CIO Interview: Paul Coby, British Airways, on IT with tight budgets and mergers

The airline has reinvented its approach to IT investment and is looking at innovative technology to support its future plans, which include the imminent technology merger with Spanish carrier Iberia.

The airline has reinvented its approach to IT investment and is looking at innovative technology to support its future plans, which include the imminent technology merger with Spanish carrier Iberia.

Last summer, the IT budget at British Airways (BA) was slashed by a third and the firm had to defer several projects to cope with the effects of rising fuel costs and the decrease in passenger numbers caused by the recession.

Fast forward 12 months and Paul Coby, chief information officer at BA, said the airline still has a budget of roughly £200m - operations account for about £140m of that sum - which is less than ideal, but there won't be any further reductions this year.

"We will try and reduce operational spend as we normally do, but because we were in a fight for survival [in 2009] we took it as far as we thought it was prudent," he said.

"The amount of money we have to spend in IT will be broadly the same as it was last year - reduced. At the same time, we have to increase revenue, delight our customers with technology and help all the other functions in the airline reduce cost," Coby told Computer Weekly at the Sita Air Transport IT Summit in Brussels last week.

"The airline industry is beginning to recover and we are not in the 'fight for survival 2009' mode, but we are highly competitive for the growth mode. The thing is, there won't be any more money [to invest in IT], so we have to control costs and find new ways of doing new things," he said.

Coby passionately argued that there is no relation between IT spend and the end result in terms of business benefit and added that the recession prompted a shift in terms of how the airline plans its investments.

"If you keep thinking of IT as a cake, which gets smaller every year and you are still trying to cut it and measure the sizes of [other departments'] slices, then you're lost," said Coby.

"We will judge every investment that comes before us on its business merits, so under that approach we would only be able to answer [what the IT spend really is] by year-end," he said.

"Focusing on annual budgets ends up driving people to some perverse decisions."

Pressing ahead with IT efficiency

Over the past year, projects that got the green light at BA include an ongoing virtualisation drive, which has already downsized the carrier's Linux and Windows physical server estate considerably using VMware technology, but the project has not encompassed its Unix boxes because of technical complexities.

According to Coby, virtualisation is a no-brainer and, at the same time, there has been a focus on sweating the assets when it comes to hardware in the company's datacentres.

"We haven't been able to rip out all the non-time expired servers. As we go through the replacement cycle, we are putting in new servers with virtualisation particularly in the Linux and Windows environments," he said.

"I keep asking people if the saving is sufficient to enable us to replace kit majorly early. So far we haven't been able to demonstrate that, but what you can definitely demonstrate is that this is much better way of doing things."

Merger implications

Projects that remain on the backburner at BA include a major enterprise resource planning (ERP) rollout, which began in 2008. Coby had plans to extend the system, which already covers human resources, in a project that would have been one of the largest implementations of its kind in Europe.

According to the CIO, the upcoming merger of technologies supporting BA and Iberia was partly the reason why the implementation did not go ahead.

"We will not make any decisions around ERP until we have completed the work we have started now with Iberia in setting up International Airlines Group [the holding company that unites the two firms]," said Coby.

"Clearly, taking a decision in finance systems in isolation would not be the right thing to do," he said.

"We are thinking about how finance systems in the new structure would work and where we will go in BA with ERP has to be determined by the new group's requirements."

Service-oriented architecture (SOA) is also something that excites Coby and the IT chief reckons that the approach can be instrumental when it comes to planning for a merger.

"If you are thinking about a merger, a joint business or alliance - as we are - using SOA can help you avoid having to rebuild stuff at the back such as ERP, customer relationship management systems and ticketing," said Coby.

"Rigorously applied SOA enables you to wrap the old back-ends and then be able to present that in different ways. You have your middleware layer, your customer records in different places and you are able to look at them and manage them in a coherent way," he said.

"However, it seems simple to put together Powerpoint slides that show you how to do that and some vendors are guilty of doing these presentations, but it ain't that easy. You need a rigorous approach to network and interfaces."

Future plans

Cloud computing is also part of BA's plans to further reduce cost and improve service. According to Coby, the airline is now looking into a new cloud offering provided by IT supplier Sita, which promises to drastically reduce total cost of ownership and flexibility (see box, below).

"We need to look into the cloud but need to be aware of where the customer data is. It needs to be a secure environment and Sita can provide those trusted services to airlines. We have been talking to them about it," said Coby.

To illustrate the potential advantages of the cloud, Coby mentioned the example of having to set up an emergency call centre, whereby agents could work from home using thin-client technology. The set-up could be easily disconnected under the cloud computing approach.

Web is a key area of focus for BA and some significant customer-facing improvements have taken place over the last decade: calendar selling started in 2002, then the airline moved on to enable change bookings online in 2004. Web check-in came in 2006, followed by dynamic packaging in 2009 and the web was also critical in disruption handling around strikes and the volcanic ash cloud this year.

Meeting the needs of tech-savvy customers is high on BA's IT agenda. Social media is also a significant weapon in improving customer service: the airline has about 50,000 Twitter followers and 200,000 subscribers on YouTube. Coby says social media capability can be harnessed further and that BA is looking at ways of doing that.

Mobile-based services also account for a big chunk of BA's client-facing IT projects. The airline's iPhone app was downloaded 500,000 times over a three-week period following its launch and, according to the CIO, that's only the start.

"We will be releasing some stylish new apps running on the iPhone and other devices next month and we will move into the mobile space very forcibly," Coby said.

After a tough couple of years, the IT boss at BA agreed that things are looking up - 56% of 129 airlines polled by Sita for the supplier's annual survey expected technology spend to rise in 2011 - but he is pragmatic when predicting the future.

"In a year's time, we will hopefully have found ways to do things more economically in terms of running the IT, as well as a new way of looking at technology investment: I hope we will not think so much about IT budgets, but be very switched on in terms of business benefits that can be enabled by technology."

Supplier offers cloud alternative to cash-strapped airlines

Airline IT supplier Sita is launching a cloud computing service, which could address sector firms' concerns about data security, while keeping tabs on IT spend.

The cloud service will have an initial six to eight nodes, moving to 15-20 nodes, which will be deployed close to or at the largest airports in the world where the infrastructure to host systems and desktops for the small remote office of airlines outside airports virtually is already available.

According to Sita, the cloud service had been under incubation development for some time. Now airlines are being invited to start trials in the environment and British Airways is among those in conversations with the company.

"Our cloud offering would reduce hardware and total cost of ownership for users," said Jim Peters, chief technology officer at Sita.

"Systems and desktops such as those used in ticketing offices would be hosted on a private cloud environment with full customer data separation, using high speeds to airline datacentres and ensuring availability and end-user performance," said Peters.

An advantage of the service over public cloud environments mentioned by Peters is the data security the supplier claims to offer as a "trusted, unique provider to the airlines industry". Another plus would be the flexibility to introduce innovations such as a "call centre in a box" or remote office in a box.

See a Computer Weekly video interview of Paul Coby recorded last summer about recession busting>>

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