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From Brick Mortar To Online Click Organisation
- Delta Airlines aims to enable online ticket sales, provide real-time flight information to employees and customers, and deliver agile solutions to business requests through improved IT infrastructure. - The company seeks to increase ticket sales and customer satisfaction while reducing costs through various eBusiness initiatives across sales, distribution, and employee engagement. - Delta faces challenges around employee morale, customer service, and prioritizing technology projects, but sees opportunities to grow revenue through eCommerce and strategic partnerships.
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From Brick Mortar To Online Click Organisation
- 1. MIS 760ST Prof:Terry Savage Presented By: Ashley, Divyesh, Karthik, Rachit & Shirley Team Case: Delta Airlines
- 2. Abstract Business wantsIT to Enable its ticket sales via online services 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
- 3. Company Background LowCustomer Metrics Timely Arrivals Customer Complaints Baggage handling Hidden Assets Brand Recognition Large Customer Base Purchasing Power
- 4. BACKGROUND Cont… Focuson sales & distribution of tickets B2C Initiatives B2B Initiatives B2E Initiatives
- 5. eBusiness - OrganizationBACKGROUND Cont…
- 6. IT Infrastructure –DNS Location Schedule Flight Maintenance Equipment Employee Aircraft Customer Ticket TIBCO BACKGROUND Cont… Prioritization
- 7. Objectives Save insales 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
- 8. Major Opportunities Increaserevenue using e-Commerce technology Experiment with new business concepts Offer free things; liquor, spa products Diversification Encourage airline competition, especially international markets Continue to invest innovatively Take multiple strategic sourcing to the next level Implement a merger to increase the U.S. legacy carrier’s stocks
- 9. Major Problems Lackof morale amongst employees Lack of customer support Poor customer service Airline passengers bumped Bags lost Fewer on-time flights Complaints about airline service other than safety or security issues Prioritization issues with technology projects
- 10. Goals Increase ticketsales 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%
- 11. Existing Products/Services NewProducts/Services Existing Markets New Markets Ansoff 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
- 12. New Market EntrantsForeign Airlines Regional Start up Airlines Cargo Carrier Business Strategy Change Substitutes Alternate Travel Services Fast Trains 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 Southwest British Airways Singapore Airlines Lufthansa
- 13. Porter’s Additional ForcesPolitical & Legal Environment FAA Rules Transportation Security Administration Local Airport Regulations International & Domestic Routes Regulations Complementors Delta.com, Priceline, Orbitz and MYOBtravel.com Technical Environment New IT Infrastructure Online Ticket Sales Demographic Environment Costly Employee Training Employee Turnover Age Passenger Identification Social Environment Sponsored Events Culture differences between travelers Macroeconomic Environment Fuel Price Fleet Maintainance Cost Employee Wage Fluctuations between foreign currency Airport Space and Gate Rent and Fees
- 14. Super SWOT Weaknesses1. Lower fair due to high competition 2. Security Inconvenience 3. Low margins 4. Highly unionized employees Opportunity 1. Add new routes of Mexico, Africa, South America 2. Add special in - flight services for greater customer experience 3. Implement Low cost model as in Southwest Airline SO Strategies 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 Strategies 1. 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 Threats 1. Low fair or special service airline 2. Rising fuel and mainte. costs 3. High bargaining power of travelers 4. High rival among large players 5. Technology advances ST Strategies 1. 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 Strategies 1. Practice low cost model and optimize the available resources Strengths 1. Broad customer base and revenue 2. Well positioned hub 3. One of nation’s top 50 corporations for multicultural businesses 4. Delta Technology, a winner of Technology Innovation Award
- 15. 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.com better responsiveness to customer needs Increased customer satisfaction
