TECH MONTH Jorg Koletzki Group CIO AerCap
21 Feb 2021
Gareth Fleming, Director of Brightwater’s IT division is in conversation with Jorg Koletzki, Group CIO of AerCap.
As part of Brightwater Tech month, we’re talking to various IT leaders across diff orgs to find out how they’ve coped with 2020, the pandemic, their view on what might happen in their field in 2021 and also to find out a bit about themselves and their organisations.
Today I’m delighted to be joined by Mr Jorg Koletzki, Group CIO of the world’s largest aircraft lessor AerCap and has been with the group since 2015. Previous to this, Jorg held very senior roles in some of the world’s most innovative companies, Volkswagen, IBM and the EON group one of largest operators of energy networks globally.
Jorg, I know it’s a real busy time for you. Thank you very much for being here today, you are very welcome.
JK: Thank you for having me on your conversation / show. It’s a great pleasure. I’m convinced we need to reach out to the community out there and this is a great platform to do so.
Let’s start with a quick introduction to yourself and your organisation
JK: I’m Jorg Koletski, I’m 53 years old and I’ve been Group CIO since 2015 with Aercap Group. I previously worked for mostly multinational companies in international settings. I worked for Volkswagen in the UK where I was CIO there, E-On in the UK and E-ON in Germany where I became Managing Director of their Shared Service Centre and held the responsibility for their global application portfolio. Now it is one thing to work in a big IT department with lots of people (2,000 – 3000 people sometimes in those departments) but it is a very different thing to come to an organisation that is very high valued in its assets like an aircraft leasing company I work for at the moment but very low in headcount. It is a very different skill required and I really enjoy that change from managing the politics around very large organisations to getting your sleeves rolled up again and getting into the detail of developing a really good IT strategy that determines the way forward for this organisation.
What kind of challenges did moving to a lower head-count environment present?
Were there big challenges moving from a shared service environment where there was a headcount of approximately 1600 moving to Aercap where your team is about 30 – what kind of challenges did that present?
JK – I had to get my hands dirty again so to speak. It was a bit of a learning curve to get back into the details of the technology, all the emerging technologies be that big data, cloud computing, artificial intelligence etc. You have to become very knowledgeable to present this in a tightly knit, smaller (from a head count perspective) organisation where you really represent the technology function. You have to understand the business, you need to be there as the advisor to the board, especially in cyber security terms, to be able to speak the language of the business but have the knowledge of the technology within your head. Obviously there’s not quite the same amount of people to delegate to so you have to do some things yourself. I really enjoy this and got very much into this. The nice thing about aircraft leasing is that we do have the facilities as well as the capital available for us to make big technology decisions if we need to. It is a small environment so the average IT cost per person is very high but the total IT spend given the turnover or the profitability of the company is fairly low compared to others.
If you look at Aercap from an IT perspective, probably very different now from when you joined, was it very typical of an FS organisation where IT was seen as an infrastructure piece for the company, off in the corner, not much investment and not really seen as a business intelligence tool?
JK: Two years before I joined, they split the IT department in half. The applications side, they outsourced to a company called Aerdata and then they sold that company. So all that was left (and that’s the shortfall of IT) was the infrastructure department. They looked after the network, the so-called data centre and if anyone wanted an application, they were happy to receive the CV, put it in the server and pressed “go”. That was it, there was no real application strategy, no business alignment, no technology strategy that would actually foster innovation and get efficiencies out of processes or even improvements in terms of data analysis. We changed that completely, 180 degrees and today about half my team are looking after the infrastructure and they’re doing a great job and great innovative projects. We just built our own Microsoft Azure Tenant. We’re starting to move applications in there, we’re starting to develop an application ourselves with partners, not in-house, but with us. That’s only half of the organisation. We’re starting to innovate on the infrastructure side and the service delivery side. The other half are really concentrated around a core group of business analysts within IT who really understand our processes and how to translate suggestions from the business as to how we can improve, into systems. We started to replace the entire application portfolio. The good news is that we’ve just agreed a programme of work for 2021 and the next two years that exceeds anything that this company has done before.
What does that scheduled programme of work for the next three years look like?
JK: It’s basically a digital transformation programme that rips out old legacy applications that are still there and will replace them with modern, probably Cloud or SaaS based applications with the concept of initially redefining our internal processes first.
So this is a huge investment from the company to get this done, similar to what a lot of other organisations are going through right now but probably very new for your industry. Has IT become a huge part of the company’s overall strategy?
JK: That’s a good example of how you can manifest how important it is. Every year, every two years, we do something that’s called “bankers’ day”. As an aircraft lessor, you are financed to the capital markets, you don’t have the money to buy all these aircraft as they cost billions, we have about €40 billion of aircraft stock so you refinance yourself in the capital markets. Bankers Day means we invite all those banks who facilitate all those loans, help us with the bonding issues in the capital markets, etc. There are about 100 bankers from all over the world, from Japan to the US, only 2 came from Ireland, in one big room here in a Dublin hotel. The first thing the CEO said when he stood up and welcomed them all was “We are a data company” Because we know better about the desires, the plans, the future development of aircraft, the future development of their technologies, fuel efficient aircraft for example. We know better what the trends are, which aircrafts are being used where, we know better, that’s why we have the largest share in the market, why we’re the largest in the world!
