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The airline industry has changed significantly in the past two decades, with the introduction of budget airlines and an increasingly demanding digital customer base. The latter is also what attracted Mattias Forsberg to take on the CIO position at Scandinavian Airlines (SAS).
“The airline industry is interesting in that it is heavily dependent on IT. The industry has been an early adopter of digital business processes, and SAS has been one of the leaders in it. Many [current systems] come from development inside SAS,” says Forsberg, who began working with the company in January 2016.
“We are at the point where we need to focus on developing SAS for the future, and digitisation is a very important part of that.”
SAS, headquartered in Sweden, is the largest airline in Scandinavia. It plans to invest around SEK500m (£44m) in digital transformation initiatives over the next few years. It is a new phase for SAS, which shifted its IT focus largely to cut costs, as it was on the brink of bankruptcy in 2012.
Cost reduction remains a priority, but with SAS now on more stable ground, Forsberg has introduced an IT strategy focused on replacing legacy systems and increasing the capabilities of the airline’s digital products and digital innovation.
“The importance [SAS] puts on digital innovation is one of the reasons I joined its management team. We aim to make the whole process efficient and transparent and create new systems for our customers to make their life easier,” says Forsberg.
“We need to be able to capture the benefits of new technologies. Digitisation will affect the airline industry for a long time to come.”
Working in a consumer business is not new for Forsberg, who was awarded the title of Swedish CIO of the Year in 2013 while working at state-owned Swedish alcohol retailer Systembolaget.
Prior to this, he gained business experience as a consultant in business transformations and working with startups. Consequently, Forsberg sees his broad understanding of business as a key strength. He says IT, like any organisation, should always have clearly defined key performance indicators (KPIs).
“It is not rocket science, but it does take a lot of time. It is important to start with clear KPIs so you can then focus on your improvement areas,” he says.
Forsberg spent his first three months at SAS interviewing everyone working in IT or with IT in business functions to learn what works in the company and where the pain points lay. Now SAS is starting to implement the necessary changes to better serve the 28 million passengers it transports annually.
One of these is increased transparency. Forsberg is a strong advocate for creating transparent processes. He sees this as particularly crucial to organisations that are highly dependent on outsourcing, such as SAS.
“We have a very small internal IT organisation, and most of the staff work in business IT functions, close to the business,” says Forsberg.
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Furthermore, SAS’s internal IT team of 72 people works in infrastructure, service management and governance in close co-operation with the company’s major service provider partners – Tata Consultancy Services, CSC and Amadeus – and a group of other suppliers.
These partners are used to boost SAS’s digital innovation capabilities. Forsberg believes it is a good model – the internal team brings airline industry experience, while the partners have deeper knowledge in the latest technologies.
“The next step is to broaden the scope for innovation to the whole company and implement a way of working with external parties and the vibrant startup communities in Stockholm and Silicon Valley,” says Forsberg.
No need for digital strategy
SAS has always been an early adopter in digitisation. In 1965, it became the first airline to use the electronic booking system Sasco (SAS computer system). However, IT is far from a support function today, which is why Forsberg believes time has moved beyond isolated digital strategies.
“You don’t need a digital strategy. Digitisation is about making all operations more digital. It cannot be the responsibility of one person,” says Forsberg. “Digital needs to be integrated in all strategies.”
Often, this approach is accompanied with a transformation project, as processes and technologies must be rebuilt to enable digital business models. Forsberg advises setting a clear goal and creating a holistic transformation plan, but one which takes into account that technologies and priorities will change over time.
“Transformation takes three to four years. You cannot plan in detail for such a long time frame,” he says.
Due to the length of transformation processes, Forsberg also likes to start small. Typically, this means tweaking customer interfaces where even small improvements can offer immediate benefits. For example, SAS released a beta version of its revamped online services in August 2016, and is now collecting feedback from customers about the touch-optimised user interface.
SAS is also in the process of moving away from legacy systems and ensuring its IT architecture is robust enough for digital innovations. This includes improving data quality, as it should be a key issue for IT to make sure applications and data are not created in separate silos, says Forberg.
Turning customer data into a personalised travel experience
Data is a major ingredient in digital innovation at SAS. In early 2016, the airline launched a unit called SAS Labs, with the specific focus of improving customer service and simplifying customer interaction through modern digital technologies.
“If you look a few years into the future, we will most likely know so much about travellers and what they like that we could create a personalised travel experience – and not only when they are travelling, but for services around travelling,” says Forsberg.
SAS Labs has developed the online platform and integrated upgraded features into the SAS mobile app. The company is prototyping electronic bag tags, which could be managed through the app instead of paper.
The airline is also experimenting with open application programming interfaces (APIs) and chatbots to expand its customer service to where customers spend most of their time.
“Digitisation is about making all operations more digital. It cannot be the responsibility of one person”
Mattias Fosberg, SAS
The aim is to make the airline’s digital channels interactive and cognitive so they can understand a user’s natural language and answer their questions automatically. This is being trialled with chatbots in Facebook Messenger and voice controls with Amazon Echo during winter 2016.
However, digitisation is not only transforming the customer experience. Forsberg believes the internet of things (IoT) and robotics will further transform the industry as sensor technologies and robotics start to take on processes in and outside the aircraft, such as luggage handling.
SAS is also looking into the potential of 3D printing for the maintenance of its fleets. The most futuristic visions see the company investigating autonomous, pilotless flights.
Forsberg says there will always be some need for human interaction, but change is inevitable.
“Digital transformation is not different from business [any more]. You need to define how to transform the business and capture more opportunities through digitisation. Companies in all industries need to change,” he says.