- 16. Generic Value ChainINBOUND LOGISTICS OPERATIONS OUTBOUND LOGISTICS MARKETING AND SALES SERVICE TECHNOLOGY DEVELOPMENT HUMAN RESOURCE MANAGEMENT FIRM INFRASTRUCTURE -Financial Policy - Accounting - Regulatory Compliance - Legal - Community Affairs Pilot Training Safety Training Agent Training In-flight Training Baggage Tracking System Promotion Advertising Advantage Program Travel Agent Programs Group Sales Ticket Counter Operations Gate Operations Aircraft Operations On-board Service Baggage Handling Ticket Offices Route Selection Passenger Service System Yield Management System (Pricing) Fuel Flight Scheduling Crew Scheduling Facilities Planning Aircraft Acquisition Product Development Market Research Lost Baggage Service Complaint Follow-up Baggage System Flight Connections Rental Car and Hotel Reservation System Computer Reservation System, In-flight System Flight Scheduling System, Yield Management System Baggage Handling Training Flight, route and yield analyst training Digital nervous System
- 17. Business Planning ModelEntrepreneurial 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
- 18. 5 Level ofleadership - Delta
- 19. SA Maturity AssessmentCommunications – 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
- 20. SA Maturity Assessment(cont’d.) LEVEL 1 Initial Process LEVEL 2 Committed Process LEVEL 3 Established process LEVEL 4 Improved Process 5 LEVEL Optimized Process
- 21. Business Strategy CompetitorsDomestic United, US Airways, Jetblue International 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-Be As-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
- 22. Business Strategy Operatesservices to more destination than any global airline 481 destinations in 105 countries Delta’s force for global good Community Involvement Distinctive Competencies No Changes Business Governance To-Be As-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
- 23. Business Infrastructure - Appoint consultants/experts to fulfill ongoing project management needs Need more training Business management HR/Skills - Form Risk/Benefit committee Individual operations – business units Formed E-Business Organization Administrative Use various matrix approaches to prioritize the projects Establishing and funding e-business projects Overwhelming opportunities Improvements in technology infrastructure Flight scheduling, Ticket reservation, cargo management Key Processes To-Be As-Is
- 24. IT Strategy GovernanceKey Applications Proprietary application for e-Business Key Technologies TIBCO, Oracle, SQL2000, Windows, Unix Key Applications Proprietary applications Key Technologies TIBCO, Oracle, SQL2000, Windows, Unix Technology Scope Robust IT platform with improved management Cutting edge technologies Automated operations over night System Competency To-Be As-Is SOX Compliance - Internal Compliance No changes
- 25. IT Infrastructure As-IsTo-Be Architecture IT Architecture – Centralized Nine central DBs TIBCO middleware - No Changes Key Processes Respond to crisis situation Y2K Digital Nervous System Built around firm’s core processes “ Publish and subscribe” approach Enhance “customer experience H/R/SKILLS Needs more training for the employees - Possible outsource for some of the technology functions
- 26. Alternatives Key Processchange 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. Fleet Transformation
- 27. Merger, Partner withother 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
- 28. Code Sharing MoreCode 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
- 29. Go International, growinternational 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 countries 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
- 30. Transform workforce, movefrom 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
- 31. 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
- 32. Key Process -Pros Online Cargo Management 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 Communication and Management over Internet Communication and Management over Phone order ** Above Pictures taken from Google Images
- 33. Process & Technologyadoption ** Above Pictures taken from Google Images
- 34. Fleet Transformation FleetTransformation 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
- 35. Stakeholder Role ResponsibilityCurrent Desired 1997 - 2003 Leo F. Mullin, President and CEO Be part of session Brainstorming session with CIO, and with Delta Technology team, Make Delta a better IT governed organisation Organisational change processes from Brick to Click kind of organisation Human 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 Unit 4 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, 4 Delta 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 desination Lower fare.
