Jetstar's CIO, Stephen Tame, has used IT to help his company weather the Global Financial Crisis and bring IT costs down to under 1 percent of revenue.
The global financial crisis has been hard on may industry sectors, but arguably few are doing it as tough as the airline industry.
Around the world business and leisure travellers are cutting back on spending, pushing this capital intensive industry, which already operates on slim margins, to take a hard look at cutting back its costs.
On top of the global financial crisis, the airline industry has also had to deal with the record high aviation fuel prices of last year and the recent drop in tourism and business travel brought on by the swine flu epidemic. It all makes for a very tough last 12 months.
However, under the watch of CIO Stephen Tame, Jetstar has successfully turned to IT to not only cut costs, but develop a cost structure that can scale with the business — through good times and bad.
According to Tame, Jetstar embarked on its transformation project mid last year, as an initial response to high fuel prices, by reducing headcount across non operational areas of the business and re-examining its supplier relationships in an effort to ‘variabalise’ its cost model.
“The first thing we did was have a 20 percent cut in head count," Tame says. “This was a bit of an ask, as I had to come down from seven to five staff. The IT business is 100 percent outsourced already so there’s not much of a team in the first place.”
“We then looked to renegotiate our service contracts — primarily around how we can get better variable costs and how we can reduce some of the service levels. Just because the contract was signed two years ago doesn’t mean we still needed the same service levels today. We trimmed the ‘nice to have’ services and got it down to basics.”
A good example of this philosophy can be seen in Jetstar’s new approach to desktop and notebook support, Tame says, which boils down to spending 15 minutes on trying to fix an issue. If it can’t be resolved in that timeframe, then the PC or notebook is formatted, OS and applications reinstalled, and brought back to its standard settings.
“These days [PCs and notebooks] are a lot more of a commodity item, and our staff know that,” he says. “We actually give admin rights to many of the staff so they can install what they want and need. But with that I give them the responsibility to manage that machine. However, if they do bugger it up, we can always put it back to where it was.”
Tame says he is comfortable with the approach and its assumption that staff already have the expertise, or will be developing it fairly quickly, to manage their own computing environment.
He’s also cognisant of the increased security risks, but has factored this in by concentrating on the Jetstar’s backend and developing ways to build security inside its networks using VPNs.
Tame has also looked to heavily virtualise the company, standardising on Microsoft servers, VMware for virtualisation, Citrix for all application virtualisation, AppSense for managing its Citrix environment, and Wyse terminals for the thin clients.
So far, Tame has moved about 400 machines — across its airport presences, engineering bases, non-head office operations and offshore locations — to thin clients able to access the company’s virtual systems. Staff simply log on via any PC, notebook or thin client to access work applications, e-mail and data.
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