That’s very interesting that he said that first. So everything that you’re working towards now, the business intelligence piece, the data piece, all of these become even more important.
JK: Yes, it will play a role. Of course, we do business intelligence, of course we do a lot of analysis, and have interesting tools to do so but in order to get even better at that, you need to lay some new foundations first. That’s what we do with our digital transformation strategy. That is connecting all these systems up so that they can cross analyse asset information with financial information, treasury and market information, whether that comes through internally through our own loan book or whether this is Bloomberg data or flight aware data of where all these aircraft are. All of these things have to be combined and in order to do that, you need to build an infrastructure that can take all that data in and provide it back to the end user. It’s not the IT department that analyses this, that’s a common misconception, the best we can do is provide the tools for the business to do it themselves. That’s the panacea. They need to be enabled to do this themselves and that’s our objective.
If you bring it back to the kind of people you tend to hire into the business, what does that look like? What is the best fit for Aercap?
JK: So, there is a message in there. I strongly believe that success, especially in a technology function like mine, is 100% based on people, not on technology. People will choose the technology, people will implement the technology and people will execute on that technology. You need smart people to choose the right technology. It’s all people based. In a small organisation like this however, it is imperative that we do have experienced people.
There is very little room for us to have a large pool of junior people who will be guided through the organisation. If we can, we will take 1 or 2 a year in from university or through a graduate programme. As an organisation, we do support graduate programmes but that’s more on the business side in terms of aircraft finance or the Smurfit programme that we are part of. At the end of the day, we are looking to find people who have significant experience in banking, insurance, or in financial services. That’s one element if you look at industry experience. I do, however also hire people who are just brilliant BAs (Business Analysts) or good project managers with experience under their skin, those who can tell me best what they’ve learned from their failures, or those who can reflect best on their learnings. That’s really a selection criteria for me.
I know one phrase you’ve always used is “intellectual curiosity”. What does that look like?
JK: You need to be up there and ask “what would it take or what would it mean for me to use this new tool or this new way of working?”. We have a significant sales force programme on the way where20we develop, with partners, apps that improve the way we handle data etc. The programme manager who is responsible for that came back and said that it would work better if we completely changed into the Agile methodology but it would give Can we live with this? And I said that I can’t tell you that but I will allow you to try it. Give it a go, build some processes around it, do your Scrum Master degree, you get some training out of it, do your set up of the team, in a way that they can have their daily stand ups, that they have their strings and it was an evolution. We didn’t plan to roll this out to everyone and fail just in the planning exercise. We said we’d try it, see what works best, let’s adapt it to our organisation, our needs, our size and continue and it was excellent.
People really buy into that, it’s great autonomy to have, especially from their CIO.
If we look back at the year that we’ve had, a very challenging year, your industry badly hit more so than most, how has Aercap managed to get through? What were the repercussions of the pandemic and how have you come out of it?
JK: So there were significant repercussions. At the end of the day, a lot of our customers, if not all of them, are in trouble. Some of them are backed by the government, and they have the loans that they need to see them through. Others are in Chapter 11. We currently have a portfolio of about 1,000 aircraft so it is a limited percentage. How did we get through? We had an okay Quarter 1, Quarter 2 was financially still okay but very difficult in terms of cash flows. The worry was that it was going to be like the banking crisis where nobody would lend you money anymore and we have refinanced ourselves through the capital markets. That didn’t come through. The crisis now is very different from the crisis of 2008 – 2009. We were able to raise significant amounts of money (in the billions of dollars) over this year to refinance ourselves which basically means that we currently have more cash on our balance sheets than we have ever had before. This is a sign of confidence from the market in us.
So a big financial hit but coming out with a healthy balance sheet?
JK: We have a healthy balance sheet but the hit is that we had to revalue some of our assets especially the older ones. AerCap has always invested in renewing its fleet in a timely way so a significant amount of our fleet is already new technology, so low fuel burn technology, the Neos, the Dreamliners, the A350 from Airbus, but we still have a number of older assets and we had to re-evaluate them. We had to take it right down in the 3rd quarter which has put us into a negative position and we will close the year (2020) with a loss but that’s not a cashflow loss, that’s a balance sheet loss. We had to depreciate the assets. At the end of the day, we will come out well out of this. We’re working very closely with our customers, to help them through this, through either a deferral of lease rents or loans to our customers. We are literally a finance organisation, we act like a bank so as a result of that, we’re very positive. With the cash in the account and the needs for these airlines to continue to build and renew their fleets, there will be a lot of opportunities to also acquire new aircraft over the coming years. We look forward to doing that and putting our money to work as best as we can.
