With appreciating margins, British Airways has proved that IT can indeed revolutionize the way businesses work. Recognizing this achievement, British Airways CEO Willy Walsh was awarded the Nasscom 2008 Business Transformation Award for encouraging the use of technology to achieve operational excellence. In a tte--tte with Dataquest, Paul Coby, CIO, British Airways, discussed the airlines IT initiatives in wake of changing needs of the industry and the strategic partnerships with Indian IT suppliers.

Coby joined British Airways in 1997, where he masterminded the move of BAs Reservations, Inventory and Departure Control systems to Amadeus, as Community functions. In September 2001, he joined BAs Leadership team as CIO responsible for the operation and development of all BA Group systems. He established the IT and Business Change team within the IT department to bridge the gap between technology and business transformation. Over the last six years he has reduced the cost of running BAs IT operation by 45%, enabling the airlines investment in the industry revolutionizing customer and employee enabled systems to increase by 50%. In March 2007, Paul won the UK CIO Innovator of the Year award. He was also named UKs top CIO on silicon.coms CIO 50 list of the 50 most influential and innovative IT leaders in 2007.

Pauls innovative approach toward IT-ising the airline business in his country goes on to prove that the British are not the stereotypes after all. Excerpts

You have been with British Airways for more than a decade. What have been the major milestones as British Airways got onto the technology curve?
Technology has been fundamental to the air transport industry. Back in the late 1990s, British Airways had, to some extent, lost the plot in terms of using technology. This is quite odd because airlines, just like banks, were some of the earliest adopters of technology. But back then, BA viewed technology as a commodity and not a key element for running the business or even a differentiator. That was when Willy Walsh, CEO, British Airways and his predecessors introduced the idea that technology was fundamental to our business.

The impact of 9/11 and its rippling effects caught the global airline industry off-guard. That was when I was appointed to Willy Walshs leadership team as CIO. A key thing that we did after 9/11 was to fight against the low cost carriers that had grabbed a major market share. We developed highly effective websites in terms of selling, and pioneered a concept called calendar led selling. This was a revolutionary breakthrough back then in terms of how you sold airline fares through the Web. Then, going forward, we included other value added online services. Recently, we have introduced services such as printing online boarding passes and online check-inall intended to make the travel experience as comfortable as possible. We are also trying to realize our vision of end-to-end online travel services by building on a system called dynamic packaging.

Paul Coby CIO, British Airways

Another key area is the work we are doing around the new Terminal 5 at Heathrow Airport. Being one of the most congested airports in the world, we are very excited about IT deployments in the new terminal.

What, according to you, were the most challenging IT implementations at BA? How will you rate the efficiency of BAs IT operations compared to other leading airlines?
IT and the Information Management Department (IM) are central to BAs business and employees. Our umbrella service, BA.com, and innovations at the new airport terminal have been some of our cherished achievements so far. Another major implementation is the introduction of SAP in our engineering department to facilitate internal operations. We have also adopted a network planning software, which links us with how we allocate the aircraft and how flexible we are in reacting to the competition and their moves. It also helps us in working closely with the Air Traffic Control (ATC) and monitor logistics such as aircraft turnaround time, availability of crew, among others, which, in turn, enables us to be more flexible in terms of increasing the number of flights or deploying a different aircraft. The ability to change and transform with speed and agility has been key to BAs success, and IM has been at the heart of making this change happen. Over the last five years, our investment in BA.com and airport technology has transformed the buying and traveling experience for our customers and staff. Technology now underpins many of our business processes.

What were the major steps taken by you to achieve cost savings in BAs IT operations over the last few years?
Since 2001, our IT operational cost has reduced by 55%, while investment in new technologies has increased by 45%. We have been working with our suppliers to develop high-quality, cost-effective systems and tools that bring in the savings. We are also trying to simplify and standardize all our processes by mass-producing certain critical systems. We were an early mover onto Linux and have pre-positioned banks of Linux blade servers in our data centers. We build remotely from our headquarters building. So, if we are bringing up any system, we build through a standard configuration wherever possible in terms of the key layers. The deployment of such processes enables us to sleep cycle times and make critical reduction in costs. We have always tried to spot technology moves and become early movers in certain areas, for eg, the Oracle rack for databases. We have also moved all our TPF (Transaction Processing Facilities) to Amadeus, as Community functions.

Who are your major technology partners today?
NIIT and TCS are our major partners in India. Our eleven-year partnership with NIIT has proved to be very productive in terms of supporting systems and developing new systems. We use SITA for networks (SITA has won an award for the Mumbai International Airport and other non-metro airports); our wireless services are provided by BT; a UK company, SEC, supplies desktops to us; Intel PCs provide us with hardware, services, etc.

We follow a pull-down model where we make sure that we dont ever lock ourselves into one big supplier contract. This is because technology evolves so quickly, the airlines needs change over time and the suppliers skill-sets also change. We prefer working with the best companies, each having specific areas of expertise. This enables us to be more flexible in terms of evolving with the technology trends, industry needs, and our suppliers skill-sets.

What should be the IT focus of the global airline industry today? What are the latest trends in the airline industry?
Customers, costs, and colleagues3Cs is what the airlines should focus on. This has always been the focus at British Airways. That is the reason why we call our services Customer-Enabled BA and not EBA or BA.com. Today, customers want to be in charge. That is where the interactive role of Web 2.0 comes into play. For eg, our customers can actually go online and look for the best seats in a 2-aisle seating arrangement on all our aircraft. We also have extensive platforms for our pilots and cabin crew, where they can interact with the management and post their queries, etc. We call this Employee Self Service 2.0. Today, IT should be the engine for reducing 100% of the airline costs, and an engine for improving 100% of the revenues of the airline.

You are on the boards of SITA, On-Air and Oneworld Airline Alliance. What are the new initiatives and changes that are being recommended?
Web 2.0 is certainly being adopted by an increasing number of airlines across the globe. The potential of Web 2.0 is being explored and leveraged upon to the benefit of the airline industry. Increasing interactivity and interoperability is the focus of the industry today.

Could you throw some light on BAs outsourcing strategy? What is your opinion on strategic sourcing?
I dont believe in traditional outsourcing. Strategic outsourcing has been the key to our success. Almost 60% of our IT spend is carried out through external partners and suppliers. More than 75% of our IT operational spend is outsourced to external partners. We have ten international technology suppliers. Going forward, I dont want to outsource all our business to international suppliers. We will focus on working with a mix of domestic and international suppliers.

We started with five suppliers in India and today, we have zeroed in on and work with two key suppliersNIIT and TCS.

What is your outlook for 2008any new deployments this year?
We are aiming for a 10% operating margin by the end of 2007-08. In terms of deployments, we are looking forward to working from the state-of-the-art Terminal 5 that opens on March 27, 2008. Our aim is to have every four out of five passengers realize a check-in online, bring in their own boarding passes or use a self service kiosk. We have set up ninety-six self service kiosks and baggage drop areas within the terminal to make the entire passenger experience much better, unlike undergoing the ordeals associated with congestion. We have put in new suites of resource allocation systems and people allocation systems which are being tested for efficiency at the moment.

We are also very excited about new aircraft such as A380 and Boeing 787s that we have added to our fleet. We are working toward building the first truly low-cost network airline.

Priya Kekre
priyak@cybermedia.co.in

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