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How Southwest’s CIO modernized the airline through turbulent times

Taking the helm as CIO is a major transition for any IT leader, but Lauren Woods’ experience at Southwest Airlines stands apart.

Two months before she was officially named CIO in February 2023, Southwest experienced one of the largest operational disruptions in aviation history, right in the middle of the busy holiday travel season, with outdated software systems at the center of the meltdown.

Southwest CEO Bob Jordan later attributed an imbalance in the company’s growth mindset and a lack of investment in digital transformation as central causes of the travel disruptions the airlines incurred during the December 2022 holidays. Focused on growth, the company’s leadership had deprioritized modernizing internal systems, hiring IT staff, and updating internal processes to keep pace with its growth agenda. The result was a PR firestorm with more than 15,000 cancelled flights, unprecedented refunds and reimbursements, a $220 million revenue loss during Q4, and a $140 million civil penalty when the dust settled.

Woods was thrown directly into that deep end, with little time to adjust to her new leadership position. She calls it an “accelerated learning opportunity,” noting that when you take on a new role, you typically expect around six months to learn and grow into the position.

Woods didn’t have that luxury. Instead, she found herself facing not only an accelerated learning curve, but also “accelerated visibility.” Almost immediately, all eyes were on her as she sought to right Southwest’s operations.

“That was interesting because I think some of the top leadership who knew of me and supported me into this role really hadn’t seen me,” she says. “So now they got to see me in action.”

Leading during turbulent times

Woods’ background leading transformative initiatives at Southwest, as well as her approach to leadership that she has developed throughout her tenure leading IT teams, suited her well in taking over IT as the airlines was plunged into chaos.

Leaning on those bona fides, Woods rallied and guided her teams to overhaul Southwest’s technical operations with a shared commitment to doing right by the customer. In fact, customer solutions is where Woods began her tenure at Southwest 14 years ago, having signed on to manage Southwest.com during a time when the company was transitioning from C++ to Java, and adopting agile development methodologies.

Woods spent the next decade learning the ins and outs of Southwest’s commercial side, overseeing the transition to a new reservation system, integrating new systems when the company bought AirTran, and eventually moving into more integration work across the company, before coming back to the front-end part of the business as a director.

When Kathleen Merrill, then SVP of technology and CIO, tapped Woods to work on operational systems, Woods was hesitant because the bulk of her experience was on the commercial side. But Merrill recognized that Woods understood software development and had both a strong working knowledge of the airline and deep domain expertise — all of which singled her out as a strong candidate to make the shift.

“I ended up leaning on my partners in the business and learning so much from them about how our airline worked and what it was like on the operational side,” she says. “It gave me insights into how important data, cloud technologies, and other things were that we really needed at that time.”

As Southwest embarked on its cloud transformation, Woods was promoted to vice president of technology platforms and architecture, taking on larger digital transformation and modernization responsibilities along the way. And in September 2022, Woods was announced as incoming CIO, set to take over the IT mantle from Merrill in February 2023.

Woods says the experience navigating Southwest IT through that turbulent period was a time of extreme personal growth, forcing her to dig into the executive role and identify what was needed from her, showing up for her team, and leading them to better organizational footing. While the events that led to Southwest’s most recent modernization were regrettable, Woods and her colleagues are proud of what has come of their efforts.

“We’re a better airline for it,” she says.

Woods benefitted from the fact that Southwest IT was already embarked on a modernization journey when she was named incoming CIO. The December 2022 meltdown simply pushed the company to accelerate that process, with a focus on updating outdated and irregular operations throughout the business.

One key issue Southwest faced during the 2022 holiday meltdown included mass flights cancelations due to operational systems struggling to recover from the initial weather-related disruptions, rendering the company unable to locate crew members at times to staff flights. Woods and her teams addressed this issue by building a tool called Crew and Aircraft Integrated Recovery and Optimizer (CAIRO).

According to Woods, CAIRO is “the first of its kind,” enabling Southwest to automate, prioritize, and reset the crew and aircraft networks simultaneously and flag potential flights that might need to be cancelled, while minimizing the potential impact on crew members.

Woods’ team was also supported by work they already did in response to COVID-19, which pushed them to focus on core data foundation changes. These made it easier to implement real-time data streaming, reducing the time to pull data from an hour or more, to just minutes.

