Flying high

By Divina Paredes | Monday, September 10 2007

Julia Raue of Air New Zealand has a radically different portfolio from most CIOs — she is also in charge of innovation and ventures.

On a recent early afternoon, Julia Raue stood amidst the throng at the Auckland International Airport. To the casual observer, the chief information officer of Air New Zealand was just part of the daily crowds passing through.

Raue was observing the passengers who at one time or another most likely have connected to the systems developed and supported by the airline’s information and
communications technology team.

For the past two years, the ICT team at Air New Zealand has been working with other business units to develop and launch successful projects around the online booking space.

These internally developed systems and processes have provided what she calls “market differential” for Air New Zealand — locally and offshore. One of these, the ‘grabaseat’, sparked an online frenzy when seats were offered for as low as $1 each to various New Zealand destinations.

Raue says these projects were achieved by the ICT team working closely with online sales staff. “I think what we definitely recognised is that the power of virtual teams across different areas of the business is extremely successful. You put a clever bunch of IT people together who know what the technical boundaries are and what they can push and are excited about pushing nodes, and you get a team of clever sales people who know that they can do something differently. You put them in a room and [they] brainstorm. It is amazing what comes out in the end.”

Indeed, Raue’s experience at Air New Zealand is a testament to how a large enterprise can be a prime setting for CIOs involved in innovation. At Air New Zealand, the ‘I’ in the title of CIO stands for both information and innovation. Raue oversees 200 ICT staff across the country, with innovation and ventures as one of her four portfolios along with production, solutions and architecture.

She has been working in ICT for almost 20 years, eight of them with Air New Zealand. Prior to her appointment as CIO in May 2007, Raue was general manager, group IT
production in Air New Zealand.

Raue says the set-up of innovation and ventures as a formal team is a recent development at Air New Zealand that began in May last year as a direct report to the CIO. Previously it had been under the solutions manager role, which Raue had held, and was more in the research and development space.

Members of the innovation and ventures portfolio work “very closely” with various areas of the business. Raue says for the past 18 months this was particularly true with her team and online sales, as they worked on the booking engine they codenamed Isis. The development of the booking engine is one of the highlights of the teamwork. It provided the platform for other initiatives that are now operational like the grabaseat offering of low fares, online daily.

“No one has been able to replicate that type of experience for the customer,” she says. “The proposition to the customer is to come back to our site every day and have a look at what we have got on specials and different travel venues.”

The other project her team worked on was called “How far can I go?”, which allowed users to plan their travels using a slide scale based on their budget. “It changes the whole travel proposition to the customer,” says Raue, as Air New Zealand is the first to provide this service. “You can slide [the online tool] down to what your budget is.”

Think differently
Raue’s favourite quote is from the physicist and Nobel Prize winner Lord Ernest Rutherford: “We don’t have money so we have to think.”

She used the quote at the start of a presentation to her team last year. And for Raue, the quote goes even further, “We couldn’t afford it so we had to think differently.”

She took this insight on board when Air New Zealand decided to use internal resources when building a new online booking engine some two years ago.

The catalyst for this decision was the ICT team’s experience five years previously, while working on its then booking engine with an outside vendor. “We were just significantly challenged not necessarily with the vendor,” she says, “but because Air New Zealand is so small you lose your ability to leverage. So when we wanted functionality, if other airlines did not want it, it was just not important. So we had to fall into a very regimented development lifecycle that just didn’t suit our requirements. It was hugely frustrating.”

When the group started working on the prototype of the new booking engine, they again looked at a number of offshore vendors. “We decided sending our guys up to the States and to the UK to share our IP to vendors and paying for that privilege just didn’t sit right,” says Raue. “We have been in this industry for long enough. We don’t need to sell our ideas, we need to protect them. It was more for us because we did want to be different. Developers found it hard to understand why. Instead of trying to work with us on what we were trying to achieve, they were telling us why we shouldn’t do it and why they couldn’t do it because it just didn’t fit in with their standard business model.”

