Digital Transformation
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Southwest Airlines is undergoing a digital transformation to modernize its technology capabilities and strengthen its competitive position. The transformation will be a 5-year effort focused on stabilizing existing systems, optimizing operations, and innovating new customer-centric solutions. It aims to unlock $3 billion in business value by developing new capabilities, minimizing technical debt, and leveraging the skills of Southwest employees to deliver cost-effective and sustainable technology. The transformation requires changes to roles, processes, and how work gets done to fully support the airline's strategic initiatives and long-term vision.
Digital Transformation
- 1. Digital Transformation Craig Maccubbin Chief Technology Officer
- 2. Proprietary & Confidential Page 2 Southwest Airlines History
- 3. Proprietary & Confidential Page 3 Southwest Airlines Today TODAY SOUTHWEST AIRLINES IS THE NATION’S LARGEST DOMESTIC AIRLINE IN TERMS OF DAILY DEPARTURES & CUSTOMERS CARIED
- 4. Proprietary & Confidential Page 4 Our Philosophy HAPPY EMPLOYEES = HAPPY CUSTOMERS HAPPY CUSTOMERS = HAPPY SHAREHOLDERS
- 5. Proprietary & Confidential Page 5 Southwest Success And a number of Firsts… Southwest.com Online ticket purchase Employee Profit Sharing Mobile App
- 6. Proprietary & Confidential Page 6 The Desire for Modern Capabilities Supporting the Long Term Vision of the Company
- 7. Proprietary & Confidential Page 7 Implications – Little or no resemblance to past results, configuration, or structure – New outcomes – New technologies – New processes – Change in who does what – Change in how the what gets done – Change in character? What is Transformation? -- “Profound and radical change that orients an organization in a new direction and takes it to an entirely different level of effectiveness.” Challenges – Weak sponsorship – Winning hearts and minds – Unclear communication – Lack of understanding capability/capacity – Uncertain roles and responsibilities – Maintaining momentum – Destination or journey?
- 8. Proprietary & Confidential Page 8 Southwest Airlines Technology Transformation Enable up to $3B in Southwest business value… …by developing new capabilities and strengthening existing... …while delivering excellence • Strengthen technology practices, processes and methodologies • Invest in disciplines critical to quality delivery • Minimize technical debt • Improve career development and performance management • Redefine our operating model to support our capabilities and business demand • Support strategic initiatives • Maintain systems to keep the airline running • Drive innovation in partnership with business Through leveraging of the skills and talents of our People to deliver cost effective, sustainable, innovative, and Customer-friendly solutions Our People Quality-Minded Enterprise-Focused Transparent & Actionable Disciplined Innovative
- 9. Proprietary & Confidential Page 9 Five Year Transformation Roadmap Focused on Strategic Business Initiatives and Transformation of Technology Stabilize Optimize Innovate Stabilize the Foundation Stability Task Force Enterprise Architecture Data Strategy Definition Program Management Practice Productivity Improvements Must Win / Critical Programs CR1 International / CODA Operating Platform NextGen Network Planning O&D Revenue Management Multi Fleet TRAX Maintenance Customer Experience Strategy Reservations Replacement Consolidate to One System Operating Platform Optimization Improved Irregular Operations Maximized Customer Experience Integrated Customer Solutions Mobile Customer Solutions Enterprise Data Strategy New Business Analytics Very Large Program • Scope, finance, resourcing oversight and mgmt • Managed risk during Test, Release Plan and Deployment • Alignment to Architecture Strategy • Rationalization Strategy Complex Business Transformation • Strategy, Architecture & Data Alignment • Integrated Business & Technology Operations • Disciplined Demand Mgmt • Change Leadership Tactical Revenue Generation Projects
- 10. Proprietary & Confidential Page 10 Transformation: Changing More Than Just Structure • Creation of capacity • Meeting business demand • Vendor management • Key measurements • Baselines • Future state targets • Continual assessment • Alignment of enterprise standards • Risk management • Disciplined delivery framework • Consistent • Enterprise-focused • Clear ownership & interdependencies • Functional org chart • Cross-functional teaming • Anticipated interaction patterns • Distinct hand-offs • Career opportunities • Clear roles & responsibilities • Knowledge, skills & abilities
- 11. Proprietary & Confidential Page 11 Transformation Approach Our strategy: • Build the things that make Southwest different • Buy the capabilities that are commodities Focus of in-house development: • Implementing our unique business ideas • Integrating our systems
- 12. Proprietary & Confidential Page 12 Transformation Approach Our strategy: • Build the things that make Southwest different • This is where Partners come in! • Buy the capabilities that are commodities • This is where Partners come in! Focus of in-house development: • Implementing our unique business ideas • This is where Partners come in! • Integrating our systems • This is where Partners come in!
- 13. Proprietary & Confidential Page 13 REQUIRED: Business Customer Assessment Customer Satisfaction Change Readiness • High level of understanding of the Technology Transformation Vision. • High level of Urgency and Commitment / Buy-in from all corners of the Company. • Very strong Willingness to Change. • Opportunity exists to close the Readiness gap with all constituents. • Senior Leaders believe Technology is driving Business Value, and Trust is strong among Southwest Leaders. • Overall, Technology has a strong reputation in Quality, Enterprise- Focus, Transparency, and Accountability. • Discipline and Innovation are the biggest areas for improvement. Applies to Partners too!
