Jetstar: Stephen Tame, CIO

Stephen Tame is chief information officer of Jetstar, the low-cost offshoot of national carrier Qantas. Now, with big plans to expand into a number of long-haul international destinations this November, Tame explains how IT fits into the equation.
Written by Brian Haverty, Contributor

Tame sits down with ZDNet Australia editorial director Brian Haverty in a CIO Vision Series interview to talk about some of the tools and technologies that are driving Jetstar. Here is an excerpted version of the interview.

What are the main areas of technology that you are excited about, and what will you be investing in over the coming year?
Tame: We've been spending a lot of time and effort looking at how we are going to be deploying and managing our systems moving forward, and a lot of that is around virtualisation technologies.

Virtualisation provides us with the flexibility to deliver those applications outside of the Jetstar world to those areas where we need to do business. I don't know whether airlines are somewhat unique in this, but we need to deal with a lot of common user, or non-Jetstar equipped locations.

We're now looking at rolling out thin-client machines -- again virtualising the applications -- and I've found that it's significantly assisted my bottom line. It's actually dropped my maintenance and management costs down by about 60 percent.

How much do you plan to spend on IT in 2007, and will that be more or less than you've spent in the current year?
Tame: It depends on how you phrase that question. In real terms, I am proposing to spend more -- I am proposing to increase my spend by about 40 to 50 percent over last year. However, in percentage terms, which is one of my KPIs, I'm actually reducing my IT spend. When Jetstar first started business two years ago, for example, my IT spend was 1.6 percent of total revenue. Last year it was 1.4 percent. This year, 2007, I was projecting 1.2 percent. Our upcoming international business will add significant revenues to the organisation, and you would normally think that adds significant IT cost. Well, that's true, but by actually holding that cost down, and holding the growth down proportional to overall revenue growth, I can actually decrease my overall IT spend as a percentage of total revenue.

You stated in the past that a very important philosophy for you was to always have that manual process in place, no matter what IT solutions you implement.
Tame: It's built in to my agreement, and it's continually voiced by me to the organisation. Success is not just delivering, success is also in managing expectations. So Jetstar, for example, is a 97.5 percent airline. And I continue to say that right throughout the organisation with regard to IT and IT delivery. That doesn't mean I don't have some high-availability systems, I do. What that means is that I could lose systems at an airport for a day, and I can go manual at that airport -- I can survive.

As well as delivering the IT and being the IT evangelist for Jetstar, I'm also the first person to turn around to the business and say that in this particular case the piece of technology you need is a pen. I try to question the organisation and say to them that in some cases IT is the last thing you want. It can add complexity, it can add cost, and it doesn't always contribute to success. Only where we find that we do get some significant synergies and efficiencies will we look to go down this IT route.

You mentioned KPIs earlier -- what are the key measures of success you use as a CIO?
Tame: It's balancing the demands of IT against the demands of the business. It's making sure that I can deliver to the business initiatives. If you want to ask me about the five-year IT strategy plan at Jetstar, well there isn't one. The reason is because the business is saying, "Well, we'll look at what we're doing next year and the year after". We've got some long-term visions about growing and developing, but we don't know what we're going to be doing yet. So I've got to build a strategy that says I will develop the toolsets, the kits, the options. I will give you all of the business opportunities and options you can have. In this case, you can pick option one and two and three. For this one you can pick something else. So it's actually ensuring that I can deliver the flexibility to the business so we can move cheaply into a location, but also get out cheaply as well.

What are your views on outsourcing IT?
Tame: Everything that Jetstar does is actually outsourced. My IT organisation is based on a very small headcount. The expectation I've got is that I can continue to run the business on that. The risk that I'm facing at the moment is that as this organisation grows in general terms, you find that your headcount grows to meet that. Yes, we want to grow, yes we want to grow our revenues, but we don't want to grow our heads at the same rate. It's a big balancing act.

How do you decide specifically what to outsource?
Tame: One of the things that I say to my team is that I actually go out seeking to buy managed services. I don't go out and buy service management, because that is the job of my team. So we will provide the service management layer, but we'll outsource all of that managed services to the various third parties. So you know we outsource our payroll HR system, it's an Internet-based solution, so much per person per month. We outsource our e-mail platform. The engineering system is supported by a supplier out of the US, our airline information management system is supported by a supplier in Greece.

You mentioned virtualisation as an area that's very exciting to you right now. Any particular technologies you're anxious to implement in the future?
Tame: We're looking at some of the problem areas within the business. I'm looking at extending electronic document management systems further. We currently use them for our crew records. We've implemented what I think is a fairly innovative solution for our invoice and payment processing, and that works extremely well for us. We are now looking to the same thing for HR and customer records, where you manage those huge volumes of paper. We just need to look at how we're going to manage those better. So I see that as something that we'll be extending next year.

Running on such a tight budget, how do you test some of the solutions that you've developed?
Tame: We've been developing these strategies over the last 18 months to two years. So this is proven technology, we've been running some regional Australian airports off no-network CDMA connections since August last year, and we're comfortable with that. The reason I can do that sort of thing, and going back to expectations, is because I continually advise the business on a 97.5 percent airline. So if for whatever reason it doesn't work, for a day, I can go manual.

It means I can experiment with DSL connections, CDMA connections. I can experiment with all of these technologies that you might argue is not a 99.9 percent solution, but I don't have to achieve that result. So as well as giving me the flexibility to give the business their tools, and saving me cost, I'm achieving some results. That 2.5 percent -- you'd be surprised at how much that locks you in, and how much that costs. That last 2.5 percent is really where the big dollars are, where the big resourcing requirements are -- and it's like a ball and chain.

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