CIO interview: BAA checks in IT transformation

When IT veteran Philip Langsdale joined BAA as chief information officer with a brief of creating a technology strategy to support a £4.8bn capital investment plan, he knew he was not in for a smooth ride.

When IT veteran Philip Langsdale joined BAA as chief information officer with a brief of creating a technology strategy to support a £4.8bn capital investment plan (CIP), he knew he was not in for a smooth ride.

He joined the airport operator in September 2008 as part of a drive to make London Heathrow simpler and cheaper to run, when the firm was still recovering from the series of IT blunders occurred during the opening of Terminal Five earlier that year.

Back then, a 'huge gulf' between BAA's IT team and the other business functions hampered efficiency. The disconnect between the operator and the airlines that use its facilities and run separate IT operations did not make things easier.

"Some significant savings had to be generated and that seemed impossible to achieve. There was no strategy for IT at BAA, we were undertaking a lot of tactical projects without strategic purpose or overall sense of architecture," Langsdale told Computer Weekly.

"Another big issue we had was the relationship with the airlines. To be successful, you need the airlines and the airport working very collaboratively, but there was a lot of disquiet between the various parties," he said.

Introducing change

In order to overcome the problems, deliver improvements and some big savings - the company is on track to deliver savings of £110m ahead of the original target of £100m - Langsdale introduced an IT 'master plan', which received strong backing from the company's board.

An IT stakeholder group involving major airlines flying out of Heathrow - British Airways, Virgin Atlantic, Emirates, bmi and KLM - was also created and BAA meets the companies periodically to go through projects, budgets and discuss ways to deliver technology improvements collaboratively.

The technology budget at BAA represents approximately £130m out the CIP until 2013, but if the spend of IT elements around the reconstruction of new terminals at Heathrow is accounted for - such as local area networks - the current overall capital spend on technology is about £500m.

"We really focused on understanding the cost and value of IT. At the same time, we have gone from being seen as a problem in terms of not delivering a good service to the airport to significantly improving service and reducing our year-on-year spend," said Langsdale.

"Core to all of that was putting a strong senior IT management team in place. I pride myself upon getting some excellent managers - eight of my previous direct reports are now FTSE 100 CIOs. I think that having the right leadership in your technology team is essential, as they play such a big part," he said.

Outsourcing decisions

BAA has already done some significant work to mobilise the new IT strategy, but the next big step is determining whether some services required to deliver the plan, such as software development and infrastructure build, will be outsourced.

Capgmini, Fujitsu, Logica, Siemens, T-Systems and Tata Consultancy Services (TCS) are all involved in the bidding process, which has now reached a "very intense stage" and BAA may reach a conclusion around this coming Autumn.

"We are exploring whether [outsourcing] would work, the ideal suppliers and so on. It will be a big step for us and I expect very significant improvement in service levels and cost reduction if we decide to outsource," said Langsdale.

"We are looking for a partner for a long-term, collaborative and sustainable relationship, who can manage the transition well and have some very clear objectives in terms of the sourcing work to help us deliver the business objectives," he said.

"However, I am under no pressure to [outsource] and I might not do it. Maybe we will find that it's best for us to do our own thing and that's a possible outcome."

The 600-strong internal IT department saw a reduction of about 20% over the past couple of years. BAA is now in the process of designing the shape and size of its technology organisation.

The airport operator has not encountered any difficulties in hiring IT staff with the required expertise. Despite recognising that the UK has a chronic problem in terms of IT skills, Langsdale reckons that is because the transformation currently taking place at BAA makes it an attractive workplace for technology professionals.

"Creating a very strong capability in-house which can provide leadership and transformation of the IT function and take a strong lead on that process is key," he said.

"In terms of in-house requirements, we need people who can understand the business, as well as some strong technologists as we will be procuring complex IT solutions, so you need a spectrum of people with different skills."

Simplifying to survive

The IT transformation is intended to reduce complexity, reduce spend, improve the passenger experience and airline operations (see IT priorities at BAA, below).

 BAA is still running Gatwick's IT systems, so another task for the IT team is to gradually migrate systems - such as email, display information applications - and get the airport completely standalone by next year.

When it comes to technology, Langsdale is totally averse to customisation and favours the off-the-shelf approach to avoid unnecessary complexity and costs.

"We are now in a position where we will use either software-as-a-service or software out a box. That's what you want - simplification. I absolutely hate complexity as it is the biggest pain of an IT director's life," he said.

"You have got to standardise and be quite firm and tenacious on those things, otherwise you will find that complexity breeds in and you will end up with high costs, inertia and inability to do things."

The reshaping of the IT function at BAA is aligned with an extensive business change programme, which also faces all manner of disruptions - including security scares, snow, volcanic ash and strikes - so keeping a sense of urgency and strategic change in a very tactical business is Langsdale's real challenge.

"In this job, you have to cope with some very stressful stuff and also follow a very strategic change plan which has strong support from stakeholders and they won't support it unless they see improvements taking place," he said.

"In summary, it's all about sticking to your guns whilst making sure that you can cope with all the astonishing things that get thrown at you."

The IT agenda at BAA

Technology work supporting BAA's capital investment programme encompasses an IT infrastructure renewal, as well as improvements around airport operational systems and business planning and support IT. The projects are aimed at making the airport cheaper andf more effective to run, while maximising shareholder value.

In infrastructure, one of the noteworthy changes is the move from the Citrix thin-client technology and Wyse terminals current in place towards a 'fatter client' set-up. BAA has also finished a virtualisation project in April, HP being the main supplier for hardware and VMware for software, where a reduction in rackspace of approximately 30% has been achieved.

There is also significant IT design work taking place around the construction of Terminal Two and Terminal Five's satellite building, T5C. Ongoing projects include a new baggage handling system for Terminal Three, with connectivity through a baggage tunnel to Terminal Five. Vanderlande Industries was tasked with designing, developing and implementation of the system, which is expected to go live in 2013.

According to Langsdale, a key focus area for BAA IT is to enable the running of Heathrow as a real-time airport. Projects related to that include the introduction of systems geared at providing an instant view of staff resourcing in areas such as security and check-in to respond to varying passenger influx and in times of disruption. Self-service is also part of firm's strategy and an ongoing project in that space will provide all of BAA's workforce of over 10,000 employees, including security staff and baggage handlers, with an email account within the next 12 months.

BAA is also replacing its legacy Oracle enterprise resource planning (ERP) platform, which was heavily customised over 15 years by Oracle's 12.1 ERP using the supplier's On Demand service over the next 12 months. The system covers finance HR procurement and will be extended to cover contract and capital management as well as property.

"The Oracle platform will be totally vanilla, we are not going to modify it,"said BAA CIO Philip Langsdale. "You don't get significant business benefit in spending lots of money changing software and you also increase project risk enormously," he added.

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