The tale of two Airlines

IT support at London based airlines

Alternative approaches taken to
solve the problem
Difference between the Atlanta
based airline approach and London
based airline approach
What advice would you give to the
London based airline

General environment
Bad weather conditions because of
foggy weather
Significant Flight delays , flight
cancellations and confused and
angry passengers
Atlanta is one of the busiest airport
Stressed out airline staff. Difficult
decisions have to be made

London Based Airlines (British

Airways)
Atlanta is a small part of their operations
with one or two departures per day. Low
on staff
Atlanta lacks the discipline and culture
that prevails at the London hub.
Anxiety about delays and cancellations
Massive fees from gold card customers.
Price discrimination high
A later flight from a competitor exists

Atlanta Based Airlines ( Delta

Airlines)
Atlanta is core for their operations. More
staff and aircrafts deployed to handle
difficult weather conditions
They do not provide onward connecting
flights , so they do not need to worry
about the passengers treatment on the
onward journey

Fare on his ticketassumption that the

agent would know that
he was a gold card
customer and had a full
fare ticket
Gold card membership

Data on connecting
flight- He assumed that
they knew about his
connecting flight , the
delay and that he had
no checked in baggage
to be transferred.

Reservation record stored in

London and downloaded to
the USA server

Gold card customer records are

kept in London if he had not

identified himself as a gold card
customer then all reservations
would have to be run against the
gold card file and the linkages
were time consuming and
complex at that time. A good
travel agent would have the gold
card data on his file and push it
through.
assumption that the London and
the US servers are connected.
There needs to be a standard
interface between the two
computer reservation systems.
Actual landing time and the gate
arrival time for the connecting

Learnings Derived
Need for a good connected Information
base
Expectations have grown in the
information age
Seamless integration of different
technologies and databases across
organizations in a seamless manner.

The Information Revolution

Costs and accessibility of IT/IS have now
drastically reduced
IS/IT is no longer an expensive specialised
back-office function which only large
organisations can afford
It is now possible for almost any organisation
to get into computing
Some organisations are using IT to make
dramatic improvements to their business
(Compare with the dot.com revolution?)

Changes that are happening

Company boundary and value chain
disintegration
Electronic commerce
Service transformation
Product transformation
Organization transformation

McFarlan: Five issues in

assessing IS/IT impact
Can IS technology build barriers to entry (by
opposing companies without access to our
technology)?
Can IS technology build in switching costs (to
discourage customers from leaving us)?
Can technology change the basis of competition
(cost, product differentiation, specialisation)?
Can IS change the balance of power in supplier
relationships?
Can IS technology generate new products?

Strategic impact - the Applications

Development Portfolio
High

Impact on
Business
operations

Factory

Strategic

Reduce costs and

improve
performance of the
core operations

Use It to support
core operations and
core strategy

Support
local improvement
and incremental
cost savings

Low
Low

Turnaro
und
Exploit emerging
strategic
opportunities as a
result of new IT
(.com revolution)

High

Impact on strategy

McFarlan: A new approach to IS

planning
Using IS planning to specify IS resource
allocation priorities
Allocate resources to areas with greatest
growth potential
Dont use simple measures (like IS as a % of
sales!) to determine IS expenditure levels
(remember Nolans benchmarks!)
IOS have many hidden second-order effects;
assess them carefully
Dont be too efficiency-oriented in IS
expenditure; encourage creativity as
appropriate

McFarlan: Deciding on your

strategic position with IS/IT
A companys approach to strategic IS
depends on where they belong in the
strategic grid
Changing circumstances may affect your
place in the grid
A number of companies and industry
groups are and will remain appropriately in
the support and factory boxes however a
companys IS function needs re-examination
to ensure its placement is still appropriate

McFarlans view of the importance

of development of Strategic IS
opportunities vary widely from one
company to another
in different situations a company may
appropriately attempt to be either a leader
or an alert follower. The stakes can be so
high, however, that this must be an
explicit well-planned decision

Effects of IT on Competition:
Changing Industry Structure
Industry structure is determined by 5
forces (Porters):
buyer power
supplier power
ease of entry
ease of substitution
competitive rivalry

IT is profoundly changing all of these case histories galore

Basis of Porters views

The Information technology revolution is now
well underway and is having drastic effects
on business. All companies are affected.
Companies are thriving or dying as a result
of their ability or inability to use IT more
effectively than their competitors
Business managers can no longer afford to
leave IT to their MIS departments, but must
become involved in it
IT involves technologies, information and
systems

How Does IT Affect the Nature

of Competition?
It changes industry structures
It gives companies new ways to
achieve competitive advantage
It spawns new businesses (often
within existing organisations)

Three Key Issues

Why has IT achieved strategic
significance?
How does IT change the nature of
competition?
How can managers assess and use IT
effectively?

CA Through The Value Chain:

How to achieve competitive
advantage
Do activities in the value chain more cost

effectively or in a way which distinguishes

your product from the opposition
Manage the trade-offs in optimising
activities better
Co-ordinate and manage linkages better
Achieve a better competitive scope
(geographical, industry, segment, vertical
integration); can be done by either
broadening or narrowing scope

IT Transforms the Value

Chain

Every value activity has a physical and an

information processing component
Technology has traditionally mainly affected
the physical component. Now IT is affecting
the information processing component
IT is now affecting ALL categories of value
activity, the linkages between them and the
competitive scope of the business
IT is also transforming business products by
increasing their information content

Effects of IT on Competition:
Creating CA
Reduce costs in activities and
linkages throughout the value chain
Enhance product differentiation by
use of information and by
incorporation of information with the
product
Change competitive scope by
expansion/linking with other
industries/segmentation/etc

Effects of IT on Competition:
Spawning New Businesses
IT can create CA through the
development of new lines of business.
This may happen in several ways: IT makes new businesses feasible
IT helps create derived demand for new
products
IT creates spare capacity/new
skills/new information which can be
sold as new products

IT for CA:
How To Take Advantage
Assess information intensity within
your companys value chain and
products
Determine the role of IT within your
industry structure
Identify and rank ways in which IT
might create CA
Investigate how IT might spawn new
businesses
Prepare your plan for taking
advantage of IT!