How JetBlue Makes Microsoft FlyBy Deborah Gage | Posted 2002-03-18 Print
When standardization offers a clear cost advantage
Jeff Cohen dogs Microsoft.
He calls, he visits, he lobbies his way into every early adopter program he can find that will help JetBlue Airways take advantage of the latest Microsoft technologies.
Cohen says he works hard at getting and keeping Microsoft's attention—much harder than he would have to work if he were CIO of a Fortune 500 company rather than a two-year-old, $320.4 million discount airline. But he thinks the benefits to JetBlue are well worth it.
"I run my company on dog food, and it works out OK," says Cohen. "I wouldn't do this without Microsoft. You can't do this stuff without them. But I'm not afraid of what's going to happen. I'll take the calculated risk of running new technology."
JetBlue's dependence on Microsoft pales in comparison to the discount airline's dependence on Airbus, which makes all of JetBlue's planes, and International Aero Engines, which makes the engines. Not only does JetBlue rely on a single aircraft manufacturer, but also on a single model and a single engine type, something the company notes as an operating risk in its recent filing with the Securities and Exchange Commission announcing its intention to go public.
Nevertheless, says JetBlue president and COO Dave Barger, complexity—whether it's in luggage carts or boarding pass readers or software—raises costs. "This airline is a low-cost, low-fare airline, and to keep things like that simple, you have to have the right relationships," Barger says.
Except for JetBlue's reservation system, which is run by an outside contractor on Hewlett-Packard's MPE operating system, all other significant company software is run on Windows. This even includes JetBlue's Oracle database, known more frequently as a Unix-based method of storing large amounts of critical information.
Cohen estimates that focusing on one operating system cuts the number of technology staff he needs to hire by 40% to 50%. At JetBlue, 27 technology workers support 3,500 employees.
And the savings are another reason the company can wage price war against rivals. Cohen claims that while other airlines spend about 5% of their revenue on information technology, JetBlue spends 1.5% of revenue.
Saving 3.5% of revenue can be the difference between profit and loss, even in healthy times in the airline industry. In 2000—before terrorists ever flew jets into skyscrapers—U.S. airlines recorded net income of $2.9 billion on operating revenue of $134.7 billion, according to the U.S. Department of Transportation. That's 2.1 percent on each dollar of revenue.
Hence Cohen's entire job is to productively manage JetBlue's Microsoft relationship—a relationship built on contacts he cultivated over five years while working independently as a consultant.
JetBlue does not get free software. Indeed, Microsoft Consulting Services representative Mark Feldman, an old contact of Cohen's who helps JetBlue navigate through Microsoft, calls the airline one of Microsoft's best customers.
Feldman keeps in touch with Microsoft program managers and product managers, watches for early adopter programs, and sets up campus tours every four or five months—in return, JetBlue spends about $350,000 a year on software.
And Cohen claims his laser-like focus on Microsoft helps JetBlue hold down costs. In return for committing itself to becoming the most technologically advanced airline running on Windows, JetBlue employees have earned free training, free consulting on projects for which the sponsoring Microsoft department has money, and direct access to Microsoft consultants and developers to help blunt the impact of being on Microsoft's cutting edge. In the last year alone, Cohen says, he sent 20 JetBlue employees to Redmond for training on beta software. He estimates annual savings "to the tune of six figures" for participating in a Microsoft Enterprise Agreement and a Select Agreement, and another $100,000 in savings for each Joint Development or Rapid Adoption or Early Adopter program in which JetBlue participates.
Microsoft consultants regularly work on projects at JetBlue, and when there are problems—like a glitch in the Windows 2000 Distributed File System that temporarily prevented pilots from using JetBlue's prized "paperless cockpit" to download flight manuals onto their laptops—a team of Microsoft developers helped fix the system, not just for JetBlue but for all other Windows 2000 customers.
"It wasn't working so we came up with an ad hoc way to make it work temporarily,'' Cohen says.
Cohen manages Microsoft by creating "pathways" into different Microsoft departments, such as the Office team and the .NET enterprise group, which tend to have different projects and different early adopter programs. Then, he turns over responsibility for those pathways to members of his team.
One factor that helps JetBlue, Cohen says, is the company's willingness to fully commit to Microsoft projects. Cohen also works at being a "tremendous reference" for Microsoft, speaking to customers all over the world, to the press, to Microsoft district sales meetings, and to the Microsoft CIO Forum, a gathering of his peers. Feldman says Cohen is so enthusiastic about Microsoft that he is sometimes mistaken for a Microsoft employee at Microsoft events, and Cohen acknowledges that his enthusiasm is not universally shared throughout JetBlue.
Even Microsoft employees, for instance, have puzzled over .NET. Feldman says he and Cohen attend the Microsoft CIO Summits together, listen to Microsoft executives spin the vision of .NET, and brainstorm about how it could apply to JetBlue. "[Microsoft says] myServices—OK, we apply that to how JetBlue could use myServices to notify customers when planes are late or when there's a special fare up on a ticket," Feldman says. "Then when the technology comes out for early adopters, we say, OK, we saw this person present on it and think, who works for that person who's in charge of early adopters?"
That can lead to revenue producing projects like ShopBlue, which JetBlue developed with a beta of VisualStudio.NET. ShopBlue doesn't sell tickets, but rather JetBlue merchandise such as T-shirts.
But every little bit helps, for a low-cost airline. "A lot of times it's just selling your commitment to do it and being in the right place at the right time," says Feldman.
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