Authenticity and courage

Woods also credits company leadership with helping her team successfully turn things around, noting that she had the full support of the executive team, who were open to hearing what needed to be modernized, what needed to be improved, and where the biggest investments needed to be made.

“So that’s where we’re focused — making sure we have these reliable and effective systems so we can create that competitive advantage where we want to be focused on being able to produce a really good product, because we have really great customers,” she says.

As CIO, Woods oversees a “wide breadth of work and focus,” as technology plays a role in every part of the business, from airline bookings, to staff scheduling, to the financial systems that keep the company afloat, she says.

Prior to coming to Southwest, Woods worked in consulting, an experience she feels helped make her the leader she is today. As part of that work, Woods became very familiar with navigating situations in which she was the only woman in the room — a reality she says she has never shied away from. As she has advanced her career, Woods has made a point to identify leaders she can learn from, as well as those she doesn’t want to emulate. Despite working in a male-dominated industry, Woods says she’s also been fortunate to have several women leaders who came before her at Southwest, including Kathleen Merrill, who was VP of strategy when Woods joined 14 years ago, as well as EVP and CFO Tammy Romo, Chief Administration Officer Lunda Rutherford, and SVP of Customer Experience Teresa Laraba.

“What was amazing about Southwest was that when I came in, there was a good amount of female leadership. That was a wonderful opportunity for me as a young leader to come in and say, ‘Okay, I see myself there.’”

That representation proved to be a cornerstone as Woods developed her leadership style, and seeing other women leaders in the organization helped her envision a similar path forward for herself. She found herself drawn to authentic leaders, especially women who weren’t concerned with being “perfect,” and who showed up as their true selves at work.

“A lot of times when we are coming up in our careers, we see people who seem very experienced,” she says. “You get the elder statesman, the very quaffed female leader, and I didn’t relate to any of those. I want to be very authentic. I like to lean into being very courageous, but I’m also very much not perfect.”

In developing her leadership style, Woods has identified authenticity and courage as her primary values. To Woods, authenticity is important because she feels it’s the only way she can show up as her best self; courage meanwhile enables her to handle the difficult aspects of her leadership roles effectively, whether it is having difficult conversations or being critical of processes and platforms.

“I always want to lean into that courage, but I want to do it in an authentic way that matches my values. I want to be kind and respectful, even if I have to be tough and hard. I want to find clarity in my role, and my team needs that clarity from me. And then I need to seek that clarity from my stakeholders and executive leaders,” she says.

Those values served Woods well as she navigated one of the hardest transitions a CIO can endure.

While Woods recognizes that leadership approaches can be shaped by those who came before you, when it comes to mentors, Woods advises aspirational leaders to ensure that they aren’t only looking above them for mentorship. While it’s important to learn from and make connections with leaders in the organization, you can learn just as much from peers in your organization, or people outside your department or career path, she says.

“I think there’s a lot of people who look for mentors to be your boss, or somebody who’s already in these positions,” she says. “And I’d really encourage women to look for people willing to invest in them regardless of their position, because some of the people who were most influential to my career aren’t executives.”

Digital Transformation, IT Leadership, Travel and Hospitality Industry
Generative AI gold rush drives IT spending — with payoff in question

A scramble to invest in artificial intelligence and a natural replacement cycle for computing devices purchased during the COVID pandemic will lead to an 8% increase in global IT spending this year, Gartner predicted.

Interest in AI, building since last year, will push a 10% increase in data center system spending this year, driving worldwide IT spending to $5.06 trillion, said John-David Lovelock, distinguished vice president analyst at Gartner.

“No company got out of 2023 without having a story about how much better their company was going to be, how much better their products were going to be, how much better their customers’ lives were going to be because of generative AI,” he said. “There were very robust stories about how great generative AI was going to be.”

That said, CIOs buying into the AI hype should beware that their ambitions are likely out front of their execution, Lovelock said. According to a Gartner survey conducted in late 2023, 42% of CIOs planned to deploy generative AI tools by the third quarter of this year, with 55% planning to roll out some other type of AI or machine learning in the same timeframe.

But those timelines — and investments — are “highly aspirational,” Loveland said. “There’s no way most companies are going to get anywhere near this. They are not going to have a meaningful generative AI product or service running at their company by the end of this year.”

