Post on 13-May-2015
description
transcript
MIS 760STProf: Terry Savage
Presented By: Ashley, Divyesh, Karthik, Rachit & Shirley
Team Case: Delta Airlines
Abstract
Business wants IT to• Enable its ticket sales via online services
o Support business and revenue growth• Enable remote access to employees• Provide flight attendants & pilots with live, real-time
update schedule information• Enable immediate transmission of schedule & flight
information to customers• Provide personal computers to employees• Deliver agile solutions to eBusiness requests
Company Background
• Low Customer Metrics o Timely Arrivalso Customer Complaintso Baggage handling
• Hidden Assets • Brand Recognition• Large Customer Base• Purchasing Power
BACKGROUND Cont…
• Focus on sales & distribution of ticketso B2C Initiatives
o B2B Initiativeso B2E Initiatives
• eBusiness - Organization
BACKGROUND Cont…
IT Infrastructure – DNS • Location• Schedule• Flight• Maintenance• Equipment• Employee• Aircraft• Customer• Ticket• TIBCO
Prioritization
BACKGROUND Cont…
Objectives
• Save in sales and distribution costs globally• Increase employee productivity• Reduce cost and increase revenue• Offer customers to earn and redeem frequent flier miles• Vendor to provide wireless services• Partner with leaders and companies in new economy
that provide opportunities to improve the core of delta airlines
• “Under-promise and Over-deliver” so that every customer is potentially a repeat customer
Major Opportunities
• Increase revenue using e-Commerce technology• Experiment with new business concepts
o Offer free things; liquor, spa products• Diversification
o Encourage airline competition, especially international markets o Continue to invest innovatively
• Take multiple strategic sourcing to the next level• Implement a merger to increase the U.S. legacy carrier’s
stocks
Major Problems
• Lack of morale amongst employees• Lack of customer support• Poor customer service
o Airline passengers bumpedo Bags losto Fewer on-time flights
• Complaints about airline service other than safety or security issues
• Prioritization issues with technology projects
Goals
• Increase ticket sales by 30%• Save in sales and distribution costs of approximately $20
million from online tickets• Rank #1 in the industry and eyes of customers• Decrease transportation cost by 10%• On-time arrival and departures will meet their expected
time 98% • Lower baggage customer complaints to only 2%
Market Penetration• Provide 20% discount on yearly travel• Free tickets with Credit Card
Application Acceptance (online)• ‘X’ purchase – tier level – e.g.– 4
tickets per year advance purchase – special price
Product Development• Interactive TV• Shuttle Service to Airport & Airport Parking• Option of Meals for domestic flights• Specialized service for families traveling with
babies• Travel Services in 7 star hotels• Vacation Country Hopper Plan
Market Development• Collaborate with international local
flights (website) to provide services local services internationally
Diversification• New website for Middle Size Businesses• Bus Service• Partner with UPS and FedEx
Existing Products/Services New Products/Services
Existing Markets
New Markets
Ansoff
New Market Entrants• Foreign Airlines • Regional Start up
Airlines • Cargo Carrier
Business Strategy Change
Substitutes• Alternate Travel
Services o Fast Trains o Boats/Cruise
• Private Transportation
• Videoconferencing • Groupware
Suppliers• Aircraft Manufacturers • Aircraft Leasing
Companies • Labor Unions • Food Service Companies • Fuel Companies• Airports • Local Transportation
Service • FAA
Customers• Personal/Business
Travelers• Travel Agents • Federal Government• Charter Service • U.S. Military • Cargo and Mail
Porter’s Five Forces
DELTA
American Airlines United SouthwestBritish AirwaysSingapore AirlinesLufthansa
Porter’s Additional Forces
• Political & Legal Environmento FAA Rules o Transportation Security Administration o Local Airport Regulations o International & Domestic Routes Regulations
• Complementorso Delta.com, Priceline, Orbitz and MYOBtravel.com
• Technical Environmento New IT Infrastructureo Online Ticket Sales
• Demographic Environmento Costly Employee Training o Employee Turnovero Ageo Passenger Identification
• Social Environment o Sponsored Eventso Culture differences between travelers
• Macroeconomic Environmento Fuel Priceo Fleet Maintainance Costo Employee Wageo Fluctuations between foreign currencyo Airport Space and Gate Rent and Fees