- 36. Recommendations International TravelExpansion 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"
- 37. 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
- 38. Next Steps #Description Assigned to Target Issues 5 Create eBusiness Portfolio management committee for better eBusiness prioritization. Leo Mullin, Vicki Escarra, Vince Caminti Business /IT ASAP Assigning proper matrices 6 Initiate talk with Cruise service providers for possible partnership Vicki Escarra, Vince Caminti Business 3-6 months None
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- 42. References See notessection
Editor's Notes
- #2 I pledge on my honor that I have not given or received any unauthorized assistance on this assignment/examination. I further pledge that I have not copied any material from a book, article, the Internet or any other source except where I have expressly cited the source. Name Signature 1. Ashley Pantaleo ___________________________ 2. Divyesh Patel ___________________________ 3. Kartik Mehta ___________________________ 4. Rachit Patel ___________________________ 5. Shirley Samtani ___________________________
- #3 Business wants IT to enable its ticket sales via online services . There are huge profits, benefits & customer satisfaction to be realized with having online ticket sales via Delta.com, Orbitz.com, MYOBtravel.com, Priceline.com Business wants IT to provide remote access to employees Business wants IT to provide flight attendants & pilots with live, real-time update schedule information Business wants IT to enable immediate transmission of schedule & flight information to customers Business wants IT to provide personal computers to employees Business wants IT to deliver agile solutions to eBusiness requests Ebusiness is a term used to describe businesses run on the Internet, or utilizing Internet technologies to improve the productivity or profitability of a business. In a more general sense, the term may be used to describe any form of electronic business —- that is to say, any business which utilizes a computer. This usage is somewhat archaic, however, and in most contexts ebusiness refers exclusively to Internet businesses.
- #4 1997 In 1997, Delta had rated low on key customer metrics in the airline industry on timely arrivals, customer complaints and baggage handling. Delta had so-called hidden assets such as its brand recognition, a large customer base and purchasing power. 2000 In 2000 Leo Martin, CEO of Delta airlines wanted to focus further on the Internet technology as it was a channel offering lower distribution costs, increased employee productivity and improved customer service. Delta airlines were the 3rd largest airline as it related to revenues & passenger miles & largest as it related to number of departures and passengers. From 1997 to 2000, delta was investing in eBusiness. Delta looked at Priceline.com as a distribution channel. Priceline.com sold Delta’s excess tickets at discounted prices to customer segment that considered ‘price’ as a factor that would determine if they traveled or not. This vision was enforced by the CFO and Leo martin was persuaded and convinced to move on this strategy. As Priceline’s stock rised, Delta banked $750 million. As Delta were the first ones to reap profits in this kind of a business model(start-ups partnering), they decided to further leverage this model by partnering with Softnet Zone (wireless services) & People PC(personal computers). This was to achieve the speed & agility of the start-up companies.
- #5 Focus on sales & distribution of tickets B2B Initiatives Although Orbitz is also an example of the B2B strategy – there was still room to grow on that area – not yet very established. B2E Initiatives This was focused around improving productivity & job satisfaction. Delta’s intranet was developed to the extent that it was a means to communicate assignments & schedules to Delta’s pilots & flight attendants. Also, free personal computers were distributed and remote access for employees was built. B2C Initiatives Travel Agents were the main distribution channel and were responsible for 85% of Delta ticket sales. By 2000, this reduced to 60% with the rest being completed via online. Delta aimed to have 50% of its ticket sales done via online by 2003. This would mean a significant cost saving for the company ($2 via online vs. $34 via TA per ticket) – approximately $20 million.