In other words, CIOs are likely to be apportioning more budget toward speculative initiatives less likely to pan out.

What does AI give me?

Companies buying the marketing hype about the benefits of AI need to look for proofs of concept, added Mark McDonald, a distinguished vice president analyst at Gartner. The first deployments of generative AI will likely be focused on simple tasks, such as drafting responses to emails and analyzing contracts.

“It takes more than just installing software to make gen AI work,” McDonald said.

A huge problem with AI adoption is a lack of a clear and compelling investment approach, McDonald added. “Many gen AI initiatives are being driven off the board and the C-level executives with this fear of falling behind,” he said. “Everybody is still pretty much at the starting line from an enterprise perspective.”

AI promises cost savings, productivity improvements, and better customer experiences, but CIOs need to figure out how to calculate the ROI, McDonald said. “The question then becomes, ‘What am I going to get from this?’” he added. “That investment is not necessarily trivial.”

While enterprises look to adopt AI, many software vendors will be flooding the market with AI-based products in the next two years, Lovelock suggested. AI-based email and collaboration tools, content services, and CRM are already here, and AI-based security software, supply chain management, app development, and ERP are coming or have come this year, he noted. Many AI apps will become commonplace in the next year or two.

“If [vendors are] looking for a first-mover advantage, this is a one-year window in many software areas, two at the most,” he said. “If you allow your competition to have a gen AI product and you didn’t, you’re going to lose market share. Gen AI systems will be coming into every product and service.”

Still, early returns, associated price hikes, and questions around value add have some CIOs not entirely sold on generative AI features just yet.

Data centers shoulder the load

To support AI workloads, spending on data center systems will increase by 10% in 2024, Gartner predicted, compared to a 4% increase in 2023. Hyperscalers will buy about 70% of the AI servers purchased this year, Loveland predicted.

Gartner’s new IT spending forecast predicts spending growth in all five major IT categories, including software, IT services, and communications services.

In January, Gartner had predicted a 6.8% increase in IT spending this year, and it measured a 3.3% growth in 2023.

Software spending will see the largest percentage growth in 2024, with 13.9%, but IT services and communications services remain the largest two IT categories, with 2024 spending at $1.39 trillion and $1.49 trillion, respectively.

Another big change from 2023 comes in the devices category, which saw a 9.1% drop in 2023. Gartner predicts spending on smartphones, PCs, and tablets will increase by 3.6% this year, as enterprises and consumers begin to replace the huge number of devices purchased in 2021 for employees and students staying home during the COVID pandemic.

About $809 billion worth of devices were sold in 2021, while Gartner predicts $687 billion in device spending in 2024, after a couple of flat to down years.

“We’re finally getting back to a regular replacement cycle,” Loveland said. “Enterprises are coming back three years later and saying, ‘Now it’s time to start refreshing the devices again.’”

Budgeting, Generative AI
Travelex leverages cloud-based customer data platform to boost retention

Money generated from prepaid travel cards is set to quadruple between 2022 and 2032, from $120.5 billion to $492.80 billion, according to Allied Market Research. This sharp upward trajectory is due in large part to an increase in international travel as tourist numbers slowly climb up to pre-pandemic levels.

Acknowledging the potential this trend offers for a foreign exchange company like Travelex, Hans van der Waal, the company’s global IT director, is constantly looking for more strategic ways to unlock the power of data to service their travel card customers. According to him, it’s fairly common for customers to load money onto Travelex’s Cash Passport money card, head off on a trip, and then come home only to forget about the money left on it. If left unused for long enough, this remaining balance is often depleted by annual maintenance fees. “This situation isn’t good for us or our customers,” says van der Waal. “It’s bad news for us because we aspire to have repeat customers, and it’s bad news for our customers because they just waste money servicing an inactive or idle card.”

Keen to address this issue, he wanted to come up with ways to alert customers about using their loaded funds and also encourage them to reload their cards before their next trip. But the data around card use and balances is part owned by Travelex, and part owned by third parties, he explains. As such, he and his team had to negotiate with these third parties to ensure they could access the data in a specific and secure format, either in real time or near real time. To do so, they developed a cloud-based customer data platform (CDP) that allows them to bring in and analyze third-party data and combine it with their own data so they can flag unused balances.

