|
-Paul Coby, CIO, British Airways
Coby joined the Civil
Services in 1978 and had a career in several Government Departments-including
Transport and Environment. He was
Principal Private Secretary to the Secretary of State for Transport during the
1990s, in charge of a £2.2 bn budget that included setting up the widening of
the world's busiest ring road, the M25. Although a policy civil servant by
background, he has always been passionate about the effective use of technology.
Paul Coby joined British Airways in 1997,
where he developed OneWorld Alliances-the Airline's alliance
relationships-and became general manager, responsible for Information
Management and Business Development. There he devised and negotiated the
industry-shaping move of BA from its own reservations system to
"Amadeus". In September
2001 he joined Rod Eddington's (then CEO) Leadership Team as the CIO,
responsible for the operation and development of all British Airways Group
systems. He has established a
Business Transformation team within the IT Department to bridge the gap between
technology and business delivery. Over
the last two years he has reduced the cost of running BA's IT operation by one
third.
In this exclusive
interview to Minu Sirsalewala of Dataquest, Paul Coby talks in depth
about his strategies for the company and the resurgence in India operations
 How did technology rescue BA
from its financial storm?
Legacy was us; our industry has the most horrible package. The airline
industry has processes invented and designed in the 1950s. Like the cardboard
pieces invented for the Titanic. These tickets were on cardboards and were
collected from the passenger and sent to reconcile house. These were clearance
houses that would collect, collate, and then dispense the information.
In the past years, we have
undertaken the most far-reaching technology initiative among any large airline.
We completely directed our efforts in cleaning the package. We left the back
office to the outsourcing partners and concentrated on business processes. Our
business had become too complex and too expensive to operate. So we used
technology to automate processes, such as flexible ticketing, flying into
accessible airports, and having back-up aircrafts in case of a problem.
Technology is a lever that
allows us to be just as price competitive as the low-frill carriers, and to meet
the demands of our customers-and still make money.
Technology allowed us to
directly take on no frills carriers and compete with them without compensating
on quality; not be termed as another no frill airway, and not become a cheap
airline.
An example of this would be
calendar led selling of tickets. It is a fancy piece of inventory management.
The system handles 38 million customers a year.
We completely streamlined the
carrier's internal networks, eliminating redundant and inefficient systems, and
recreated its ticket distribution and customer service operations.
What has been your strategy?
Our CEO believes as much as I do that the smart use of technology is
fundamental to BA.
Concentrate on what will make a
difference and concentrate on cost.
Use technology to sell (example,
online selling). Web creation is an important aspect in our services and we have
increased the capacity and capability intensively. This needs to be communicated
to the market which we did through the smart use of technology.
We at BA do not have much to
spend at our disposal. Our IT budget is much lower compared to other players. We
have around £93 mn to spend and have to be very cautious about the way we spend
it.
And the budget is expected to
increase only modestly.
One of the really strategic
choices you have is 'Where am I going to invest the IT budget?' In BA we spend
about two per cent of our overall turnover on running the IT operation and a
much smaller amount than that on the IT investment.
Overall strategy is to simplify
and automate BA's business processes to fundamentally change the way the airline
interacts with its customers and employees.
How has this strategy and
initiatives worked?
We've put our customers in charge of their travel arrangements
completely-and we've made our operations transparent to the customer.
Part of this is the
'customer-enabled BA' program. This resulted in discontinuation of ba.com (a URL
owned by Bell Atlantic) and an increase in online bookings, e-ticketing and
self-service check-ins.
Passengers can now use the Web
for everything that used to be done at airport check-in desks. Also if you want
to change your meal, seat, upgrade, register for advance passport info, do
executive club transactions, you can do all of that online.
For example when you book a
flight on the Web, we'll show you 7 days, plus or minus the day you want to fly,
and color code which are the cheapest and which are the most expensive flights
at various times of the day.
Sixty percent of our ticket
sales for U.K. and point-to-point flights are online.
A third of our customers are
using our online services before they get to the airport. We've saved our
business about $180 million over the past two years from this. And the savings
from the internal network activities are on target to be about $95 million. The
site has served as many as 750,000 passengers and has gone up to nearly one
booking taking place every second.
Anyone doing business online has
to be able to interact with this world and BA.com has been able to exploit these
new opportunities.
With stiff market competition
especially from the no-frills airlines which had embraced the web as a low-cost
way of doing business, meant more innovation for BA for its survival.
|
Inventory
management
BA amongst the world's busiest airlines has shed legacy and adopted
Amadeus' new generation inventory management system. BA moved its global
inventory and route network to Amadeus Altéa Inventory. It now manages
its complete inventory and route network on Altéa Plan. The system
handles 38 million British Airways customers a year. The managed service
gives airlines complete control over their inventory and seat planning,
providing the tools to maximise the yield on every seat.
In
the biggest overhaul of British Airways' core technical infrastructure in
over twenty years the plan allows airline the ability to handle most
sophisticated revenue management techniques available today, at the same
time improving the cost-efficiency of internal processes.
