With Branson's (and Patrick's) no-frills airline nipping at the heels of Qantas, the flying kangaroo has turned to 'vanilla' systems and managed services in a bid to cut IT costs and appease shareholders.
With 600 centrally managed applications across 30 different platforms and an IT spend of around $400 million, Qantas Airways' group general manager, managed services, Michael Dodd said the age and complexity of IT systems was the telling situation going forward.
"There are [aircraft] fleet lessons for IT; aircraft get upgraded and IT needs to move forward as well. Half of Qantas' underlying technology is 30 to 50 years old. [But] because it has been running for so many years it is extremely stable and cheap to run.
"We have been acquiring best of breed solutions for many of our systems and environments. However, the complexity of the systems prohibits changing quickly. This is why we are moving to managed services; we don't want to have to deal with the inflexibility."
Speaking at the AIIA's March business briefing breakfast, Dodd said more than 50 systems will be outsourced. Qantas already outsources its desktop service and LAN environment management to Telstra Enterprise Services.
The announcement of more outsourcing comes in light of "constrained" IT costs at Qantas, which Dodd said would be kept "close to flat".
Qantas has around 100 critical systems, but it was only due to Y2K that the airline got a good handle on the condition of their systems, he said.
This review of the company's IT systems resulted in a new IT vision; several projects of which are currently underway.
Dodd said the carrier is moving away from having hundreds of applications to a "small number" of managed service software suppliers, and is "determined" not to customise applications.
He said just like the airline would not consider building its own aircraft, so too IT has to change its mentality about building its own applications, which will result in significant savings.
"We have to change business processes so we are in line with industry standards, thereby reducing costs." e-Business and system re-use is another focus. "If you look at our Boeing fleet, we are able to redeploy aircraft from international and domestic routes if there is a downturn, as there has been. We would like to be able to reuse our IT systems as well."
Dodd believes "significant" reuse of components of IT is now possible due to globalisation. He said the outsourcing of the reservation, inventory and department control systems to Amadeus (due to go live in November 2002) was an example of this.
Dodd said many companies have silos of information and Qantas was no exception.
He said HR and procurement had literally dozens of systems each and some of the systems in use in HR have been in place for about 20 years.
"[For HR] there is one core system, but each department has developed their own database and data, this is not cost effective.
"If we bought our aircraft the same way we bought our IT systems we would have lots of different aircraft."
However, as part of an e-business project - eQ - encompassing HR, finance, payroll and customer loyalty, these systems will be rolled into a 'vanilla' managed service solution.
An Internet-based e-procurement and inventory management system will also be created.
This project was started mid last year with RFT in December 2001. Dodd said Qantas is currently completing the vendor selection process.
"There has been a significant amount of funding for change management [for this project], which has been the most difficult bit. Cultural change will be very challenging."
Other systems under review include the company's rostering system (which will be linked into the e-business program).
Dodd said the company has many systems, some of which are shared and some are enterprise-based. "However the enterprise systems are not that great. It is at the enterprise level that we want most of the rostering done."
He also said staff administration would be moving to a "self-service" model for employees and managers, leveraging business intelligence with an internal focus for end to end value chains.
Dodd summed up the thinking behind the major IT changes occurring within Qantas as: "Internally there is thinking 'I want this', but it has to change to 'I can live with this'."