A boardroom spill at Qantas has seen CIO Fiona Balfour bounced out of the race to become the airline's next CEO and unceremoniously parked sideways - along with her IT division - to report to chief financial officer, Peter Gregg.
News of the spill came after a confidential staff memo from Qantas CEO Geoff Dixon found its way online at gossip site Crikey, with Qantas representatives since confirming the document is authentic.
Always ranked an outside chance to become CEO by aviation industry insiders, Balfour has long been a champion of promoting tight alignment of IT through outsourcing and commands one of Australia's highest IT salaries at $1.2 million.
However, the leaked memo from Dixon reveals the airline is still ravenous for more cost-cutting, with IT now a prime candidate.
"We also have a need to introduce further efficiencies across the group's corporate activities. To help achieve this and to provide tighter integration of key processes between financial services and Qantas Business Services (QBS) I have decided that the executive general manager business services and chief information officer, Fiona Balfour, will now report to Peter Gregg.
"This move will enable a more effective linkage between IT and strategy initiatives such as the Sustainable Future program," Dixon states in the document. The moves do not bode well for Qantas' outsourced suppliers, especially IBM and Telstra, who chalked up $1.4 billion worth of contracts over 10 years in April 2004. At the time the contract was signed, Balfour promoted the IBM deal as a significant saving because it utilized an on-demand (pay as you use) model and relieved the airline of costly legacy data centres and some 200 IT staff who were either retrenched or sent to IBM.
Balfour has previously stated she will migrate some 600 Unix-based servers and the airline's mainframes over to open source platforms using Linux courtesy of IBM; however, the airline has so far declined to publicly comment on the current progress of the project.
In another attempt to shed cost, Qantas is also in the midst of overhauling its yield management and departure control systems through hosted global distribution system vendor Amadeus, which currently has a 10-year, $400 million agreement with the airline.
However the Amadeus GDS has not been extended to Qantas' budget subsidiary JetStar, resulting in significant obstacles in transferring passengers and baggage on the same electronic ticket (interlining).
Balfour defended JetStar's choice of Navitair's Open Skies booking engine in November, telling Computerworld it was not yet cost-effective to use Amadeus on JetStar - and that Qantas and JetStar were very different airlines.