Managing it - There has been a sea change at P and O. A £30 million, five-year investment programme in an armoury of computer technology has reaped huge efficiency gains.
Exotic cocktails and elegant restaurants may not sound like your experience of Channel ferries but this is the image P and O European Ferries (P and OEF) is trying to create in its battle against the Channel Tunnel. Taking a ferry is not just about crossing the water, the company says, it is the beginning of your holiday.
Behind the image of Edwardian style, however, is an armoury of computer technology that controls everything from reservations and the issuing of tickets to duty-free supplies and fraudulent credit cards. Without such systems it would be impossible for P and OEF to operate, says Nigel Powis, the company's computer services director.
The volume of passengers on the cross-Channel routes alone is more than at Heathrow or Gatwick - a typical day for the Dover to Calais service transports 11,000 cars, 1,200 lorries and 63,000 people. Just feeding that many people is a huge task. They consume an annual 1.4 million sandwiches, 3 million eggs and 2.5 million sausages.
'Handling such volumes is only possible through fast, effective computer systems,' Powis says.
P and OEF is not the only big IT spender in travel and tourism. Indeed, the sector accounts for around a third of the UK's annual £12.4 billion IT spend. But P and OEF is unusual in the diversity of its technology and applications. State-of-the-art techniques such as image processing that links cameras to computers, cellular communications and the transmission of electronic trading data are being exploited to create the comfort and luxury of former ocean cruising.
It is a far cry from the situation in the late 1980s, when P and OEF's systems were manual and very labour intensive, says Powis. 'There was massive room for improvement in speeding up the process of getting people on and off the ships without trauma.' Hence the company's investment of some £30 million in hardware and software during the past five years.
Huge efficiency gains have resulted. The annual IT budget including staff has shrunk from £6.5 million in 1989 to £4 million in 1994. Staffing levels have plunged from 100 to around 60. Meanwhile, productivity has doubled in terms of service levels, new systems and technical modifications.
The biggest and most expensive project was the £5 million reservation system, dubbed Dolphin, developed three years ago. It enables some 8,000 terminals in travel agents and tour operators throughout Europe to dial directly into P and OEF's computers. Bookings take just three seconds from the moment the agent presses the last key, compared with nine seconds previously. The system's flexibility also allows P and OEF to offer hundreds of packages targeted at specific customers and markets, whereas before it was limited to a few products.
Dolphin's links to all the other P and OEF systems have radically improved accounting practices. As soon as reservations are made the sales ledger is automatically updated and tickets are issued. When the customer checks in, the loop is closed by the port-handling systems. Receiving ports are also linked so that during transit the exact status of customers' transactions is known.
According to Powis, many companies, particularly airlines and other ferry operators, have shied away from the redevelopment of reservation systems because of the huge investment they have tied up in their old systems. 'The trouble is that the old systems gradually start to strangle the company by making it impossible to innovate and change.' Dolphin was a major development, and not taken on lightly, he says. But the system has hugely improved P and OEF's ability to handle increased volumes and will make it much easier to add new features or change direction in future.
Powis's proudest achievement, however, has been the implementation of an automatic check-in system based on issuing passengers with a combined ticket and boarding pass. The magnetic encoded tickets are inserted into electronic readers by passengers when they arrive at the port, instantly updating the administrative systems. This technology has more than halved the average 45 minutes it used to take checking 2,000 passengers on to a ferry - an impressive achievement, says Powis, given that airlines, take more than two hours to load 400 people on to a jumbo jet. Although the airlines conceived the idea of the combined ticket and boarding pass, so far not one of them has fully implemented such a system. 'The ticketing system has revolutionised our business. It gives us more efficient and effective loading of freight and tourist traffic on our vessels so that we can better utilise our deck space and take last-minute reservations.' The fact that there is no longer any need to book - you can just arrive at the port and drive on - is another key weapon in fighting off the Chunnel.
IT is also being used to prevent vehicles driving on to the wrong ferries at Calais. An individual label is printed and attached to each vehicle as it checks in. As vehicles drive on to ferries the labels are scanned by cameras mounted on an overhead gantry - incorrect vehicles trigger a red light and the ring of a bell.
To conceive and develop such projects, Powis, who sits on the board, has five managers reporting to him in separate business areas. He puts his propositions to the managing directors of the company's three divisions - Felixstowe, Dover and Portsmouth. Once a proposal is agreed between himself and the appropriate MD it is then put to the rest of the board for formal approval - few ideas are rejected by the time they reach this level. 'All our directors have a good understanding of the importance of IT in giving the business competitive advantage.' Powis is a firm believer in small teams. His staff work very closely with end users, who often initiate ideas - as in the case of the video loading system, which was dreamed up by the operational department. The biggest problem Powis faces is getting users to tell him what they need. Developing the technology, he says, is relatively easy these days.
The tightly focused, team approach helped beat the airlines to automatic check-in. 'We are very ambitious and set ourselves extremely tight schedules, whereas the airlines' projects go off the rails, over budget and tremendously over time.' Four-to five-year development cycles are no use in the travel industry, he says. By the time you have got there the world has moved on. Few systems at P and OEF take longer than 18 months to develop, otherwise the application they are trying to address may have become redundant.