Super SWOT
Weaknesses1. Lower fair due to high competition2. Security Inconvenience3. Low margins4. Highly unionized employees
Opportunity1. Add new routes of Mexico, Africa, South America2. Add special in - flight services for greater customer experience3. Implement Low cost model as in Southwest Airline
SO Strategies1. Use well positioned hub and broad
revenue base to add new routes.• Offer special in-flight services at key
destinations which provide great return
WO Strategies1. Enhanced customer experience can possibly increase the fair and increase margin while still retaining customers.2. Practicing low cost model to address employee union and increase margins
Threats1. Low fair or special service airline2. Rising fuel and mainte. costs3. High bargaining power of travelers4. High rival among large players5. Technology advances
ST Strategies1. Use Delta Technology and same type of planes to reduce cost, increase productivity, and achieve competitive advantage against rivals and small competitors.2. Use multicultural staff to win customers over international rival flights
WT Strategies1. Practice low cost model and optimize the available resources
Strengths1. Broad customer base and revenue2. Well positioned hub3. One of nation’s top 50 corporations for multicultural businesses4. Delta Technology, a winner of Technology Innovation Award
Customer Relationship ManagementCustomer database Customer
profiles Households Support records
Data Mining Looking for
patterns and similarities
Cross-selling
Better Target Marketing
Loyal Customers
CRM Program
Entertainment System Vendor Partnership
Airline tickets Ecommerce products Car rentals Hotel reservations Internet services Wireless services
MYOBTravel (specific clients)
Proactive Service Delta Logo in
partnership products
Priceline.com Delta.com MYOBTravel.co
m
better responsiveness to customer needsIncreased customer satisfaction
Generic Value Chain
INBOUNDLOGISTICS
OPERATIONS OUTBOUNDLOGISTICS
MARKETING AND SALES
SERVICE
TECHNOLOGY DEVELOPMENT
HUMAN RESOURCE
MANAGEMENT
FIRM INFRASTRUCTURE -Financial Policy - Accounting-Regulatory Compliance- Legal - Community Affairs
Pilot TrainingSafety Training
Agent Training
In-flightTraining
Baggage TrackingSystem
• Promotion
• Advertising
• Advantage
Program• Travel
AgentPrograms
• Group Sales
• Ticket Counter
Operations• Gate
Operations• Aircraft
Operations• On-board
Service• Baggage
Handling• Ticket
Offices
• Route Selection
• Passenger Service
System• Yield
ManagementSystem (Pricing)
• Fuel • Flight
Scheduling• Crew
Scheduling• Facilities
Planning• Aircraft
Acquisition
Product DevelopmentMarket Research
• Lost Baggage Service
• Complaint Follow-up
• Baggage System
• Flight Connections
• Rental Car and
Hotel ReservationSystem
Computer Reservation System, In-flight SystemFlight Scheduling System, Yield Management System
Baggage HandlingTraining
Flight, route andyield analysttraining
Digital nervous System
Business Planning Model
Entrepreneurial Mode – (1997-2005) B2B, B2C, B2E Initiatives New Partnerships IT Infrastructure
Planning Mode – (2005-2007) Organization restructuring Chapter 11 file (Sep. 2005 to April 2007)
Adaptive Mode – (From 2007) Adjusting to market conditions
5 Level of leadership - Delta
SA Maturity Assessment
• Communications – 4 - Bonding, unified
• Competency/Value Measurements – 4 - Cost effective, Some partner value, Dashboard managed
• Governance – 4.6 - Integrated across the org & partners
• Partnership – 4.2 - IT enables/drives business strategy
• Scope & Architecture – 3.8 - Integrated with partners
• Skills – 5 - Education/careers/rewards across the organization
SA Maturity Assessment (cont’d.)
LEVEL 1 Initial Process
LEVEL 2 Committed Process
LEVEL 3Established
process
LEVEL 4 Improved Process
5LEVEL
Optimized
Process
Business Strategy
Competitors• Domestic
o United, US Airways, Jetblue
• Internationalo Air India, Singapore, British
Airways
Customers/Clients• Commuter services
• Government, Postal and Army
Customers/Clients• Individual consumers• Small to Large corporates• Other vendors and partnered
airlines
Products and Services• Airline carries for domestic and
international destinations
• Ticket reservation facilities using different platforms
Business
Scope
To-BeAs-Is
Products and Services• Deploying more better Jets• Improved services after
deploying new infrastructure• More destinations across the
globe
Competitors
• Similar to As-Is and more in the future.