These insights allow Travelex to proactively approach customers, and hopefully influence their behavior, by encouraging them to cash out their remaining balance or, even better, use their existing balances for future travel. The ultimate goal is to send the right reminders to the right customers at the right time, he says.

Step by step

Once Travelex had a clear idea of the type of data platform they wanted to create, they adopted an iterative strategy to bring the idea to life. “This isn’t groundbreaking, but I think it’s very important to start small, try things out, stop things that don’t work well, and don’t hesitate to start over again if needed,” he says. In doing so, they could build something, test it out, and then go through various cycles of changes and improvements so the final product was production ready when it was launched.

In addition to partnering with third parties to access the required data, van der Waal also had to work closely with Travelex’s marketing and product teams — as well as data privacy and security execs— to come up with different theories on why someone might not spend the money on their cards, and then create the most appropriate messaging. They also spoke to customers in airports to find out more about their preferences and use, and not just lean on internal expertise and resources to guarantee project success.

The decision to host the platform in the cloud, in particular on AWS, was a question of efficiency, he says. Rather that having to build something themselves from the ground up, they could leverage the native cloud solutions available through AWS and then tailor them to meet their specific requirements.

But to make the most of cloud, the right skills are needed. While the business does have internal talent, they also enlist the help of third parties like SourceFuse and Mesh AI to ensure they leverage the cloud in a way that’s most effective, given the specific project requirements.

“These third parties either complement Travelex’s internal tech team, or they’re brought in to do things for us we can’t do ourselves,” he says. “This is one of the primary benefits of partnerships like this because we can access the advanced skills and knowledge needed to support our future business needs.”

To measure the impact of their efforts, Travelex established a small control group to whom they initially didn’t send the card balance related alerts, even though they fit the profile of the type of customers they’re trying to target. “From the data, we see these messages have made a tremendous impact,” he says. “So much so that we’re now extending the project to other territories.”

CIO, Data Management, Data Quality, ICT Partners, IT Leadership, Travel and Hospitality Industry, Vendor Management
Cloud native platforms: To build or to buy?

When it comes to cloud native application platforms, we’re at an important evolutionary point: will the best practice for platforms be to build or to buy? Should you choose the components you need for a platform and integrate them together, or should you buy a pre-integrated platform? Unless you’re a handful of organizations, the practical answer is that you should buy the platform.

Before I get to why, what even is a “cloud native platform”?

Defining a cloud native platform

The Platforms Working Group at the Cloud Native Computing Foundation (CNCF) has a great paper defining “platform.” Trying their best to boil down 13 pages into one paragraph, the authors summarize a platform as:

Platforms curate and present foundational capabilities, frameworks, and experiences to facilitate and accelerate the work of internal customers such as application developers, data scientists, and information workers… A platform for cloud-native computing is an integrated collection of capabilities defined and presented according to the needs of the platform’s users. It is a cross-cutting layer that ensures a consistent experience for acquiring and integrating typical capabilities and services for a broad set of applications and use cases. A good platform provides consistent user experiences for using and managing its capabilities and services, such as Web portals, project templates, and self-service APIs.

Platforms support the software you’ve built to run your business. A platform not only runs that software, but it manages the services your apps need. Typically, the platform also specifies how your apps are packaged, configured, and deployed to your platform. The platform usually has opinions about your app’s architecture. For example, a cloud native platform really wants your apps to follow the 12-factor best practices and use a microservices architecture.

Avoid accidental platforms

Platforms are the interface between your application developers and the cloud infrastructure and services their apps use. To me, that’s the key thing that makes it a platform instead of just a pile of clouds or catalogs full of “services” that developers have to find, learn, and integrate into their applications.

All apps need a platform to run. Developers will create that platform if one doesn’t exist. This leads to the spread of “accidental platforms” across the organization. All of these platforms need to be managed and cared for, and since they’re all different, staff spend a lot of time managing each platform. In a large organization with thousands of developers and applications, teams don’t get the benefits of scale when they have a bunch of different platforms. This creates a huge amount of drag on IT: an IT manager, for example, and his staff could end up spending between 70% and 80% of their time on maintenance just keeping all the platforms running, with little time left over to improve those platforms or add new functionality developers need.

