Yet more IT problems at BA

[Final 3 Greens]

Originally Posted by BDAttitude

While the monthly expenses and/or deprecation for a certain infrastructure projects are well defined, risks associated with failures mitigated by these are not. Risk is probability of occurence multiplied by damage and neither is clear until the event finaly set in and are therfore subject to manoeuvering, whitewashing, sugercoating. What attention gets a once in a decade or a semi-centurial event by decision-makers focused on the next quarterly?

Disagree. Any properly constructed case will contain a robust risk analysis (using quantitative methods, not qualitative Prob x Imp) and response strategy. The risk of inaction can be illustrated clearly.

[BDAttitude]

Originally Posted by Final 3 Greens

Disagree. Any properly constructed case will contain a robust risk analysis (using quantitative methods, not qualitative Prob x Imp) and response strategy. The risk of inaction can be illustrated clearly.

That's the theory. Practice is what happen's to that analysis through the hierarchy until it hits the "one pager" presented to the BOM.

[old,not bold]

Classifying something as a cost creates a negative bias in the minds of those making decisions, which influences their whole perception of that function and how they treat it.

A cost is a cost; something you have to buy or pay (eg tax) in order to run a business. It is a negative figure in the P&L account. (Let's not get into depreciation, which is also a cost). Wrapping that definition in psychobabble simply allows CEOs and CFOs who have no understanding of the hard facts of life to delude themselves that their business is healthy when the hard reality is that it is loss-making and thus heading for administration.

[Final 3 Greens]

Originally Posted by BDAttitude

That's the theory. Practice is what happen's to that analysis through the hierarchy until it hits the "one pager" presented to the BOM.

It's not theory in the well run organisations I've seen at close hand, it's practise, it may not be at other companies.

[yoganmahew]

Hold on a sec, the distinction is between an overhead cost and a plain cost. An overhead cost being a cost not related to the provision of service.

https://www.investopedia.com/terms/o/overhead.asp

What is Overhead?

Overhead includes all ongoing business expenses not including or related to direct labor or direct materials used in creating a product or service. A company must pay overhead on an ongoing basis, regardless of how much or how little the company is selling. It is important for budgeting purposes, but also for determining how much a company must charge for its products or services to make a profit. For example, a service-based business with an office has overhead expenses, such as rent, utilities, and insurance that are in addition to direct costs of providing its service. Overhead is any expense that supports the making or selling of a product or service.


IT is no longer an overhead cost for airlines (and hasn't been for some long time). As we see with these outages, airlines cease to fly with certain types of IT outage.

"Disclaimer, strategist and executive education tutor in a business school here - I am surprised that you misdescribe an overhead and some other definitions.

Identifying IT as an overhead is not an attitude, it is a fact"
It is not a fact, it is a mistake. Accountancy needs to put away its quill and amble into the late 19th century.

[Hipennine]

Originally Posted by old,not bold

A cost is a cost; something you have to buy or pay (eg tax) in order to run a business. It is a negative figure in the P&L account. (Let's not get into depreciation, which is also a cost). Wrapping that definition in psychobabble simply allows CEOs and CFOs who have no understanding of the hard facts of life to delude themselves that their business is healthy when the hard reality is that it is loss-making and thus heading for administration.

So true. It never cease to amaze me how many finance types can spend hours over the minutiae of balance sheets, and making the numbers work, but have no comprehension of the commercial implications of what those numbers are telling them.

[Rated De]

The problem is endemic in the corporate space world wide.
The reason is simple.
Cost focused management driven "generic" post graduate courses.
Costs axiomatically are the easiest thing to focus on, their reduction simple.

Thus, there are literally reams of graduates sitting with excel, "minimising cost". It matters little whether the business be a public entity or private, the focus is the same.

Penny wise pound stupid.
They know the price of everything, the cost of nothing. They cut until they nick a vein and in aviation related endeavours that can be fatal.

[3rd_ear]

Originally Posted by PerPurumTonantes

https://www.theregister.co.uk/2017/06/02/british_airways_data_centre_configuration/
"...wannabe budget airline British Airways"

I've worked for a company who outsourced building maint to CBRE; all existing staff were TUPed over with some exchange of positions within CBRE. Some of the electricians were seasoned old hands who, after one ludicrous outage elsewhere called the other team the "Have A Go Heroes". Outsourcing in a nutshell.

[old,not bold]

They know the price of everything, the cost of nothing.