- #6 eBusiness Organization 50 employees formed the entire team; pulled into projects as needed Cross-functional phenomenon Changing internal processes to enable firm respond to faster e-business opportunities Partnership with start-up’s Using Consultants & Contractors eBusiness team would disband from projects such as MYOBtravel.com & Orbitz & transfer to functional units such as sales & distribution
- #7 Delta had TIBCO as their IT alliance partner to support business event based activities to be captured using technology. IT Infrastructure Business wanted to improve on customer experience, as a result of which old legacy systems were eliminated/rebuilt with new infrastructure – DNS – build around firm’s core processes. Firms Core Data was captured in 9 databases Location Schedule Flight Maintenance Equipment Employee Aircraft Customer Ticket Middleware used was TIBCO – All applications would access all updated & Relevant data. Prioritize – Profitability & Competitiveness Vince did ROI of Projects – Reduce Costs, Increase Revenues, Offer Valuable equity Positions This information was sent to the IB Board, where an evaluation would be done relative to other IT Projects
- #8 Lower distribution costs as part of the company’s ongoing restructuring efforts. Continue to charge customers if purchased via ticket agent or ticket booth at airlines. Those purchasing tickets via Delta website do not incur the fees. Focus on enhancing productivity and job satisfaction to create a motivating work environment where all employees are treated fairly. Effective project managers must learn to cultivate this powerful method of worker motivation to increase employee productivity. Reduce cost by promoting greater fuel efficiency and reducing flying times. Delta to retire older, less fuel efficient planes and use new planes as much as possible as a way to cut emissions per flight. Customers to earn and redeem frequent flier miles through opening and using credit cards. Give gift incentives for customers when credit card is charged over certain amount. In addition to getting free mileage they get gifts as well. Continue to provide wireless connection while in flight. Establish partnership with leaders and companies that are passionate to provide the very best experience possible. Ensure every employee under promises and over delivers to each customer to gain their trust to potentially acquire a repeat customer.
- #9 Provide millions of worldwide airline passengers each year with new business concepts and other services while in flight. Diversify and expand to encourage other companies to buy in and increase market share. Enable strategic sourcing in support of airport maintenance and provide innovative solutions to meet business needs. Delta’s e-business initiatives to support its core business driving value from it’s hidden assets. Build a promising new future on a solid foundation. Take air travel to the next level with continued excellent service in award winning Mileage Plus program, extensive international network, and premium seating. Merge with airline company to force competition to act as well.
- #10 Delta needs to develop, manage and sustain morale values among employees in order to reach a high performing organization. Delta needs to instill and create an environment where managers apply approaches for employees to have increased morale. When developing the vision and strategy the foundation should be customer and client oriented. Customer support is weak with Delta. When a problem occurs, immediate assistance is not provided to the customer. This is a major problem since you want returned customers and build a reputation as #1 airline. Without a strong customer support base, the customer will not be inclined to use the airlines for future service. Delta is facing difficulty with providing excellent customer service. Airline quality is low since flights are not departing in time, passengers are being bumped to other destinations and bags are not being delivered to their proper destination. Delta is receiving complaints that are not related to safety or security issues. These complaints are decreasing the number of passengers choosing to fly with Delta.
- #11 Increase sales and distribution of airline tickets by having Delta as one of the airline choices from all online purchases. Incentives to be distributed to customers to boost online tickets sales. The extensive worldwide destination on flights and services will be available for all online purchases to each customer. Online ticketing is cheaper and quicker and customer can readily search for products and compare prices over the Internet. Having Delta available for all online purchases would provide customer with more options to choose to fly with Delta. Rank #1 amongst competition with quality standards and customer service. Delta to be the number one choice of airline when it comes to flying passengers and cargo from anywhere to everywhere. Decrease transportation cost by 10% by using new planes that will save on fuel per flight. Every plane that departs and arrives will be on time with no delay. This will increase customer satisfaction in hopes to establish and gain repeat customers. Lower baggage complaints by increasing staff so that for every 40 baggage's an employee will be responsible and ensure it is taken to the correct destination. Ensure that there are the proper amount of employees available to be responsible for successful delivery to airplane. Hire staff to have a representative available for any questions when baggage arrives. This will increase customer service and lower baggage customer complaints significantly.
- #12 Market Penetration – Penetrate further by providing more incentives to further spread in the market. Partner with Credit Card companies to provide free ticket on line. Provide package purchases with special rates. Product Development – Bring new capabilities to existing markets – provide interactive TV on airplanes, provide transportation services, additional meal choices, a separate flight or separate section for families with babies, provide travel plan for the higher end customers, vacation plans that can be sold in combination with tickets & partnerships Market Development – Internationally spread services – so you can gain new markets Diversification – Website for different segment tapping new markets. Provide a complete new bus service. Also collaborate with other industries.
