Piloting an airline's makeover

Managing 160 projects simultaneously and over 700 staff, Qantas CIO Fiona Balfour thrives on the complexity of business. Her focus today is on shifting an ageing IT shop with a 30-year-old data centre into a lean, mean outsourced machine that will eventually be an 'on-demand' style operation.

Balfour spoke exclusively to Computerworld about her IT vision for Australia's premier airline and the complexities involved in managing more than a billion dollars in contracts with Amadeus, IBM and Telstra.

When she first took the CIO reins in 2001, Balfour’s greatest challenge was to convert an old IT shop into something that represented a modern day IT services organisation.

"Like most large airline companies, we were early adopters of technology, but our technology had been around for more than years," Balfour said.

"We needed to evolve into a professional services organization.

"The big challenge three years ago was converting the way we carried out the IT function. We were still running everything ourselves (in-house). We needed to focus our skills on what we could deliver best. Rather than running our own reservation systems, data centre or networks, we actually bought in IT services to do that."

Qantas began its IT makeover by first determining what will stay in-house and what will be outsourced. The first function to be outsourced was the reservation system in 2002 which, she said, couldn't possibly be effectively managed by a local supplier.

"We now buy reservation services from Amadeus in Europe, which was a joint decision we made with British Airways," Balfour said.

"We have interline air ticket and e-ticketing facilities with Britsh Airways and American Airlines, and we will soon be expanding that to cover more OneWorld partners. We could never have managed that with the old reservation system.

"For reservation systems you have to go to suppliers of scale and there are only two providers in the world that can provide this, Amadeus and Sabre."

The next step for Qantas is to outsource its data centre and network services.

"Our existing data centre was built in the 70s and it had a 30 year design life," Balfour said.

"It was at the end of its functional life because you can’t renovate data centres and keep them running at the same time.

"At the time it was built, Qantas’ turnover was less than a billion dollars a year. Now we are a $13 billion company. Our requirements in information processing have changed dramatically, so we needed to move into much more resilient, robust world-class facility."

Balfour said an airline isn't about building data centres - the money is better spent on buying aircraft.

As a result it signed a $650 million agreement for IBM to manage its data centre operations, mainframe and mid-range computing and other managed services over 10 years. Telstra is responsible for domestic data, voice and desktop services over seven years under a $750 million agreement.

"Going forward we will pay for our data centre and infrastructure on a usage fee based upon the number of units we are using from time to time, she said.

"A unit is clearly definable, such as the number of servers we need to deploy."

This will give Qantas the flexibility to ride the peaks and troughs of flight demand which can often be unforeseeable, and avoid the usual stickiness in an IT operational environment.

The changeover process is expected to take up to two years and will be closely managed by IBM using a detailed migration plan that will be developed over the next four to five months. The plan will identify which systems will move across to the new data centre and in what order.

Balfour said the fallout for IT jobs will be minimal.

"Of the 200 staff this agreement affects, all of them were offered positions with either Telstra or IBM and at this stagemost employees have accepted these new positions."

The remaining IT staff will focus on policy, architecture, planning, security, project management, systems development and applications support.

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