CIO Be Nimble
- 05 October, 1999 10:05
When veteran airline executive Michael Conway set out to launch a new airline to serve the blossoming Las Vegas leisure-travel market, he knew his IT operation would need to display all the dexterity of a stunt pilot. The airspace over Sin City was already hotly contested, so the first two years of operation would require the company to make sudden turns, adjustments to changing conditions and compensations for sharp drops or rises in altitude.
None of that would be possible without fast and flexible IT leadership.
Conway had all that in mind when he and the other three founders recruited Tim Stanley, a former consultant and product manager from Intel , to serve as National Airlines 's vice president of information services.
"There is a stream of things coming through these doors all day. If we couldn't turn on a dime a dozen times a day, we'd be going nowhere fast," says Stanley, noting that National went from 75 employees to more than 500 in the three-month period bracketing the airline's May 1999 launch and that the company will likely have 1,000 employees by year's end.
Startups in established, highly competitive markets are hardly the only businesses that depend on fast and accurate actions to keep them from tumbling.
In today's frenetic economy, woe to any enterprise whose IT organisation isn't mentally resourceful and swift in action and thought. In a word, agile.
Here are three examples of IT operations that fit that description and keep their respective enterprises flying high.
Twenty seconds over Vegas National Airlines CONWAY, WHO COFOUNDED Phoenix-based America West Airlines in 1981, spotted opportunity in Vegas several years ago when hotel chains announced building plans that would increase that city's 100,000 rooms by one-third. Casino operators had been clamouring for more capacity and better service from the airlines; and leisure travellers, spoiled by the lavish treatment they get when they go to gamble, had long vocalised their displeasure over the discomfort of business-type travel.
Conway took several steps to position his new company to carve out market space. First, he established a partnership with Harrah's Entertainment and Rio Hotel & Casino that allows travellers to skip baggage claim and have their bags taken off the plane and sent directly to their rooms in Harrah's and Rio hotels; it also allows them to check bags for the flight home right at the hotel. National also offers special discounts to selected Harrah's and Rio "frequent players." Next he leased a small fleet of Boeing 757s-and only 757s-from other airlines and aircraft leasing companies and refurbished them with roomier and cushier seating. Not only would this satisfy the vacation crowd, but the standardisation to one aircraft would make for greater efficiency in maintenance. (This approach was pioneered by Dallas-based Southwest Airlines with the Boeing 737, a move whose success was not lost on Conway.) Then he looked for ways to keep costs down. After all, Vegas travellers want to use their cash at the casino, not getting there. But incumbent carriers wouldn't sit back while a new kid on the block undercut them on price, so maximum expense reduction was a prerogative.
That's where Stanley and his IT department come in. An extranet connects National to its suppliers for quick restocking of on-board provisions and amenities. National in turn is connected to The Boeing 's extranet for tracking mechanical parts and scheduling maintenance, and other extranet technology connects National to its outsourced reservations partner. Online ticketing via the company's Web site allows customers to help themselves to available flights and seating options.
And a data warehouse, incorporating not only reservation information from its own system but also all the data Harrah's and Rio can provide on meal preferences, snacks, souvenirs and other purchases made on the property, allows National to fine-tune. It also enables yield monitoring so that the company can track the pricing and profitability of each seat ticketed and run a targeted frequent-flyer program based on dollars rather than miles.
With an in-house staff of just eight, Stanley relies heavily on outsourcing partners, consultants and contractors. And he leads them in the fine art of making fast but measured moves-a delicate dance required of anyone building an infrastructure from scratch.