- #13 New Market Entrants: Foreign Airlines Regional Start up Airlines Substitutes: Alternate Travel Services Fast Trains Boats/Cruise Private Transportation - Business executives can purchase and use personal jet. Groupware - Improved group dynamics with use of groupware software's such as SharePoint, Blogs and Wikis allow less travel for business travelers. Customers: Personal/Business Travelers - Frequent Personal/Business travelers demand additional incentives/benefits. Travel Agents - Travel Agents may request extra commission when referring to Delta Federal Government - Federal Government may request discounted prices for Government Employees. U.S. Military - U.S. Military may force Delta to allow free transportation for Military corps and allocate several routes to overseas military base. Suppliers: Aircraft Manufacturers Labor Unions - Pilot unions enforce considerable power because there is no good alternative to a well-trained pilots. Food Service Companies Fuel Companies - There is very few fuel companies in the market so they have major stack in price of fuel. Airports - Airports can tell Delta to not use it as major hub in the market forcing to use longer routes. Local Transportation Service
- #14 Political & Legal Environment: FAA Rules Transportation Security Administration Local Airport Regulations International & Domestic Routes Regulations Complementors: (something that suppose to be good but goes wrong way) Delta.com, Priceline, Orbitz and MYOBtravel.com - Instead of focusing on different customer segments they starts competing with each other and bring ticket prices down. Technical Environment New IT Infrastructure - New Infrastructure most of times takes few years to get stable Online Ticket Sales - Downtime of online ticket sales has direct impact on revenue stream Demographic Environment Costly Employee Training - Pilot training has huge cost associated. Employee Turnover Age - Many pilots retire at early age due to health and vision are not matching government regulations. Social Environment Culture differences between travelers Delta sponsored events - Sponsoring football game may be viewed as encouraging violence for some customers Macroeconomic Environment Increasing cost of Fuel and maintained of aircraft Increasing employee wage Fluctuations between foreign currency - International traveler may buy cheaper ticket from other countries for same trip.
- #15 Strengths: Broad customer base and revenue: In terms of passengers carried (87 million in 2004), Delta is the second-largest airline in the world. In terms of total operating revenues, Delta is the fourth-largest airline in the world. Well positioned hub: The Delta’s flight network is spanned across 452 destinations in 95 countries One of nation’s top 50 corporations for multicultural businesses: In 2004, Delta was named one of the nation’s “top 50 corporations for multicultural business” by DiversityBusiness.com Delta Technology: Delta Technology, information subsidiary, won the Computerworld Smithsonian Award for technology innovation in 2000. While Leo Mullin was named by Forbes magazine as a member of “The E-Gang”, twelve executives who were forcing the web to grow up. Weaknesses: Lower fair due to high competition: With so many small and big airlines across the US, there is high competition for every route. That has significantly affected the air fairs. The airlines cut air fairs just to match its competitor for each route. Security Inconvenience: In post 9/11 era, there has been great inconveniency associated with air travel for the flyers. At many airports, the airlines required flyers to come almost 3 hours before the departure to fulfill the security requirements before boarding. Security personals even required flyers to take of shoes for checking and in few incidents suspected the infants and toddlers. Low margins: In 3rd quarter of 2005’s published report from Air Transport Association stated that cents per Available Seat Mile equaled passenger yield at 12 cents. Highly unionized employees: Delta and other industry leaders have highly unionized workers, as it was the business practice in 20th century. Opportunity: Add new routes of Mexico, Africa, South America: Atlanta, Georgia is Delta’s one of the biggest hubs. Atlanta is a gateway to non stop flights to Africa, Mexico and South America. There are no US airlines providing service to Africa, so there is a great chance that Delta can take the advantage of this situation. Add special services in flight for greater customer experience: Delta can provide various services in-flight which are not available to greatly enhance customer experience. Delta can allow flyer to pre-select his/her choice of food during the flight. It can also provide a refreshment area in the international flights for