The IT organization is at the heart of an airline’s ability to cope with dramatic growth and external change. So says Kerem Kızıltunç, SVP & CIO at Turkish Airlines.
A fast growing airline must place big demands on the IT function?
Yes, of course. Turkish Airlines is among the longest established airlines in the world, first beginning operations in 1933. But in the last 10 years we’ve seen the most radical change and growth in our history. Ten years ago we flew to 73 cities and carried about 10.4m passengers. By 2014 we were flying to 261 destinations and carried almost 60m passengers. In 2008, we became the 20th member of the Star Alliance and our fleet has grown in line with this expansion – from 73 aircraft in 2004 to 262 today.
In mid-2014, and for the fourth year running, we were voted Europe’s Best Airline at the 2014 Skytrax World Airline Awards – and we’ve picked up a number of other awards. Given the scale and speed of growth, we’re particularly proud of these service quality endorsements.
This level of growth is very welcome. It’s energizing and set to continue – and our IT strategy must help enable it. By 2020 we plan to have about 400 aircraft in our fleet, carrying 120 million passengers a year. But we won’t have enough space at the airport in Istanbul – so another airport is being built. Construction started in June last year (2014) with a planned capacity for 150 million passengers and the first phase will go live by the end of 2017. As well as dealing with the growth of the airline, it means we’ll also have to manage the move of our hub. Anything on this scale is a major challenge for any company – and it places particular demands on technology.
How is your IT organization coping with this growth?
Our IT organization has been transforming itself. It’s a pretty young organization – today we have about 450 people and more than half of them have joined in the last five years.
We use about 300 applications, of various sizes. We manage about 180 contracts, and work with about 100 technology partners at various parts of the IT stack. And we have a strong record of delivering projects, large and small.
We’ve done this in part by ensuring our organization is aligned with the business, with three vertically structured elements. One looks after the commercial portfolio – handling reservations, CRM, loyalty, revenue management, sales and so on. The second looks after everything to do with operations – flight crew, ground operations and cargo end-to-end. The third is the back office group, handling corporate requirements such as revenue accounting, Enterprise Resource Planning (ERP) and business intelligence.
We also have a shared services group, which we call portfolio services. It looks after contracts, information security, some of the architecture requirements, as well as demand and portfolio management. And then every working piece of software and hardware is looked after by the standard infrastructure and operations teams on a 7x24 basis.
Can you tell us more about your transformation program?
We started it in 2010, with a two-phased approach – the first from 2010 to 2013 and we’re now in the middle of the second phase, from 2013 to 2017.
In the first wave, we worked our way through a number of large-scale projects as well as hundreds of small improvements and medium-sized projects. We concentrated initially on flight planning – an area where we could get operational efficiency and cost management results.
We launched a mobile application in 2009, overhauled our website in 2011 and introduced two major implementations around revenue accounting and a real-time revenue management system – both went live in 2013.
Next we changed our fares and pricing infrastructure, crew planning and transfer, and passenger management at the Istanbul hub. A large scale ERP transformation program started in 2010 and has been completed in three phases. We also completed Electronic Miscellaneous Document (EMD) work for ancillary revenues infrastructure.
The second phase is essential to our customer offer and passenger experience, including the possible replacement of our in-house Passenger Services System (PSS). Before that, we’re pushing through a further overhaul of our website, including enhanced mobile applications.
We’ll then look at changing our Customer Relationship Management (CRM) infrastructure. We’re currently using an in-house loyalty program, and we’re adding multistep campaign management capabilities, e-mail marketing, direct marketing and more.
Our cargo team is also changing their infrastructure as well as reservation, sales and revenue accounting systems. On top of that we plan to add cargo revenue management and B2C portals to allow some channel shifts.
Finally, we’re working on a digital flight initiative that includes tablets both for the cockpit and crew on the aircraft – and we’re building a new data center! So our IT organization is doing a lot to enable continued growth for Turkish.
What lessons have you learned?
It’s important to start a project with the assurance of the relevant business team’s strong sponsorship. That’s crucial. Then we try to ensure that executive sponsorship continues during the complete project life cycle. We try to keep that rhythm with executive committees and continuous reporting, as well as constant prioritization. That’s because, as a growing airline, a problem that wasn’t hurting three years ago might become a US$10 million cost-saving opportunity just three years later and you may want to prioritize that now.
All of these complexities and incoming demands need to be managed – so we focus on planning and constant communication. The fact that individuals now talk to other individuals rather than interacting with a machine is fundamental to the post-industrial society.
We call it ‘social’ these days because now it involves customers and us, and then suppliers and IT, and IT vendors, and so on. In reality, this has been true for the last 40 years. But today it’s more and more important – and part of our daily lives.
IT staff are still sometimes seen as the technology nerds who like to buy hardware, PCs and laptops. But we’re not just technologists – we’re making a major contribution to addressing the airline’s business needs by using the capabilities of IT. Of course we’re tech savvy, but we’re also acutely business-aware.