"Our network is completely Internet-based, period," says Stanley. "It's not rocket science, but it forces us to create gateways with some of the outdated legacy protocols still in wide use in the industry." He cites the Sabre reservation system, used by most travel agencies to choose from a selection of airlines, as an example. If you're not on Sabre, you don't exist to many travel agents. "The most advanced they've gotten is Windows 95 PC-based with a special card in them. Very unreliable. The things go down on us and they're inherently difficult to manage remotely." Unchecked, downed computers translate into impatient travellers lined up at ticket counters and bad press. "My plans never included gateway architecture and these funky systems that are sitting in the middle of everything," says Stanley. "For us to be as agile as we can, it's imperative that we keep our network scalable, redundant and fallover proof and just keep everything up and running." Until Sabre catches up with National, the latter will have to maintain flexible connectivity so that Sabre's problems don't frustrate National's customers.
And then there's the people part of the picture "We could not have done all we've done up to this point without heavy reliance on partners and vendors, whom you don't directly manage," says Stanley. "You have to be effective at project management and negotiations to be able to get these people to buy into delivering innovative stuff in an ungodly short time span without a lot of money." Agility becomes a matter of selling a vision, he says, and giving all parties a stake in bringing it about.
"This is really a do-or-die industry," says Stanley. "Another airline went down in July [WinAir out of Long Beach, Calif.]. It's brutal. You either move fast or fall out." Fast Cars Faster IT Team Rahal FOURTEEN SECONDS IS ALL Bobby Rahal gets to make decisions that determine whether his enterprise goes home a winner or a loser. Rahal, a former Indy driver, now leads a 65-member, two-car staff on the Championship Auto Racing Teams (CART) circuit-and that is all they get on a typical pit stop. In a sport where less than one full second often separates first place from 15th, the cup, with all its attendant glory-and lucrative sponsorship support-often goes to the team with the most agile response to reams of data.
Professional race cars these days are like 200 mph computers. Outfitted with sensors and telemetry equipment to relay feedback on everything from fuel consumption to tire pressure to engine heat, they challenge drivers, engineers and the other team members to combine analytical precision with gut feelings.
"There are all kinds of data that we can accumulate from both our computer equipment and our drivers," says Rahal. "But some data just reflects static realities; it has very little to do with anything improvable. And some is very crucial to overall performance. You have just those few seconds to separate the two, to decide which data to act on and which to ignore." Much of the crunching comes between races, which generally occur three weeks out of every four during the summer (and every other week during the rest of the season, which runs from March through November). Data is collected in practice runs and analysed by engineers, mechanics, machinists and others who use it to decide how to improve performance. It might mean some new aerodynamic tweak to the body (the team has its own machine shop to make parts). Or perhaps a new adjustment in the shock absorbers to bring more responsive handling.
"You're never done trying to perfect a car, because the perfect car will never be built," says Don Hayward, the team's technical director. The CART league sees to it that the restrictions on modifications and configurations are changed or tightened frequently enough so that speeds don't get out of hand.
Everything the team might want to know about a car is contained in a set of databases that add layers of detail with every lap, in practice or a race. Like many teams on the circuit, Team Rahal fields two cars in each race.
The two cars and their respective teams compete head to head during a race, but "we're all one big happy family on a network, sharing info," says Hayward. The team hauls two semitrailers to every race, one for each car, each containing a Hewlett-Packard NT server. They're connected to enable data sharing between the two. In the front of each truck sits a work area in which engineers plug their laptops into the network.
There's also a separate network setup in the pit lane, where the crew waits to service the car during a race, run by two data acquisition specialists (one for each team). Data is transmitted by telemetry as the car goes around the track, and more detailed readings come in during pit stops, when a download cable with hundreds of data channels is plugged into a server on the car.
"Once it's all on the data acquisition person's laptop, anyone else who wants it can hit his PC and pull that data," says Data Acquisition Engineer Rob Trinkner. After a session or race is over, the team's data acquisition specialists tote their laptops back to the semitrailers and dump their data into an archive in preparation for in-depth analysis back at the shop.