• Rapidly growing industry
Business Strategy
• Operates services to more destination than any global airlineo 481 destinations in 105
countries
• Delta’s force for global goodo Community Involvement
Distinctiv
eCompetencies
• No Changes
Business Governance
To-BeAs-Is
• Be a leader in customer services
• Offer the most competitive rates to its consumers
• Federal Aviation Administration
• Transportation Security Administration
• Local Airport Regulations
• Internal Audit
Business Infrastructure
- Appoint consultants/experts to fulfill ongoing project management needs• Need more training
o Business management
HR/
Skills
- Form Risk/Benefit committee• Individual operations – business unitso Formed E-Business
Organization
Administrative
• Use various matrix approaches to prioritize the projects
• Establishing and funding e-business projectso Overwhelming opportunities
• Improvements in technology infrastructure
• Flight scheduling, Ticket reservation, cargo management
Key Processes
To-BeAs-Is
Governance
Key ApplicationsProprietary application for e-Business
Key TechnologiesTIBCO, Oracle, SQL2000, Windows, Unix
Key ApplicationsProprietary applicationsKey TechnologiesTIBCO, Oracle, SQL2000, Windows, Unix
Technology Scope
• Robust IT platform with improved management
• Cutting edge technologies• Automated operations over
nightSystem
Competency
To-BeAs-Is
IT Strategy
• SOX Compliance
- Internal Compliance
• No changes
IT InfrastructureAs-Is To-Be
Architectur
e
• IT Architecture – Centralizedo Nine central DBso TIBCO middleware
- No Changes
Key Processes
• Respond to crisis situationo Y2K
• Digital Nervous Systemo Built around firm’s core processeso “Publish and subscribe” approach
• Enhance “customer experience
H/R/
SKILLS
• Needs more training for the employees
- Possible outsource for some of the technology functions
Key Process change
Code Sharing
Go International
Brick to Click Organization & HR changes
Merger, Tie up with other airlines
[1] Professor S. Seshadari, IIT Professor slides on Datawarehousing. Only the diagram structure taken by Professor’s slide. The concept & content based on my understanding of Delta case.
Alternatives
FleetTransformatio
n
Merger, Partner with other airlines
• Merger with airlines.
Pro’s• Employees satisfaction, high
morale.
Cons• Tie up with Airlines with
incompatible competition where processes merging, philosophy is different.
• Difficult to synchronize the processes, more work for Employee of both companies, Union dissatisfaction, will lead to further downside of the ailing airline.
** Above Pictures taken from Google Images
Code Sharing
• More Code Sharing with International and domestic airlines [1]
Pros• Gain exposure through display of
their flight numbers even without actual operating in these markets. [1]
Cons• Tie-up with airlines that does not
come at par with standards set by Delta..
** Above Pictures taken from Google Images
Go International, grow international
• Alter existing route structure
• Reducing domestic capacity by up to 20% while growing more profitable international route (special Asia, Caribbean and Europe) capacity up to 25%.
• Focus on emerging markets, BRICK countrieso Brazil, Russia, India, China, and South
Korea.
Pros • Greater global presence and possibility
of higher profits in emerging markets.
Cons• Late entrant into the market• Delta applied to serve a daily non-stop
flight to China but rights were instead awarded to competitor.
** Above Pictures taken from Google Images
Transform workforce, move from Brick to Click Organization
• Workers / pilots to be Train / retrenched in order to prepare company to survive in the Internet age in light of big losses and coming out of bankruptcy.
• Change process – Demand supply, distribution, marketing, Seat reservation. like the renowned Sabre system.