The main issue here is that it drags down the actual business because an organization’s apps are increasingly how the business functions, and even what the business is to customers. Think about how people interact with businesses, government agencies, schools, and even their hobbies and entertainment. Most of that is done through an app, through software as the primary, if not mission critical, component and “storefront.” And it’s not only that, software is how businesses get better, grow, and innovate.

Is Kubernetes a platform?

Over the past few years, there’s been a lot of confusion about where the line between a platform and infrastructure is, mostly driven by everyone’s interest in Kubernetes. Kubernetes is more focused on standardizing how infrastructure is used and managed, and how apps are configured and run.

That standardization is the goal of Kubernetes: wrapping an industry-standard API around all the different cloud infrastructures. It’s removing variability, which is always good in large IT shops. But, as said long ago, Kubernetes is a platform for building platforms. You use it to standardize your infrastructure across clouds, across on-premises, and even “edge,” so that you can then build your application-focused platform. On its own, Kubernetes just delivers a blinking cursor: an empty cloud that’s ready to be filled with useful services and apps.

But if you stop there, things go poorly. Many organizations are much too quick to hand over that blinking cursor to developer teams who have to first understand how Kubernetes works, and then, second, build the platform they need on top of Kubernetes. The result is a backslide into a mess of accidental platforms.

So, is Kubernetes a platform? Not the kind we’re talking about here, a platform for application developers. It’s the foundation for a platform. You still need to add the services, interfaces, and tools that application developers use. There are also all the usual operations, security, and compliance services you need.

Pitfalls to building a platform

This is all to say that if you’re building a platform, you have a lot of work to do. You need to select each of the components, integrate them together, keep them updated, and improve them as you learn what works and doesn’t. In short, you now “own” a full product, including supporting it. And you need to run it and manage it. Ongoing, as new capabilities come along you’ll need to add those into your platform, for example, AI, new versions of programming languages and UI frameworks, databases, and so forth.

This is a lot of work. There used to be a quip that “all companies are software companies now.” which always seemed weird to me. No matter how good at software my favorite fried chicken restaurant is, if I order some Korean fried chicken, I want to find some fried chicken and fried cauliflower in the box, not software. But, once you start building your own platform, then you are a software company with the responsibility to build and maintain a software product. That requires a lot of corporate resources like time, money, and attention.

Whether your business is fast food, insurance, manufacturing cars, collecting taxes, or whatever else, you’d probably rather spend time being good at your business than good at platform building.

Benefits of buying a platform

For most organizations, a platform contributes very little to a business’ differentiation. You need a platform, but like electricity, email, ERP systems, and even analytics, the platform itself isn’t what makes a difference. What makes a difference is what you do with the platform and how you use the platform. The more time you spend building and maintaining your own, homegrown platform, the less time you spend focused on your actual differentiation, including your applications.

So, unless your customers buy from you because of your unique platform, you should probably buy your platform instead of building it.

This frees up your resources to focus on your actual competitive advantages. You’ll also benefit from the platform being an actual product. For example, at the Tanzu Division of Broadcom, we build a platform, and we spend all of our time adding new features, improving it, and integrating it with as many types of infrastructure and services as possible.

The feature-set isn’t static like so many homemade platforms in large organizations end up being. You can see this with the AI services we’re adding to the Tanzu Platform – that’s become a priority for many organizations, so we’ve been adding it to our platform. The comprehensive integration with the Spring Framework is another example. If you have enterprise applications, you likely have many Java applications, and if you have Java applications, you’re very likely using a lot of Spring. If you use the Tanzu Platform, you can update your Spring apps quickly and easily, benefiting not only from new features in Spring and Java but also getting the performance and cost savings improvements.

What that means is that you have more time to focus on what actually matters: your own software and applications. That’s enough work, and hard enough, without having to worry about how you configure and deploy software, manage security, handle data, and otherwise do all that stuff below your apps.

To the question of whether it’s ultimately better to build or buy: buying a platform means you can focus all of your effort and resources on making your business better by perfecting how you make your software.

If you’re interested in how a platform fits into improving how your organization builds and runs software, check out this discussion I had on that topic with Purnima Padmanabhan and James Watters.

We of course talk about the VMware Tanzu platform, but you’ll also hear how large organizations are thinking through this build/buy decision.

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