the flyers. During long fly hours, flyers in economy class generally has option to go to toilet to relax a little bit. With this refreshment area, flyer can roam around and socialize for a while. Then Delta can cooperate with its partners to minimize the stay between the halts. Let’s say, I am flying from New York to New Delhi, India and there is 4 hrs. of halt in Paris. If there is a partner flight flying from Paris to New Delhi in next hour, the Delta may be able to shift me to the partner flight and I can save 3 hours of waiting. Implement Low cost model as in SouthWest Airline: The SouthWest Airline uses its employee base most efficiently. It’s employees are working almost 20 hrs more than industry average. It doesn’t have the employee union. It completely rewards employees based on profit sharing and stock options. It greatly optimizes the airplane by flying it for almost 11 hours a day which is more than any major airline. Threats: Low fair and special airline companies: There are many small airlines who fly only in small regions. With low profile and low fair strategy, it can lure customers away from big players. Airlines such as Hooters Air, for their special services can also lure customers away from Delta. Rising fuel and Labor costs: The US Airline cost Index report published from Air Transport Association states that labor and fuel cost amount to 49% of total administrative cost. High bargaining power for travelers: Presently, the current focus of an average flyer is on low price. The internet services such as Travelocity, Expedia and Priceline have made very easy for customers to find lowest available price to fly. High rival among large players: To avoid bankruptcy, the airlines are making reactionary price adjustments where every single dollar counts. They have opened many loyalty programs to retain customers and it has greatly affected their relations. Technology Advance: Tele/video conferencing & Virtual Meetings have greatly affected the frequent fliers. More and more companies are trying to implement this technology in their strategy to reduce the travel expense.
- #16 Create Customer database : Need a database to contain information about customer profiles, booking records etc. to capture customer activities Data Analysis: Analyze database for various patterns and look for similarities on customer preferences, behavior, travel frequencies, frequency of online eBusiness sites etc. Decision about which customer to Target: Based on customer behavior determine how to engage customer. For example, if a customer visits delta.com few times in a month then send him/her monthly e-mail with special fare offers. Use different tools for targeting the customer: Segment Customers : Use different website like MYOBTravel.com, Orbitz.com, Delta.com to server different customer segments Offer free Goodies : Very loyal customer of Delta, for a long time offer goodies with delta logo. Build relationship with targeted customers: Proactive Customer Service: Offer proactive service to targeted customer. For example, in event of flight delay or cancellation call customer as soon as event is triggered. Loyalty Programs: reward customers for repeat purchasing. Offer special incentives upon site visits from frequent computers. Cross-selling: Airline ticket sales, ecommerce products, car rentals, hotel reservations, internet services, wireless services, Delta has partners in all of these areas and can sell all of these products/services Privacy issues: Make customer aware about where his/her information is being used and let customer pick in case of he/she wants to opt out. Metrics for CRM Success: CRM tools measures metrics for success of CRM. This way Delta can determine success of their current and future e-business initiatives. Also Delta can determine new product development which provide value. For example, based on data analysis if customer are interested in better personal entertainment while in flight then Delta may want to consider partner with Entertainment System Vendor and offer services to other airline companies.
- #17 The Generic Value chain analysis, is a concept that was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance. Value chain is a useful analysis tool as a model that helps to analyze specific activities through which firms can create value and competitive advantage. The concept has been extended beyond individual organizations. It can apply to whole supply chains and distribution networks Delta can gain “Competitive Advantage” by performing these activities more cheaply or better than its competitors. Competitive Advantage can be achieved by optimizing the value chain. This optimization can be achieved by improving the linkages between individual value chain activities or by reconfiguring the value chain.
