Can BA weather the storm?

Facing massive losses, pressure from low-cost competitors and the aftermath of the terrorist attacks in the US last year, British...

Facing massive losses, pressure from low-cost competitors and the aftermath of the terrorist attacks in the US last year, British Airways has achieved considerable cost saving with its business-to-employee initiative. Sally Whittle reports.

Things were already looking bad for British Airways last summer. Facing cut-throat competition from low-cost airlines and a 5% fall in passenger numbers, the airline was haemorrhaging £2m a day and had cut 5,800 jobs. Then came 11 September.

"Spending fell off a cliff," says IT architecture director Phil Matthews. Following the terrorist attacks in the US, BA embarked on a £650m cost-cutting programme and said 7,200 more jobs would have to be go. "We had to do a lot of rethinking and rationalising. Maintaining the business capability while running down 13,000 jobs had to be the priority," he adds.

Top priority now is given to an ambitious business-to-employee (B2E) initiative that will save £75m a year in staff and administration costs. The airline has spent 18 months revamping its corporate intranet to provide staff with an e-working programme that will include e-learning, self-service applications and improved workflow. An Internet Protocol (IP) network and a series of wireless local area networks (Lans) will offer BA's 18,000 mobile workers access to the applications.

Kathy Harris, research director with analyst firm Gartner Group, says, "Increasingly, B2E initiatives are being seen as an imperative." B2E can just be moving human resources processes online, but it also spans knowledge management, e-learning, self-service and business intelligence. Starting with an intranet, it has the potential to transform entire enterprises, she says.

At BA, the e-working programme will span the whole company and is the biggest IT project it has ever undertaken, Matthews says. It is made more challenging since all 980 IT contractors employed by BA were laid off earlier this year. "We have to use people more efficiently if we are going to maintain the business capability," says Matthews. The airline has reorganised its IT department around a centrally-managed pool which rotates staff between projects. A group of senior managers make up the design authority, which is responsible for creating strategy. An additional layer of senior architects oversees individual projects.

Matthews estimates that BA has invested £8m in e-working so far and generated savings of £10m. Much of the success is due to self-service applications. "We have eliminated 1,200 forms; consolidated our helpdesks; cut the training function substantially; and improved productivity," says Bill Thomas, a project manager with the design authority.

The online holiday- and route-bidding system, for example, lets crew request particular trips or days off online. Their requests are processed automatically and in many cases a response is generated in seconds. In the past, staff asked for time off through a central scheduling unit where telephone operators wrote down requests and passed them on to managers.

According to market analyst Butler Group, 80% of companies are at least planning B2E initiatives. Butler senior research analyst Mike Davis says, "Empowering employees can deliver extremely fast benefits, which is why we have not seen any slowdown in adoption of B2E. There is no point asking someone to print and fill in the expense form then passing it on to someone else who enters the information into an application."

However, IT involvement is essential if companies want to deliver the maximum, long-term benefits of B2E, Davis adds. "Many early projects were business-led and delivered great early results. But the real potential is in standardising on a single directory; consolidating servers and storage; and simplifying the security architecture," he says. "Unless IT is involved at the start, many companies will miss out on that."

A steering group comprising business unit and IT staff at BA designed the e-working programme and an infrastructure was built to support it. This includes a single Netscape directory, redesigned intranet and all-new IP network to speed up performance. The airline's security architecture has also been redesigned so that the 32,000 remote and mobile workers can access the self-service applications over the Internet.

These staff work in customer-facing roles at airports or on aircraft and are more difficult to communicate with, says Thomas. "You can't phone them because half of them are asleep in another time zone, and they may only be in the office once a month," he says. "Letting them access this stuff using Internet kiosks at airports or through their home PCs will provide a real boost to productivity."

From next month, senior cabin crew will have Compaq iPaq handheld computers providing mobile access to corporate information, customer service manuals and BA timetables. Crew will use the devices to fill in forms on embarkation and landing, and devices will be synchronised at either end. Later in the year, BA will be testing in-flight connectivity, Matthews says.

The roaming access is also being extended to the corporate headquarters at Heathrow, with a series of wireless Lans which will let staff work anywhere in the building. Together with a hot-desking system, BA hopes to increase the capacity of the office by 1,000, allowing the company to sell other real estate assets.

The final element of the e-working programme is a business intelligence scheme that will integrate all of BA's enterprise reporting applications into a single portal. This will provide 5,000 knowledge workers with access to BA's datawarehouses. Potentially, this could provide the greatest savings of all, says Matthews. "We have invested a lot of money over the past 15 years in datawarehouses that, as many companies have found, people simply didn't use," he says.

The past year's cost cutting has been challenging for everyone at BA. "We had to do a lot of this on zero spend, and that has been a good learning process," Matthews says. "We have all learned how to make a little go a very long way."

BA's recently published April-June figures are a sign that the medicine seems to be working.

BA's e-working programme

Self-Service Applications
Office workers use the intranet to access a range of applications which have replaced telephone and paper-based support functions. New systems include online helpdesk applications from RightNow; Oracle's HR administration; workflow from Oblex; Lotus e-forms; and procurement from Ariba

Remote Access
The airline's 18,000 remote workers can access the secure copies of applications and the intranet via a new Cisco Internet Protocol network. Policy Director software from IBM lets workers access Lotus/Domino applications securely

Mobile Working
Workers in the BA headquarters will soon be able to access the network through wireless local area networks (Cisco) and hot-desking will be used to increase the building's capacity. From next month, cabin crew will use Compaq personal digital assistants to access manuals, timetables and roster information on the move

Business Intelligence
The company is testing portal software (Business Objects) that will provide a Web front end to its proprietary and Oracle datawarehouses.

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