Customer focus enables low-cost airline to become high flier

Jan Marcshall, CIO and vice-president of technology for Southwest Airlines Co., reveals how the Texas-based airline company turned around its fortunes by cutting IT cost and making technology simpler to use for both customers and employees.

Charlie Feld: Southwest Airlines Co. has evolved into a big airline, but has used technology to keep the model simple for the customer and employees. Can you describe your approach?

Jan Marshall: We started in the 1970s as a three-city commuter airline. We’ve grown to the size of many of the biggest carriers, but we’ve stayed domestic and true to our model of a point-to-point versus a hub airline. We’ve continued to offer low fares, and the low fare model brings the IT cost structure into play.

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Not only do we have to keep technology simple for our customers, we have to keep it simple for our employees because we look for highly-efficient transactions. But there’s a tremendous amount of complexity at the back end.

The way people buy tickets is very high-tech. Our website is visited by millions of people a month. We have built very sophisticated architectures to connect our customers to highly complex back-end systems that makes their interface intuitive and simple to navigate. We’re also doing international code shares with other airlines, so we have to talk in their terms about our customers and their itineraries. We have to handle both things-the simple view to the customer and employee and communicating in a more traditional way to other airlines, through technology.

We’ve tackled that through a service-oriented architecture that helps us integrate our front-end applications, such as refunds and exchanges, with our business transaction engines (such as our reservation system) using Web services and a set of common business rules. To our customers, though, it looks pretty straightforward.

We weren’t necessarily early adopters of exciting new technology, but when we did deliver new

technology, we did it in a way that was very simple to use and easy to understand. We were among the first adopters of digital technology with pilots for communicating messages from air to ground. With gate readers, we were the first to adopt barcode scanning on boarding passes instead of magnetic stripes on the back of the card stock.

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CF: How is Southwest able to invest in IT and remain a low-cost carrier?

JM: It’s hard to be an airline right now, between the recession and people wanting to stay home and companies wanting to manage their travel dollars. And the price of oil is going up or fluctuating dramatically.

But we have a philosophy of managing in good times like they’re bad, so we can manage in the bad times-and we’re taking the opportunity to invest strategically in technology. We embarked on a plan around three years ago, which we’ve extended, to rebuild some of the foundational components of our revenue stream, such as our ticketing, revenue accounting and airport ticket counter and gate systems as well as looking to technology that helps to build additional revenue streams. We want to build additional services, capabilities and products that we can offer to customers and not have the economy slow that down-we want to be using those investment dollars to help fight the downturn and its impact on Southwest. Taking on the economy is a real cultural mantra for us; we are preparing for the future.

We recently rolled out our mobile device site for PDAs and iPhones. We are also putting major investment into our website: We launched our Travel Guide earlier this year, bringing our customers together to talk about the destinations that we fly to. They talk about their experience on Southwest and review opportunities in those places that we fly to, like sporting events, restaurants or shows.

We’re also improving our commerce engine. You’ll see big changes in how you shop for and book a flight. It should be a smoother process. And we’ve added functions to our kiosks in our airports, so you can now, for example, change your itinerary at the kiosk, change your flight. You couldn’t do that before.

CF: How did the economy influence the way you manage IT?

JM: When I first got here in 2003, the technology organization was almost a nice to have thing. Our deliver pipeline was broken. We couldn’t consistently deliver a project on time or within budget. Our business partners weren’t counting on it and we weren’t counting on it in the marketplace. Now that’s very much flipped. Our business partners are counting on us to deliver when we say we’re going to deliver, what we’ve committed to deliver and for what we said it was going to cost us. From tightening up our development lifecycle to improved release management to automated testing, we’ve had to improve our processes to ensure that we can make every dollar that we spend matter.

Another thing we’ve done is partnered with technology companies and we’re delivering some of our products together. This has changed over the past couple of years; we weren’t as heavily vested in our partnerships as we are today.

We’ve tried to keep the organization-I have 900 employees and about 300 professional services contractors-informed about what our priorities as a company are and what’s going on in the other areas of our business. We’ve also had to work together with our business partners to manage our priorities and the amount of work that we get.

We all feel tremendous pressure to deliver. The organization can see why the work that they’re doing is so important to the success of the company. I think that’s the good part: They understand their value. But they have to manage that pressure and stress.

They’re doing well with it. We’ve gone from an organization that maybe could deliver two big programs a year to one that is delivering three to five big programs in a year and working on them in parallel. We’ve really stepped up our ability to deliver new development and also to ensure we have tight change management so we’re not sacrificing the quality and reliability of the systems that our customers are counting on.