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Product-based IT fuels Lufthansa’s digital CX transformation
The German airline is putting control in the hands of its customers and data in the hands of its employees — all part of a digital transformation pivot to product-based IT, CIO Thomas Rückert says.
Like many airlines, Lufthansa Group had its business upended by the COVID-19 pandemic. By April 2020, with travel bans proliferating, the airline suffered losses of €1 million per hour.
Thomas Rückert, senior vice president and CIO of Lufthansa Group, says those early days of the pandemic laid bare that the airline’s digital solutions were not scalable.
“The customers all had to go through flight disruptions, all had to go through service centers, which you couldn’t scale up in line with the need fast enough, so it made it very visible and tangible that self-service solutions are an absolute must improvement for the call centers,” Rückert says.
Lufthansa’s customer experience (CX) strategy has three pillars, Rückert says: physical, service, and digital. Because Lufthansa’s business is moving people from place to place, the physical side of the customer experience is still the airline’s primary pillar. The company also prides itself on providing the best “service touch” it can to its customers.
“You have the service touch that comes from employees, which is probably the thing that we still get the most positive feedback on,” he says.
The digital component of Lufthansa’s customer experience efforts has become increasingly important in supporting the first two pillars.
“How much can you control your journey through the digital space? That’s something that we lacked in the past and we don’t want to in the future,” Rückert says. “Also, how do we enable our people in the service, in the cockpit, and in the cabin or on the ground to provide a better service to the people? We strongly believe and focus a lot on how we can give better data to cabin crews so they can, for instance, welcome you.”
The pandemic accelerated a general trend in the airline industry toward digital transformation, Rückert says, as it was already clear the public wanted more control of their travel experiences through their mobile devices. “That is a trend that started much before the crisis, but it has accelerated significantly,” he says.
At the same time, airport and air traffic control staff are much reduced from pre-pandemic levels, which has put additional pressures on the travel experience that are sometimes outside an airline’s control. That, in turn, leads to more disruptions and more need to rebook travelers on flights — a volume issue for airlines, and one that many travelers want to handle by themselves, Rückert says. “Self-service is now much more important.”
Getting there has been easier said than done for Lufthansa, which was among the first airlines to build a data warehouse for its customer data, but much of that technology is now decades old.
“We had a few tough nuts to crack because our backend technology is quite complex, so finding a way to turn that into a modernized platform detached from the back end is really a difficult problem,” Rückert says. “But it’s much easier than solving the other end of the problem, which is to get the business to let go of decision power a little bit. If you don’t give that to the developers together with some business product owners, you don’t get speed.”
Rückert took the reins as CIO in January 2021, promoted internally from vice president of Base Maintenance Services at Lufthansa Technik, where he helped overhaul the subsidiary’s worldwide overhaul network. When Rückert stepped into the role following the departure of predecessor Roland Schütz, Lufthansa was already a year into a digital transformation journey, one that started with an effort to standardize its various platforms.
“The benefits of those investments are slowly coming to the surface now that the platform is becoming more harmonized,” Rückert says. “So if we make an improvement, we don’t have to do it five times anymore with seven interfaces, all different.”
But Lufthansa’s real transformation started about a year ago, as the IT function started moving away from the traditional project mindset and adopted a product focus, Rückert says.
“We’re moving from a project approach where maybe our board was still thinking the app will be finished one day, where now we’re setting up the pipeline where new features will come down to improve the ones we have,” he says.
His team has already found success in harmonizing and standardizing the web portal, the booking engine, and the app, says Rückert, noting that the team has just started a large-scale alpha test for the latest app versions.
“In the back end, we’ve made a lot of changes to enable better customer data connection with travel ID,” he says. “Those two elements together are the focus of what lies now ahead, connecting those two in a smart way, meaning making good recommendations to the customers. Offering through the profile real advantages, like data only in one place, a simplified process to check in. It looks completely different compared to what you had to do in the past. Safe services is a huge focus topic.”
One of the tools Lufthansa has turned to, with the help of partner Boston Consulting Group (BCG), is BCG’s Digital Acceleration Index (DAI), a survey of companies across 10 industries that seeks to benchmark digital transformation and identify how the most digitally mature companies have achieved success.
“We did one big exercise to evaluate ourselves about one and a half years ago,” Rückert says. “Since then, we’ve been doing smaller steps.”
This year, Rückert plans to do another exercise to determine how the company stands in terms of platform automation and the use of data and AI.
To his peers, Rückert says, “don’t underestimate how difficult business transformation is. For us, it started as an IT transformation, platform harmonization, but that’s the easy part. The difficult part is the business transformation, because if that doesn’t happen, you don’t get faster and you have a Ferrari but you can only drive 30 kilometers an hour. I spend a lot of time on that part and I still am. You just have to anticipate that.”
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