Tech to enable even lower fares with Ryanair

Serverless has been touted as a game-changing technology that can deliver cost and time efficiencies to businesses in all sectors. However, companies and CTOs that focus on costs and spreadsheet calculations may have a hard time understanding its value, even though leading digital platforms have been using it for years.

Serverless empowers technology workers to bring solutions to production with less specialist knowledge, enabling them to focus more energy on understanding the business domain and their customers.

In travel, as we’ve noted in our recent article on Connecting the customer journey between airports and airlines, margins are low and competition is high. Driving efficiencies can make the difference between flying high and running to the ground.

Ryanair is the ultimate efficiency-driving travel brand, notoriously cutting the frills to keep prices low. It’s no surprise that they’ve seen the benefit of moving their technology infrastructure to the cloud, but unlike Amazon, Google and Expedia, Ryanair have been late to the game and have yet to realise the true value of the cloud, serverless technology and the positive impact they can have on teams.

Serverless abstracts developers from server complexity

Serverless is a strange buzzword. You might think it is some magic where servers don't exist. Unfortunately, that's not the case. With serverless technologies, the complexity of servers is removed from the development process so that teams can focus more of their effort on logic to add business value.

This type of technology has existed for some time, but its generalisation has expanded its use to encompass what has been previously accomplished on traditional servers. ITTT (If This Then That), Zapier, and Mac Automator have been operating for over a decade now, allowing users to react to events programmatically without worrying about server management. These tools have allowed anyone to perform certain pre-defined interactions, such as monitoring email for keywords and sending an SMS or replicating data between two storage providers. Where ITTT and Zapier focused on tying together various cloud-based services to automate workflows, serverless generalises the concept to not only coordinate cloud services, but to actually build the cloud services as well.

Higher infrastructure cost; lower people cost

Serverless is billed only for actual resources consumed. If a user uploads a photo that needs to be resized 8 times and cropped square without cutting off objects, this operation may take 200 milliseconds and 100 kb of storage. With serverless, you are only charged this exact amount of processing and storage consumption. If there is a later need to reprocess a few million images to add another size, serverless allows a thousand servers to be spun up and process the images in a few seconds, then automatically shut down again. And because developers need not spend much time worrying about infrastructure and setup, new features can be added and deployed as independent services in hours. When cloud costs rise to the millions of pounds a month, having independent services with precise billing becomes very important.

IT Operations still have a role to play in a serverless environment; in setting the guard rails of security, auditing, profiling, and monitoring. Importantly, however, their role is much more advisory to the team, rather than critical members. Reducing the need for specialists has been a constant trend in digital. At each step in its evolution, more of the complexity in building and running software has been standardised and commoditised, allowing work to be completed by more generalists.

The cloud has been a large jump in commoditisation over the last decade; previously IT departments needed specialties ranging from HVAC (heating, ventilation and air conditioning) and fire suppression to expensive storage systems, tape drives and fire safes. With the cloud, resilient servers can be setup in minutes without continuous involvement from operations. With serverless we are seeing product teams not only creating infrastructure in seconds, but also building and delivering solutions to users in hours with up to 80% reduction in operation costs.

Of course, not everyone is seeing these benefits. The hourly cost of leasing servers from Amazon or Microsoft can be three times as expensive or more as a financed server from Dell or HP. Serverless costs even more than a cloud server. And the resiliency of cloud servers does not match the level of some enterprise servers. Traditional IT operations have treated servers like pets, tending to all their needs and making sure they have long and healthy lives. In the cloud model, servers are treated more like cattle: it’s no harm if one dies as there are plenty more to replace it. Developers must understand the environment they are working in to realise savings. Designing software to run on cattle can flip the financial equations in favour of cloud and serverless, while attempting a lift-and-shift of legacy apps to cloud solutions often fail to realise gains.

The business case for the cloud on the surface doesn’t stack up. So why have innovators embraced the cloud, while laggards have been slow to adopt? And why is serverless the correct choice to drive innovation? It comes down to the people and process changes that serverless enables. Those that use technology to enable even greater collaboration and a focus on customers have reaped enormous benefits from serverless, while laggards are still struggling to rationalise investing in the cloud because their organisation is not structured for constant evolution to exploit it.

Building digital products is becoming ever more of a collaborative exercise. Finance, marketing, and user experience professionals all have a place in delivering valuable solutions. The companies that win today understand the value of interactions and cooperation throughout their organisation, including IT.

Ryanair’s IT transformation and team fragmentation

Ryanair appears to run a very efficient operation, yet it was only in May 2018 that they decided to fully embrace the cloud. A peek into their financial breakdown shows, however, that the cost of selling tickets is no lower than their competitors like easyJet.

As we’ve written about recently in Ryanair and the dogfight to own the leisure traveller, Ryanair wishes to compete in the wider travel segment against the likes of Google, Amazon, and Expedia. Expedia moved over to the cloud in 2012 and has invested heavily in serverless since 2016. Ryanair has been on a 4-year journey to revamp their IT department, and only now sees the benefit of the cloud. We believe the reason is that so far Ryanair have neglected the human capital component. If they wish to drive down costs and compete with Expedia they first need to sort their people problem. Only then can serverless shine.

