Qantas Airways: a perfect storm for IT failure?

Qantas, the Australian national airline, has endured two high-profile IT failures in recent years and a third major project appears to be at substantial risk. In many respects, the company offers a case study for examining how underlying management issues can cause multiple IT projects to go bad.

Project eQ. In late 1995, Qantas canceled its project eQ technology services contract with IBM, four years into a ten-year agreement. The overall program cost was $200 million. According to The Australian Financial Review (1/31/06):

The project is understood to have run into trouble early last year after the human resources element was completed. People close to the project say deadlines started to slip as attempts were made to map the new finance application against the complex Qantas corporate structure.

The project was restarted nine months after the IBM contract was canceled. Australian IT said the purpose of the restart was "stripping complexity out of the carrier's aging computer systems."

Project Jetsmart. In February, 2008, Qantas canceled Jetsmart, a $40 million parts management system implementation. Issues with the project go back to at least 2004, when the union entered a dispute with Qantas, claiming the software unnecessarily increased its members' workload. At that time, the union advised mechanics employed at Qantas to "not assist with the implementation".

Qantas Engineering's executive general manager, David Cox, also acknowledged problems with Jetsmart:

The company had made a large investment in Jetsmart, which was regarded as an important first step in the company's investment in new information technology systems to drive its maintenance, repair and overhaul operations, Mr Cox said. "During the development phase some issues arose with the system, training and the management of change.

"This is normal and these issues are being progressively addressed," Mr Cox said.

Qantas' Chief Financial Officer, Peter Gregg, said:

The Jetsmart system was an interim phase to hold together our existing systems until we decided on a replacement system and so Jetsmart will in time be phased out and the new system will replace it.

I don’t consider it to be money down the drain because if we didn't spend the money we wouldn't have had a system to account for and record our engineering cost base.

It was supporting systems that were in excess of 20 years old and the people who were actually supporting these systems were retiring.

Project Marlin, a new engineering and maintenance platform, is replacing Jetsmart. Referring to the new project, Gregg remarked "the new IT system for our engineering business is meant to bring us up to speed with the latest software available...."

THE IT PROJECT FAILURES ANALYSIS

There seems to be several reasons why Qantas has faced repeated IT failures.

Complicated legacy applications infrastructure. Qantas started its long-term upgrade and modernization plan only after the company's IT infrastructure had become complex and unwieldy. This apparent poor planning put the entire upgrade program, including its individual project components, at increased risk. Here's a 1995 description of Quantas' infrastructure challenge:

The carrier's 50-year-old IT shop is presently wrestling with the management of 700-odd applications, many of which are written in older programming languages such as COBOL and FORTRAN, and serviced by an aging group of programmers.

Dysfunctional relationship with software users. Peter Gregg's attitude toward the engineers (licensed airplane mechanics) who will be users of Project Marlin seems bizarre:

We wouldn't ask the engineers what their views on our software systems were. We'll put in what we think is the appropriate for us.

In effect, Gregg has issued a senior-level policy that militates against project success. Given that Jetsmart was abandoned in large part due to poor user adoption, this attitude is completely baffling. Seriously, folks, I don't get it.

To better understand why users resisted Jetsmart, I called Steven Purvinas, the union's Federal Secretary. Purvinas explained the software was poorly designed and difficult to use, and that engineers didn't receive sufficient training:

Australian engineers will only use software they think is beneficial. If engineers are not involved in decisions around the software they won't use it, which is what happened to Jetsmart. Management is not qualified to determine what the software needs. Jetsmart was a white elephant that didn't work. When you have an airplane holding 400 passengers that needs repair, you fix the plane, not play with software.

I repeatedly tried to contact Qantas for comment. Despite several phone calls and emails, including direct conversation with their media relations department and with Peter Gregg's personal assistant, the airline was unhelpful. When I asked Lloyd Quartermaine, Senior Communication Adviser, to respond specifically about Peter Gregg's weird statement on Project Marlin, he retorted, "Do you know when and to whom this alleged comment was made?" That was the last I heard from Qantas.

A perfect storm for failure? I believe Qantas is poised for ongoing IT failure: complex technical infrastructure, outdated legacy systems, leadership that doesn't understand basic IT issues, union problems, and an historical pattern of failure combine to paint an uncertain future. It's interesting to note the company's IT expenditures increased 8% in the second half of 2006 and 26% in the same period for 2007:

"The [2007] increase included new projects for application support transformation," Qantas said in a statement to the Australian Securities Exchange.

Application support costs linked to the outsourcing of internal IT systems support also played a part, it said.

We'll be watching to see whether 2008 brings additional IT failures along with a corresponding increase in IT spending.