If you’re in aviation, it doesn’t get much better. It’s Heathrow, a beautiful new terminal is open and the first flight takes to the skies. “What a joy this is going to be for passengers and staff,” said Sir Anthony Millward, chairman of BA forerunner BEA, on the opening of Terminal 1 in 1968.
But when BA’s CEO, Willie Walsh, found himself addressing staff and the media in 2008, the Terminal 5 experience wasn’t quite the same perfect moment and, 40 years on, Walsh found himself in a very different position to Millward.
The British Airports Authority (BAA) may own and manage T5, but it was BA that was pilloried for the debacle, caused by a forgotten software filter in BAA’s baggage handling systems. Walsh shouldered the responsibility and was extraordinarily frank during the Parliamentary Transport Committee’s enquiry into T5.
With BA taking the blame, on the morning of 27 March, 2008, was there any IT chief not wondering if BA’s global CIO, Paul Coby, was about to become history? Passionate about BA, he’s survived huge corporate ructions over the last 12 years but did he ever consider quitting over T5?
“No,” he says. “I never contemplated resigning. BA’s systems and IT infrastructure worked perfectly from day one. The principal IT problems were in BAA’s baggage systems. It was their accountability and the accountability of their suppliers. The [parliamentary] report makes clear the software for the baggage system is provided by BAA, their contractor Vanderlande and their subcontractor IBM. This is not BA software. The baggage system is designed as a complete ‘black box’ that is provided to BA as the occupier of T5.”
Walsh set an example of leadership in his dealings with the Parliamentary Committee that every failed banking CEO in front of the Treasury Select Committee should follow. While that toxic crew denied any personal culpability for creating the economic maelstrom that is wrecking the globe, Walsh acknowledged that risks had been sanctioned by him and, with hindsight, the opening should have been delayed to allow for more training and familiarisation for BA staff. He apologised to customers, and Coby mirrored the approach soon after when he spoke at a Forrester Research event, saying: “BA as a company apologises for the problems that we may have caused many of you travelling through Terminal 5.’
Why did BA’s CEO and Coby, now Global CIO and Head of Financial Shared Services, take such a high-profile approach? Coby says: “The ‘mea culpa’ is, in my view, unavoidable, honourable and the right thing to do and, when I talk to people who were there, they recognise that.”
It’s in character. When CIO published Coby’s article entitled “50 Things I wish I’d known before becoming a CIO” a couple of years ago, number five on the list was entitled ‘Try to be human’. “People expect a lot from CIOs. They want leadership but prefer to work with someone who is not afraid to show that they have emotions too. Admit to making mistakes,” he wrote. A final thought was that “if you’re not scared as a CIO, you either lack imagination or don’t run the IT … We have another big lever to pull when we open T5 at Heathrow and that’s terrifying.”
And so it proved, but many CIOs still question BA’s decision to take the flak on T5. They argue that BAA’s one customer at T5, BA, shouldn’t be getting it in the neck but should instead be receiving massive recompense based on service-level availability penalty clauses. Coby’s take is that the customer should always come first.
“Everyone in BA recognised that it does not matter to our customers where the problems were – they paid good money, bought tickets from BA and deserved to have a great travel experience, which we did not deliver. Lessons had to be learned. How big cutovers [IT system transfers] are done is not just about IT issues – it is a whole interconnected system. We accepted responsibility for what happened to our customers because that was, and -remains, our primary accountability.”
He says BAA is a supplier which contributes to the overall service levels but admits that “you can’t get away from the fact customers don’t buy their tickets from BAA, or their IT, or the people who wrote their software systems”.
And that is fundamentally important if we’re looking for teachings from what happened at T5
, he says.
“Yes, we learned some hard lessons – particularly about the need for training and yet more training in a new infrastructure and environment. When CIOs are dealing with a project the size of T5, they should focus on people and training – double it, square it and cube it. It’s people.”
In terms of the relationship with BAA, he says that a close relationship and common goals are essential when the two organisations share the same flight-path. “What really matters there is we have a total alignment in goals and service ethos. More importantly, the improved service for customers at T5 provided by BAA now is not because BA enforced or changed SLAs – it is because [BAA] CEO Colin Matthews and the new CIO Philip Langsdale are changing the culture and the attitudes at BAA, and are aligning them with ours. That is, they care for our paying customers. The closeness with which BA and BAA now -operate can’t be overstated.”
