A Unifying Platfor

December 30, 2007

Most IT organizations are amazingly complex and have individual initiatives that are like independent countries, each with its own business applications, technologies, culture, data definitions, and orientation. Project costs soar because individual teams are isolated rather than harnessed together, and few teams reuse each other’s components – a condition exacerbated by a plethora of consultants and competitive technologies. And when a company is runnin hundreds of heterogeneous hardware and software systems, costs run rampant.

Consider the cost of such complexity at Delta Air Lines. In 1997, Delta’s fleet consisted of 600 airplanes and a rainbow of models, ranging from 727s, 737s, 757s, to 767s, from MD 80s and 90s to L1011s. (By contrast, Southwest Airlines operates only one kind of airplane.) Each plane carried different instrumentation from different eras; as a result, the company needed to train pilots and crew members to operate the different models. Keeping track of aircraft, people, parts inventory, qualified mechanics, handling equipment, and catering carts all added to the structural cost of the airline. Delta’s new CEO,Leo Mullin, and his executive team understood that if they reduced the number of plane types they operated, they could lower annual costs by hundreds of millions of dollars.

What the executives didn’t understand was that they had an even worse problem in their IT organization. The company was running more than 30 major IT platforms, with 60 million lines of code, none of which were integrated with each other. Each platform required approxi approximately 100 IT support specialists to keep the systems up and running. That arrangement cost the company about $700 million per year in capital and operating expenses. The problem within IT made the air fleet look like a model of simplicity.Running the airline was nearly impossible. Gate changes by the tower systems were not received in time by the people who needed them: the crews, caterers, reservation agents, ticket counter agents, mechanics, baggage handlers, and customers. The gate-change data were locked inside individual and often conflicting systems.

Once it understood the root cause of complexity, Delta’s executive team agreed to a long-term simplification project.Delta launched an effort to build an IT organization that spoke a common language, operated against a simple and well-understood set of principles, and created an architecture that included a common set of databases. Everyone in the IT organization focused on a consistent set of methods, technologies, and management disciplines.

From 1998 to 2003, Delta refocused its formerly decentralized IT investments of $200 million to $300 million annually on a unified IT architecture called the Delta Nervous System, which cut inefficiencies out of virtually every area of its operation. Like Frito-Lay’s system, Delta reconnected the electronic brain (IT) to the physical body (operations) by linking the customer, flight, schedule, and employee databases that keep track of everything from reservations to ticketing to check-in and baggage handling to crew operations.

The foundation of the Delta Nervous System was a comprehensive and aggressive simplification effort within the IT architecture to keep the number of moving parts to a minimum. To rebuild and simplify its IT systems, Delta took a radically different tack.Rebuilding the systems from scratch would have been extremely costly– plus the company had an airline to run. Instead, Delta built a new set of software, or middleware, that connected a common infrastructure with every application. The middleware within the Delta Nervous System sat on top of the old transaction systems and carried critical operational data from one application to the other. If a gate changed, the middleware pushed the news to the other systems that needed to know about the change (catering, crew, gate agent, baggage tracking, and so on).With this middleware in place, Delta could then go back and upgrade or replace older systems where necessary, without disrupting the IT system as a whole. (For a visual of the Delta Nervous System, see the exhibit “The Silo-Based Organization Versus the Layered Organization.”)

The middleware layer within the Delta Nervous System proved essential to leveraging technology innovation at Delta. It allowed the company to add new technology in a simpler and less risky manner over time. Most companies go through the agonizing work of rewriting their systems as technology changes. Delta, however, did the opposite. For example, Delta disconnected the manual systems that fed the operations control center (OCC) and reconnected them to the Delta Nervous System. This effectively rejuvenated the OCC without resorting to radical surgery or replacement. The OCC became a vibrant, fully functioning participant in the Delta Nervous System at a fraction of the cost.

The design of Delta’s nervous system also formed the road map and contract between IT teams, providing guidance on how data would be stored, where the data woul come from, how many copies the company would keep, as well as rules for calculating and interpreting the data. For example, all systems (operations control center, tower, gate, passenger, and crew) could now agree on the samemeaning for a “flight arrival.”

Since Delta revamped its information architecture, the company has reduced its IT costs by 30%.And despite the downturn in the airline industry, Delta has committed to a cost savings and revenue enhancement of $2 billion by the end of 2005, while increasing its service levels. Just as important, Delta has learned that discipline and simplicity in its approach to technology management lead to both speed and efficiency.

In doing the hot, sweaty work of simplifying its systems and aligning IT with the company’s overarching business goals, Delta’s senior managers also learned to trust their instincts. They learned that the same business skills that allowed them to see what was wrong with the company’s fleet of aircraft could also guide them in managing Delta’s armada of technology platforms.

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