She has no regrets at all in taking this route. “There is amazing local talent in New Zealand, I just don’t think we tap them enough.”

For one, she says, the project had a tight timeframe and they were able to meet the deadline of 12 weeks. The offshore vendor that would have been its closest aligned partner in terms of being able to deliver what they needed had failed to meet the deadline for another customer, also an airline. “So we know if we would have gone that way we wouldn’t have been successful.”

The internally-developed systems have been paying dividends for the airline. Raue says in June Air New Zealand reached more than $1 billion in online sales for the first time within a financial year, a month before target — clocking an average of 100,000 visits per day. Customers are also able to access a range of options like code sharing with other airlines and multi-city bookings. Contrast this to four years ago, when she says the airline earned around $150 million in online sales using a third-party booking engine for domestic flights and limited international flights. The average daily visits then were 15,000.

So for those taking a similar step, Raue has some basic advice: “Really understand your business. Where is the IP? Where do you want it? The other advantage for us in terms of developing our own booking engine is it was our IP.” For Raue, innovation is an intrinsic part of ICT leadership. “It needs to have a role no matter how big or small your team is,” she says. “Innovation is extremely important.”

This she can quote through having worked in ICT teams ranging from the Auckland City Council to Presbyterian Support Services. She singles out her experience at the latter, a not for profit group. “You really needed to be innovative because you just didn’t have the money to spend. You really needed to look at different ways of providing high-quality IT service and be innovative in terms of how you got that service or how you used your limited funds.”

She points out at Air New Zealand the link between IT and innovation has become stronger in the past year, and it is not just driven by financial performance or operational spend. “For us, innovation is important to ensure that we have market differential,” she says. “New Zealand is such a small country so we really do need to ensure we are competitive and that we are different. We can’t afford to be like everyone else... that drives a requirement for a high level of innovation.”

Air New Zealand, she says, encourages innovation across all business. It has a programme called “Test Flight” where employees from all departments can pitch ideas to the executive team using an online entry form. “It is designed similar to a ‘dragon den’ [referring to the television show Dragons’ Den, where entrepreneurs present ideas to financiers] type of approach. So if you have got an idea you would like to pitch that you think will make the company successful in a different area, then you come and pitch it to the executive team.”
The executive team meets about every quarter, or when there are enough ideas on board. There is a huge presentation in the auditorium where people are encouraged to come along, she says.

Continuous improvement
Successful projects, of course, have challenges, though Raue prefers the word opportunities when she deals with different issues. For instance, during the first anniversary of grabaseat, the team was aware the significant hits on the website had impacted on customer performance. “It is an opportunity that provides us with added risk,” she says. “We must ensure the system is stable, has a good performance and that the customer experience is what they expect and is reasonable and high performing.

“We worked really hard at trying to interpret what the customer hits will be and we do have a continuous improvement model, so as a result of what we saw we’ll continue to review our performance and improvement.”
Raue’s office at the Air New Zealand headquarters has an open floor plan. Scattered across the offices are large monitors perpetually screening what seems to be a computer game in progress.

In fact, the screens are running the ‘InfoSphere’ application, which tracks and reports each sale made on the home-grown booking engine and the lights and arrows indicate key statistics across the different local and offshore destinations. Raue says the monitors are also displayed in key business areas so “staff can see the success of the engine in real-time”.

When asked about staff recruitment and retention, one of the key management issues facing ICT departments today, Raue says, “We don’t have a high attrition rate in IT, [but] we certainly have turnover.”

She says an advantage in Air New Zealand is the opportunity for staff to work across different areas. “We are quite diverse in the number of teams and systems we support. It really is like working for 10 to 15 different organisations. People tend less to leave and more to move into a different role,” she says. She also points out there is a sub-team department in IT where staff have been with the airline for 30 years or more. Having that staff with historic knowledge of the company is invaluable. “Often they have worked in other areas of the business,” says Raue. “If they understand the business and how it operates and its processes and then we bring them into IT, it really does help us understand what the business is trying to achieve and how we can influence that.”