I was unfortunate enough, quite a long time ago, to be running an aircraft maintenance/hangar/charter facility in the UK, which was a 100%-owned subsidiary of a large construction and plant organisation which went into adminstration. The aviation subsidiary had just begun to turn an operating profit. That meant nothing; every Friday at about 3.30 someone would appear on the site from the administrators team; invariably an arrogant prat with an MBA and no idea whatsoever of how things actually work. We had a wide-range of approvals for different aircraft up to and including King Air 200. He would come into my office and without any preamble inform me that i needed to sack a number of staff, including the highest paid ie Licensed engineers. We were down to the minimum manning to maintain the licence for the approvals we had, without which we could not sign off an aircraft. I would try with enormous patience to explain to the berk that if we lost any more LAE we might as well close down the business. That would cut no ice, and I was simply incapable of understanding how things had to be. So I would then tell him to select the people who would be handed their cards that day (this is why he always came of Friday) and then tell each one, himself, face-to-face in my silent presence, that he was being fired and why. The threat of actually confronting people whose lives you were ruining because his silly little spreadsheet said they had to go was invariably enough to send him back home to Head Office, not having sacked anyone, to complain about my uncooperative attitude. But we kept the staff and head office had a good laugh. If I appear to have a contempt for MBAs and accountants that episode, along with other similar ones, is why..

[Final 3 Greens]

Originally Posted by yoganmahew

Hold on a sec, the distinction is between an overhead cost and a plain cost. An overhead cost being a cost not related to the provision of service.

https://www.investopedia.com/terms/o/overhead.asp

What is Overhead?

Overhead includes all ongoing business expenses not including or related to direct labor or direct materials used in creating a product or service. A company must pay overhead on an ongoing basis, regardless of how much or how little the company is selling. It is important for budgeting purposes, but also for determining how much a company must charge for its products or services to make a profit. For example, a service-based business with an office has overhead expenses, such as rent, utilities, and insurance that are in addition to direct costs of providing its service. Overhead is any expense that supports the making or selling of a product or service.


IT is no longer an overhead cost for airlines (and hasn't been for some long time). As we see with these outages, airlines cease to fly with certain types of IT outage.

"Disclaimer, strategist and executive education tutor in a business school here - I am surprised that you misdescribe an overhead and some other definitions.

Identifying IT as an overhead is not an attitude, it is a fact"
It is not a fact, it is a mistake. Accountancy needs to put away its quill and amble into the late 19th century.

You really do not get it, do you? IT is an overhead, it is also a critical enabler to airline operations - the two things are not mutually exclusive. Pilots are direct costs, they are also critical to airline operations.

As the OP posted, I really don't understand why there is an argument about this.

[Final 3 Greens]

Originally Posted by old,not bold

I was unfortunate enough, quite a long time ago, to be running an aircraft maintenance/hangar/charter facility in the UK, which was a 100%-owned subsidiary of a large construction and plant organisation which went into adminstration. The aviation subsidiary had just begun to turn an operating profit. That meant nothing; every Friday at about 3.30 someone would appear on the site from the administrators team; invariably an arrogant prat with an MBA and no idea whatsoever of how things actually work. We had a wide-range of approvals for different aircraft up to and including King Air 200. He would come into my office and without any preamble inform me that i needed to sack a number of staff, including the highest paid ie Licensed engineers. We were down to the minimum manning to maintain the licence for the approvals we had, without which we could not sign off an aircraft. I would try with enormous patience to explain to the berk that if we lost any more LAE we might as well close down the business. That would cut no ice, and I was simply incapable of understanding how things had to be. So I would then tell him to select the people who would be handed their cards that day (this is why he always came of Friday) and then tell each one, himself, face-to-face in my silent presence, that he was being fired and why. The threat of actually confronting people whose lives you were ruining because his silly little spreadsheet said they had to go was invariably enough to send him back home to Head Office, not having sacked anyone, to complain about my uncooperative attitude. But we kept the staff and head office had a good laugh. If I appear to have a contempt for MBAs and accountants that episode, along with other similar ones, is why..

Geez, that is arrogance on a stick.

[Blackfriar]

Originally Posted by DaveReidUK

I don't have an MBA, having resisted pressure to do one (ironically, while I was working at BA), but you don't need one to recognise that IT, for an airline, is both an overhead (in accounting terms) and critical infrastructure (in operational terms).

I'm mystified that there's any argument about this.