Langsdale, a vastly experienced CIO, wasn’t employed at BAA in March 2008 when T5 opened but replaced Richard Rundle who retired last summer. CEO Colin Matthews joined BAA just prior to T5 opening.
“Philip has set up a Heathrow Customer Stakeholder Board which is has brought about a sea-change improvement in attitude and openness. This is entirely down to Colin and Philip but we believe we have resolved all the issues with BAA. The professionalism of the IT services and the acceptance of responsibility for the quality of that service have greatly improved. We are where we wanted to be on day one and have statistics to prove it. It’s a tribute to how well the whole thing is working together. T5 is in a fantastic situation.”
Willie Walsh has said that BA’s CIO and his team played a critical role in ensuring the software problems were resolved as quickly as possible. It was a matter of extreme urgency and Coby clearly used every resource, asset and influence to do that. The rogue software filter issue was identified and fixed by the Sunday.
“The short-term fix was to deploy all the considerable skills in BA and BAA – and those of our respective suppliers – to understand the immediate problem. We have a discipline I learned from the now retired, much-missed head of operations, Dave Weston, who worked at BA for 42 years. He taught me to always find the root cause and keep worrying until you know what that is. Otherwise you waste time and money treating symptoms, not eliminating the root problem.”
Coby says that blame doesn’t help fix a problem, but understanding that problem does. BA now has Continuous Improvement Groups to better understand when things go wrong, fix them and ensure they don’t happen again. He adds: “I’ll forgive people once for making a mistake but I’d be very concerned if they make it twice.”
Coby also believes that effective relationships with suppliers are fundamental and he has been working hard on getting new structures in place at Heathrow over the past year.
He reiterates the criticality of “understanding and recognising where suppliers fit in your universe … and recognising that you have different sorts of suppliers, like Amadeus for reservations, and SITA for our networks. Along with BAA, they are the most mission-critical for us and we need very particular relationships with those organisations. If you outsource functions, that’s still your accountability as a CIO and as a brand. Customers don’t care and nor should they if someone is directly employed by BA, SITA or Amadeus.”
Financial shared services recently became part of Coby’s remit, and now he has accountability for a £250m budget – about the same as the IT budget – he has made a point of calling the people who provide facilities management for properties.
“The first time I spoke with them, it wasn’t when we had a problem – and when we did have a problem later, at least he knew who the heck I was. It is absolutely fundamental when everything is so interdependent that we manage key suppliers – and that doesn’t mean you neglect your own direct area of accountability and people.”
So, how about media relations and PR post-T5 and the messaging campaign to the effect that ‘Terminal 5 is working’? BA spends over £100m a year on advertising and around 10 per cent of that went on the T5 summer campaign, which came in for criticism when some statistics it used regarding take-offs proved inaccurate.
“Given the impact of day one, we were in a very bad place,” says Coby. “We plastered London with adverts to get people in and experience T5. We had to, and the great customer satisfaction scores show that T5 is now running extremely well.”
He says it’s no coincidence that customers saying they were very or extremely satisfied is up to 75 per cent of respondents, and that there are similar improvements in punctuality and baggage handling. The T5 debacle was a searing experience for everyone involved and it is clear that many lessons learned there were applied elsewhere.
In February, BA moved home from Terminal 1 to Terminal 3. There were no hitches that day and the first flight left a minute early. Of 21 departures, 19 left on time. That performance is being enabled by T5, says Coby, and statistics show a marked improvement in baggage handling, punctuality and customer satisfaction.
With a functioning T5 there’s now a take-off or landing every 57 seconds. It set new records in January and February this year with 68 per cent of flights overall on time, and 87 per cent for European flights. On 23 February, 140 flights out of 263 departures went early. That’s unheard of at BA and again, Coby says it’s due to a fully-functioning, integrated T5.
The airline also handles mass disruption more effectively, he says. During the sudden snowfall in February it contained within the system the number of bags that did not travel with their owners on the Monday, repatriating them quickly. BA says similar disruption in T4 would have generated baggage mountains and taken weeks to address. The record day for baggage (mis)handling at T5 was February 7, down to only five in 1000.
