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.
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The next stage, Tame says, is to further roll out virtualisation across the business over the next two years in two stages. Stage one will see the company virtualise about 150 head office PCs and move those users to thin clients. Stage two, and a more radical approach, will be to have every new employee bring their own notebook to the new job and be responsible for its upkeep and maintenance.
“If you consider the PC to be a commodity, then you need to rethink how you run your business in that environment,” Tame says. “We recently developed an SOE or virtual machine using VMplayers for our engineering bases. We don’t care what the laptops are anymore, we just ship that out on 16 gig SD card [Secure Digital Memory Card]. I can see a future where you join a company and they say ‘Congratulations. . . Where’s your laptop? And, by the way, here’s a 16 gig SD card that contains our SOE.’
While not yet fully rolled out, the virtualisation strategy is already paying big dividends, Tame says, with Jetstar’s IT cost and support model changing dramatically. “When Jetstar business started in 2004 IT as a proportion of revenue was 1.6 percent while most of the mainline carriers were running about 3 percent,” he says.
“In 2005 we got down to 1.4; 1.2 in 2006 when we really started looking at virtualisation. In 2007 we got down below 1 percent and in 2008/2009 we got to 0.82 percent. . My objective is to maintain my IT costs below 1 percent which is a top benchmark for airlines.”
Tame says his cost of support at the local airports Jetstar occupies has reduced by 60 percent, maintenance is down by 40 percent, and costs of local systems and servers have reduced by 100 “because I’ve pulled the servers out”. Just as importantly, Jetstar’s IT is consuming 85 percent less power due to the virtualised machines, so therefore there’s less CO2.
As a result of the cost savings achieved in Jetstar’s IT budget, the company has been able to look more towards projects that deliver innovation. One such project is the company’s roll out of SMS boarding passes, slated for later in the year.
Using the service, a passenger who pre-enrols for online or self check-in is e-mailed and SMS-ed their boarding pass 36 hours ahead of their flight. Using optical character recognition technology at Jetstar kiosks based at the airport, the SMS is scanned and a boarding pass is printed. The project increases service levels for customers and cuts costs for Jetstar,
Jetstar has also moved to adopt videoconferencing, setting up a telepresence link between Australia and its Singapore operations in May, and is now looking at a similar set up between Australia and its Vietnam operations.
“We’re also looking at it as facilitator to help run our federated business model,” he says. “For example we are looking at our helpdesk and having it run out of Malaysia. We also have organisations in the Philippines looking at our flight planning and load control works.”
“An issue with separating those things is communication. Our CEO is thinking about that. Bandwidth is pretty cheap these days, so why not have a 24/7 telepresence between all those locations to bring them closer together.”
Despite the potential for telepresence and videoconferencing to undermine the need for air travel, Tame sees no irony in Jetstar’s use of the technology.
“My view is that telepresence does have a role to play, but it doesn’t replace face-to-face meetings,” he says. “It does fill in the gaps between those meetings and significantly enhances the quality of those meetings, but it isn’t like being there on site. It may replace a meeting but not a review or discussion.”
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