- #18 Under Leo Mullin’s leadership enabled Delta to enter in entrepreneurial mode. Many different new initiatives were established. B2C was instituted and Delta customers could choose from a variety of online channels. Delta joined a consortium of thirty airlines working to establish a B2B exchange. B2E initiatives focused on enhancing productivity and job satisfaction of Delta employees. Delta’s intranet enable its mobile workforce and was used as a means of communication. Delta employees got free PC encouraging PC literacy and the ability to work from home. Delta saw the benefits of this as employees familiarity with computing technology increased. Delta entered alliance with Priceline. No other airline in the industry had attempted this. Priceline sold tickets to customers for whom price was the major determinant guiding their travel choices. Delta sold $250 million in tickets through Priceline in 2000. For customers who typically compared prices, Delta formed Orbitz.com with United, American Continental and Northwest. Leo Mullin also wanted to strong IT infrastructure for Delta. The firm spent hundreds of millions of dollars to tear out it old legacy system and rebuild its IT infrastructure called the Digital Nervous System was built around Delta’s core competencies. Information needed by the core businesses was captured in nine central databases and middleware built around the databases so new applications could access and update relevant data. In September 2005, Delta introduced a comprehensive restructuring plan to achieve $3 billion in annual financial improvements by the end of 2007. Therefore on September 14, 2005 Delta and its subsidiaries file voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code to address financial challenges and support ongoing efforts to become a simpler, more efficient and cost-effective airline. During the reorganization process, Delta succeeded at cutting costs and eliminated some unprofitable routes transforming the airline into a strong, financially viable company. After Delta came out of bankruptcy, there has been various talks going on with merging with another airline in order to reduce cost and minimize competition. This is favorable in short term due to increasing competitions from international airlines and increasing fuel costs.
- #19 Leo Mullin, CEO of Delta, falls into Level 4 in the Five Levels of Leadership method. Delta employees followed and respected Leo because of what he did for the company. When Mullin became CEO in 1997, Delta rated last on all three of the key customer metrics in the airline industry. Three years later, Delta was the only airline to score in the top three on all three of the customer metrics. Mullin also lead Delta in actively pursuing e-business initiatives as well as other IT initiatives. He was prepared to initiate and accept responsibility for growth by developing a purpose and seeing it through to completion. Mullin made the difficult decisions that resulted in positive long term gains. Investment in robust IT infrastructure and notion of e-business to every delta employee helped Delta to come out of Chapter 11 file about a year ahead of expected time frame.
- #20 Strategic Alignment Maturity Assessment Communications: Level 4 – Bonding & Unified Understanding of Business by IT: Level 3 – Limited IT awareness Technology upgrades correspond to new services, for example Delta has very new IT Infrastructure in house so IT may not aware of proper capabilities since there is some learning curve and they may not aware of full capabilities until its full use. The IT group uses state of art technologies into proposed services, but only after new services have been decided upon by business units. Understanding of IT by Business: Level 4 – Very good business awareness Business units are aware of functionality, the finished product Business units are involved in details behind implementation or why an upgrade is needed Inter/Intra-Organizational Learning: Level 3 – Informal Protocol Rigidity: Level 4 – Limited, relaxed Knowledge Sharing: Level 5 – Very structured process for sharing knowledge Liaison(s) Breadth/Effectiveness: Level 5 – Limited tactical knowledge Based
- #22 As –Is: Products and Services: Delta is an airline service provider for international and domestic destinations. It also provides charter services corporate clients as well. Delta uses different platforms to reserve tickets. Platforms include reservation via telephone, internet and travel agents. Customers/Clients: Delta’s list of clients include individuals, small to large corporates and other vendors. Delta also has partnered with other airlines to expand its services and vice versa. Competitors: Current competitors of Delta includes domestic and international airlines. Domestic airlines include United, US Airways and Jetblue etc. International competitors include Air India, Singapore, British and other airlines. To-Be: Products and Services: Delta has future plans to improve its technology infrastructure to offer better services to consumers. Also, this will enable them to offer services to more destinations across the globe. Delta is continuously investing in its aircrafts for its improvements. Customer/Clients: Delta’s future plans will enable them to attract new domestic and international clients using competitive rates. The company is also trying make the US Government, postal carriers such as FedEx and UPS and Army as its clients. Competitors: Airline is rapidly growing industry and Delta’s list of competitors will be increasing with the time.
