Originally Posted by
artee
“Legacy carriers like BA saw spending on [IT] as an overhead,” says Henry Harteveldt of Atmosphere Research, a consultancy.
To be fair, that was the attitude in many companies, not only airlines, that were run by an older generation of top managers who didn't really understand the pervasive necessity of IT in the modern world. Most of those companies have learned their lesson now.
“But it should be seen as a cost of doing business.”
That's what an overhead is: a cost of doing business. The difficulty often was to get the dinosaurs in management to see IT as producing benefit, not cost only. That wasn't helped by turf wars within certain companies.
Example from a large company (not air industry), anonymised to protect the guilty: two relatively small units, because of what they did, each legitimately spent as much on IT as the whole of the rest of the company. Both fought tooth and nail against integrating their IT with the rest of the company, against counting their IT spend in the company's total IT spend and, crucially, against counting even small parts of their profits or successes as 'benefits of IT'.
"In 2015 airlines spent 2.7% of their revenues on IT, half the norm across all industries and a lower share even than hotels."
Crude percentages like that are meaningless. There's no real 'norm' across all industries – I think he must mean the average across all industries, which is meaningless too. How much does Google spend on IT? I don't know, but obviously the percentage must be high because that's most of what Google does. OTOH, as some people here may have noticed, airlines have to spend a
lot of money on certain highly complex and very, very expensive equipment (clue: it's not IT*). The fact that their spend on IT is less,
as a percentage of their total spend, than in other industries is hardly a surprise.
* Although, of course, modern aircraft contain a lot of embedded IT. Is the purchase and maintenance cost of that kit counted as 'spending on IT'? Turf wars over again?