BA is one of a growing number of blue chip companies that is getting serious about e-commerce. David Bicknell explores its online strategy with head of e-commerce, Pat Gaffey.
Pat Gaffey has a dream. By 2003 BA's head of e-commerce operations wants 50% of the airline's revenues to come from online business - its Web site, electronic procurement and services or revenues generated online by travel agencies. To achieve that would demand a 400% increase year-on-year in online revenues. In an offline world, such a figure would be pie-in-the sky. But in e-business, it seems anything is possible.
BA believes a number of scenarios will help it achieve its goal. One is that travel will become cheaper and more accessible through direct bookings over the Web. Another is that monitoring of passengers' location and consumer habits will allow the development of true "e-service".
BA chief executive Bob Ayling understands the significance of e-business and is its biggest cheerleader inside and outside the organisation. Such support gives BA executives the confidence that they are not going out on a limb over e-commerce. But Gaffey and his e-commerce team know that BA cannot achieve its goal just by having a funky Web site. Success will mean getting the product, the business decisions and the pricing policies right.
BA has started to roll out a number of the modules that will make up its e-commerce platform. This includes registration for Web site visitors, which complements BA's existing customer database by providing a picture of potential consumers. It has also put a London hotel database online where people browsing in the US can look for hotels in the London area through an intuitive graphics-based booking process.
The airline has also developed an extranet for the travel agency trade, which is in beta test phase at the moment. Travel agencies continually call up BA about the logistics of flight routes and most of those calls have now been shifted online, with a subsequent reduction in costs.
Gaffey says the greatest strength of the extranet, however, is the personalisation it provides to different members of the travel agency profession. "If you're the manager of a travel agency, you'll want to log on and get management information - such as financial data, for example. If you're the office manager there is product information available. Then if you're a travel consultant, there would be information promoting a new brand."
But Gaffey is also aware that customers will demand to access BA via a number of online channels, including the Web. "If you are shopping around for a ticket and the services that go with it, you either have to get on the phone or walk to different offices. The ability to go online gives companies the opportunity to offer you additional services, such as delivering the tickets to your house."
Gaffey has spent a large part of his career working on the operational side of BA, working closely with IT. He is acutely aware that success in e-business calls for an IT operation that is able to deliver effective support and back-end systems.
Adapting the IT infrastructure to support the company's online initiatives has been one of the biggest challenges for BA, he reveals. But, he stresses: "I don't think it's about clever ideas any more - it's about execution and back-to-basics reliability. It's about scalability and its about things that don't sound so sexy, but apply just as much to systems and IT today. There are killer ideas that are great, but if your Web site crashes, people are going to walk away from it."
Nine months ago, he sat down with the general manager of BA's commercial group to rethink the company's approach to IT. "We decided we needed more people dedicated to it and to change the way it was organised. We had organised IT across a number of functional silos to respond to customer organisations, but this online stuff brings it all together. It cuts across a number of areas, such as sales, customer services, and marketing. We needed to cut the organisational silos so that they mirrored the way the business will work," says Gaffey.
Gaffey believes that it is no longer possible to carry out development in the traditional terms-of-reference approach because the lines between technical development and creative are blurred. Now, everything BA's developers do is "time-boxed, across multifunctional groups," he says. For example, BA's London Hotel project was conceived around September, with a goal of being up and running by the end of November.
A group comprising IT, the front-end people, US-based people, Agency.com, and some of the IT vendors such as IBM and BEA were all put in a room together and told: "That is the drop-dead date and you have to make it. If you have to strip functionality out, then do so. If you need to break rules and short circuit bureaucratic processes then that's what you do," recalls Gaffey.
Gaffey praises his IT staff for working out flexible solutions to problems such as how to access huge volumes of data - staff suggested cacheing pieces of data locally. "That was a piece of technical creativity," he says. That does not mean that there aren't some tensions, particularly over getting Web projects in place. Gaffey admits that where projects have been prototyped, there is a temptation to get it up-and-running immediately.
BA is sure that the deciding factor in e-commerce and e-business is going to be who can best deliver successful "e-service".
Currently, says Gaffey, no one is really providing e-service, except perhaps bookseller Amazon - though there is a big difference between that company's business and BA's. "The difference between us and a pure online business is that we can actually touch our customers - a lot of these guys don't. There are great ideas out there. But there's nobody out there with what I'd call a 'wow' factor," says Gaffey.
"One of the great things that we've got is huge amounts of data that we've collected operationally - we check you in, we know when you get there, we can tell whether you use electronic ticketing, we can tell whether you use self-service. We can take that type of data, and say 'Here's a guy who actually comes to the airport 50 times a year, and he never uses self-service. So either he doesn't know about it or doesn't feel comfortable with it. So, lets talk to him and say: Next time you're coming through, do you want one of our guys to meet you, because we can save you time in the process?'"
Intelligent agent technology offers further potential to improve e-service. A demonstration at the MIT Media Lab in the US, prompted BA to consider how it could work for them.
The demonstration utilised the Global Positioning System linked with an online bookshop. Once a shopper has stated their wish, the GPS could locate them and recommend the nearest bookshops selling the books requested for the cheapest prices.
Applied to BA: "A customer could walk into the airport with an intelligent agent that says, 'I'm here. I'm going to the gate, and I've got one bag to check in,'" says Gaffey.
Whether or when intelligent agents will be used is open to question. A better bet is that BA will reach its goal of achieving 50% of its business online by 2003. It started as an aspiration and became a desire. Now, BA believes it's a possibility.
BA has chief executive support for its e-business plans
E-business solutions can be supplemented by 'e-working' and 'e-services'. How companies create new 'e-services' is likely to be critical to their success.
IT has to deliver a supportive back-end to front-end web operation
Web development has to be 'time boxed' with traditional IT and creative staff working hand-in-hand.
The desire to have new Web operations up-and-running has to tempered by a realistic view of whether they are 'industrial strength'
Intelligent agents are a technology to watch The Project Team
IBM led the project to the e-commerce platform as well as the customer database.
BEA Systems Provided Weblogic e-commerce transactions software
Agency.com Provided creative input and ran strategy workshops for senior executives