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