Qantas kicks off application review

Carrier faces big challenges and major expenses as it converts to new applications and a new IT strategy.

3 min read
The nation's leading carrier plans to examine how it delivers software applications as the next step in a billion-dollar-plus IT transformation project spearheaded by Chief Information Officer Fiona Balfour.

While Balfour declined to discuss the options for the company's applications strategy, she confirmed the nine-month review would kick off before Christmas. She described Qantas' thinking in the area as "at its very earliest stage."

The carrier's 50-year-old IT shop is wrestling with the management of about 700 applications, many of which are written in older programming languages, such as COBOL and Fortran, and serviced by a similarly aging group of programmers. The antiquated nature of the IT operation is a large contributor to the airline's IT and telecommunications costs, which swallow about 4 percent of revenues. On average, regional competitors spend about 2 percent of revenues for those services.

However, Qantas has started its new program. The proportion of applications managed in-house is 75 to 80 percent, according to Balfour. "We have service providers for a significant number of applications already today," she told ZDNet Australia.

One initiative undertaken three years ago was to replace all its corporate applications--which included 38 separate human resources databases and a 25-year-old mainframe application--with Oracle's E-Business suite running on Linux. Oracle is one of Qantas' strategic partners that remained after the carrier consolidated a number of its suppliers. Other partners include Telstra, IBM, Amadeus (which hosts its reservations system) and SITA (which provides the airline's international network).

Other systems to be upgraded or outsourced include the general ledger and human resources.

Huge challenges continue to confront Balfour, who is also Qantas Business Services' executive general manager. The carrier's engineering and maintenance software, written in COBOL, is long overdue for replacement. But getting a business case together for the $73 million ($AU100 million) cost to shift it onto a Unix environment has proven tough.

Big partnership deals
The Qantas transformation project is designed to turn the airline's information technology arm into a streamlined, largely outsourced operation delivering cost-efficient service to the carrier, which does $9.5 billion (AU$13 billion) of business annually.

The company in May 2004 signed deals worth a combined value of $1.02 billion (AU$1.4 billion) to Big Blue and Telstra for management of its infrastructure and telecommunications. Big Blue has a 10-year contract worth AU$650 million to handle mainframe and mid-range computing as well as data center operations and other managed services, while Telstra has assumed responsibility for voice, data and desktop services for seven years under a AU$550 million deal.

While the agreements leave Qantas with a 700-person information technology arm running more than 100 projects at a time, the program is causing massive upheavals at the carrier. Late last month, the airline relocated its mainframe environment from its 35-year-old data center underground in Sydney's central business district to a new IBM facility in Baulkham Hills 27 miles away.

Balfour said the move encompassed TPF (transaction processing facility) environments and IBM MVS (multiple virtual storage) systems with multiple partitions running up to 120 business applications in a variety of development environments, as well as a Teradata data warehousing environment.

The shift was undertaken successfully between 11 p.m. Oct. 23 and 3 a.m. Oct. 24, Balfour said, with "Qantas' stringent safety and operational procedures" being followed at all times. The four-hour window was set at the least sensitive time for disrupting airline operations. A dress rehearsal was conducted the previous weekend to minimize risks associated with the actual event.

However, it is far from the last relocation the airline faces in the near term. About 16 midrange servers must be moved before Christmas this year, while around 80 servers supporting the Qantas.com Web site are due to be shifted after the Christmas peak load sometime in the first quarter next year, Balfour said.

Telstra is also making its presence felt under the deal, installing 700 new computers per week to a total of 17,000, Balfour said. This is just one component of an overall refresh encompassing 38,000 devices in all, with others including boarding pass printers.

The refresh project also includes a shift from Windows 2000 to XP on the desktop, to occur progressively over the next 18 months.

She added that a planned shift of the airline's legacy networks to an end-to-end IP network--part of the Telstra deal--was on schedule for completion in the latter half of 2006.

Iain Ferguson of ZDNet Australia reported from Sydney.