• Strengthening Technology division and Tie – up / Acquire with Online travel websites
Pros• Save money from Pension benefits, job
cuts, hiring younger age call centers workers
Cons• Face employee wrath, dissatisfaction
could lead to hostile takeover by a competitor like American Airlines.** Above Pictures taken from Google Images
Key Processes - Cons
Ticketing & Check in
Cargo management
Flight Arrival Departures Personnel, Food,
Entertainment management
Ground staff, crew, pilot, customers data
management
** Above Pictures taken from Google Images
Key Process - Pros
Online CargoManagement
Online Ground staff, crew, pilot, customers data communication and management
Online Ticketing & Check in management
Delta Personnel, In-flight Food, Entertainment Online Ticketing & Check in management
I Communicatio
n and Management over Internet
Communication and Management over Phoneorder
** Above Pictures taken from Google Images
Process & Technology adoption
** Above Pictures taken from Google Images
Fleet TransformationFleet Transformation
• Airline operated trijets (three-engine planes), retiring in favor of twinjets (two-engine planes).
• The Big Lockheed L-1011 replacement with the Boeing 767-400 ; Boeing 727s with Boeing 737-800
• MD-11, McDonalds aircraft replacement with Boeing 777-200ERs.
• Small jets replace big place – Counter Jet Blue small airlines, small fares like Bombardier CRJ-900 for domestic routes, smaller planes, smaller fares.
Pro’s• Fuel efficiency, speed, low maintenance cost,
lower fares.
Cons• Money to buy these in light of recent
bankruptcy and re-organization plan.
** Above Pictures taken from Google Images
Stakeholder Role Responsibility Current Desired1997 - 2003Leo F. Mullin,President and CEO
Be part of session Brainstorming session with CIO, and with Delta Technology team,
Make Delta a better IT governed organisationOrganisational change processes from Brick to Click kind of organisationHuman resources changes to more Technology adaptive employees.Bring in consultant say from IBM where required. in developing systems.
Bring Delta software and technology, which was outdated and facing Y2K crisis then, at par with competition like American Airlines
Maybe consulting job in airline industry or retire after a long career.
1 Bob Derodes, 2 Vince Caminti,
3 Delta Technology Unit4 IBM Consultants
Implementing new processes, organisational change initiatives taken up by Leo F. Mullin.
1,2 Better processes and computer systems.1,2 Agile systems, use of Blackberries, Laptops by staff.1,2 Bring in consultant say from IBM where required. in developing systems.
3,4 Develop Computer systems
1,2 Outdates processes, workforce not able to adopt technology.
3. Some employees in the Delta technology unit would be affected, though unclear how many might lose their jobs.4. IBM gains business
1,2 Organisational change processes from Brick to Click kind of organisation
3, 4Delta technology unit and IBM aspire to Manage whole Delta systems, job security.
Customers flying Delta Loyal Customers Feedback and desire for easier travel from booking to arrival at destination
Buy ticket via ORBITZ, Delta websites
Book tickets via Mobile, make tickets deals as done in Hotwire, Priceline.com websites.Ease in travel from ticket purchase to desinationLower fare.
Recommendations
• International Travel Expansion
• Offer cargo services in passenger flights for UPS, DHL, FedEx
• Execute Acquisitions or Mergers with Niche Competitive companies to eliminate competition
• Partnership with various cruise companies to transport their passengers
• Create new revenue model via leveraging their existing IT infrastructure "Digital Nervous System"
Next Steps# Description Assigned to Target Issues
1 Create vision and business objectives for partnerships with business providers (i.e. UPS, FedEx, Cruise Service providers)
Leo Mullin Business ASAP
Define limitations and constraints
2 Identify Revenue Recognition Milestones and Target new market areas
Vicki Escarra Business ASAP
maintain loyal customer base
3 Develop employee loyalty strategies
Leo Mullin, Vince Caminti
Business 3-6 months
Demographics risks
4 Promote Delta's new IT Infrastructure and provide customer access via mobile devices
Bob Derodes, Vince Caminti, Users
Business & IT 3 -6 months
Customer awareness with wireless mobile devices
Next Steps# Description Assigned to Target Issues
5 Create eBusiness Portfolio management committee for better eBusiness prioritization.
Leo Mullin, Vicki Escarra, Vince Caminti
Business /ITASAP
Assigning proper matrices
6 Initiate talk with Cruise service providers for possible partnership
Vicki Escarra, Vince Caminti
Business 3-6 months
None
Questions ?
Thank You
Table of Contents
References
• See notes section