CIO

A well-travelled CIO

How Qantas’ tech chief, Luc Hennekens, is ensuring the airline’s IT function is at the forefront of business innovation.

Qantas CIO, Luc Hennekens, is possibly one of the most travelled IT leaders in Australia. So it’s appropriate his current role is in the cockpit of the country’s largest airline, helping to steer the technology team to become custodians of business and customer experience.

Hennekens grew up in the Netherlands and studied industrial engineering, but in his eagerness to pursue an international career, he moved into IT.

His first job in the 1990s followed a week-long student placement at Procter and Gamble, which led to an internship with the FMCG company’s IT function in Spain working not only with technologists but also architects, biologists and psychiatrists.

“I’m not the kind of guy that likes specialism,” Hennekens comments. “IT at P&G was interesting because the internal IT organisation was seen as one that figures out how the business gets more value through technology.

“I worked a lot with marketing and R&D on customer data, as P&G was making a science out of customer understanding.”

After stints in France, Latin America and the UK to join P&G’s newly formed Global Business Services team, Hennekens moved to Manila to help set up the shared IT services unit in the Philippines.

He then switched to HP in a business and commercial role, spending three years in the US. It was when he was looking to head back to Europe that he was asked to join a New Zealand energy company as CIO.

“The more we talked about it, the more I understood the transformation agenda and thought why not,” Hennekens says.

“Going from a market that’s highly competitive in the US, with plenty of capability, to a very small market, where we were a big fish in a small pond, brings a whole new set of challenges.

“One was reporting to a board, which I hadn’t done when I worked for HP or P&G, but it was a great experience.”

Hennekens joined Qantas in January 2013, initially as CTO.

“My first reaction was that I’m not by nature a CTO – I haven’t grown up through deep technology and have always been more on the business side,” he says.

“But I got talking to Paul Jones [former CIO and now executive general manager of strategy and planning] and we were on the same wavelength. I loved what he was doing here in Qantas.

“Qantas was clearly going through a huge transformation from being a government organisation in a monopoly and duopoly position, and into a market that has opened up to a lot more competition.

For someone who wants to work in technology and business, it’s a great opportunity.” It was also apparent the CTO role was a clear path to CIO, and Hennekens was promoted to the job nine months later.

Putting a stamp on the CIO role

While it’s inevitable any new CIO will bring an individual flair to the role, Hennekens tells CIO it’s important to be mindful of change for change’s sake.

“The first thing is not to replace strategy with something else and yank the organisation in another direction, unless it’s completely wrong,” he claims.

“Most IT strategies are not that different; the fundamentals are always in there. We are taking our costs to benchmark levels, which means taking out all costs that aren’t adding any value. Any good business needs to do that.”

Employee engagement is another strategic pillar, as is operational excellence, especially given the airline’s dependence on IT.

“Innovation and technology leadership are also going to be there, so the strategy is not by itself a big surprise, it’s how you execute it,” Hennekens continues.

“The first two years were really about getting the basics in place. The phase we’re in now is very much about taking IT from an organisation that looks after the technology, to an organisation that drives business growth.”

With 90 per cent of IT capability outsourced, Hennekens is doing this through two metrics: Customer experience and bottom-line improvement.

“You have to shift the organisation away from the intricacies and complexities of managing technology, and start with ‘what do we want to get out of that technology and how it benefits our business and our customer’,” he says.

“It’s easy to say that, but you have to review your outsourcing agreements at a contractual, governance and relationship level. It also means you have to review your organisational structure, creating completely different roles.

It means getting IT staff around every leadership table of every leadership team in the business, which we have also done. And that requires having the right people, because you don’t want to put a pure technologist in that position.

“We’ve kicked off a number of other transformational activities that really get the IT organisation to think differently about its role in the business, and to get the business to think differently about the opportunities technology brings.”

Cost is certainly a huge driver. Qantas has been through a tumultuous few years, burdened with significant financial losses and inefficiencies.

As a result, the airline is slashing $2 billion from its operating costs and is cutting 5000 jobs, a decision that has also affected the IT function.

When asked about the impetus to cut costs versus being innovative, Hennekens argues the two support each other.

Not only is IT on track to achieve its goal of getting spending levels to industry benchmarks, it’s also adopting a smarter approach to technology optimisation, he claims.

“I don’t think there’s a dollar of savings we have made that I regret, because what we’re doing is getting better at understanding what we are spending our money on,” he says.

“By doing that, we have simplified the organisation, and you get people to really focus on the things that add value, and make life better for the customer.”

However, Hennekens admits cutting staff was a sensitive issue.

“I’m really proud of my leadership team, which worked day and night with me over a short period of time to figure out how the operating model needed to change to make this happen,” he says.

Cultural emphasis is another core pillar for Hennekens, and he’s imparting a set of business led behaviours through workshops and training.

He’s also invested in a new matrix organisational structure and created a number of roles to support a more business and customer-oriented IT team.

“Traditionally, IT organisations are organised along IT and technology lines. While that is important because you get economies of scale and expertise, it’s even more important to have the horizontal lines across the technology slices that focus on why we’re doing all of this stuff, and on the outcome,” he says.

Next up: Cloud vision

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Cloud vision

Like his peers, Hennekens is investigating the productivity and efficiency improvements that moving new outsourcing agreements and cloud-based services can bring.

One program, called ‘Project Helix’, is restructuring how Qantas does application maintenance services. The contract for this was recently awarded to Tata Consultancy Services.

One of its first public cloud trials, meanwhile, has been simulating flight routes and services, such as the Sydney to Dallas longhaul flight, using analytics, Hennekens says.

