A Tale of Two Airlines in the Information Age

Interorganizational IS, databases, and global interconnectivity
together creates platforms for higher service levels.

What assumptions did Prof. McPherson make regarding information
technology support at the London-based airlines?


What factors do you think lead to the difference between Prof.
McPherson’s expectations and the reality of the situation?


What alternative approaches could have been taken to resolve the
situation?
What were the differences between the Atlanta-based and the London
airline’s approach?


Do you believe they are realistic assumptions for the technology
environment of the mid-1990s
In approaching the problem, did the Atlanta-based airline have any
special advantages?
What advice would you give the London-based airline’s management?
A Tale of Two Airlines in the Information Age
What did Prof. McPherson assume the British Airway's gate
agent would know about him and what are the enabling
technologies that would be required to execute them?
Assumptions
Enabling IT
Ticket Fare
The reservation record (stored in
London or downloaded to a USA
server
Gold Card Member and a regular
patron
The reservation system should have
his Gold Card data and should
be able to use it to their
advantage
That they will know he is on a
connecting flight and the data
on the connecting flight.
Integration of two computers
reservation systems which
historically had no need to be
interconnected with one another.
The information accessible will
show when the plane touches
down and when it actually
attached to the gate
A Tale of Two Airlines in the Information Age
 What are the possible service alternatives
for British Airways?
1. Hold the airplane for Prof. McPherson
2. Hold the plane at the gate until the scheduled
departure time
3. Send an agent to meet McPherson at his arrival
gate and attempt to get him to the plane.
4. Have an agent at the London-based Airways
departure gate briefed on McPherson’s situation
and action alternative in hand.
 “we held the plane until last moment. We have
reserved a seat for you on flight number and is
there anyone in London we can call to notify
them of your delay”
A Tale of Two Airlines in the Information Age
 Delta (Atlanta-based airline) situation?
 Different tradeoffs are possible in bad weather.
 They held the plane for 15 minutes to pick up an extra
8 known connecting passengers.
 There information systems had identified the 8, the
time they needed to connect, plus analyzed the tailwind
data
 A clearly empowered gate staff and crew existed.
Information, guidelines and training had allowed a
partial transfer of operational decision-making to the
customer interface
 It is easier to do this at the hub than in the outlying
regions. Service failures tend to take place at a
distance.
A Tale of Two Airlines in the Information Age
 Reaction from Chairman of British Airways in London
 He had the head of British Airways in USA and his
marketing manager visit Prof. McPherson three weeks
later.
 What do you think will be the focus of the discussion?
 Inflexibility of the British Airways information
architecture
 Difficulties of getting London-based files and other
airline data to the gate agent
 Conflict between operational excellence and now the
additional need for high touch customer service

Facilitated by flexible use of the new technologies
A Tale of Two Airlines in the Information Age
1.
The bottom line of this case is that in the information age, the
expectation of what constitute good service have increased
dramatically. Making it happen seamlessly requires the
integration of large amount of different technologies and
databases being passed across organizations in a seamless
fashion.
2.
The new technologies require fundamental changes in training
and attitudes. One airline had done it and the other had
experienced a collapse in outlying region.
3.
In the today's networked economy business environment
distance is no longer an excuse for inferior customer services
4.
There has been an increased in global customer and global
business customers
5.
Customers are highly knowledgeable and therefore the level of
expecting has increased significantly.
6.
Ability to use IT appropriately (including empowerment) will
continue to be a source of completive advantage.
Targeting IT-Based Investment
High
Increasing
operating
performance
Catch up
Manufacturing gap
versus industry leader
Maintain
Advantage
Increase flexibility,
responsiveness
Differentiate
product and
services
Low
Low
Services / Marketing gap versus industry leader
High
Different competitive investment strategies facing industry players as they
consider there position versus industry leaders.
Targeting IT-Based Investment
 Type A:
x
 Used IT to transform marketing and production and
the organizational design and management process
required to support IT-based investment
 Strong leadership
 Senior business leaders assume responsibility for
planning and executing IT strategy for the firm
 IT is defined as a core capability of the firm.
Targeting IT-Based Investment
 Type B:
x
 Used IT to support manufacturing and logistics
 IT investment are targeted towards streamlining,
integrating, and coordinating production and
distribution while controlling costs and improving
quality
 Strong relationship between IT and senior
management must be in place to support the
requirement for interfunctional integration.
Targeting IT-Based Investment
 Type C:
x
 The challenge to better different their products and
services to meet the needs of ever more-focused
markets.
 The ability to capture detailed data on individual
buyer preferences, competitor prices, and product
moves is crucial.
 Strong IT and general management links are
needed to assure success.
Targeting IT-Based Investment
 Type D:
x
 Deed catch up situation, outmaneuvered by
competitors on both sides.
 Comprehensive, coordinated efforts are needed to
achieve a defensible competitive position.
 Long lead time and high capital investment costs often
create a situation so serious that the survival of the
corporation is at stake.
 Massive IT investment needed to maintain competitive
position within the industry served to ‘weed out’
competitors that failed to recognize early, the
opportunities that IT would provide for integrating
operations, identifying and meeting customer
expectations, and differentiating products and services.
(e.g. People express)
Categories of Strategic Relevance and Impact
A contingency appropriate to IT management.
High
Factory
Strategic Impact of
existing IT system
IT are important but they
are not fundamental to the
firms ability to compete.
Support
Strategic Impact of IT
on operations and future
strategy is low.
Low
Strategic
Totally depending on it
Turnaround
Not absolutely depending on
totally uninterrupted,
fast response-time.
Low
High
Strategic Impact of IT applications under development
Strategic impact of
existing operating systems
Categories of Strategic Relevance and Impact
High
Factory
Turnaround
Strategic
Support
Low
Low
High
Strategic impact of
application development portfolio
Sourcing Policies for the IT Value Chain
Decision Criteria
Business strategy
Core competence
Information/
process security
and confidentiality
Availability of
suitable partners
Availability of
packaged software
or solutions
Cost/benefit
analysis
Time frame for
implementation
Evolution and
complexity of the
technology
Ease of
implementation
Pressure to “Make/Own”
IT application or infrastructure
provides proprietary competitive
advantage
Pressure to “Buy”
IT application or infrastructure
supports strategy or operations, but
is not considered strategic in its own
right