In other words, we see ourselves as the experts who are joining the two worlds together. But we bring another dimension to the business as well – the good old project management. We have extensive practical experience because of our own recent history. For instance, any successful IT project requires a mastery of project management skills such as risk management and change management. So, yes we can find a technology solution to a particular business issue. But more importantly, we have the experience to see it through.
Say a particular business has a two-year project. We have business analysts, architects and project managers with relevant experience. We can warn of potential risks, how they can impact the entire organization, how the business needs to consider organizational change management. We can warn of issues that might pop up unexpectedly and how these can be anticipated from the outset.
Are colleagues willing to take on board your experience?
Most key decision-makers have been through organizational change before – and they’ve seen the advantage of collaborating. For all long-term projects lasting up to a couple of years and more, we find that people learn to use each other’s capabilities to the maximum – not least because the very nature of the project forces all sides to collaborate.
How do you decide whether to outsource or not?
Some technologists think everything should always be done in-house. Others think IT needs should be completely outsourced – from infrastructure to applications and even project management. Over the past few years we’ve seen the pros and cons of both approaches and one thing we’ve learnt – especially if you’re growing fast or going through a rapid transformation cycle – is that you need a good mix of the two.
You cannot build a huge IT organization in a very short time and do everything by yourself. You certainly need some of the best of breed applications to quickly deliver against business requirements. You want to get there fast and you don’t want to have to do everything from scratch by yourself.
On the other hand, since the organization is going through a very quick transformation cycle, you also need to be able to respond rapidly in particular areas. There might be opportunities you want to grab. There might be issues you need to respond to, or new ideas you want to try out really fast.
If everything is outsourced, you have to go through the hassle of renegotiating contracts and managing the relationship. But if you have an in-house team, you can move people from one project to the next quickly and smoothly. At root, you need the flexibility to do what’s needed when it’s needed. With a mix of internal and external, you can lean on whichever provides the best solution to your needs.
What are you planning over the next couple of years?
Given the continuing focus on technology as a key enabler of future growth, we’ve given a name to the theme of the second wave of activity: ‘Digital Aviation’. There are then three sub-themes for each of the vertical areas I mentioned – commercial, operations, and back office.
The ‘digital customer experience’ is an area where we’ll try to deliver better experience to our passengers at each and every touch point. ‘Digital operations’ is another area where mobile and wearable devices will have a huge impact on how airlines operate. We are also trying to improve our operational efficiency in the back office.
The digital customer experience will be defined by two large scale projects. The first is a project we call Web 3.0 whereby we’re aligning our web and mobile platforms. We’ve agreed to use a single personalization engine, a single user experience design and even a single vendor to see if we can explore other options in the mobile. The second is a sizeable CRM project which will address a comprehensive set of functionality.
The potential for mobile was understood as much as five years ago, but there are still areas to be explored in this field, which we are addressing. Incidentally, I sometimes wonder whether or not tablets are mobile. They don’t fit into your pocket, so maybe they’ll be out of date in a couple of years when we have a better experience with other truly mobile wearable devices! But in the meantime, we are addressing tablet opportunities.
A note of warning, though: jumping onto a technology bandwagon can end up burning your fingers. We’re trying to be cautious about the pace and depth of innovation. So it’s good that some IT vendors are taking a leap with some of the new technologies on our behalf – SITA with Google Glass, for example. Maybe it’ll work in airports; maybe it’ll be better in the cabin, maybe somewhere else along the passenger journey? We’ll see.
Where are you heading with the use of mobile in operations?
We’re looking at multiple options here. In June last year we announced a mini iPad application for cabin crew. We launched our Electronic Flight Bag in August in the cockpit. We’re working on another project for instructor pilots, so they can do all of their paperwork during their flights.
We’re also looking at options to reduce congestion at Istanbul airport, caused by the massive increase in arriving, departing and transfer passengers. One particular project, called the Turnaround Manager, has recently gone live which helps our ground operation coordinators to make use of the tablet technology to smoothen the aircraft turnaround process. We think technology has much to offer. So we’re looking at self-bag drops and home bag tag printing as alternatives.
In the back office we’re also investing a lot on mobile technologies simply because the workforce is becoming more and more mobile. We rolled out electronic signatures last year and now we’re looking at mobile signatures for all internal approval cycles. We’ve even implemented a mobile ERP application to improve small but essential details such as vacation requests.
These are all areas where we think the IT organization can help the growth of our airline. We have large scale programs but there’s always a new disruptive technology approaching from around the corner. We need to have the flexibility to take them into account, to evaluate them.
This underlines the key point in any IT organization’s work: we cannot do it all by ourselves. We need good technology partners whom we can trust, who are capable of a profound understanding of our needs and capable of helping us deliver. Partners who will be there to help us reach our target date of 2020 safe and sound.