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Technology Equals Productivity

By Tom Steinert-Threlkeld  |  Posted 2005-04-10 Print this article Print

Southwest Airlines is the only U.S. carrier to be profitable every year since 1972. Baseline spoke to CEO Gary Kelly about how he uses technology to help keep the airline turning planes around quickly and maintaining its primary advantage: low costs.

Q. Is it a matter of a long-standing relationship?

A. It's also strategic. If we're going to continue to press for productivity improvements, technology plays a critical role in that. You need to have a CIO who is a businessperson and has a say in business process change. And I definitely wanted the rest of our team to know that our CIO was going to be one of most senior executives.

Q. How involved do you get in the decision on what system to buy or put in place?

A. I don't know that I'm going to get involved in a lot of technological decisions, per se. Tom is our subject-matter expert. Certainly, I keep abreast of our major technological efforts and when we're going to get them, and how much they're going to cost.

Q. How do you look for technology to fulfill business objectives?

A. Well, it really spans every area of the company. The challenge that we have for every employee and every work group is to be the best in the airline industry. Have the best time performance, have the best customer service satisfaction rankings, have the lowest cost, consistently offer the best fares, have the best information to make decisions. So we're looking for all those things from technology. And, of course, it has to be delivered in a cost-effective way.

Technology is one of those areas where you can spend yourself wildly out of control. Fortunately, we've actually flatlined our technology spending. The cash spend for '03, '04 and now '05 is hovering around about $170 million [per year] or less. That's total capital and people costs. And the number of people in our technology department also is not growing.

Q. What's changed?

A. A decade ago, we were woefully under-resourced and had more construction projects than could be effectively managed. So now we try to be much more disciplined about it. This is how much we're going to spend, this is our multiyear work plan, we're going to give you what we promise, on time.

It's not perfect, though. For example, ATA Airlines declared bankruptcy in October and put its Midway [Airport] operation up for sale. We wanted to continue to grow in Chicago, which we have been undertaking for 20 years. So what did that translate into? A need to code-share with ATA, the first time we had ever done that, and there was no technology in place to do the code-share. But from a dead start at about Thanksgiving, that technology was in place on Jan. 16 for the first day of sale. That was something we couldn't have done in the past.

Q. You're trying to apply the Southwest way of running an airline to the way you develop code. How so?

A. Rather than have one flavor of every different airplane type, we have one. The 737. We're trying to do the same thing in technology. We have a way of constructing the software that all our developers use. We have a single data architecture. We have a standard testing approaches, where we will rarely allow shortcuts. It's not quite as crisp as the airplane approach, because we have three decades of other stuff that we're still supporting, but we've certainly become a lot more disciplined in our choice of technologies .

Q. How do you get what you want out of technology?

A. I try to shepherd the process, but not dictate to our officers what choices to make. I just demand that their decisions are well thought-out, and that there is a business case for the true choices.

  • Story Guide:
    Introduction: Southwest Airlines: Flying Low How to make the dollars count.
  • First, eliminate waiting; make ticketing convenient for passengers
  • Next, work closely with the CIO; apply the same tough analysis to IT as operations
  • Keep managers focused; do weekly analyses; know what you need to know, when you need to know it.

    Next page: Keep Managers Focused

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    Tom was editor-in-chief of Interactive Week, from 1995 to 2000, leading a team that created the Internet industry's first newspaper and won numerous awards for the publication. He also has been an award-winning technology journalist for the Dallas Morning News and Fort Worth Star-Telegram. He is a graduate of the Harvard Business School and the University of Missouri School of Journalism.
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