After Hours

Higher than average IT budget? That's not inefficiency - that's a smart investment

Lufthansa Passenger Airlines' CIO on why tech spending is not a drain on an airline's finances...

Lufthansa CIO

Lufthansa Passenger Airlines' CIO said the airline industry should be increasing its IT spendPhoto: BriYZZ

With the airline industry facing increasing costs from rising oil prices, you might think now is not the time to be arguing for a boost in IT spend too. But, according to Lufthansa Passenger Airlines' CIO, you'd be wrong - a big tech budget is the sign of a company making savings in other areas.

According to Dr Christoph Klingenberg, contrary to received wisdom, spend on IT is not a drain on an airline's finances that needs to be cut but is rather an investment in lowering running costs.

"When you have a discussion with the CEO, tell them that IT is not a cost factor, just the opposite," he told delegates at the Sita 2011 Air Transport IT summit in Brussels last week.

"IT is an enabler and productivity gainer. If your IT spend is higher compared to other airlines then it shows more automation of other things," he said.

The Sita Airline IT Trends survey, a survey of 200 airline IT decision-makers released last week, found that airlines' IT spend for 2011 will remain stable at 1.8 per cent of overall revenue, which represents an increase in actual spend due to a recent uptick in takings.

Airline IT departments can maximise returns on their spend by outsourcing as much IT development and operational work as possible, Klingenberg said, while pushing vendors to keep the cost of these contracts to a minimum.

"If you're developing your own lines of code or if you're operating servers somewhere, my experience is [you should] get rid of all this," he said, advising: "Just contract it out."

Getting on board

As well as highlighting the importance of greater IT budgets, Klingenberg also called for the IT department to have greater say in how management decisions are made.

"We have to tackle the task of getting IT into the boardroom," he said.

"My biggest challenge is how to get IT out of the tech corner with a language that no one understands, and integrated into management decisions."

Klingenberg has seen both the business and technical side of the company. Before taking up what is his first CIO role, he held senior roles in planning and operations at the airline.

The need for management to have some understanding of technology is particularly pertinent in airlines, he said, where businesses can spend hundreds of millions of euros on new IT systems.

"We have spent €200m on a new IT system, so it is important for them [the board] to really understand what is behind that," he said.

The app factor

Not all IT projects are created equal, however. According to the airline IT chief, CIOs shouldn't fall into the trap of believing that offering new technologies to passengers - such as smartphone and social media apps - will give their business any lasting edge over the competition.

"Whatever you develop on the consumer market can be copied in a few weeks or months by any other airline.

"A new [Lufthansa] iPad app is available in the App Store but it certainly won't differentiate us."

The Sita Airline IT Trends survey found that over the next three years, most of the airlines surveyed, 91 per cent, are planning to provide or pilot the provision of services to passengers via mobile devices like smartphones and tablets.

About Nick Heath

Nick Heath is chief reporter for TechRepublic. He writes about the technology that IT decision makers need to know about, and the latest happenings in the European tech scene.

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