The BCS Elite spring event took place on 27th February 2007.

Working for turn around at British Airways

Paul Coby (Group CIO of BA) started his presentation with the words 'British Airways, the UK's favourite airline, and favourite headline'.

Like all companies BA is trying to survive in an ever-changing world. For instance none could have predicted that we would see radioactive planes in 2006!

In 1996 BA was the most profitable airline, in 2000 it was 21st on the list and by 2005 it was back on top.

Why did this happen? The company lost control of the cost of projects because there was no adequate measurement in place.

Coby believes there are no IT projects, just business projects; that IT departments bring technological advice to the table to help a business improve and that IT does matter.

IT is a strategy differentiator in the airline industry. It not only cuts costs but it delights customers, and is often the anvil on which business can be driven forward.

Post 9/11 a new approach was required. Travel had become too complicated with too many fare types, too many translators, multiple data sources and myriads of systems. The originators of the old system hadn't realised that optimisation of part of a process can make the thing too complex for the whole process.

The customer wanted to be in control, with instant information, full choice, mobile technologies, and time to enjoy their leisure time with less stress over the whole flight booking system. Self-service was born and has remained very popular. The vision was that in dealing with BA the process would be so easy the client would choose BA self- service every time.

IT had to completely reengineer customer systems and all commercial processes. Many companies just put up a website on top of their existing products but BA re-engineered the whole thing. They set targets, maintained clear governance and mandated transformational targets.

For example, their aims included:

• 100% e-ticket;
• 50% self-service check-in;
• 80% self-service customer transactions.

The golden rules the business followed:

• have a simple and compelling cost proposition;
• design processes for use by the customer;
• do it right first time;
• single solutions across all departments.

To achieve these rules BA had to turn the IT architecture into business strategy. Their reward for this was getting the right sort of investment.

BA found 'Snap back' to be a key business tool, whereby each stage of a process has to justify any complexity within them, thereby turning complex, duplicate, fragmented and error-prone systems into simplified, standardised, global, measured, error-free and customer enabled systems.

Governance is difficult to do and hard to maintain. Leadership sponsorship is necessary, with early agreement to investment plans and deliverables a must, thus providing the team with a mandate to achieve their targets.

BA customers can now print their own boarding cards and are generally pleased with the system, which has a bar code at the top, thereby retaining some of the old style familiarity. In fact online bookings and servicing are increasingly popular.

These new improvements to service have achieved deeper penetration within the market with an average of 75,000 visitors per hour. In fact it takes only five minutes to sell a planeload of tickets on certain more popular flights.

The IT department's objectives were to:

• Deliver a robust and reliable worldwide IT operation, 24x7, at lower absolute costs;
• Deliver the systems to time;
• Year on year productivity improvements;
• Simplify BAs' business by smart use of IT.

Costs have fallen. BA now has a four-layer model whose direction can be controlled. It can integrate components of the business and uses professionalism instead of outsourcing for this, although it still partly outsources when it comes to components.

BA learned that in order to achieve its long-term goals a business has to integrate its business propositions and processes with technology. BA's IT department had to become almost the anti-IT department by forcing itself to think about the processes and the people first and foremost.

With passing time it has become increasingly apparent that BA's business will be IT enabled and will depend on its professional team to help drive the company forward over the coming years.

BA is looking to recruit more IT staff, and offers them two weeks initial training followed by six months of mentoring. BA work closely with e-Skills UK and the Prof IT Alliance and have a good professional development programme for its staff.

As the global PC base grows year on year so airlines have to become more tech savvy and use IT to their advantage to stay in the game. Hence, airline businesses must remain flexible to survive. CEOs have to understand the leverage that IT gives business. Rapidly changing technology can destroy a business model; hence these have to be revised on a regular basis.

Ultimately, BA had to turn its IT department from just being seen as a technical support group to one which is seen as a real enabler for change in business. Through collaborative project management, with an accountable finance manager, and with a CEO who understands the leverage IT can give a business it is possible to turn any business around.

