Amadeus reaps benefits of in-house IT

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Amadeus reaps benefits of in-house IT

Outgoing CEO explains why its data centre could not be outsourced.

Travel technology firm Amadeus has pinned its growth on a 2002 decision to keep its data centre and software maintenance operations in-house.

At a media briefing in Sydney today, outgoing global CEO David Jones said the company had actively decided against outsourcing, although it had been approached by IBM and EDS.

It now operates a five-petabyte data centre in Erding, Germany that processes up to 17,000 transactions per second with an advertised uptime of 99.99 percent.

"About ten years ago, we actively decided that we were not going to outsource our data centre," Jones said. "That has been a critical element in the success of our business."

Jones said the travel industry faced financial pressures in the wake of the September 11, 2001 crash. IT outsourcing was one way for Amadeus to ease those pressures.

Competitors were also choosing to outsource, he said. In July 2001, US-based Sabre sold its infrastructure outsourcing business and IT infrastructure assets to EDS, inking a 10-year IT outsourcing deal that has since been extended to 2014.

"We were considering it at the time," Jones said, noting that Amadeus had been approached by both IBM and EDS about IT outsourcing deals.

"[But] as a technology company, we couldn't contemplate outsourcing such a critical part of our company."

An in-house IT team allowed Amadeus' 9,000 employees - including 200 in Australia - to work more closely as a team, Jones said, adding that a need for detailed budgeting, contracts and lawyers in outsourcing contracts would only "make life more complex".

Team-work was especially important for Amadeus's "New Generation Technology" project, under which all systems would use open, Linux-based systems instead of IBM's legacy TPF mainframe operating system.

Amadeus planned to have all products working on open systems by 2010, and to have completely decommissioned all TPF systems by 2012.

"When we're developing new applications, or planning our migration from legacy to open systems, our software developers and operations team are working on it together," Jones said.

"Our software developers are Amadeus employees ... They're supporters of the same bottom line."

Addressing questions about Amadeus system outages that delayed thousands of Qantas travellers in November and January, Jones said the partners had "reached an agreement" that Qantas was "happy to accept".

"We had an unfortunate period," he said. "Since that time, we've gotten back to what I regard as our normal levels of service: 99.99 percent reliability, 24x7.

"Obviously, systems have problems from time to time ... new things [issues] happen," he said. "It's all about an asymptotic approach to 100 percent - you're never quite going to get there."

When Amadeus went public on Spanish Stock Exchanges on 29 April, it floated 119.7 million shares at €11.00 (A$15.92) per share, giving the company an enterprise value of €7.8 billion (A$11.29 billion).

It was the "biggest European IPO since 2007, and would have been the biggest IPO in 2010", Jones said today.

In March, Amadeus reported that its travel agency air bookings had increased year-on-year by 9.4 percent worldwide, and 18.9 percent in Asia Pacific due to a growing customer base.

However, this was in comparison to the company's results in Q1 2009, which Jones acknowledged was a tough period for the travel industry. When compared to Q1 2008, Q1 2010 Asia Pacific bookings were up only two percent and worldwide bookings were down two percent.

Jones said he would leave the company to retire on 31 December, and be succeeded by current Deputy CEO Luis Maroto.

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