BA saves £2m as tech staff work for free
IT workers at British Airways have saved the company more than £2m by working for free or taking unpaid leave amid forecasts of a slump in airline IT spend this year.
Techies were credited by BA chief executive Willie Walsh for being among the 7,000 of BA's 40,000 staff who cut back on hours or pay to help the company through the credit crunch.
BA chief infomation officer Paul Coby said there has been a "significant reduction" in manpower within BA's IT team and its services department, which handles business intelligence, financial shared services and property.
"It is a significant reduction in terms of not having people around so you have to prioritise: if you have a critical system, it is not going to be sensible to let all three people supporting it take unpaid leave at the same time," he said.
Coby was speaking at the Sita Air Transport IT Summit in Cannes where the annual Airline IT Trends Survey 2009 found that, among the 116 airlines questioned, operating spend on IT and telecoms will fall to its lowest level since 2002 this year, accounting for just 1.7 percent of airline revenues.
The survey found that many airlines are in "survival mode", with 72 percent intending to renegotiate IT supplier contracts and 70 percent planning to invest in IT that will lower overall enterprise costs.
BA has cut the money it will invest in new IT projects by a third this year to £68m and dropped the deployment of an integrated ERP system, which would have been one of the largest projects of its kind in Europe.
Coby said: "You have got to survive. There is no point having a great ERP or maintenance system if you do not survive. The current [ERP] systems are compliant with Sarbanes-Oxley and fit for purpose."
Walsh said that BA's priority is currently the "conservation of cash" and short-term cost savings but, by 2011, improved market conditions should allow IT investment for longer-term cost reductions.
Having dealt with the fallout of lost luggage after a software glitch in BAA's baggage handling system at Terminal 5 last year and keen to avoid a similar breakdown, Coby said he is very careful in deciding where to cut investment.
"Obviously there is no sense saving half a million and then costing the company £20m by shutting the airline down for half a day," he said. "It is our job to walk that tightrope and get the best cost but never endanger security or operational integrity."
According to Coby, the introduction of technologies including IP telephony and more efficient Linux-based datacentres have helped the airline reduce its operational IT spend by 45 percent since he joined the airline as chief information officer in 2001.
Chief executive Walsh added a proposed merger with Spanish airline Iberia would also allow both carriers cut their IT costs.
"I am convinced that BA and Iberia will get together and we will look to a common IT platform, because that will be a critical issue in terms of facilitating integration and cost reduction," he said.
BA is already realising savings using business intelligence, which has helped it spot and stop people from scamming free airline tickets by setting themselves up as fake travel agents as well as preventing marketing material being sent to the same person more than once.
The airline is also looking to its BA.com website to save money and generate extra revenue at little cost, for example, by allowing travellers to buy entire holidays, including services such as car hire and hotel booking through the site.
The holiday bookings have been made possible by the development of service-oriented architecture (SOA) hubs, which allowed information to be shared between BA's systems and those of companies offering car hire or hotel bookings.