Economic turbulence prompts BA to throttle back IT spending

Coby: "It is my job to introduce things at the right time"

British Airways (BA) has slashed its IT budget by nearly a third as the airline struggles to cope with high fuel prices and the slump in passengers caused by the recession.

Last month, the firm reported its biggest loss in more than two decades –­ some £401m ­ – and has set about reviewing all areas of the business where savings could be generated, with IT right in the firing line.

The 30 per cent IT spend reduction means that BA now has an annual budget of £140m to maintain its IT systems and an additional £68m to invest in new initiatives.

“It is essential that IT stays on the agenda, but at the moment all we need to look at are opportunities to become more cost-effective,” BA chief information officer Paul Coby told Computing.

“We looked at the business priorities against the challenging market conditions and decided that we should only proceed with things that support business continuity or translate into an improvement in customer service,” he said.

During the review, BA decided to postponed a number of projects, including a company-wide enterprise resource planning (ERP) rollout, which began last year.

BA already has ERP systems covering areas such as human resources. Had the project gone ahead, the integration would have been one of the biggest implementations of its kind in Europe.

“It would have been useful to move to a fully integrated platform, but you have to spend a lot of money and management effort in those projects and right now, that would be totally irresponsible,” said Coby.

“When the recession ends and people start travelling again, we will have to think about the projects that were postponed, but that is not going to happen tomorrow,” he said.

“We do not see any recovery at the moment, but we have a long-term plan and will be continually considering and factoring in any market changes.”

Coby said he is not worried about possible threats posed by the delay of some projects until the upturn comes. “It is my job to introduce things at the right time,” he said.