Why Jetstar turned IT giants away from its infrastructure refresh

Cut-price airline Jetstar has revealed it turned big IT providers like IBM and Fujitsu away from its infrastructure outsourcing market refresh in favour of vendors that would be the right fit for the business’ “DNA”.

Speaking at the Future IT Infrastructure forum in Melbourne this week, Jetstar’s operations boss Alex Adams stopped short of naming the contract winner, but reflected on what he learned getting to this point.

The airline called in the support of sourcing strategists ISG to help it secure a new infrastructure partner, after its incumbent supplier made it clear it would not throw its hat back in the ring at the end of its existing contract.

ISG advised Adams and his team to go after a vendor that matched Jetstar’s position in the market, not just one that had the biggest marketing budget.

“Jetstar may be a $4 billion enterprise, it may have 7500 workers, but we are not a tier one business,” Adams said.

“Qantas is bigger than us. Banks are bigger than us. So immediately went forward with an idea that the tier one IT vendors would not be the right fit for our DNA.”

This meant IBM and its peers on the top of the IT food chain were not amongst the six infrastructure providers invited to bid for the deal.

“No disrespect to IBM - we think they deliver a great service to the right clients - but we didn’t think they were the right fit for us,” Adams said.

Jetstar, a newcomer compared to Australia's national carrier and Jetstar owner Qantas, is unencumbered by legacy IT or unpredictable demand cycles, which Adams said goes a long way towards keeping his costs down.

He said getting vendor analysts on board in the market refresh stage delivered another budgetary head start for the notoriously lean IT operation.

“It kept the vendors honest and it kept the vendors engaged,” he said.

“We wanted to ensure they didn’t just think we were kicking tyres. ISG assured all the vendors that this was a real opportunity for them so they committed their best resources to try and win our business.”