The
Plan manages 673,000 individual flight/date inventories on a rolling,
yearly basis-more than 2,000 flights every day. Moving all this data to
the new system took just five months. The new system was initialized
during the first two months, and was then run in parallel with the old
system as the control of the flights were progressively given to the new
system (on a flight/date basis). This process ensured a smooth migration
and protected critical business functions with minimal impact to the
airlines' day-to-day business.
Now
the airline can create an inventory record for every flight for the next
12 months in advance. The system adds selling classes, configurations and
the seat map before publishing that information in all Global Distribution
Systems and airline selling systems around the world. Information on the
number of seats sold, seats available and all customer-related information
is then passed to the departure control system for the check-in process to
commence. The inventory system also relays schedule and customer load
information to the weight and balance system that will calculate the
optional trim and load allocation for the flight. |
How is a typical week for
you?
I generally split the week in 5 tasks where 20% of the time is spent
managing the IT department, 20% of the time on airline business like spending
time with the Capital investment team, strategy team to chalk a vision and
growth plans. An awful lot of my time is spent with suppliers, especially if one
needs to sort out some difficult relations. As suppliers and vendors play a
critical role good deal of time is spent strengthening and sorting the
relationship. Other 20% of the time is spent on managing the projects both new
and old. For example lot of my current time is spent on designing and building
the terminal 5 which we now have at Heathrow the busiest airport.
I like to spend time on
communicating with people. We have a program where every employee is made to
participate in cross department meetings. Every month we have a big issues day.
You've really got to spend at least 20 per cent of your time – one day in five
– on communications or listening or some form of interaction with people.
We try and mix people and one of
the leadership team comes down to talk to the group. At the end of the week or
month I like to map and check if I have got most of my activities right.
There has been a significant
resurgence in your India operations, how does this fit in with your IT plans?
India was British Airways' second biggest long-haul market after North America,
and the third biggest after the UK and the US. We have increased our business
presence in the country and have focused on cities like Bangalore, Chennai and
few other Metros. This explains BA's ongoing £2 mn country campaign launched
after the campaigns in the UK and the US.
 We will see flights increase
30-50% within two-three years leading to a tripling of operations in the
country. With 60 jobs added recently, BA now has a 600-strong team in the
country. We want to provide facilities to India as we do anywhere else in the
world. India is on par with all our other locations.
We have introduced online
printing of boarding pass at Bangalore and Chennai, and would very soon be
activating it at another 3 cities. Our Indian frequent flier customers are
extremely thrilled and happy about this facility. There has been no added load
on the network and the new locations and services have been integrated
seamlessly.
What are your mantras to be
successful?
Transformation Targets, Golden Rules, and Good Governance.
You have to aim or 'over aim' to be close to reality. When we aimed at 100%
e-ticketing for passengers we are at 83% today and will be at 90% in another 6
months. Through e-ticketing we will not only be streamlining the ticketing
process but also save cost and stop shuffling paper. 80% of our club fliers are
now on line. We are gradually phasing out our numerous fare categories, which
were causing confusion and now have best fares available and other customized
services for our frequent flier members. We had fares like World Cup fare, Dogs
in the Boxes fare.
The Golden rule is 'build
every system for end customer use'. We usually build for our departments and
for their ease of use, but if we target the end user, the department by default
benefits.
For example, we have baggage
access fare built for self-service. This helps the passenger significantly in
time. The important aspect is the user-friendly interfaces, which allow the
passenger for a click or just drag and drop option. If it involves too many
clicks it will not be of any use or advantage.
We have a governance board,
which I in my capacity as an IT officer chair with other CFOs and other business
directors, to drive the projects forward. The team is also charged with
formulating the airline's future business plan help deliver transformation
targets.
It is important that IT sits at
the top table and has its say. The advice is to concentrate on particular areas
and respond to the request in an organization only if there is a point of
convergence.
Another important aspect is to
have a strong established partner. In India, TCS has been an old partner-for 9
years-and currently there are talks with Infosys for another partnership for
application development work.
Could you share your current
and future IT projects?
Looking at future technology trends and making sure it's the one is an
important function of the IT department.
Things will very soon go a lot
smoother at London's Heathrow Airport with the expected completion of our VoIP
deployment by March '06. Cisco will deploy VoIP to over 14,000 British Airways
staff, which will use 8,500 Cisco IP phones at its UK offices and airports.
Another important project is the
Terminal 5 development, again at London's Heathrow airport. The project will see
BA transfer all of its services from the other terminals to Terminal 5 by spring
2008. It's a major undertaking for IT, with all aspects of the
terminal-including customer check-in and baggage-to be handled by new
state-of-the-art systems.
The Terminal 5 IT systems are
set for an initial launch in January 2007, so that the team can perform testing
for a little over a year before it goes live to the rest of the world.
Apart from these we are actively
scouting new business partners in India, like Infosys, for further development
and back end process outsourcing. Page(s) 1
| 
