CIO Leadership Live Australia with David Hogarth, Chief Information Officer, Virgin Australia

00:00 Cathy O'Sullivan: Hello and welcome to CIO Leadership Live Australia. I'm Cathy O'Sullivan, Editor-in-Chief APAC for CIO. My guest today is David Hogarth, Chief Information Officer at Virgin Australia. Virgin Australia took the win for Team of the Year - Customer Value at this year's CIO50 Awards. It's great to have David on the show today. Welcome, David, how are you doing today?

David Hogarth: Good. Thank you. Thank you for having me.

Cathy O'Sullivan: Great to see you again. And of course, the last time we caught up was that the CIO50 Awards after that big win. And you very much talked about the impact of the pandemic on the on Virgin Australia overall, as a business and more specifically on the technology team. Can you tell us a bit more about that time and its impact on you, your team, and the business.

David Hogarth: COVID was a difficult period for aviation industry, Virgin Australia, our employees, our customer. We obviously went through a voluntary administration, which has been pretty public in the media. We were lucky to be bought by Bain Capital. They've been great owners since they purchased the company. We emerged out of voluntary administration into a pretty challenging operating environment when COVID waves sort of fluctuating demand. So the business had to be very nimble through that period. And while all that was happening from an operating environment, I guess we will be launching the airline with a new business model, we'll be getting transformation to reach the full potential of that business model. So lots what's happening in a pretty challenging time for the business. For the technology team. That meant through voluntary administration, we needed to keep the systems running through COVID. And through that administration period, we then had to transform our cost base. And then coming out the other side, we then had to ramp up capability and capacity to enable the business transformation. So that the initial complication for us was leading into administration, we didn't have the money to spend on technology that we needed to so we had to really overhaul the technology and our skills just underpin that business transformation over the last few years. So, quite a lot of happening in IT as well as the business over the last few years.

Cathy O'Sullivan: Absolutely, certainly a challenging time for a lot of businesses, but none more so than anyone in the travel industry. So can you highlight some of those technology and cyber risk reduction initiatives that were undertaken by the IT team? How did those initiatives contribute to improving overall productivity and reducing operating costs?

David Hogarth: The positive thing about Bain Capital buying us is they've invested a lot in the business. They've invested a lot in technology and people in our fleet, which has been fantastic. And part of the part of that key investment was in technology. And we found ourselves in a position to transform the business. An airline is one of those sorts of businesses that rely on technology to do a lot of the transformation. And for us, we weren't in great shape. So we still had tapes in the in the data center and I haven't seen that in a business in a very long time. And so the team has done a great job over the last few years refreshing our technology stack, focusing on simplicity and supportability. To refresh the data centre network, we built a cloud environment, replaced all of our end-user computing, put in a new integration and streaming platform, put in new data platform… so lots being done in a short amount of time. And then replacing the legacy equipment with the latest generation equipment. We've seen a sustainable reduction in our costs, which means we've been able to reinvest in new platforms to support the business, which has been been a good story.

From an employee's perspective, having much faster network and modern end user computing really has helped them from a productivity perspective. Systems respond much faster than they used to. And we've seen a dramatic reduction year-on-year in terms of incident volumes. So now the responsiveness, the stability is dramatically improved. And we built in a lot of monitoring in our technology environment to so we can reduce the the time to fix incidents. So we know about incidents before people call, we're able to get to the root cause very quickly. And then from a cyber perspective, we had a lot of key controls already. But modernizing the technologies mean we can embed a lot more controls as we've modernised. So they're probably some of the initiatives in the last few years.

Cathy O'Sullivan: That's so much work done in such short space of time. Considering all those challenges, what did you learn during that time? How did you keep morale up when there was such a such a huge amount of uncertainty and huge amount of work to do as well?

David Hogarth: I think that it's been a very challenging time for the team. So you're going into administration in that uncertainty, because that was a challenge from a morale and retention perspective. But all the investment and support to us in coming out of administration means that we've been able to give pretty interesting and rewarding work to people. So a lot of a lot of people like the complexity and the challenge of the new projects. I think that's been instrumental and keeping people engaged. But as we said, the amount of work we've done in a short amount of time is challenging from a workload perspective, and I guess that's not for everybody. But we've got some very excellent leaders in IT. And we do a lot to acknowledge and celebrate our achievements and make sure we regularly thank the people in the technology department, because they're sort of the backbone of all the work we've been doing.

Cathy O'Sullivan: Absolutely, definitely a test for resilience for anyone in your team, but also for you as a leader. What did you learn about yourself as a leader during that time?

David Hogarth: Oh, I think I learned a lot actually. I'm generally a pretty calm sort of a person and that that trait has helped me a lot through, you know, all of the changes that have happened over the last few years, I think that that calmness has helped me lead the team through some complex situations without getting consumed by them to make good decisions. Also, the resilience side of things, you know, through this period, your resilience gets tested. And as a leader, people look to you to be be calm and confident in what we're doing. So I'm pretty proud of myself and how we've come through that. But then looking at the team, you know, we've built a pretty diverse team. And we've achieved a lot in the last two years. So I'm quite proud of that as well.