“You want to run 100,000 different flight plans, and each takes 20-30 minutes to run, so there’s 2-3 months’ worth of work,” he explains. “We put that in the cloud and did it in hours.”

Qantas is now setting up the capability to shift more IT workloads to the cloud. Hennekens says this will help drive shorter and more iterative projects.

“The technology enables us to grow a lot faster and to not plan everything out to the nth degree, but to learn and adjust as we go,” he claims. “It gets people more engaged and gets you a net result that’s more relevant.

“Once you have the capability it becomes a lot easier. The main thing about cloud is that it’s shared and automated.”

Embracing cloud does create challenges and trade-offs for Qantas’ long-term IT suppliers.

“The key thing for me is it becomes part of how we do things and that means building the capability, processes and ability to manage that,” Hennekens responds.

“We’ll work with suppliers that support that and most have.”

The fourth transformation initiative is what Hennekens calls ‘Project Beehive’, and which sees Qantas integrating its six help desks into a unified support function that provides better internal customer support to its 30,000 highly mobile staff via mobile devices.

Tactical moves

CIOs often have to juggle the demands of strategy with day-to-day IT delivery, and Hennekens is no different to any IT leader trying to keep the proverbial lights on.

“If you let it go, one day you’ll end up with issues and have to spend lots of money to fix it again,” he says. “We have made that mistake in the past.”

Two major projects nearing completion are set to address this: One focused on overhauling workplace technology including networks; and one to update the data centre.

Both are due to be completed by mid-2015 and once done, it will see the airline running email, intranet, internal social media and Office 365 in the cloud.

The key to balancing tactical work with innovation is to design simplicity into platforms right from the start, Hennekens says.

One of the ways he’s achieving this is by investing in systems to run IT. For example, invoicing data is now being channelled into a system that allows IT to break down costs by function. In addition, data is fed in from all major cloud providers for seamless integration.

“You want to have some level of control and understanding of who’s doing that and if it’s adding value, or costs will go out of control,” Hennekens adds.

Customer agenda

Ask any CEO today what’s on a par (or more important) than cutting cost, and you’ll no doubt get ‘customer centricity’ as a reply.

Hennekens has wholly embraced the challenge to become more customer oriented, and says Qantas needs to fulfil the emotional connection travellers expect at every touchpoint of experience.

“We need to understand those customers and how the things we do impact on their experience, and then make that experience a really good one,” he says.

“We have to become like the grocer in the corner shop who knows all their customers by name, what they like and dislike, and who knows something didn’t quite work for that customer last week, so they get a bit of a discount next week.

“But you can’t do that in that way as a company with 30,000 staff.”

Technology is making sure the intelligence Qantas has on its customers ends up in the hands of the people on the frontline, Hennekens says.

“That’s where mobile is already having an impact,” he says. “We are using mobile technology to make sure the data we have today is in the hands of the staff.”

The plans don’t stop there. Hennekens has a vision to build a sort of ‘customer nervous system’, pulling together the rich information Qantas gathers on customers and their past journeys as well as loyalty data.

This hub will also include information from events, such as check-in or flight delays, along with the business rules around data usage.

“What this will become is the central intelligence behind all of our channels, whether it’s mobile or kiosk, or devices our staff have and use,” Hennekens says.

“The key thing is we ensure everything we know about the customer is coming together and can be used in the right format at the right time.

“That’s a huge balancing act between the customer intimacy you need to provide the best experience for the individual and giving the impression you know more than you need to and being big brother.”

Qantas is already building the intelligence to ascertain which information belongs to what customer.

“We do already have cloud-based customer databases that feed information to the iPads in the planes, for example, and pockets of innovation are going on everywhere,” he says.

Its loyalty business leads the way in terms of data analytics capabilities and has even launched a business-to-business offering (Red Planet) providing data services.

“We are working with business leaders on what the opportunity looks like around customers and analytics,” Hennekens says.

“It’s a massive opportunity, but we’re aiming to be specific – what do we do first, second and third… and how do we make things quickly happen so we can start learning, adjusting as we build this?”

How to use data appropriately is one such focus. “In some cases, it’s OK to work with data that has a probability factor attached to it; in other use cases, you have to be certain,” he says.

“That’s where IT has a big role – we sit across all those use cases, but at the end of the day it all goes back that central point.”

Having enacted so much change in his first year as CIO, Hennekens says his biggest asset has been the commitment of his team and executive peers to the task.

“The senior leaders in this business are incredibly supportive of IT and that wasn’t always the case,” he says. “It’s been tough, especially when you have to let people go, but I’m pleased with how far we’ve come.”

Hennekens’ top 3 CIO skills

Understand how the business thinks

“A higher quality IT system isn’t necessarily going to drive a business outcome. Unless you can point to that business outcome and how it’s going to be delivered by something you do in the technology world, you’re going to find it hard to convince people.”

Be a confident diplomat

“The CIO role spans the entire company, so you will constantly have to deal with conflicts of interest and people wanting to pull you in different directions,” Hennekens says.

“You can’t just say no and you also can’t please everybody. You have to develop a skill and ask: ‘What is the business outcome for the group, company and enterprise that we really want to achieve, and what’s the best way to get there?’ Unless you become a diplomat, you can’t play a role.”

Drive your own view of how things should be

“There are many forces in the IT world that want to keep things the way they are,” he warns. “There are also people within the company trying to protect their interests. You have to have a vision for what is best for the company and what changes you need to drive, then have the confidence to drive them.”