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? Do you believe they are realistic assumptions for the technology environment of the mid-1990s 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? 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? Hold the airplane for Prof. McPherson Hold the plane at the gate until the scheduled departure time Send an agent to meet McPherson at his arrival gate and attempt to get him to the plane. 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 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. 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. In the today's networked economy business environment distance is no longer an excuse for inferior customer services There has been an increased in global customer and global business customers Customers are highly knowledgeable and therefore the level of expecting has increased significantly. 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 Increase flexibility, responsiveness Differentiate product and services Maintain Advantage Low Low High Services / Marketing gap versus industry leader Different competitive investment strategies facing industry players as they consider there position versus industry leaders.

Targeting IT-Based Investment Type A: 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. x

Targeting IT-Based Investment x Type B: 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: 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. x

Targeting IT-Based Investment x Type D: 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 IT are important but they are not fundamental to the firms ability to compete. Totally depending on it Strategic Impact of existing IT system Support Turnaround Strategic Impact of IT on operations and future strategy is low. Not absolutely depending on totally uninterrupted, fast response-time. Low Low High Strategic Impact of IT applications under development

Categories of Strategic Relevance and Impact High Factory existing operating systems Strategic impact of Turnaround Strategic Support Low High Low Strategic impact of application development portfolio

Sourcing Policies for the IT Value Chain Decision Criteria Pressure to “Make/Own” Pressure to “Buy” Business strategy IT application or infrastructure provides proprietary competitive advantage IT application or infrastructure supports strategy or operations, but is not considered strategic in its own right 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