Despite these positive outcomes, many have argued that BA should still have delayed T5 but Walsh later explained that the effect of a postponement would have been to lose the summer operating season. The costs of that would have been crippling to BA, which like the rest of the airline industry is under pressure. The global aviation industry is in meltdown with the International Air Transport Association (IATA) saying airlines lost over $8bn (£5.5bn) in 2008. The losses topped $4bn (£2.7bn) in the last three months of 2008 alone, when the global credit, financial and economic crisis became acute and aviation fuel prices hurt carriers.
It’s a dire situation, “far worse than 9/11 in terms of revenue challenges and the sheer systemic shock”, says Coby. BA has come back from the brink before, however, and his mantra as a CIO has always been to “cut costs, cut costs and cut costs again; find some IT innovation that will make a difference to the top and or bottom line … and keep cutting costs”.
“We may fly to 157 countries and deal with 34 million customers a year but we are a tiny part of the world’s inter-actions and growing interdependencies,” Coby says. “The inter-dependencies are critical and when you think about what’s happening in the world today – and that significant parts of those interdependencies have stopped working, gone wrong or disappeared in terms of world trade – that’s the systemic shock we are trying to deal with. That’s the environment in which we will be operating over the next few years. It would be very foolish to assume otherwise.
“I’ve always said that the challenge to the IT department at BA is to do more with less and now the challenge is to do even more with even less. Now. Not next quarter or next year. There’s the bigger role with shared services and that includes performance, business intelligence, operational research, property and business metrics. We must reduce cost across all of those. How do we do that? If spend is not discretionary, how do we reduce it? If it is discretionary, we reduce it.
“We’ve reintroduced some 9/11 measures like the much hated Star Chamber where every single piece of expenditure gets looked at. We offered voluntary severance to any manager that wanted to go, and about a third across the airline went. So, we have lost some very senior people and that’s as true in IT as elsewhere. We must spend only on the things that matter, that deliver great payback or create direct relationships with customers.”
Still there may be some accidental positives. Coby is on record as saying: “SAP is the highest cause of fatalities among CIOs”, and he looks positively cheerful when confirming that a global ERP project was canned. “That was a big fat target that didn’t survive last autumn. We have a lot of legacy back-office stuff that should be replaced but we reached our Sarbanes–Oxley targets, so we are fit for purpose.”
Despite the cost-cutting, BA is changing online. BA.com now represents 50 per cent of UK sales by volume and it provides a cost-effective customer service, says Coby.
“If the BA.com guy can demonstrate that spending £100,000 will deliver a quarter of a million pounds this financial year, then yes, we will invest,” he says.
“If there isn’t a demonstrable effect on revenues or customer benefit then we shouldn’t be doing it,” Coby admits.
“We are re-engineering the website via a project called ‘Leapfrog’. BA invested fairly early, back in 2002 to 2003, in BA.com, but it’s not as agile as we’d like and our business colleagues are very keen to manage the way the site looks and its content without making fundamental -coding changes.”
One way towards agilty, appropriately enough, is through the Agile approach to software development that mandates frequent updating and closely orchestrated teamwork.
“Agile is fascinating,” Coby says. “We have six streams and there’s not much there that’s brand new but it does seem to bring together a lot of previous experiences and plain common sense. It’s about delivery in weeks, not years.
“It absolutely cuts with the kind of cultural change that we’re trying to do with the whole airline – making people accountable and empowering them to change. There’s no point in accountability if you can’t do something with it.”
So what can CIOs take away from Coby’s experience of T5 and make sure that it doesn’t happen on their watch?
1. Avoid large scale cutovers whenever possible;
2. Focus on people and training to the nth degree;
3. Recognise that technology is at the heart of everything an organisation does these days. “It would be nuts to says IT should determine which aircraft BA buys in 2012, but IT is in everything from crew rostering to data downloading to in-flight entertainment,” Coby says.
4. Consider relationship interdependencies, internally and externally;
5. Know that CIOs and their teams need to be recognised as trusted advisors providing an inside track on technology. That must be true for every business nowadays, regardless of sector.
