CXO

The secret to low-cost IT? Offload whatever you can

How easyJet keeps IT costs down while still delivering innovations

European airline easyJet runs its IT department at about half of what it costs its competitors as a share of annual revenue.

The secret to the airline's thrift, according to the company's enterprise architect Bert Craven, is not to burden in-house IT with running anything that it doesn't really have to.

easyJet runs an IT team of about 120 people on 0.85 per cent of annual revenue, compared to an average of 1.65 per cent of revenue for the airline industry.

The airline uses SaaS to provide much of its back office systems, including payroll, engineering and crew email, and has been using managed hosting to provide a range of non-essential services since 2006.

”These are commodity things, there is no competitive advantage to be gained from running them,” said Craven.

easyJet owns two datacentres, which contain both internally managed IT systems and a private cloud platform managed by Savvis. It also uses the Microsoft Azure cloud platform to test out new business ideas before rolling them out, such as allowing staff to use mobile devices to check in passengers and their bags.

Farming out the non-essential systems frees easyJet's in-house team and infrastructure to be dedicated to tasks that are core to the business.

”Something is either the crown jewels because it’s operationally critical or because it represents massive commercial advantage,” said Craven.

”We have to run a reservation system and departure control system that have to be up all the time. We don’t sell cans of beans or books, we sell aircraft seats, and you can’t sell that seat twice. The idea that we can have any kind of inconsistency in that data is an anathema, we can’t really do that. Those systems must also be massively disaster resilient."

A specialised distributed SAN fabric between the two datacentres allows easyJet to carry out transaction-by-transaction global replication  for its core systems.

"You just can‘t run that as private cloud, it’s not commodity enough," said Craven.

Over the last 18-months the number of people within the IT department has grown from about 65 to 120, as the department has stepped up operations to support changes like easyJet offering passengers the ability to book seats onboard flights.

”We're now delivering an awful lot more but we're now 0.85 per cent of revenue,” he said.

”As you grow in size the circumference of your perimeter gets bigger and bigger. No organisation is going to let its IT function expand at that rate. They're going to say 'No, we want you to stay this big and deliver more'. It changes your focus and you say 'Let's try and get more of our perimeter delivered by third parties.”

Craven isn't just talking about making greater use of hosted services and SaaS, he's also referring to building APIs to internal systems so external developers can build apps and services that benefit customers, for example offering an APIs that feeds flight pricing to a travel comparison app.

"If organisations focus on building real value in their corporate systems and surround those in a really rich set of APIs this opens up a world of opportunities that don’t necessarily require any additional IT resource to exploit. If somebody says ‘I've got a brilliant idea for a mobile app’ you can say ‘go ahead and build it, here's our API, here's a key, knock yourselves out'."

About

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

6 comments
info
info

...Although it's a bit harder for us, since we're knee-deep in things. On-going, I'm with you guys. A service I can perform that is out-sourced will usually end up being more expensive cash-wise over the long-run... BUT, if you're looking at the bigger picture, time is money. Especially if you hire a bunch of pricey IT gurus to support your real-time reservations database and all of it's perks for your customers, and they end up putting out fires for internal resources. You're not getting the value that you're paying for, so get rid of it. Even if those pricey IT guys end up sitting around a bit, they're there, focused and AVAILABLE.to reduce or remove any negative impact on your customers, which has it's own cost. It's not something we can easily see, though. (Of course, whether this is REALIZED or not is a debate of it's own! ;) ) In this day and age, look at the PlayStation 3. Superior hardware, software and better pricing structure... But Microsoft has 'won out' with consumers because they've better delivered the service aspect. It might not make sense, but you follow where the money goes...

RuntyMuz
RuntyMuz

I fail to understand the logic presented here. easyJet has less IT staff because they are responsible for less. Using the same logic to an extreme: IT would be free if it was outsourced completely? 0.85 vs 1.65% of annual revenue means nothing if the services delivered are different. The Services delta is purchased as SaaS instead, so there will be flow-on cost to other areas of easyJet’s business. (i.e Extra contracts, extra Accounting etc) but this doesn’t affect the IT department??? I genuinely believe that SaaS may be the right option for easyJet, just not for any of the reasons described.

WZ17
WZ17

Offload all of the critical thinking to your advertisers.

Tony Hopkinson
Tony Hopkinson

You can show how you've reduced your costs and get a bonus / promotion. The fact that you just stuck one of your rivals for the next rung up the ladder by offloading your costs on to them, is a twofer.

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