Rahal remembers the days when analysing data meant revving the engine and listening to the sounds it made. Is he satisfied with the ROI he gets from IT? "Yes, though it can be kind of frustrating," he says. "The genie is out of the bottle-everyone is using computers, so we can't afford not to." For Team Rahal, adds Hayward, agility is as much about ignoring data as it is about applying it. "Computers supply us with a lot of very crucial information," he says. "But there are so many variables in this business and, if you're not careful, you can really get bogged down overanalysing them. The real challenge is finding just the right mix of information and intuition." Brewing flexibility Peet's Coffee EVERY TIME I MAKE A DECISION, I strive to choose the path that is the most flexible," says Rawson Groves Hobart, CIO of Peet's Coffee & Tea. Hobart defines agility as the state of being ready and able to change direction in short order, pursuing a particular set of paths while leaving options open to turn back or veer off. And agility is helping Peet's, a 50-shop, $60 million outfit in Emeryville, Calif., take aim at the industry's 900-pound gorilla, $1.3 billion Starbucks (26,000 employees in more than 2,000 stores). Example: Last year Hobart set out to select and implement a new point-of-sale data-collection system, one of the uses of which will be to gather information on consumers' purchasing habits from all Peet's stores. The choice came down to re-cabling to replace an old coaxial configuration or setting up a wireless solution using a radio LAN. The latter would be more expensive in facilities physically friendly to re-cabling, but it could be preconfigured to allow store staff to install it with no or very little assistance from IT-flexible enough to accommodate different users in a variety of settings.
In other words, for a company focused on agility, it was a no-brainer. "When it comes time to do training in the stores, the staff can pick up their POS terminals and move them to the back room," says Hobart. Peet's had also previously decided to add Web kiosks in the stores for taking orders online; choosing the flexibility of a wireless solution means the company can put the kiosks anywhere within the stores. "All we were asked to do was collect customer data, and now we have all these possibilities in place. I'd say that's an example of agility," Hobart says.
And once adapted, a focus on flexibility finds a way to suggest other agility-enhancing innovations. Recently the IT department was asked to make improvements in the chain's supplies-ordering system, which stores had been managing with an Excel spreadsheet. "We took a close look at it and realised that we could do much better than just beef up the spreadsheet," says Hobart.
Looking to the retail front-end of the company's commercial Web site, which could already track customers, Hobart configured it to offer store managers up-to-the-minute inventory options. Now they know what they can order and in what quantities it's available.
Hobart says that only two hurdles stand in the way of his keeping his eight-member staff nimble enough to perform feats of flexibility like these: money and people.
"When merchandising comes to me and says, 'Fix our spreadsheet,' I can't just go away for a month and come back with a Web site-#151;they'd hate me," he says. "I need to bring them in and say, 'Don't tell me how to solve the problem. Don't limit any of us that way. Tell me you have a problem, and let's discuss the myriad ways it might be solved.'" Then there are the internal IT issues. "We've had a problem with huge functional divisions between hardware and software people," says Hobart, noting that it can be difficult to get the two groups to work together and share responsibility. "The stress of always being understaffed and overworked can really slow you down at the times you most need to be both flexible and agile." With flexibility as job one, does Hobart fret over keeping so many options open that he fails to commit to any one plan of action? "To some extent, that's going to happen," says Hobart. "You're going to have some initiatives planned and waiting that never go anywhere. And you're going to waste some time and some money on them. But you can do things in a way that is not exclusionary-such that you open up possibilities rather than just solve one discrete problem." If you're putting in a network, he advises, put in much more bandwidth than you think you're going to need. When you're laying in systems, build in more power so that you can build them larger than you think you need to. When you create a customer interface on your Web site, assume that you may find some intranet or extranet application for it later on.
"We're constantly moving forward with various initiatives, but as we proceed we're constantly thinking of ways to leave doors open to expanding or changing whatever it is we're implementing," says Hobart. "Starbucks has incredibly deep pockets, a huge market presence and a tremendous brand. What do we have? Agility. That's become one of our main points of differentiation, and we'll do all we can to maintain it and build on it."