CIO interview: Kari Saarikoski, Finnair

Finnair is on a digital transformation journey and the airline’s CIO is changing the IT department as it progresses

The battle of the skies is increasingly focused on going digital. For Kari Saarikoski, CIO of Finland’s national airline Finnair, this has meant embracing the cloud and cross-functional teams to improve both digital and physical customer experiences.

Saarikoski says there are three themes of work on the journey: “Going digital is one, how it is tackled with a new way of organising IT closer to business is another, and the third theme is the disruption of technology [including the cloud].”

Finnair has already put its plans into action. In the past year, the company has released a mobile application for the Apple Watch, joined the growing number of airlines offering in-flight Wi-Fi with its new Airbus A350 fleet, and started transforming its technology infrastructure into a more flexible hybrid cloud platform.

The airline has also shifted the focus of its application services procurement into the cloud, either using a software as a service (SaaS) model or running more traditional systems in the cloud.

“It is more a matter of when all services are in the cloud than whether we should go into the cloud or not,” says Saarikoski. “As long as the data stays inside Europe, we don’t see any problems with the cloud.”

The foundations of Finnair’s cloud-friendly approach stem from 2002, when the airline first outsourced its basic IT services and application management to IBM, which is now building its cloud platform

“Back in 2002, all significant applications were coded by us in-house,” says Saarikoski. “Ten years later, everything has been moved to different package solutions, such as Amadeus, Lufthansa System’s industry solutions, SAP and Siebel. We don’t have any mainframes or in-house applications any more.

“If we then had around 400 applications, now it’s around 130 – so it is a much easier entity to manage.”

Outsourcing model

Saarikoski knows Finnair’s operations inside out. He joined the company 27 years ago as a PC application developer and jumped into his CIO boots in 2002 after the outsourcing deal.

He says a decade spent adapting to the outsourcing model and modernising Finnair’s application portfolio has also helped his team to adopt the skills needed in today’s IT.

“In traditional IT organisations, there is often resistance against new kinds of services because some jobs will disappear – they become integrated deep into cloud services,” says Saarikoski. “There is also a certain pain in giving something up when you no longer configure servers or code, but instead need to learn to monitor SLAs [service-level agreements] and discuss things with suppliers.

“We made these changes in job descriptions a long time ago.”

Read more Nordic CIO interviews

  • Modern Times Group’s CIO discusses the challenges and benefits of moving an established business to the cloud.
  • CIO of Finnish paper and forest products firm UPM talks about its journey to cloud-only IT.
  • The CIO at Danish wind turbine company Vestas is playing a key role in turning the company into a software supplier.
  • Fiskars CIO Frans Westerlund discusses the challenges faced by IT when a business instigates a major strategic transformation.
  • The IT department at Swedish telco Hi3G is on a mission to a utopian planet, with Olivier Smith at the controls.
  • Mikko Vastela, CIO of newly formed Nordic insurance company LähiTapiola, on the importance of informing employees and stakeholders what IT is doing.
  • Saab Group’s CIO discusses the huge challenge of integrating 40 separate IT organisations into one.

The past two years have been a time of experimentation for Finnair in how best to organise its centralised IT unit of 80 people. Saarikoski says the right operational model has now been found to meet the needs and fast pace of digital developments.

The basic idea is that the minimum requirement functions of IT are managed by three internal “offices” – architecture, development and services management – each employing five to eight people. This frees up two-thirds of the IT team to work on specific application areas.

“We are introducing a new operational model where IT people work in the same team with business development people and, in some cases, also with a service provider’s people,” says Saarikoski. “These cross-functional teams drive the needs of a certain development area. Their common goal is based on the goals and outlines of that specific area, and IT supports that goal.”

The aim is to bring IT and business closer together by reducing the borders between them.

“We are only starting this now, but it is clear that in the future, business is IT and IT is business,” says Saarikoski. “It is quite different from 2002, when IT had its own business unit, own building and everything. Now it starts to be hard to separate IT; everyone is an IT person to some extent.”

Cross-functional model

Finnair has already tested its cross-functional model in a few projects, such as the development of its new in-flight entertainment (IFE) system with Wi-Fi connectivity. A mix of business, maintenance, security, IT and service provider staff worked on the project at Finnair’s open-plan headquarters.

Saarikoski says clear rules and control are needed when people from different work cultures come together, but adds that the benefits easily outweigh the challenges.

“In this model, we all work in the same space and fill the walls with Post-it notes everyone can see. You can’t say who works where,” he says. “This helps to bring up ideas and issues much faster.

“Working together every day is worth its weight in gold, especially in digital, where we look for new direction and try out different things at a fast pace.”

“The focus should be shifted to information and how it is used to better serve customers and to target services to customers”

Kari Saarikoski, Finnair

The model also highlights a wider change in IT where technology is now rarely an issue, he says. “The key things to control today are data and information. You need to have a good grasp of where the data is, how it is integrated and what kind of overall picture it forms. The emphasis in IT should be on the letter ‘I’, not on the ‘T’,” says Saarikoski.

“Of course, we cannot forget technology, but the focus should be fundamentally shifted to information and how it is used to better serve customers and to target services to customers.”

While Finnair is working on new digital services for customers before, during and after their flight, a current challenge is how to seamlessly synchronise the digital self-service experience on a growing number of channels with physical customer service.

The airline’s cabin crew already use tablets to process sales during a flight, but they also need to keep up with customers who have made advance purchases and help passengers with pressing issues, such as flight connections.

Saarikoski says services will soon expand on-board as wireless connectivity during flights becomes more common. Finnair estimates it will have Wi-Fi-enabled IFE installed across all its fleet by 2018.

“What we need to create new service and product entities is data to understand where a customer is on their journey and what is important to them at each specific moment,” he says. “The IT experts of the future are those who understand this process and the information and best refine it into services.”

Read more on CW500 and IT leadership skills

Data Center
Data Management