Coby concludes: “Everyone learned a lot from T5, which is surely the most important point, and precisely why the terminal is functioning so well now.”
Paul Coby: CV
1978: Joined civil service as trainee and worked in Departments of Transport and Environment
1982: One-year secondment to IBM
1992: Principal Private Secretary to John MacGregor as Secretary of State for Transport
1996: Secondment to BA Information Management department
1997: Joined BA and led the outsourcing of its reservations and check-in systems to Amadeus
2000: Appointed CIO with accountability for IT policy and strategy
2001: Made BA Group CIO with responsibility for IT operations and new IT developments, developing BA.com and IT for T5
2009: Added role as Head of Financial Shared Services
The CIO Questionnaire
Q. Which business (or other) books have been influential in your career?
A. I don’t read business books – life is too short. The book I most admire is The Later Roman Empire by AHM Jones, because he pulled together everything then known about the so-called end of the Roman Empire and brilliantly described the economy and society in its entirety. Oh, and Terry Pratchett’s Discworld series for insights into human (and non-human) nature. My hero is of course Vetinari…
Q. Who have been the most influential people in your career?
A. My parents for values and my wife Sally, for constant and unfailing support. In business, John Griffiths who I worked for in IBM in the early 1980s. It could not have been more different from the Civil Service – I had seen the future and it worked. Jean Caines, who was Head of Information (not IT but press and PR) in the Department of Transport, where I learned about the media and politics. John MacGregor for whom I was the ‘Bernard’ to his ‘Minister’ [from the Yes, Minister sitcom]. Don’t believe all the things you read about politicians – he was hard working, principled and motivated by the public good, and an effective politician.
Q. Do you believe in mentoring?
A. Yes. You need to expose yourself to as many different experiences and people as possible so I was fortunate enough to spend secondments in IBM and the Northern Ireland Office and as a speechwriter for ministers. The reason I came to BA in 1996 was on another secondment to broaden my experience again, so you never know what can happen as a result…
Q. Which tools or tactics have given you most success in communicating?
A. I enjoy most meeting small groups of colleagues to talk about their work and especially their successes. I never fail to be impressed by the breadth of skills and achievement of everyone in BA’s IT department. IT is in my view a team sport. I also write a very intermittent blog and have enjoyed participating in online discussions with colleagues across BA.
Q. What has been your biggest mistake?
A. Is this a job interview? I am going to skip this question…
Q. And your greatest success?
A. I played a part in BA.com which I am very proud of, but that is something many people in BA have contributed to, so I will instead go for turning around SITA (Société de Télécommunication Aéronautique).
In 2003, I was elected Chair of SITA – the airline industry’s network and solutions company – when it was seen as an anachronism selling purely commodity products. With a truly global board of directors from across the industry and an excellent management team we have turned SITA into a strong and competitive company with no debt and cash in the bank. We provide telecommunications, systems and solutions to airlines, airports, governments and the UN, so if you check in at an airport or use a self-service kiosk there is a high chance that your agents’ screen, the kiosk or the baggage system and networks used will be provided by SITA.
Furthermore, we are a co-operative which is owned by its customers who form the Board, a model of global collaboration which I believe has some important lessons in the world we now find ourselves in.
Q. What is your greatest strength?
A. Picking good people.
Q. And your greatest weakness?
Q. How do you keep up to date with the march of technology?
A. I try to listen to my experts in the airline – we have world-class talent. I talk to other CIOs, especially in the US where there is still amazing amounts of innovation coming out of Boston and the Bay Area. In SITA we have a new technology lab looking at IT innovation and I am on the board of SITA’s joint venture with Airbus called OnAir, which is pioneering on-board data and voice connectivity. I don’t read the glossy magazines sent round by suppliers.
Q. How do you deal with stress?
A. Make time for my family, write Roman history and model 19th-century German railways.
Q. What profession would you most like to attempt?
A. Publish that book on Roman history…
Q. Which word or phrase do you most use/overuse?
A. “That’s fundamental.”
Q. Do you have a sport you practise?
A. I’m an inexpert skier but love the views and it’s a sport you can do as a family. The most terrifying words you can hear on the slopes are “Follow me, Daddy!”