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.
This was first published in July 2003