When airlines Go and easyJet merged, IT manager Blair Stewart
was told to cherry-pick the best from each business. But he had
just 12 months to complete the job
Merging two companies takes seconds to announce, but a lot longer
to achieve. IT manager Blair Stewart was given 12 months to
integrate IT when the two low-cost airlines easyJet and Go merged
in August last year.
The £374m merger consolidated two competitors in the market,
creating an airline that was double the size of the separate
businesses, and promised an even lower cost base thanks to
economies of scale. Moreover, said Stewart, who was IT manager at
Go before the merger, there was uncanny synergy between Go and
easyJet, with little overlap of routes and airports, and both were
dedicated to low-cost business models.
There was also, he said, the same kind of synergy when it came to
the airlines' IT. Although both spent several millions of pounds a
year on IT, this was less than 2% of revenue and other airlines
spend 4%-6% on IT. In addition Go and easyJet had Wintel
architectures with about 1,000 PCs in total.
"In some cases we had exactly the same systems and we just told the
vendors to plug them together," said Stewart.
There were differences between the two airlines' approach to IT.
The younger airline Go, for instance, had an IT strategy of
centralisation and outsourcing, such as its website development,
focusing on an efficient infrastructure, whereas easyJet favoured
bespoke IT systems, which were maintained in-house, and was more
decentralised.
EasyJet had also developed a computer reservation system
specifically to gain a competitive edge, rather than use the
dominant third-party system most low-cost airlines used.
The different approaches to IT meant that the merged company could
adopt an integration strategy of cherry-picking the best of Go's
and easyJet's systems.
Stewart said the selection process was a case-by-case choice of
which ones to keep. "By and large we went for the easyJet business
systems and some of the Go infrastructure. Some systems were kept
on a make-do basis and now, 12 months later, we are looking to
replace them."
However, some systems simply could not cope with the doubled volume
they were now expected to handle, instead of the 25% annual growth
which is the norm for each airline. "Some vendors were confident
their systems could cope, but they could not," he said.
Scalability became a key issue for what to keep and what to
replace. Replacements, such as a new wide area network for the data
circuits, meant spending money, but others served to contribute to
the expected merger cost-savings.
The area where Stewart was able to save most money almost
immediately was in voice comms. "We added the airlines' voice
traffic and rushed out a tender for the combined volume, getting
revised rates that were significantly lower," he said.
In all, Stewart is confident that the merger has reduced the
combined IT spend by between 10% and 20%. "We have merged
everything that counts and met the final milestone. We have driven
costs down below what they were before," he said. "Mergers are just
about unheard of for low-cost airlines. We are now far, far more
prepared for the future."
Lessons drawn from merging Go's and easyJet's IT
systems
Find out as much about the other company as early as
possible
IT manager Blair Stewart was fortunate in reporting to Go chief
executive Barbara Cassani, so saw the merger coming early. "A lot
of cost was saved by early awareness," he said. "I was able to put
some projects on hold and not sign some contracts. If we had gone
ahead with them it would have been money down the drain."
As soon as he could, Stewart sought as much information about
easyJet's IT as possible. "We knew virtually nothing about each
other, apart from that we shared a few suppliers," he said.
The Centennial Discovery software used at Go identified all the
hardware and software components at easyJet and helped view them as
a single entity with Go's inventory.
Tackle people issues first Since Go and easyJet had been fierce
rivals, and their IT architectures and strategy were different, it
was vital to ensure that the two workforces were properly
introduced and that any mutual suspicions were set aside. "It is
tempting to grab people, say 'You've all met haven't you?' and just
dive in," said Stewart. "But you must spend time on team-building
at the outset and get buy in. We've gelled well now, but it was a
lengthy process."
Mergers are major, time-critical projects, use expert
help
There were key three key targets to hit in the merger:
integrating operations, brand and total integration within a year.
Deloitte Touche was brought in to advise while Stewart headed up
the IT workstream in the integration programme.
"The advisers got us to answer 'What are the benefits of
merging?' We had to identify as soon as possible where we might get
economies of scale to strip cost out of a combined IT," he
said.
Key areas to review were system duplication, software licences
and communications tariffs. Stewart also hired about 10
contractors to shoulder the extra workload imposed by the
merger.
Don't let business departments hold up IT
integration Because IT is shaped to suit the needs of the
business, it is essential to find out what the post-merger business
requirements are going to be so IT can start to meet them.
"Push the business hard to make their key decisions. We could
not start any IT planning until we knew them," he said. "Forcing
requirements out of them was vital."
Two key business decisions affecting IT were the location of the
new head office and whether the easyJet reservation system was
going to have to change to accommodate differences in Go's product:
for example, its policy of having assigned seats or not. Stewart
assigned an IT account manager to liaise with each business
department.
Don't put the future on hold
Mergers can act either to catalyse projects that might not have
been undertaken yet or to delay projects.
But making the decision is tricky. It can be a mistake to shelve
high value-add projects even with all the integration work going
on. Stewart admitted that he did not always make the right
call.
"An electronic data interchange project to receive fuel bills
electronically is a real value-add for the finance department, but
we put it on hold for eight months as it wasn't a major integration
milestone," he said.
Don't opt for the quick fix
It can be very tempting, under such pressure, to opt for a
quick-fix integration.
"Don't jeopardise the final architecture just to deliver major
milestones," warned Stewart. "Don't do too many workarounds or you
will end up with an architecture that is unmaintainable, unscalable
and unsupportable."
Take the trouble and do it right.