- 14. Proprietary & Confidential Page 14 Data Center of the Future Transformation Solution: Data Center of the Future address key operational risks Current State Future State Business Needs Limited Scalability Unlimited scale Above industry average High Severity outages Industry or below industry High Severity outages Limited geography mix & higher risk Broader geographic mix and lower risk Growing technical debt and costs Modernization and optimized operating cost Limited architecture Advanced architecture and integration Burning platform: As Southwest moves to 24x7 operations, our current Technology Infrastructure and Security support model serviced by 8x5 staff is unsustainable Our current support structure is only designed for 8x5 support…. …But our business requires 24x7 support Central Time
- 15. Proprietary & Confidential Page 15 • Infrastructure and Security L2/L3 services that operate 24x7x365 • Partner takes over services in SWA facilities and transforms to new Data Centers • Improved service levels that are consistent with industry standard • New Data Centers and Infrastructure equipment • Fully redundant DCs with separate Disaster Recovery Facility • Capacity to ramp up and down as required to meet demand • Energy efficient and environmentally friendly • Cloud-like economics and elasticity upon which to build future business • Increased stability and reliability Data Center of the Future Transformation Goals
- 16. Proprietary & Confidential Page 16 Objectives • Establish Enterprise Product Support and leverage a cost effective sourcing strategy against our scope of applications, while driving increased product stability and reliability • Design an operating model that will support growth while providing appropriate governance Benefits • Improves operational efficiency • Realigns SLAs to support Technology and Business goals • Ensures continuity of skilled resources assigned to our account • Establishes an effective cost model • Creates growth and career opportunities for our People • Aligns Application and Maintenance support to our Technology operating model • Assures consistent performance for our People & third party Partners • Increases efficiencies by bringing all product support under EPS EPS/AMS Transformation Objectives and Benefits
- 17. Proprietary & Confidential Page 17 • Incorporate industry best practices in to Support Model • Adhere to Technology Transformation processes such as SAFe, Service Management (ITIL), Project Governance • Define and implement consistent roles, responsibilities and processes (one approach for all EPS Teams) • Create shared accountability between EPS and other capabilities for providing reliable business services • Utilize performance metrics across our EPS Partners to proactively manage and drive intended results • Expand view of shoring options EPS/AMS Transformation Guiding Principles
- 18. Proprietary & Confidential Page 18 The Next 5 Years 2021 Themes Differentiating Trends • Contextual Personalization • Operationalized “Extreme” Data • Seamless Customer & Employee Experiences • “Work My Way” • Cognitive Learning “Table Stakes” Trends • “Umbrella” Ecosystem • Ready to Diversify & Acquire • Payments & Loyalty Systems • Sustainability • Always Connected (In Secure & Private Way) Underlying Influences • Sharing Economy • Lower Attention Spans • Population Shifts • Population Shifts • Wearables / Implantables • Security • Self-Service • PaaS Digital Customer Enabled Workforce Optimized Airline Enterprise Everywhere
- 19. Proprietary & Confidential Page 19 Four Strategic Themes and Guiding Principles Digital Customer Enabled Workforce Optimized Airline Enterprise Everywhere
- 20. Proprietary & Confidential Page 20 • Tier 1 companies are struggling to deliver and perform –Delivery cures a world of ills • The world is flatter than it has ever been • Big opportunity for mid-tier companies • Customer agility is key • The Pursuit Team vs. The Delivery Team • Transition excellence is table stakes • Transformation excellence is where true Partners shine A Customer’s Perspective on the World
- 21. Proprietary & Confidential Page 21 Strategic Partnership Success OUTCOMES Strategic Partnership Characteristics Delivery Trust Co Investment Top-to-top Relationships Integrity Partner on Strategic Programs Long-term engagement Business Success Must be aligned to our business values and our business outcomes
- 22. Proprietary & Confidential Page 22 Spectrum of Partnership Contract focused Make it up as we go along Where should we be?
- 23. Proprietary & Confidential Page 23 Spectrum of Partnership Partnerships – not vendorships, supplierships, or third-partyships Contract focused Make it up as we go along
- 24. Proprietary & Confidential Page 24 • The lessons we learned from the dating sites and matchmakers is that we are not looking for people just like us • We want people and a culture that is complimentary to us • You are only as successful as the people you put on the ground Cultural Fit 101
- 25. Proprietary & Confidential Page 25 • Not just looking for someone to take our mess for less • We engage partners for the innovation they can bring to our business • Process innovation • Tools innovation • Business process innovation • You need to clarify how you bring innovation in order to obtain (and retain) the long term engagement • Innovation can’t look like, “let me sell you more stuff” • Innovation should be pervasive in approach…tools...who does the work...outcomes... The Role of Innovation in Partnerships
- 26. Proprietary & Confidential Page 26 Success SUCCESS What people think it looks like SUCCESS What it often really looks like
- 27. Proprietary & Confidential Page 27 Success SUCCESS What Customers rely on Partners to deliver
- 28. Proprietary & Confidential Page 28 Questions