply, obtaining price quotations, negotiating with suppliers on price and delivery, preparing contracts, arranging documentation, insurance, and shipping, and monitoring the installation and commissioning of procured equipment. The ICAO’s Civil Aviation Purchasing Fa vo ra bl e U nfavorable Expertise Neutrality Fixed Costs Expensive Availability Uncertainty Figure 3-3. Favorable and unfavorable perspectives on the use of consultants (Sondhi 2019).

16 Airport Software Solutions and Services Sourcing Service exists to provide administrative and technical assistance in procurement activities (ICAO, n.d.). As with procurement, airports have specific processes for hiring a consultant or consulting firm. Full-service consulting entities serve as force multipliers of the airport staff yet often come at a premium price. Specialty consultants can be highly experienced but unaware of specific or more global nuances paramount to the airport. Application Programming Interface (API) Integration An API is a software intermediary for platforms to talk to each other. Definitions and proto- cols operate in the background for seamless integration. Individuals and firms implement APIs for various reasons, including the connection of cloud apps and access to legacy data sources on old technology. As technology continues to progress, API integrators have become a necessary resource for integrating new technologies and heightening security. Figure 3-4 offers a visual example of API integration that connects mobile devices to the cloud and social media while allowing for routine department updates on specific processes, including a status update on a technological procurement. Figure 3-4. How an API integrates with existing capabilities.

Next: Chapter 4 - Technology Procurement Vehicles »
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The technology procurement process includes sourcing and acquiring software, hardware, and services. Systems and nuances of technology procurement vary within each airport, and navigating such variances at a pace that meets the airports’ needs and technology evolution can be challenging.

The TRB Airport Cooperative Research Program's ACRP Synthesis 120: Airport Software Solutions and Services Sourcing identifies the efficient and innovative technology sourcing and procurement practices developed by airports.

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