I know aircraft leasing from an IT point of view, from a staffing point of view, is a boots on the ground industry. It’s an office- based industry. People are typically in the office. How successful was your remote working strategy? I know that was probably a big pivot.
JK – If I’m honest, pure luck. The reason it was lucky is that we did 2 things as a planned infrastructure, renewal and refresh. The first is that the end of 2018, we rolled out laptops to everyone, so Windows 10, new operating systems, hardened laptops and everyone was on direct access and had an alternative VPN on it. Everyone was asking why we were doing it as we had just moved to a new office. It’s the same type of laptop for everyone. We invested a significant amount of money to get it all harmonised and then a couple of months before, we finished a project that meant we upgraded our router and dial in systems so it was software based rather than hardware based and we were able to patch the software to upgrade our external access capacity ten-fold with one little patch. We did that a week before the lockdown in March happened and everyone went home and we continued to work as is from home. That was lucky
You could take the glory there and say you saw this coming. This is good disaster planning.
JK: It was part of the disaster exercise, not for Covid although Covid could be considered a disaster. It was because we did not have a second building in Dublin but we do have facilities in Shannon. It was all about being able to take your laptop, get on a bus and drive to Shannon for example or go to yet another alternative building if anything happened to the Dublin location or vice versa, Shannon to Dublin. So from that perspective, it was part of that thinking. Covid just appeared, nobody expected a pandemic. As a result of that, the processes that we put in place, they worked really well. One thing, not everything is shiny and there were problems, is that our video conferencing capability was limited. We found that global internet and intranet capacity sometimes struggled a little bit and the system that we used that we used and that we’re going to get back to had limitations of 100 participants. Other technologies like Zoom and Teams are more standard. We tried to find a work around with a different alternative with the same provider. It’s not that good so we’re looking at implementing Teams in early 2021.
The message that I’m getting is that you’ve got a slick IT set up in Aercap, you’ve a lot of confidence turning back into the organisation, you’re investing heavily in technology, in digitalising the business which is good to see, you’ve got good ability to hire in high calibre people. What are the main challenges you see from a hiring point of view for AerCap?
JK: Not all of these people are available in Dublin. There is a very good IT resource stock in Dublin, lots of companies that deal with that kind of environment. However if you look at banks or insurance companies, you often look to London or Frankfurt and Paris. People are surprised at the infrastructure and the cost of living here in Dublin. That is an issue for us. As I am new in Ireland (relatively new, 5 years here now) it surprises me all the time how many Irish people there are abroad and how many want to come back. We have a number of those in my team, that have that experience abroad and come back for family reasons, for parental reasons. The one thing that I can honestly say about myself and my IT organisation, is that it’s important to consider those situations, people have families with young children. I may be a little bit older but I do have a 3 year old son so I know what that is like. Work has to support life and there has to be a balance between work and life and that’s something that my team really values.
I think that’s something that people really will want, coming out of this, and that’s the work-life balance. I think that’s important. It’s a great view to take. When we look at hiring, one debate, one question that comes up again is gender equality and gender diversity. How does that manifest itself in AerCap?
JK: So we do have a lot of women and men working here. I can’t really tell you the ratio off the top of my head. In my team, we have 2 Business Analysts who are women. The CISO (Cyber Security Manager) is female as well as those on our Service Desk in the USA.
There are 5 women in my team out of 25 so that’s 25%. I think keeping that balance on the rising side is important. It brings a very positive cultural aspect in it. The mixture between classic view is the hard drive of the male way of working and the social competence I see in women are far stronger and the balance between the two of them makes a very good mix.
I know there’s an interesting stat for your peers across your industry, that many of the senior executives are women.
JK: Yes –many of my colleagues do have a circle, the Aviation Technology Leadership Group where there are more women than men. There is representation of the biggest aircraft leasing companies in Ireland and the world. The companies that are numbered 1, 2,3, 5 and another one 7 or 8, are all represented there, twice as many women as men.
That’s amazing, that is very much against the trend.
One last question – Brexit. It’s obviously in the news a lot and on the horizon, hopefully we’ll still get a deal but we don’t know for certain. Will Brexit have a big effect on AerCap?
JK: No, and the reason for that is that we are a truly global organisation, our customers, over 200 of them, are distributed over all continents. Airbus does have manufacturing sites in the UK and I know that is very high up on their minds. From our perspective, we do not have an office there, we do have very close relationships with the banking sector in the UK but we are listed in New York and we have a tiny office there to be close to the city. So I would say no, Brexit will not have a big effect on AerCap but certain airlines may feel the pinch.
That’s all from me, thank you so much for your time today, Jorg. I really appreciate it, such an interesting conversation, thank you very much
JK: Thank you very much for the opportunity and good luck with your TechTalk.