Career flight path
While holding one of the biggest CIO jobs in New Zealand today, Raue, interestingly, got into ICT quite by accident. She started with a course in a secretarial college as a stop gap before going to the University of Auckland for a degree in English and law intermediate.

Raue decided to take a year off from university and worked at the Auckland City Council. “I got to know their systems quite well,” she says, and applied to be a member of the user-support team when a staffer went on maternity leave. She never went back to university as more challenging roles beckoned.

Her next step was the Presbyterian Support Services, which runs aged-care facilities. As she puts it, she just “wanted a change” at that time and took on a month-long contract to work with the sole person in charge of IT. She stayed for five years and was IT manager when she left. “They had network issues and in the four weeks I was there I made a number of improvements. Through the savings I justified the role for myself.”
Raue was planning to go on OE to the UK after her partner finished some certification courses. So she applied for a three-month contract job at Vodafone. She never went, as the Vodafone job became a three-year stint. Later, however, she was able to work overseas, when she joined Ansett, then owned by Air New Zealand, for a year in Melbourne.

Raue has been Air New Zealand CIO for the past four months, and describes it as a Monday to Friday role. But she is pragmatic enough to acknowledge this will only be in terms of time at the office. “We have planes flying across the world. You need to be available in case there are issues with systems, people or processes,” she says.

The key is having a “fantastic management team” under her. “We have the right level of escalation and engagement. The CIO naturally gets called in for some direction someone might need or some experience that I might have or been through.”

Raue was appointed CIO after Air New Zealand launched a global search to replace Alastair Grigg, who joined Xero as chief operating officer.

Air New Zealand is one of the few companies that have a CEO, Rob Fyfe, who was a former chief information officer. Raue, however reports to the chief financial officer, Rob McDonald, and finds no issue in this. “Air New Zealand management is not hierarchical anyway. If I need to speak to the CEO I know I could book some time with him.”

At the same time, having a CEO with a strong ICT leadership background has its nuances and advantages. “He looks at the world differently probably to other CEOs,” says Raue. “He understands technology and how to leverage it. He knows what is achievable.”

Beyond ICT
Raue’s interests outside ICT revolves around her children — her son, aged nine; and her daughter, aged four. “Obviously they keep me pretty busy,” says Raue. “When you have got children I think you look at life differently.”
Thus, when Raue and her team were thinking of involving the staff in volunteer work, they chose the children’s Starship Hospital as one of the beneficiaries. That was two years ago, and the programme, now known as “Giving IT Back” allows the ICT staff to help various charities.

Raue says when she first rang the charities, she asked whether they needed help like IT expertise. She was amazed when none of the organisations requested IT-related help.

So some of the work Raue and her staff have been involved in has included painting the fences of an SPCA office, providing security for historic houses that were opened for tours and building the floor for a Habitat for Humanity house. “It creates a different team dynamic,” she says. “It is about getting people to work together, it is a bonding thing.” CIO New Zealand Magazine

Sidebar
Into the dragons’ den
Air New Zealand has shown innovation takes deliberate planning, leadership, accountability and a lot of teamwork. Thomas Koulopoulos, founder of the innovation consultancy Delphi Group, lists five ways to generate new ideas in your organisation:
• Develop clear directions. Staff need to know how to submit ideas and who they should be submitted to.
• Create a transparent means of ranking the ideas. Those who submit suggestions should see what other ideas are being submitted., and cCritiques should be based on sophisticated checklists to objectively evaluate merit.
• Explain to people why their ideas were not accepted. Why exactly did the idea not work? How might the person or team approach the problem next time for better results? It’s especially important at this point to nurture motivation and to prevent discouragement.
• Make sure all members feel they are important to the innovation process. Innovation is not the capability of a select few. Everyone — whether in a flashy or hardworking way — can contribute to the innovative process. Appreciate and openly praise those who contribute behind the scenes as well as those who typically get the attention.
• Tie financial rewards to the acceptance and implementation of ideas. Koulopoulos says one of his clients, a large healthcare organisation, awards profit-sharing to a successful idea’s owner and business unit.
Diann Daniel