Qantas moves ERP out of IBM and into MacTel

Qantas has moved its core Oracle-based ERP platform out of IBM's Sydney data centre in favour of a new software-as-a-service model hosted by Macquarie Telecom, as part of its push to cut $2 billion out of its costs in three years.

IBM - Qantas’ key data centre partner since 2004 - had hosted the airline’s Oracle E-Business Suite R11 platform out of its Sydney data centre, with Tata Consultancy Services providing application support, until May this year.

The airline has spent the last 12 months renegotiating its supplier contracts in an effort to save $150 million in three years as part of its broader cost reduction program.

Qantas outsources 80 percent of its IT to external suppliers including IBM for IT infrastructure, Amadeus for passenger management software, Fujitsu for end-user computing, and Tata Consulting Services and Mahindra Satyam for application management.

As part of its cost reduction program, Qantas identified a need to revamp its approach to the Oracle ERP, which over time had developed into an expensive multi-vendor environment.

The platform was also reaching its deadline for “extended support” - meaning from November 2014 Oracle would only provide a “sustained” level of support for the platform, removing some of the maintenance and legislative update provisions it had previously provided.

As such, Qantas tasked TCS with taking over control of the system and updating it to a more modern version - a process which included 1800 customisations.

The ERP system was moved into a new data centre as a result of TCS's preferred partnership arrangement with Macquarie Telecom, under a software-as-a-service model.

Qantas’ head of technology services Kash Paracha said in a statement the project had achieved three important goals, including “greater business agility and a superior user experience” thanks to the more modern functionality.

“Secondly, we have ensured smooth and stable business operations by virtue of a simplified infrastructure platform,” he said.

“Thirdly, we have consolidated all IT services under one supplier to ensure vastly improved quality of service and usage based billing. TCS has delivered this ERP transformation on budget, on-time and without business disruption.”

Qantas outlined defined business outcomes within its service level agreements to ensure the project met its goals, alongside governance processes such as weekly risk and issue workshops and periodic reviews.

A Qantas spokesperson declined to comment on the savings generated from the move to the MacTel facility as well as the length of the arrangement, but confirmed TCS would continue to manage the platform and have end-to-end accountability for the service.

Qantas said its ongoing arrangement with IBM for data centre services would not be affected by the shift to the MacTel facility for ERP.

IBM has two remaining contracts with Qantas: a seven-year, $200 million contract for project delivery, signed in 2009; and its data centre deal - which also includes mainframe and mid-range computing, and which will expire in 2017.