Jetstar CIO Stephen Tame is asked to cut IT infrastructure costs by 6 per cent year-on-year. In fact, it\u2019s one of his key performance indicators as CIO of the Qantas-owned, low-cost airline.\nSpeaking at the recent CIO Summit in Melbourne, Tame told attendees he \u201caccepts the fact\u201d that he needs to drive down technology costs.\n\u201cI\u2019ve got to be smarter, I\u2019ve got to have different technology, I\u2019ve got to challenge the way things are \u2013 I\u2019ve got to have different supply agreements, I\u2019ve got to drive down my unit cost,\u201d he said.\n\u201cThese days, that\u2019s not hard, the cost of running server infrastructure three years ago is actually a lot more expensive than the cost of running server infrastructure today, and replacing it gives you a better outcome.\n\u201cBut in addition to that, I need to continue to drive investment in my business; so if I\u2019m driving down [IT] costs by 6 per cent year-on-year, I turn around to my business and say \u2018I should be investing 6 per cent year-on-year.\u201d\n\u201cBecause if I\u2019m not improving the process, I am going backwards,\u201d he said.\nJetstar\u2019s benchmark target of IT spend in Australia and New Zealand is 1.1 per cent of total revenue. The airline reported earnings before interest and taxes (EBIT) of $138 million for the financial year ending June 20, 2013.\nThis was down 32 per cent, which \u201creflected the competitive domestic market and additional start up loess in Jetstar Japan and Jetstar Hong Kong,\u201d according to the Qantas financial results for FY13.\nThe best low cost carriers (LCCs) are operating in the 1 per cent to 1.5 per cent range and others are as high as 2.7 per cent, Tame said.\nTame said that once the percentage of revenue spent on IT is set, it \u201cbecomes a matter of managing that position.\u201d\n\u201cMy IT mix is different to most airlines. I probably spend more on hardware and telecommunications than I do on internal resources, so I\u2019ve got my mix differently.\n\u201cThe reason why I spend more on hardware and telecoms is primarily because I have virtualized most of my technologies so you need more network spend. I\u2019m delivering cloud services in to Japan, Hong Kong and Singapore and Vietnam. So I need to spend more in that particular space but it significantly reduces my internal management costs,\u201d he said.\nTame and his team deliver all IT to Jetstar Australia and New Zealand for 1.1 per cent of total revenue, deliver a complete IT service for Jetstar Hong Kong and Japan, as well as \u201cmandated\u201d back-end systems for Jetstar Asia.\n\u201cThat means that I am an external IT service provider because these companies aren\u2019t owned by us entirely \u2013 these are minority shareholdings,\u201d the CIO said.\n\u201cIt\u2019s all aligned to revenue\u2026.which is quite scary, if the revenue falls, what do you do?\u201d he says. But even though it\u2019s challenging, it does drive the correct behaviour.\n\u201cI\u2019m keeping an eye on the business revenues and I\u2019m looking at how I can try and line up with those things. If the business revenues start looking like they are taking a dive, then I start looking at what programs I need to start constricting,\u201d he said.\n\u201cSo my IT delivery model is very much aligned to where the organisational thinking is,\u201d he added.