Ryanair's digital revamp began in 2014 after recognising that customers would no longer tolerate slow and poor quality digital products, and the business needed to move faster to grow their wider travel and leisure offerings. Ryanair is now on what is phase 4 of their IT transformation, beginning with segmenting IT as a functional department, hiring tech workers, investing in new software, and now moving all in on the cloud. Yet each of these phases has neglected the benefits of bringing people across different teams and disciplines together. For Ryanair to succeed in the cloud and embrace serverless, they will first need to invest in bringing their people together. And unfortunately, this means re-doing much of their investment over the past 4 years.

Amazon has been seeing the gains from serverless since 2013 because of their focus on teams and collaboration. Jeff Bezos's famous Two Pizza Team rule states that a team should be no larger than what can be fed by two pizzas. By limiting teams to 6 or 7 (American pizzas are sized just beyond reasonable), Amazon attempts to bring together close bonds where information flows quickly and efficiently. The team members are also given the same single business metric to be evaluated against. Finally, the team is meant to own the product from inception to operation. Amazon's CTO Werner Vogels' motto is "You build it, you run it", as a way to bring the entire product team closer to its operations, and therefore the users it’s meant to benefit. Throwing work over a wall or letting another team handle a product problem is strictly controlled.

Businesses with a traditional IT setup struggle to run small teams. Specialists are needed to operate the servers, database administrators need to control the schema, backend developers are needed to connect services, while frontend developers provide the visible part of the software. Not much room is left in this team structure for finance, marketing or user experience without ballooning the team size. This stretches the capabilities of communications, frequently leading to walls between the different team functions. At Mobile World Congress 2018, Ryanair's CTO John Hurley said “the marketing department is the biggest challenge we have - they want perfection and we want to go quickly, learn, iterate and improve”.

Ryanair began in 2014 to create "Digital Innovation Labs", where IT workers would be segregated into new buildings with a more modern working environment to attract IT talent. This segmentation has moved their IT workers further away from collaborating effectively with other departments. Its second move was a continuation of the trend, hiring new talent into the segregated teams.

The interesting third step in Ryanair's plan was a focus on new technology investments, while not fully buying into the cloud. Ryanair went out and bought technology rated highly by Gartner for enterprise IT but did not do it with the goal of running in the cloud and using leaner operations teams, nor for creating empowered teams. In fact, Ryanair have been trying to bridge the gap to their competitors by hiring even more specialist roles in their teams to communicate between departments instead of equipping existing employees to collaborate.

Small, multi-discipline, collaborative teams

Now that Ryanair is buying fully into the cloud, what are the chances they will be able to gain advantages from serverless? Given that serverless is again 1.5-2x the cost of traditional cloud, it’s a hard case to sell.

First, Ryanair needs to bring their business functions together and align people in teams with shared goals and the right mix to bring value to customers.

Second, Ryanair needs a mix of people who excel at communication, team-building, and a drive toward satisfying customers, not people who are solely motivated by technical excellence or being at the cutting edge. With this staff and their close proximity, they can reduce their team sizes to communicate efficiently around shared business goals. Serverless will let them move quickly, bringing business value to market faster and cheaper. New ways of developing software will emerge to exploit this technology to drive even more operational cost savings.

image004 Evolving from a traditional, heavy IT team to small multi-discipline teams

The case for serverless continues to grow

Machine Learning adds weight to the opportunities for serverless technology. It can be incredibly computationally expensive but can be equally as rewarding. There are obvious benefits to a business that can crunch millions of customer reviews to categorise hotels or judge room quality by user submitted photos. Cost of course needs to be considered as well.

How good does the technology need to be to reach break-even, and when does the cost benefit swing back the other way? The goldilocks level of benefit can be delivered only by involving finance teams, user researchers, developers and fined-grained serverless billing. Teams not working in unison can easily spend millions for little gain, and worst of all, with segregated operations and delivery, they might not even know it.

Analytics and marketing departments can also see large benefits in moving to a serverless infrastructure. We are increasingly finding analytics teams that report collecting billions of data points a day. Collecting and holding data isn't free, and analysing data to turn it into information can consume a large amount of processing power and an order of magnitude more processing to turn that information into actionable knowledge. With traditional IT, the payoff of such a strategy is murky, with long investment times before reaping benefits, if ever. With serverless, finance teams can understand just how much value there is in processing each extra user interaction, photo or comment. And because of the micro-scaling of serverless and its faster development cycles, teams can experiment to confirm assumptions before engaging in additional investment.

When computing moved to shared data centres and the cloud, having in-house knowledge of HVAC systems and nitrogen/argon fire suppression systems was no longer needed. In the cloud, developers can deploy highly resilient databases on their own and frontend developers can implement database schemas. We are approaching the era when a generalist developer can handle most situations. The new frontier may be no developers at all.

If you’d like to learn how serverless technology can help your business to take off, get in touch with Miranda