Cathy O'Sullivan: So of course, one of those achievements was your team taking out the win for customer value at the at the CIO50 Awards. For the benefit of our audience, can you give us an overview of the initiatives you and the team implemented to improve customer value in the last couple of years?

David Hogarth: We've done quite a lot in the customer side of things. The three key things that we put in for the award included the Middle Seat Lottery, which was a campaign for those people sitting in the middle seat, they could win some prizes. We also rolled out a new baggage system with notifications to customers. So we're the first in Australia to roll it out. We also rolled out a product called Rapid Rebook, which in the event of a disruption and allows the customer to sort of self service and find a new flight and book accommodation if they if they need to. So those were the three things we put in. We've been doing quite a lot in the customer space through digital channels in the last 12 months as well.

Cathy O 'Sullivan: Absolutely. And I love that middle seat lottery because it is the one that you're always trying to avoid [on a flight]. That's quite a novel idea to transform that perception of the middle seat. How did that initiative come about? And what have been the outcomes?

David Hogarth: So we were doing some research into customers. And as we're relaunching the airline, trying to understand really what our customers wanted and how they experienced the airline. So that customer value proposition work. And we're also working through to relaunch the brand, you would have seen our wonderful brand campaign launch earlier in the year. And through those through both of those, we had a cross a cross functional team. We were sort of ideating on how do you make the middle seat more of an experience, because we're an experience brand. And we want people to have a great experience when they fly with us. So working through what are our ideas around making the middle seat, a better experience, and that's sort of how it came up. And we quickly turned it into a campaign and embedded it in the app. And it went viral on Tiktok. And we got mentioned on a few of the tonight shows in the US. So a very, very successful campaign for us.

Cathy O'Sullivan: Fabulous, great outcome. So you mentioned there as well earlier, that baggage reconciliation system and again, you know baggage is definitely key to any customer experience when it comes to flying. How has that new system contributed to improving customer experience?

David Hogarth: Well, firstly, we deployed a new baggage system and new scanning technologies to all of our airports which I guess if you've if you've deployed any sort of technology in an operational environment has changed, management's really important. And that sort of rollout went really well. And we got really great customer employee engagement scores through that rollout, which meant that the ramp team was able to reduce loss baggage metrics to industry leading levels, which was great. And they're able to find bags in minutes when there was taking much longer time in the past. So it's been a really great project from an operational deployment. And those really great metrics and allow us to share with the customers where the bag is in its journey. And we've had some really excellent customer feedback about the baggage notifications. I guess at the end of the flight, when you when you it can be stressful when you try to find your bag, or you're waiting at the carousel. So that's keeping the customer up to date, when we received the bag when it goes on the plane, which carousel just takes a little bit of stress out of it and gives a much smoother travel experience. So we've had some great feedback from customers.

Cathy O'Sullivan: Great to hear. So you know, clearly you work quite closely then with the wider business when delivering these technology-led customer value initiatives. Can you give us a bit more insight into how you work with other parts of the business to bring these these benefits to life for customers?

David Hogarth: There's really two parts of that for me. We made a really strategic decision early on in transformation, we moved the technology function into the customer function. And so the technology team is very close to now just by proximity to the customer strategy team or product team or customer contact centre team. So that enables us to work very closely together. And you can see lots of airlines now adopting that sort of model just to help customer experience putting the you know all the pieces to be successful with the customer together in one function. But then it depends on the initiative itself. It's a very tech heavy initiative. So the tech team will essentially run the project from defining the problem to selecting the tech and putting it in and working with the business to do the change management of process. So we will do the whole thing if it's a very tech heavy project. If it's more digital marketing related, then we'll provide some of the solution work and some of the software development, let's say it's mobile app development, we'll do those things. So it depends a little bit on the on the initiative. But I think putting the tech team with the customer function has really enabled us to do a lot more in a faster timeframe.

Cathy O'Sullivan: Absolutely. And I guess it feeds into them understanding more about the business? And likewise, the rest of the business understanding more about what's needed from technology to get these enhanced initiatives underway and finished?

David Hogarth: That's right. And I think we in our town halls and a lot of our comms with the tech team, we like to provide more local context of what's going on in the business and, and I find the tech teams generally quite interested in our customers and what happens in the business. So that works quite well.

Cathy O'Sullivan: So then finally, David, you've had quite a busy few years through all those challenges the enhanced initiatives that have delivered such great customer value. What's important to you in the months ahead?

David Hogarth: We're still got a very strong pipeline, we've probably got two or three years of IT projects to do. We've got a lot a lot coming in the next six months. And I think yeah, we're just not done getting better yet. So I think that's our job is to keep getting better. And yeah, I think there's a there's a promising road ahead in terms of features and functions coming from a customer perspective.

Cathy O'Sullivan: Well, it certainly is an interesting space to work in and we wish you all the best with those initiatives ahead. David Hogarth, Chief Information Officer at Virgin Australia, thank you so much for your time today.

David Hogarth: Thanks, Cathy. Thanks for having me on.