Paul Coby has been the chairman of SITA, the telecommunications provider for the airline industry, since 2003. Prior to joining British Airways in 1996 had had spent a 20 year career in the civil service finishing up as Principal Private Secretary to the Secretary of State for Transport. At British Airways he is a member of Rod Eddington's leadership team as Chief Information Officer (CIO), responsible for the operation and development of all British Airways Group IT systems. Our monthly leaders discourse takes us into the world of high tech!
Nicholas Carr famously wrote an article in the Harvard Business Review entitled ”IT Doesn”t Matter”. He went on to publish a book called ”Does IT Matter?”, a title which suggests at least some lurking doubts about his proposition. His view is one which I believe to be fundamentally misconceived.
Carr”s principal point is that IT is no longer a source of competitive advantage for enterprises, it has simply become a commodity. This is far too sweeping a judgement to stand up to scrutiny. However, behind Carr”s deliberately eye-catching title lurk some useful insights. Carr wrote that ””the emergence of a ubiquitous, shared IT infrastructure has many important practical implications, both for how companies manage and invest in technology itself and, more broadly, for how they think about creating and defending competitive advantages. ” Spot on! This is exactly what SITA delivers to the airlines industry. However, it certainly does not follow that IT does not matter any more! My thesis is that IT has always mattered to the air transport industry. Information and communication technology has revolutionized the air transport industry at least once a decade.
The air transport industry looks set to be the first industry in the world to be truly ”Web-enabled”. British Airways is targeting 100% e-ticketing by April 2005. Representing the world”s scheduled airlines, IATA has set a target for the entire industry to achieve full e-ticketing by 2007, thus abolishing paper tickets!
IATA voted at its June AGM for this and three other projects, all of which depend on IT. As well as 100% e-ticketing by 2007, the airline industry has also committed itself to acceptance of common user self-service (CUSS) kiosks; examining the use of common bar code standards to replace magnetic stripe boarding passes; and investigating the use of radio frequency identification (RFID) baggage tags.
I never tire of making the point that there must be no IT projects, only business projects. IT is like any business project: it”s not how much you spend that matters, but how effectively you spend it. It is far more challenging ” but infinitely more rewarding for the company, shareholders and employees ” to invest smartly in IT which is entirely integrated with ” and designed to improve ” your business processes. This tight coupling between business process and IT is what I call Smart Technology building Smart Businesses. The companies that spend smartly, and that recognize that IT is an essential part of the strategic equation, will be the ones that gain competitive advantage.
The latest results from SITA”s own Airline IT Trends Survey (conducted with Airline Business Magazine and now in its sixth year) and our new Airport IT Trends Survey (see http://www.sita.aero/AirportITTrends) support my ”IT does matter” thesis. Looking at what the air transport industry told us, it is clear that sustainable profit recovery depends on three things: cost reduction, efficiency gains and improving passenger service. IT is the critical enabler for all three.
My job as an Airline CIO is to make the right business and technology choices for our customers, shareholders and employees. My job is to decide where I should use community systems and services like those provided by SITA, to give the lowest unit cost; and where I should invest in new systems for competitive advantage? You have to decide which processes are genuine ”commodities” and which will ”make the difference”.
I have identified a pattern in airline technology which I call the ”tipping point” ” this is the point at which a technology has been adopted by the leaders in the airline industry and very quickly ” over six to 12 months ” becomes mainstream. You have to spot these coming, if you are not to be left behind. For instance, you can see tipping points coming in e-ticketing, online booking and common user self-service kiosks. 16% of airlines already deliver over half of their ticket sales by e-ticket. The Web channel already accounts for more than one fifth of airline ticket sales worldwide. So airlines really do lead the world in web-enablement!
Another tipping point is the migration from the legacy mainframe networks to an IP (Internet Protocol)-enabled environment. SITA has lead this move for the air transport industry, and by the end of this year more than two-thirds of airlines will have completed the essential move to IP.
The answer is simplify your business! ”Fools use technology to automate existing processes.” Technology should be used to simplify your business. To achieve these extremely stretching targets the whole industry must co-operate on common standards. The air transport industry has for a long while been able to recognise that competition is essential on points that differentiate; and that co-operation on industry wide systems and services is equally vital in order to provide passengers with joined-up air travel networks. That was why our forebears created SITA, as far back as 1949. For basic common services, share the workload and share the cost. The essentials of air transport are safety, security and reliability. Strong community technology is therefore in the best interests of the passenger and the industry.
So where”s the advantage of IT? Why does it matter? Well, it”s not each individual element that matters. It”s how smartly you put the components together. So although many or even most IT elements will be themselves a commodity, it”s the way you assemble these IT building blocks that most emphatically is not a commodity. It”s through the intelligent use of IT that airlines, airports and others in the air transport industry can deliver sustainable profitability and a smart business that adds value to shareholders and, let”s not forget, great enjoyment to people”s lives around the world. So IT really does matter to airline passengers, to airline shareholders and to airline employees”.
Paul Coby. Chairman SITA
http://www.sita.aero