British Airways' IT department has drawn up plans to complete key IT projects more quickly in order to save £10m before March next year.
BA IT director Paul Coby has been told all the systems for Heathrow Airport's new Terminal Five have to be installed a full year before the terminal opens for business in March 2008. He needs to meet this deadline as well meeting the boardroom-imposed budget cut, which was handed down last week.
The £10m cut in the airline's IT operations budget is part of a £225m reduction in costs for the 2006-07 financial year. Executives are targeting a second £225m tranche of cost cuts in 2007-08, although further reductions in IT spending have yet to be specified.
Coby said, "My budget is £152m on IT operations and we have also invested £93m. The cut is a further £10m out of the operational spending to £142m." He said the budget for capital investment in IT would remain at £93m.
BA's board has already decreed that the number of senior managers in all of the company's departments, including IT, has to be halved by the end of March 2007, and the number of middle managers must be cut by one third by end of March 2008.
The £10m spending cut is the latest in a series of reductions in the IT budget at BA. Since September 2001, all areas of the company have had to make savings. However, the capital investment in IT projects has increased from £60m to £93m over the same period.
Coby said he would achieve his target of £10m savings by prioritising his key IT projects and managing them more efficiently.
"We have nominated 15 projects as 'fast IT projects'. The idea is to give these a really high focus in order to pilot how things should work effectively. We will roll out the lessons learned across the entire portfolio of projects."
Contracts are due to be signed with the finance and procurement functions, with the specifications for each fast IT project to be set in the contract. Neither IT nor anyone else in BA will be able to change a project's specification once the contract has been signed, said Coby.
Over the next 12 months, the IT department also has to increase the number of customer-facing applications that integrate with its website and interface with third-party systems.