Parcelforce Worldwide

Vanessa Leeson, managing director of Parcelforce Worldwide, a company who have an eight per cent share of the total parcel delivery market, gave the second talk of the evening.

Parcelforce used to be part of the Royal Mail until 1992. It had made a loss of over £193M and needed to streamline.

Parcelforce handles over 45 million parcels per day from a wide range of customers, including BT and the MOD. The company has made a profit for the last 27 months, approximately £18 million worth.

The organisation was fundamentally broken to begin with. It had high costs and a poor delivery rate. It had too many unnecessary staff (10,200), which was later reduced to a more streamlined 4,000.The company now reorganises about once every 15 months.

Great parcel companies come from great people and great IT. Parcel force has been lucky that through its people there has been no industrial action throughout all the changes.

The organisation has prided itself in creating a culture where everyone works together in a flexible manner with the result that productivity increased along with profits. The management always explain any changes to their staff and they recently moved from a weekly payment scheme to a monthly one.

The organisation obsessively measures changes. For example the number of staff absences fell from 7.6 per cent to 4.6 per cent. When surveyed 78 per cent of staff responded saying they wanted to remain with the company. In order to engage its staff Parcelforce implemented a number of successful initiatives including share schemes.

Over the years management have learned a number of lessons:

• Have clear, understandable goals;
• Paint a compelling picture of the need to change to staff;
• Do not duck bad news - be adult about it;
• Create time and space to discuss how people feel;
• Being cash poor is good for change;
• Have clear priorities;
• Balance change and high service and cost reduction;
• Rolling talent injection – letting everyone know why new people are being brought in;
• All things decay – use rolling refresh to maintain a dream team;
• Business readiness processes are vital;
• Put power in the right place.

IT-related change

Parcelforce only has around 30 in-house IT staffers - the rest are outsourced.

Throughout the changes made to the company one of the major IT ones involved deliverymen's handheld devices. These have to be changed and upgraded every three years. The software is all bespoke and has to be integrated within the new solution facility. As part of the stage one changes project rationalisations were done for every aspect of the organisation's systems.

For stage two a network downsizing exercise was completed, where simplification was the key. The company reduced its systems down from 47 to 21.

Stage three saw the team develop the strategy to replace as necessary with simpler systems and move the business more towards being web focussed. The organisation was prepared to learn from everyone including the military with their 'department in a box' mobile unit solution and their satellite technology.

The success of all this, both in the short and long term, was dependent on getting it right in five areas:

1. clarity of purpose;
2. smart processes;
3. delivery culture;
4. effective governance;
5. leadership.

Most of the organisation's IT is done online. IT should never be the reason to lose or fail to win business. Parcelforces's IT team attend high levels meetings from the second meeting onwards when discussing new business projects, to ensure they are kept 'in the loop' at all times.

With the new parcel tracking system Parcelforce can ensure a parcel successfully arrives at its intended destination via text messaging, which is integrated into a web-based WDM.

The organisation has found that it's better to talk when things go wrong and be upfront with its customers, since trust is such an important element to the client - vendor relationship. Parcelforce have also learned to 'enjoy demanding customers' as these tend to be the ones through which new lessons are learned and innovations are developed off the back of.

What next?

The parcel industry is not regulated and is rapidly reaching overcapacity. Even Tesco are now offering delivery services. Internet sales are growing 30-40 percent per annum meaning the growth of packages is approaching approximately eight percent.

eBay growth is also seeing massive change, for example 300 percent growth last year. There is an increasing focus on B2C, and commoditisation is also key to the B2B market.

There is now software available to compare the service of all the different vendors. This service differentiation might be a good way to engender perfect competition between the different courier services.

The organisation will continue to build on those aspects it has got right and will continue to work on the areas it is weaker on. Parcelforce is continuing to expand overseas where it is forging new partnerships. Overall the verdict must be that radical change is often better than incremental change, which is probably harder to do anyway.