On Saturday morning, a power surge knocked British Airways’ data centre offline.
This led to the collapse of key business process technology underpinning the airlines operations. Its immediate concern is returning stranded passengers and damage mitigation. Next, will come criticism and the need for a sacrificial lamb.
Publicly, the leading contender is British Airways’ corporate greed and vicariously its Indian outsourced IT partner, Tata Consultancy Services.
With the unions leading the charge, such a narrative is to be expected. But to reduce the risk of future incidents, an autopsy will need to be done and lessons will need to be learned.
British Airways has outsourced its IT in part to reduce costs and benefits do follow such as access to wider expertise. Facing continued competition from low cost carriers and with a prestige service to maintain, to maintain the latter the company had to make savings.
New business strategies have also emerged, but the easiest way to reduce overheads is to cut in-house staff. However, too often companies which go to outsource any function think that this is the end of it.
The National Audit Office frequently criticises UK public sector procurement for replacing ongoing outsourced contract management with inexperienced staff.
Further down the line, this often leads to issues.
Make no mistake; a provider rigorously watches its side of the deal. The buyer needs to pay similar ongoing attention.
Outsourcing can lead to savings and additional expertise. But third party provision does not mean jettisoning your own responsibility.
With an intelligent core in-house service, British Airways could have responded faster and helped Tata Consultancy Services deliver a better service.
Instead, over a bank holiday weekend, the slim retained IT service didn’t have the local nous to kick start the system without its offshore partners.
For any company with or thinking about outsourced services, in any function – the lesson to be learnt is that does not mean can pass the buck.
Instead, outsourcing only works in concert between both parties. If done right, contracts evolve from simple supply and demand relationship to holistic vehicles for technology-led transformation.
This means going beyond cutting back-office costs and seeing off competition with agile and revolutionary services to customers.
Whether its millennials or silver surfers, passengers demand responsive online services; but a traditional IT outsource isn’t going to deliver this.
True partnerships between prestige buyers like British Airways, and contracted suppliers can become agile enough to see of stiff competition from new entrants.