By Colin Edwards
In an ideal world, Abu Dhabi-based Etihad Airways would have taken off some three years ago supported by state-of-the-art IT infrastructure designed from the bottom up and capable of scaling easily to meet projected growth. The fact that it did not means that today the airline's IT head, Klaus Giesemann has a massive catch-up task ahead of him, he tells Colin Edwards. But with 25 years’ experience in the airline industry, initially with Lufthansa's IT division and then Amadeus, an airline solutions provider, he is more than up to the challenge of delivering the IT infrastructure that one of the fastest growing airlines in the world needs to keep it flying high.
Arabian Computer NewsHow involved were you with the design of Etihad's IT infrastructure? Were you able to influence what was essentially an IT manager's dream - a Greenfield site?
Klaus GiesemannWhen I joined Etihad - some 15 months ago - there was no real head of IT. There was a group of very good people who took care of the infrastructure, the PCs and network, but there was no one who saw IT as an umbrella function for the whole company. As a result each department had implemented what they knew from the past or believed was best for them. Now we are in the process of trying to integrate all those different applications. This is one of my major tasks for the rest of this year and next.
ACNWould you have liked to be in on the ground floor at Etihad when it was a Greenfield site?
KGI would have preferred it, but unfortunately it did not happen. Generally, I'm very much in favour of outsourcing. Etihad is an airline involved in the business of flying from A-to-B, not building huge IT departments. I prefer to manage IT rather than run IT. But IT outsourcing requires stability and basically we are not stable in terms of the growth we're experiencing. No outsourcer could give us an SLA (service level agreement) for what we are doing at the moment. If we had a stable environment we could do that, but we are growing so quickly.
ACNWhat outsourcing plans are you currently considering ?
KGWe have just issued an RFI for the IT equipment in our outstations - the printers and PCs. Currently we have about 50 sites. Since these had to be opened quickly, the local staff took on local suppliers. As a result we have different hardware, partners and software. The idea is to have one global outsourcer who takes care of everything.
ACNCommentators say the industry has gone too far when it comes to outsourcing, and people like Delta Airlines lost control of their IT systems. Is this a danger?
KGGenerally outsourcing is OK. If you look at Gulf Air they outsourced everything to Satyam. I was talking to its IT director and he is happy. But still, you have to manage the outsourcer. Some companies, I believe, underestimate the effort that this entails. An outsource contract is extremely complex and some people don't realise the complexity and how to handle it. I believe that outsourcing in general is fine, but I prefer selective outsourcing.
ACNYou spoke about the need now to integrate your different core systems. What needs to be done in this respect?
KGActually - everything. If you look at the crew system or the operations control system, then everything works well individually, but now we need the crew system to be interfaced with HR, for example, because the names of the crew are in HR. But interfacing is something you should not do. What I have in mind is middleware and service architecture. Interfaces have to be created and maintained. That's expensive, time consuming and can cause errors. So integration has to take place.
ACNSo you're aiming for a service oriented architecture (SOA). Isn't this a huge task to be contemplating?
KGWe are going SOA. But it is not really an IT task. It's a business task. IT can provide the SOA tools.
There are plenty on the market. It is more that business has to participate. I have presented to the management board regarding this idea of implementing SOA and it was well received.
At the moment I am preparing a business case. How big is it going to be? Well it's not a one time shot in any case. It's an ongoing process. We start by integrating two applications; then comes the next one, and so on.
ACNApart from SOA what else is on your radar screen going forward?
KGAlong with SOA is the development of a BCP - business contingency programme. Despite Etihad being operational for two-and-a-half years, there are still aspects of its infrastructure that are still missing. Yes, you need to be able to make a reservation; yes you need operations control and crew control. All these applications needed to be implemented yesterday. But now we have reached the stage where we have to integrate them and secondly we have to consider what would happen if there were to be a disaster. It means we have to have this BCP. We have to find another site so that we can switch over the IT operations in a disaster.
ACNNo backup system - isn't that living dangerously especially for an airline, where your lifeblood is having reservations systems available 24x7?
KGWell of course we back up the data, but we don't have a disaster recovery site yet that could take over the IT operations in the event of a disaster happening. This is one of the tasks that I believe needs to be done immediately.
ACNWhat about your core systems? What do you have in place?
KGWe have a reservation and we now have our Guest (loyalty) programme, which was heavily IT, but people don't normally see this. This is fine by me, because I don't want to be in the front line. We have the crew system, ops control and commercial planning in place, decision-making support. Without IT nothing is going to happen.
ACNWhere does that put you as an IT manager? Does business put a lot of pressure on you to make the business happen or is it vice versa?
KGReally as an IT manager I would like to put pressure on business, but since we are still new and growing, business is putting pressure on us. We are driven by the business. This is fine, but I hope we will reach the point with SOA where we will influence business.
As you know, with new IT systems you can do a lot more than business is aware of, especially with SOA. But we have not reached that stage yet. But the main reason is that we are growing fast and if they need a new application then again it is needed yesterday.
There is no time for proper planning to see how this application would fit or integrate in the existing landscape. So we have quite a varied application landscape, which we now have to manage with quite a small IT team.
ACNHow big is that team and is it involved in in-house development?