One problem with no easy answer, however, is how to avoid equipment becoming obsolete when technology moves in a new direction. The old reservation system, for example, relied on several very large ICL mainframes and sizeable Wang processors. This created tremendous cost overheads in the IT department because many teams were needed to support different types of hardware, software and operating systems.
So Powis decided to switch to a single range of equipment that would give the benefits of downsizing from mainframes to superminis, distributed power for ports and office functions, and which would require fewer staff to maintain it. The system he chose came from Digital Equipment (DEC). 'In 1989, DEC was the only supplier that could offer a growth path from desktop to mainframe using one operating system and one regime. Even today, you would be hard pressed to improve on it.' Apart from DEC's product range, part of the attraction was the company's grasp of P and OEF's business and its willingness to work alongside its customer to develop applications. 'Computer systems these days are nothing but boxes, so from suppliers we are looking for total flexibility in their product ranges, first-class service, continued product development and good account support.'
Partnership is crucial, he says. 'In the '80s we used to keep suppliers at arm's length. It was them and us. Now they have to understand our business requirements, particularly in an environment that needs 24-hour, non-stop coverage, seven days a week.' Too many suppliers don't understand their customer needs before they start proposing business solutions, reckons Powis. 'Also, once a sale has been made they cut and run, whereas they should be supporting and developing that relationship because further spend will materialise.' The change is beginning to happen, he says. But it is slow. 'We don't need these fly-by-night salesmen that trip from company to company on big bonuses. They don't do anybody any favours.' Even after suppliers have been selected, Powis continues to monitor and assess their performance. Those that fall behind on service are axed because the company does not want to lose its ISO 9000 registration.
Powis sees himself as having to walk a very fine line between delivering systems to meet business needs and making sure that they will not become outdated. His solution is to design open-ended systems that are flexible and modular. For example, if P and OEF's competitors decide to introduce a new fares structure, it has to be able to respond. The modular architecture means that in the worst case all it has to do to make changes is discard a software component and build another. This takes no more than eight to 12 weeks.
The computers at P and OEF are also so-called open systems - they conform to design standards so that they can speak to computers from other suppliers. The aim is that as more technically sophisticated systems become available it should be relatively easy to migrate existing software. 'That will let us take advantage of more power, improved performance and greater cost efficiency, which is the prime motivator.' In addition to consulting users, Powis gets lots of his ideas by looking laterally at what other sectors are doing with IT. 'Why reinvent the wheel?' For example, when it came to replacing electronic point-of-sale systems on the ships two years ago, he scoured the high streets and supermarket chains to see what was available. Each ferry has around 30 sales points in duty-free shops, restaurants, bars, and gift boutiques. On the short Dover-Calais crossings, the 2,000 passengers need to be handled in less than an hour.
Powis could find no retail system up to the task. 'We needed accurate, fast, efficient equipment that would be highly reliable because of having to work at sea.' So he decided to collaborate with Olivetti and Quintek, a Wokingham-based software house, to develop tailor-made systems. On-board computers compile all the data collected from sales points then transmit it to the Dover data centre using the cellular mobile-phone network. 'Passengers can go on board, buy something with their credit card in the duty-free shop, and if they're really unlucky we'll have processed the purchase by the time they set foot on the other side.' In a recent development, the on-board systems are being plugged directly in to the company's network when the ship docks via a quayside socket. Stock replenishment lists are then squirted down the line along with crew management and personnel data, information on fraudulent credit cards, electronic mail and messages for staff.
The diversity of systems at P and OEF helps retain IT staff. Another attraction is the ability to see the result of one's efforts on the ships and in the docks, says Powis, who began his career as a computer operator in 1970 at Anglo American, the mining and investment group. After working at Townsend Thoresen, Powis joined European Ferries in 1981 and became group director for computer services in 1989 after the company had been taken over by P and O.
Having spent the past five years proving what he can do, he is not worried that there might be a boardroom decision to subcontract the entire IT function, as some other large-scale users are beginning to do. 'It's your life in their hands - no thanks.' He once tried subcontracting network maintenance and the result was a barrage of requests from users to reinstate the old in-house maintenance team. 'The users wanted our own staff back because they're part of the company and they know the pressures under which we operate. Third parties don't know and in some cases they don't care.' Outsourcing, as it is known, might work for canteens or phone systems, but these are fixed products, Powis says. They don't change every day. 'In IT, when opportunities present themselves we need to be able to capitalise on them - outsourcing companies can't do that unless they're working here.' It is a false economy, he reckons. Third parties say they can provide more cost-effective systems but at the end of the day they're trying to buy the business. 'It costs you more in the long run.' He also rejects the fashion for subcontracting emergency back-up services. 'Disaster recovery is a rip-off,' he says. P and OEF shares all its data-processing load between two sites several miles apart in Dover. In the event of a failure at one location, the other site can step in without losing any data and continue processing the entire load.
P and OEF believes that the rewards of going it alone in IT outweigh the risks. As for the Tunnel - the company admits that most people will want to try it once, and that the through trains to Brussels and Paris may be attractive to business travellers. For the rest of us, it is pinning its hopes on the irresistible combination of a glamorous, relaxing ambience supported by some of the world's most advanced computer technology.