Lufthansa Makes Its IT Fit for Future
OREANDA-NEWS. The Lufthansa Group will be realigning its IT activities and thus laying the foundations for the future. One key aspect is the set of organizational changes to what is now Lufthansa Systems AG. “Strong IT expertise with specialist know-how in the aviation sector is an essential competitive factor for the Lufthansa Group," says Simone Menne, Member of the Executive Board and CFO at Deutsche Lufthansa AG and Chairperson of the Supervisory Board of Lufthansa Systems AG. "We must also ensure continuous optimization of our portfolio while focusing all of our resources on our core business." The plan is therefore to split Lufthansa Systems into three separate companies. This will involve transitioning the Infrastructure division into a partnership with an international IT service provider as part of the Group IT outsourcing process. An invitation to tender will be announced shortly and the bids received will be evaluated accordingly. The Lufthansa Group will then contract out its infrastructure services to the new partner as part of a long-term agreement to create growth opportunities for the business and new prospects for the employees. It is planned to finalize the project by the end of 2014.
The partnership aims to secure IT expertise and experience into the long term, both for the Lufthansa Group itself and for the other business divisions in the current Lufthansa Systems AG and its approximately 450 customers. The IT infrastructure services market needs a high level of investment because it demands a steady stream of product portfolio improvements and strong, sustained growth. Economies of scale are a key competitive factor. In the future, these are to be achieved by working with a major IT services provider operating on a global scale. The Airline Solutions and Industry Solutions divisions will be retained as independent companies operating within the Lufthansa Group. The aim is to create a framework fostering the optimum development of these business divisions in their respective markets. Specifics will be determined as part of an agreement on the reconciliation of interests.
The Airline Solutions division with its wealth of airline process optimization expertise combined with highly-specialized IT solutions has the potential to play an even more important role in the Lufthansa Group than before. Further details of this new role will be specified in the coming months. As a leading-edge provider of innovative IT solutions for aviation, this move will enable Airline Solutions to continue its successful growth in the international airline market by focusing on continuous product innovation. Today, over 300 airlines worldwide rely on the know-how of IT specialists at Lufthansa Systems. Plans are to further increase the proportion of third-party business beyond the current figure of 70 percent. Airline Solutions will therefore continue marketing its portfolio as a full-service provider.
As a system integrator working in a highly-competitive market, the Industry Solutions division is a stable, successful business with good development prospects. Powerful IT solutions backed by comprehensive process and consultancy expertise have made the division a key player in the German professional services market. Its customer base features over 150 companies, from SMEs to DAX multinationals. Due to its sector specialization, Industry Solutions has developed a high level of industry-specific expertise and will invest further in strengthening its position in the market. Accordingly, Industry Solutions is well-placed to continue benefiting disproportionately from the growing market for IT consulting services in Germany. Plans are to substantially increase third-party business beyond its current share of around 60 percent.
The strategic positioning of the Airline Solutions and Industry Solutions divisions as independent companies operating within the Lufthansa Group will have the effect of creating an ideal framework for the promotion of further profitable growth. "The markets served by our divisions are fundamentally different in terms of relevant competitors, market dynamics, customer structure and customer requirements," comments Stefan Hansen, CEO of Lufthansa Systems AG. "As competition becomes increasingly fierce in such environments, each and every division needs to focus on its strengths and develop these in line with the demands of the international IT market to ensure it can continue deploying the knowledge and expertise of its personnel in the future." Due to the systematic restructuring and positive development of Lufthansa Systems over the last two years, the necessary adjustments can now be made from a position of considerable strength, states Hansen, emphasizing that "one key focus for our management team will be to ensure that our customers and their needs are kept center-stage, both during the transition and within our new organization. For us, their confidence in our expertise and ability to deliver represents a commitment that we will endeavor to renew each and every day – whatever our corporate structure.”
This decision now forms the basis for the realignment of the Lufthansa Group’s IT activities. Implementation details are being discussed with the codetermination committees as part of the reconciliation of interests.