No, not another post about green IT
Mention green to most CFO’s and they’ll assume you’re talking about the color of money. Which is exactly the language of a Wall Street Journal article (subscription required I fear) on Sir Richard Branson’s new Virgin America discount airline.
IT is 15 people and $5 million
That isn’t lean, it’s cadaverous. The secret?
. . . the new closely held discount airline used inexpensive servers that run the Linux operating system and built many homegrown applications, including its Web site, using low-cost, modifiable “open source” software. It also outsourced big chunks of its information technology — including software monitoring and the voice technology in its phones — to more than 10 tech partners.
This is how IT changes
I’ve never seen IT willingly take down a working application in favor of something “better”. They know that once a system is working the best thing you can do is never touch it again.
New applications – and companies – are change vehicles. Branson’s Virgin group of companies has over 60,000 employees, so he has a lot of opportunities to use lean IT as a competitive weapon, and he loves to upset the status quo.
The WSJ continues:
. . . there is reason to think the lean-tech approach will catch on at airlines and other heavy users of IT resources. Many established airlines spend an average 2.5% to 3% of their annual revenue, which can total in the tens of millions of dollars, on IT and have IT staffs of 600 to 1,200 people, International Business Machines Corp. estimates.
Virgin America, founded by British billionaire Sir Richard Branson, has just 15 in-house IT staffers and an annual IT budget of less than $5 million a year, Mr. Maguire says. . . .
Mr. Maguire estimates that the 540-person airline has saved about $5.4 million on IT costs since January 2006 by using open-source software and other inexpensive technology, instead of off-the-shelf products from big tech vendors.
The inexorable, invisible “hand” of capitalism
Now that the major airlines have renegotiated all their labor agreements under cover of bankruptcy and load factors are high, it is time to look at other ways to cut costs. Fuel prices aren’t dropping any time soon, so other major cost centers are next.
Such change is “creative destruction” when it happens to someone else. And a big wrenching mess when it happens to you.
The StorageMojo take
I’d expect Southwest Air to be the first airline to respond to Virgin America’s lean IT challenge. But SWA won’t be the last. The move to web-based services – and SWA has led the industry in online ticket sales – doesn’t eliminate traditional infrastructures, but it means the growth is in clusters rather than mainframes.
More importantly, these stories percolate through corporate America. Most people will just hope they go away, but there will always be those who listen and adapt.
Did the “open source” vendors need an expensive sales force to sell Virgin America? I don’t think they have any. Instead, the customer came to them. The “open source” brand is taking hold, and the IT industry will never be the same.
Comments welcome, of course. What has your company’s experience with open source been?