I do have an MBA (paid for by BA) and totally agree with you!

[Blackfriar]

Critical

Aren't Senior Management both overhead and critical?

[Final 3 Greens]

Originally Posted by Blackfriar

Aren't Senior Management both overhead and critical?

That's one way of putting it

[cee cee]

Originally Posted by Final 3 Greens

You really do not get it, do you? IT is an overhead, it is also a critical enabler to airline operations - the two things are not mutually exclusive. Pilots are direct costs, they are also critical to airline operations.

As the OP posted, I really don't understand why there is an argument about this.

As someone who does not have an MBA, but is in IT in a different industry, this is what I am seeing.

Generally, IT cost is an overhead. It does not directly proportional to the per unit cost of the product. That is fine so far in terms of accounting.

Now comes management who wants to better the bottom line. The simplest way to do that is to cut cost. And since overheads are not directly related to per unit product cost, it is contiually in the crosshairs of shaving x% off in the name of efficency.

That is not the end of the story. Because IT is a combination of infrastructure and employee knowledge, these reduction in spendings does not lead to immediate failures. Like a house that is not maintained, it may very well stay up for another decade or two before the roof falls in. Risks increases slowly but not visibly. Embolden by the seemingly good results of the previous cycle of cost cutting, senior management continues blithely on, most of them not seeing the consequences as they are long gone by the time the piper needs to be paid.

In the organisation where I work, IT has just been demoted to report to Finance instead of straight to the president. The whole team that manages email has been made redundent (and we have since had email issues that no team is willing to take responsibility for). The team I am in have been constantly losing one position every year or two while taking on more responsibility with each reorg. The last reorg made workers redundent while increasing the number of managers, contractors and consultants. Morale is through the floor and we have had around 25% absentism this year, which increases the workload on those left behind even further.

[Final 3 Greens]

Originally Posted by cee cee

As someone who does not have an MBA, but is in IT in a different industry, this is what I am seeing.

Generally, IT cost is an overhead. It does not directly proportional to the per unit cost of the product. That is fine so far in terms of accounting.

Now comes management who wants to better the bottom line. The simplest way to do that is to cut cost. And since overheads are not directly related to per unit product cost, it is contiually in the crosshairs of shaving x% off in the name of efficency.

That is not the end of the story. Because IT is a combination of infrastructure and employee knowledge, these reduction in spendings does not lead to immediate failures. Like a house that is not maintained, it may very well stay up for another decade or two before the roof falls in. Risks increases slowly but not visibly. Embolden by the seemingly good results of the previous cycle of cost cutting, senior management continues blithely on, most of them not seeing the consequences as they are long gone by the time the piper needs to be paid.

In the organisation where I work, IT has just been demoted to report to Finance instead of straight to the president. The whole team that manages email has been made redundent (and we have since had email issues that no team is willing to take responsibility for). The team I am in have been constantly losing one position every year or two while taking on more responsibility with each reorg. The last reorg made workers redundent while increasing the number of managers, contractors and consultants. Morale is through the floor and we have had around 25% absentism this year, which increases the workload on those left behind even further.

cee cee, I see this a lot. It is myopic management and fails to recognise that IT is a core business activity these days. Value should be the true aim, not cost reduction and boards who fail to recognise the critical nature of good IT are failing miserably.

[Paul Lupp]

BA site has gone partially down again.... just about to check in online and from the main BA page, online check-in (was OK to click through), it's gone to "sorry not able to do that" and now the whole site is down too.

What a way to run an airline in the 21st century......

[esscee]

That is the problem, IT at BA is NOT up to 21st century standards!

[SteppenHerring]

Originally Posted by cee cee

Because IT is a combination of infrastructure and employee knowledge,

This. The employees with the most knowledge also tend to be the most expensive. Look at the high-profile IT failures that have happened in the last few years. They all could've been averted by having expert staff with the power to take action.

That is the problem, IT at BA is NOT up to 21st century standards! That is the problem, IT at BA is NOT up to 21st century standards!

IT at BA is exactly up to 21st century standards.

[Jack D]

Originally Posted by Blackfriar

I do have an MBA (paid for by BA) and totally agree with you!

As there are so many people holding MBA,s at BA
why is it such an average experience to fly with them
( as a passenger I should add)
Does that peculiar little Irishman who runs the show have an MBA .. ? He might as they are handed out fairly freely ( but not cheaply) but didn’t he used to be a F/ O at Aer Lingus ?