KGWe're a team of 43 with basically 70% involved in taking care of the infrastructure, helpdesk, PCs. The rest are doing project management to support the business and the demand from business is growing of course.
We try to buy in as much as possible. In-house development - we do very small things or the interfaces. Again, I'm of the opinion we are an airline. We should fly, not build IT. For some areas that I see as business critical, such as eCommerce, we have partly taken over what was developed by external companies, and we're now doing the maintenance and getting the knowledge to be able to react faster to marketing requirements.
ACNWhat business systems are in place?
KGOur financials are based on Oracle, but we are looking at HR and maintenance systems at the moment, but nothing is decided yet. Etihad Technic has only just been formed so we've only recently taken over live maintenance. If they require a new system, we will do something with Gamco - the Gulf Aircraft Maintenance Company - a sister company that we work closely with.
Also we have implemented electronic ticketing bearing in mind the IATA initiative of 'no more paper tickets' by the end of 2007. Every airline has to be able to issue electronic tickets. E-ticketing is not so much the issuing itself, but the inline agreement with other carriers, where they have to change tickets, is. But we are confident of meeting the 2007 deadline.
ACNSo how much does standardisation figure in your plans?
KGStandardisation must be the ultimate goal. We are already moving to a standards-based environment with SOA. We are also standardising with the outsourcing in the different outstations with one provider. We are also looking at how everything integrates in our landscape.
Normally in IT applications you used to have a solution life cycle of 20 - 25 years; now it is three to five years. So, in two years we will have been around for four years and most of our application will be three years old, so it might be a good point to review what we have. However, with SOA there might not be a need to throw away any of those applications.
ACNWhen will you have done the bulk of the SOA project?
KGAgain it is not an IT project. To deliver the SOA base - the software - the servers - it's peanuts. It's done in a week. But to convince business that they should actively participate is an internal selling job. For me, this is the crucial part. It is a challenge because, as we are in a growth phase, they are doing their daily work. It's difficult to take them out of this and tell them they are also responsible for SOA. People understand it, but they are not ready to invest in it. So my major task is to do this internal selling. The need is understood. But IT alone cannot drive such a project. Of course, we also have to ensure that our own daily operations runs smoothly and we give internal SLAs to our customers - our colleagues.
ACNHow are you using IT to control the cost issues that are so critical to airlines?
KGIf you want to control costs you have to know where the money goes, hence our use of Oracle financials. You have to have a cost control system. One reason for outsourcing the IT equipment in the outstations is to have a unique environment as well as cost control. If you have one leased price per PC or per printer, it is much easier to control costs and to budget. At the moment, we cannot do that. At the moment, the IT costs are decentralised and they need to be centralised, so we're looking to centralise our management.
We're also looking for IT support to determine efficient routes. If you have a new aircraft you need to define the viability of where you are going to fly. You have to make forecasts of passenger figures for the next few years. Implementing a new route is very expensive so we need a planning tool that allows us to estimate the revenue on new routes and this you can only do with heavy IT support. Everything turns around money and costs.
ACNWhat about CRM? What's been happening there?
KGWe are starting this now with our Etihad Guest programme, which is extremely innovative in that a guest (frequent flyer) can redeem from the first point. There are no black out seats or black out periods. With Etihad you can get every available seat with your points.
It involved integrating the CRM and database with a new web site. At the back end there are many interfaces and integrations that had to be done. If you book a flight on your PC there are so many systems in the back that need to be connected. For example, our servers for the web page are sitting in London; our server for payment is in Switzerland; and we have a few here in Abu Dhabi. They all talk to each other. You hit a button and get a response in seconds. Of course this is all IT.
The servers are outsourced to England because the bandwidth in Europe is a lot higher than the UAE. Since we hope that many people are using our web site we had to optimise it.
ACNWhat are your main concerns as an IT manager or CIO?
KGMy main concern is that IT is not seen as strategically as it should be. Ten to 20 years ago, IT was an enabler. Instead of writing a ticket you printed it. This role has changed and now IT has become a driver, but business people are not aware of it or don't accept it as such. It's not really a concern, but it is something we have to work on. I like to be in the driver's seat and not pushed by business. Again in a stable environment you can do that.
ACNOther than SOA what's the main focus in the year ahead?
KGMy main focus is to have a stable environment. We have to be operational and up to date. This is task #1. All our systems have to be up and running. We have to improve our services.
At the moment we are implementing a 24-hour service support for our customers. It was not necessary in the past, because our flight operation was quite limited. But with our new operations in Toronto and New York we cannot afford to be in a position that when our colleagues in Toronto start working we have closed our help desk.
This, SOA, BCP, and the unification of our workstations worldwide - I reckon that will keep us quite busy.
Of course, it would be easier for us if we had SOA in place already because to create and maintain those interfaces is going to be relatively difficult. I have seen many airlines try to avoid such a scenario, but this is a very fast moving industry and business requires it. You must be able to sell a ticket somewhere. You must be able to connect a travel agency. There is no way you can just think about how to do it for half a year. It has to be implemented today. If you're a small airline - up to five aircraft - you can do it manually on an Excel sheet, but if you're any bigger then there is no way. You need IT.