5 questions CIOs must ask after Southwest Airlines’ failure

The last thing any CIO wants is to experience catastrophic operational issues during a peak season, but that’s exactly what executives at Southwest Airlines faced last week. While weather may have been the root cause, the 16,000 flights canceled between Dec. 19-28 far exceeded any other airlines’ operational impacts.

Experts point to Southwest’s point-to-point operating model as problematic in recovering from major weather issues compared to the hub-and-spoke model used by many major airlines. But Southwest’s technology was also cited by experts and the company’s leadership as contributing to the calamity. “IT and infrastructure from the 1990s,” said Casey A. Murray, president of the Southwest Airlines Pilots Association, and “Southwest has always been a laggard when it comes to technology,” according to Helane Becker, an aviation analyst with Cowen.

Even before the blizzard hit, Southwest Airlines CEO Bob Jordan acknowledged on Nov. 30, “We’re behind. As we’ve grown, we’ve outrun our tools. If you’re in an airport, there’s a lot of paper, just turning an aircraft.”

Surely many more details about this failure will surface over the next several months. CIOs know that tech issues get the trigger finger of blame when businesses experience operational disasters, but we also know there are culture and process issues that can be primary and often untold contributors — both well within the CIO’s purview.

So, I’ll use this opportunity to point out what questions CIOs should be asking about their enterprises based on what we can already discern from last week’s Southwest Airlines IT disaster.  

1. Are you investing enough in digital transformation?

Southwest Airlines recently announced a quarterly dividend that will pay out to shareholders starting Jan. 31 what amounts to $428 million a year. They also received $7 billion in pandemic aid and performed $5.6 billion in stock buybacks between 2017 and 2019.

And how much are they investing in their digital transformation? In 2017, Fast Company wrote that Southwest Airlines’ digital transformation “takes off” with an $800 million technology overhaul, but only $300 million was dedicated to new technology for operations.

The investment seems minuscule given that Southwest Airlines was a $33-$38 billion market capitalization airline in 2017. Its market cap has dropped significantly since then, but considering what’s being spent on buybacks and dividends, shouldn’t they have invested more to accelerate their transformation?

And that’s my question for CIOs: Are you investing enough in digital transformation? Do you have strong relationships with the other top executives and the board to raise the bar if your enterprise lags behind competitors or if legacy systems and technical debt pose a significant operational risk?

While CIOs must recession-proof their digital transformation priorities, underinvesting and slowing down can negatively affect customers, employees, and financial results. And if that doesn’t sway the executive committee, perhaps Southwest’s near 16% drop in stock price over December and the fear of having to respond to a federal investigation will get their attention.

According to CEO Jordan, Southwest does not have a quick, automated way to contact crew members who get reassigned. “Someone needs to call them or chase them down in the airport and tell them,” he said.

I’m having a hard time believing that Southwest, let alone any major enterprise, doesn’t have technologies and automated procedures to reach employees to inform them of operational changes. And during a crisis, organizations should have procedures outlined by human resources and supported by multiple technologies to reach employees, ensure their safety, and provide protocols to support operations.

Another key question is whether call centers are staffed and have scalable technologies to support a massive influx of calls and communications that often happen during a crisis. 

While we should all sympathize with customers impacted by a crisis, organization leaders must also consider employees and their well-being. Murray reported that pilots and crew waited hours to speak to staff about reassignments, and hundreds of pilots and crew members slept in airports next to passengers.

3. How quickly can you realign operations during a crisis?

Looking beyond operations, do leaders and managers have collaboration tools, real-time reporting dashboards, and forecasting machine learning models to aid in decision-making? How often do teams schedule tabletop exercises to play out what-if scenarios? Has IT invested or piloted a digital twin to help model operational changes and support decision-making during a crisis?

Southwest, like other airlines, relies on scheduling software to route pilots, crew, planes, and other equipment. But when things go wrong at a significant scale, relying on manual operations is highly problematic. “It requires a lot more human intervention and human eyesight or brainpower and can only handle so much,” said Brian Brown, president of Transport Workers Union Local 550, representing Southwest dispatchers and meteorologists

4. Is your organization learning from past failures?

This isn’t the first time Southwest Airlines canceled flights and blamed weather issues as one of the causes. They canceled over 1,800 flights over a weekend in 2021 that Southwest’s pilots’ union attributed to management’s “poor planning.”

All too often, you see organizations recover from a crisis, fix a few low-hanging issues, and go back to business as usual. The question for CIOs is whether they can use a crisis to demonstrate a strong enough business case around more holistic improvements.  

5. Does your organization have the culture to support software development?

Developing and maintaining proprietary software and customizations entails an ongoing commitment to talent development, product management disciplines, and DevOps practices. It requires prudent decision-making on what capabilities to invest in and when platforms have reached their end-of-life and require app modernizations.

SkySolver, the software Southwest uses for crew assignment, is a customized off-the-shelf software developed decades ago that the airlines customized. The software is at the root of Southwest’s delays in restoring operations, and I suspect the company’s IT leaders will now have the support to replace it.

Of course, no one wants to wait for a disaster to drive legacy modernizations, especially around complex operational systems. Too much urgency and stress can drive teams to select suboptimal partners, make costly architectural mistakes, or underinvest in scalability, quality, or security.

So the key question for CIOs is how they use this crisis to educate boards and executive committees on the fundamentals of agile software development and cloud operations. Many executives still believe that software development is a one-time investment, that maintenance budgets are discretionary, and that just moving to the cloud will solve IT infrastructure bottlenecks.  

CIOs know never to waste a good crisis to drive mindset changes. Using today’s headlines to ask the tough questions can be a catalyst for gaining new supporters and investment in digital transformation.