Qantas checks in with cloud computing

Qantas IT’s newfound enthusiasm for cloud computing has big implications for its sourcing model and relationships with existing technology partners.

The airline currently outsources 85 percent of its IT needs to a select group of partners, IBM and Fujitsu being its largest, with offshore applications support services otherwise in place with Satyam and Tata Consulting Services (TCS).

A Qantas spokesperson told iTnews in March that as part of the airline’s major cost base transformation, suppliers are now subject to an ongoing review process and a new engagement model with the airline.

But that doesn’t mean traditional outsourcing partners will be shown the door.

“Qantas IT is 85 percent outsourced and we haven't changed that ratio,” Hennekens said. “We are looking at the way we manage our outsourcers in the context of how we innovate faster, add value faster and get more bank for buck.”

Qantas IT will use the knowledge it gleaned via the proof of concept trials to dictate to partners not just what they must deliver but how.

“The journey we have been on has been as much for them as us,” Taylor told iTnews.

“We took a conscious decision to educate ourselves, to build our own internal skills and understanding of the values, deficiencies and capabilities of cloud-based platforms. We’re now fluent in these cloud platforms.

“But that is not because we want to run it, but because we want to specify how it should be run. That’s really important. We have brought partners along and they have been part of process. We haven’t kept it back from them.”

In practice this means suppliers will be asked to use the same cloud platforms, the same source control systems and automated testing systems as Qantas’ IT team.

“We’re asking [technology partners] to be efficient, to embrace automation and reuse,” Taylor said.

“We are providing them the ecosystem and standards to do so. We have acquired the skills whereby can say, this is how you will do it. This is the tooling, these are the standards for consuming this cloud-based service. Off you go.”

Driving contractual value

The pressure is now on Qantas’ outsourced IT providers to prove they can use the tools to the same effect as the airline’s internal IT team.

Hennekens conceded that for some applications, old contractual terms might inhibit cloud deployment in the short-term. But those contracts will eventually expire.

“Some contracts provide a lot of flexibility, others do with added cost, others don’t,” he said. “For some systems, the cost of [moving to the cloud] is contractual, and some business cases will not fly on that basis. Others will.”

He said he looked forward to the day that such long-term deals are a thing of the past.

“One of flaws in traditional IT models is that in order to get market prices, you had to commit to volumes for a long time. That’s not helpful for innovation or agility.

“For anything we have contracted recently, we’ve focused on flexibility - our ability to adapt to what our business needs at that point of time - rather that that what we agreed on five years ago,” Hennekens said.

“Another big advantage of the cloud is that such problems go away. You don’t have to sign up for something for five years, which doesn’t make sense now that things are moving so fast."

Allie Coyne and Andrew Colley contributed to this story.