If a CIO’s worth was measured by the size of their budget, British Airways CIO Paul Coby’s career might seem to be faltering: in the last six years, annual spending on the operational side of IT at the airline has dropped by 42%, from £252 million in 2001/02 to £146 million in 2006/07. But even as Coby has targeted cost-inefficiencies in the structure of BA’s back-end, he has aggressively re-channelled BA’s IT energies into some of the world’s most innovative customer-facing systems.
That gives him the nerve to lead what he regards as “the anti-IT department”, pointing out that the bulk of the business-changing IT has been centred around BA.com, with its online check-in, home printing of boarding passes and extensions to link in hotel, hire-car and other travel packages.
That continues to fuel Coby's passion for his role, his achievements and the transformational power of IT. “I think IT is actually rather cool,” he told the audience at Information Age’s Effective IT Summit in Cardiff in January,
As they discovered, Coby’s view of the IT function and its ability to contribute value to the enterprise is not based on what revolutionary technology he can implement. Rather it is based on a pragmatic view of what the business needs. “IT has had a reputation for not delivering the goods. We don’t need to be focused on what the next ‘big thing’ is; our job is to make all that ‘stuff’ count for our business.”
It is in that light that Coby’s willingness to share the figures of spending cuts is best understood. The airline industry is experiencing major uncertainty: during the past few years the threat of terrorist attacks, the outbreaks of diseases such as SARS or avian flu, the carbon issues surrounding flying, and more locally, the notorious pre-Christmas fog and the threat of strike action by staff have all had an impact. Alongside that has been the intensified pressure from budget airlines and increased government taxes.
BA has had to ensure it has the kind of IT architecture that can cope with such uncertainty. Looking back to 2001, Coby says the company had sliced and diced its fare structure so many ways that there were literary thousands of ways to book a seat – a situation sometimes mockingly exemplified internally with reference to the (real) “World Cup referee’s special fare”. It was “baroque complexity on top of baroque complexity, and a complexity that was impairing business agility, “ Coby explains.
Transforming BA into an Internet-based, customer-focused business presented a huge opportunity to strip out costs and become more competitive, but it required root-and-branch restructuring. “We needed to completely re-engineer our customer systems and processes,” says Coby.
BA had been incredibly siloed, he outlines, “which is odd, because essentially we’ve got one product: flying you from A to B, possibly onto to C – preferably with your bags.”
“You cannot believe how radical this was,” he says. “Our processes were not really designed for passengers but for call centre operators or travel agents.”
By making the company more easy to deal with, making fares more transparent, BA has tried to put the customer in control. The development of online booking systems, check-in and home made boarding passes are good examples of how this has been enacted.
Paul Coby
CIO, British Airways
Here, Coby’s shrinking IT spending has helped bring senior management to the table. Instead of re-engineering processes from the ground up, the IT department has looked to build re-usable, componentised business processes, utilising the existing infrastructure.
For the past five years, the demands placed on Coby by his board have been constant: to deliver a robust and reliable global IT operation that is available 24/7, while reducing absolute costs. “If you don’t do that, you don’t get to talk about all the gee-whiz things,” says Coby. A management board which is asked the question, “have you heard about Web 2.0’, when the check-in system isn’t working,” is going to tell the CIO to “bugger off”, he says.
Gee-whiz things
Meeting the transformational targets is always going to be tough. For example, Coby was given a two-year timeframe to get to 100% of passengers using e-tickets. “We’ve got to 91%, so have we failed? “Maybe, but by setting the 100% target, we nearly got there. And that’s the point: it is these tough transformational targets that change the business.”
Coby has had a number of other stretching targets, including increasing the numbers using self-check to 50%.
The approach to this large-scale change has been guided by what Coby terms his ‘golden rules’: introduce simple and compelling offerings; design the process from the customers’ perspective; get the change right first time; and introduce common systems across all of BA’s global operations. “These all involve technical issues, but they’re as much about social change as technology change,” he notes.
The streamlining of back office infrastructure and processes has allowed BA to cut costs across the board. For example, it has reduced the number of UK call centres it needs from five to two.
From a technology point of view this has been achieved through the integration of the ‘whizz-bang’ new technologies and more established infrastructure, insists Coby. The boarding pass system is a perfect example: to deliver the personalisation that allows individuals to print their unique pass, BA had to introduce some “fancy pieces” of service-oriented architecture; but it also drew on well-established technologies such as barcoding. Such moves have pushed the IT department “into the mainstream of what the company does,” says Coby.
The new development at Heathrow Terminal Five (T5), where BA will centre all of its Heathrow flights, is testament to how IT has become a focal point of innovation within the company. With T5, which is due to open in March 2008, BA has a blank canvas on which to plot how an ‘airline of the future’ will operate. It will help the company radically improve customer service: BA has adopted a mantra of ‘zero queues’ for the terminal. For that to work, BA needs to successfully persuade all but a small percentage of customers to check in online or at self-service kiosks; then, rather than the limited number of check-in desks they face today, there will be scores of fast bag drop points that finally live up to their name.
Coby expects these changes will help deliver excellence in customer service, and believes IT will drive that agenda. “We must deliver, because fundamentally we’re a customer service company.”
It is a “really interesting time”, says Coby. Some new exciting technologies are helping IT to finally deliver on some long-standing promises, while, simultaneously, old, established technologies are really beginning to blossom.
There is plenty of work still to be done, admits Coby – simplifying the “cat’s cradle” in its back-office, for one. But the goal for the IT department is firmly established, and it is one that will position it at the forefront of business change at BA. “We want to be the first to build a truly IT-enabled low-cost network airline, and we’re going to use automation and simplification of process to reduce costs.”
Effective IT breakout: New models for innovation
WHEN Tim Berners-Lee, the founding father of the World Wide Web, put his first website online in 1991, he laid the foundation for the transformation of future generations of business. Before long, online travel agents and bookstores began to proliferate, business leaders started re-engineering processes around the Internet.
Today, the dust has long since settled on the first wave of the World Wide Web. Now a second generation of Internet technologies is poised to transform the digital landscape yet again. Known as Web 2.0, the new Internet wave is about using new tools such as wikis, blogs, mash-ups and social networking sites to build new business models.
While the leading lights of the Web 2.0 movements, such as MySpace, Wikipedia and video sharing website YouTube have an established web presence, the principles are only slowly inching into the enterprise. Many business leaders have reservations about giving employees – never mind customers – access to blogs and wikis. As one delegate at Effective IT 2007 Summit observed the risk of a rogue users inadvertently leaking sensitive information, or “tarnishing the company’s brand” was too high.
Even so, some businesses are already embracing this next ‘revolution’. The executive of a major oil company told delegates how he had built social networks within his organisation. Staff were already covered by codes of conduct, while an editorial team has been able to monitor the site, as an additional safeguard. “If anything is published that is likely to be offensive and if the web community does not deal with the matter itself, then we will be in a position to pull it down,” he said.
But Web 2.0 is not the only development that could change the Internet. Back in 2001, Berners-Lee described the possibilities of what he termed the ‘Semantic Web’ – which is an extension of the existing Web allowing users to find, share and combine information more easily, through the use of sophisticated metadata standards.
This is already being exploited by so-called ‘mash-ups’ – web applications that combine content from more than one source. The oil company delegate described how his company had used mash-ups to protect their oil infrastructure and employees against the threat of hurricanes: “We can track the hurricanes, where our facilities are, and where we predict them to go through,” he said. “The mashup then provides [the information] to us in context of what we have to do to protect ourselves."