- #23 As-Is Distinctive Competency - Delta Air Lines operates service to more destinations than any global airline. They offer flights to 481 destinations in 105 countries on Delta, Delta Shuttle®, the Delta Connection® carriers, and our Worldwide Partners®. Delta's employees, customers, and community partners together form a force for positive local and global change, dedicated to bettering standards of living and the environment where we and our customers live and work. Delta also participates in community affairs to aid services such as cancer research society, Hurricane fund services etc. To-Be: Distinctive Competency: Delta’s goal is to be a leader in customer service to outweigh other competitors. Also, by improving the infrastructure and reduction in operation cost they want to offer the most competitive rates to its consumers.
- #24 As-Is: Administrative: Currently Delta has one of most effective approach to operate within its business units. They recently formed an entity named E-business organization who focuses only on the opportunities to grow in that particular sector. Key Processes: At Delta, with the growing need for e-Business, the most key process is to establish and fund e-business projects. The management committee believes that the opportunities are over-whelming and there is a need for some priotaizing. Business also believes that this business is technology driven and continuous investment is extremely necessary. HR/Skills: Business division may need training for business management topics. To-Be: Administrative: The administrative structure will be the same for now and no changes will be introduced. Key Processes: In future, Delta may use various matrix approaches to priotarize the projects. HR/Skills: The firm can also appoint consultants and experts to fulfill its project management needs.
- #25 As-Is: Key Applications: Delta currently uses Proprietary applications which are based on TIBCO, Oracle, SQL2000, Windows, Unix technologies. System Competency: Delta has been using cutting edge technologies as the management firmly believes, “this is technology driven business”. Most of its processes are automated and scheduled as a nightly batch process. Governance: To-Be: Key Applications: Delta’s technology division will continue building its applications using cutting edge technologies. System Competency: Delta’s goal is to have a robust platform in place with improved management skills. Governance:
- #26 As-Is: Architecture: The information required for the firm’s core processes was captured in nine central databases and TIBCO middleware was built around the databases so that new applications could access and if appropriate relevant data. Key Processes: Delta’s key process for the IT division includes responding to crisis situation such as Y2K. Their current infrastructure is called Digital Nervous System which is built around firm’s core processes. Also, it uses “Publish and subscribe” approach where people can be notified regarding urgent situation at their own discretion. HR/Skills: Delta needs to offer more training to its employees to provide better support. To-Be: Architecture: No changes will made to its technology architecture in near future. Key Processes: With the ongoing improvement, Delta’s technology team would continuously working on enhancing the customer’s experience by providing more robust platform. HR/Skills: Delta may outsource some of non-critical technology tasks to overseas for savings in operational cost.
- #27 ** Only graph of slide taken from IIT Professor S.Seshadari’s slide, inputs and details are my own understanding of working of Delta case. Details notes are attached in respective slides points. This is only an index slides and so does not have notes.
- #28 *** Above Pictures copied from Images in Google Any talk of alternatives must be done taking in mind that For the first time in its 76-year history, Delta files for Bankruptcy protection in September 2005. [1] In December 2006, Delta files a five-year reorganization plan with the bankruptcy court and rejected Tempe-based US Airways' unsolicited offer to buy Delta in a hostile bid now worth $8.4 billion. [1] Source: http://www.cbsnews.com/elements/2005/09/15/in_depth_business/timeline846841_0_main.shtml [1] On September 14, 2005, Delta filed for Chapter 11 bankruptcy protection for the first time in its 76-year history. The company cited high labor costs and record-breaking jet fuel prices as factors in its filing. At the time of the filing, Delta had $20.5 billion in debt, $10 billion of which accumulated since January 2001 [1] Source: http://www.cbsnews.com/elements/2005/09/15/in_depth_business/timeline846841_0_main.shtml Delta Air Lines files a five-year reorganization plan with the bankruptcy court that calls for it to emerge from Chapter 11 as a stand alone company. The carrier says it has rejected Tempe-based US Airways' unsolicited offer to buy Delta in a hostile bid now worth $8.4 billion. [1] Source: http://www.cbsnews.com/elements/2005/09/15/in_depth_business/timeline846841_0_main.shtml [1] http://en.wikipedia.org/wiki/Delta_airlines In era of market consolidation in wake of declining revenues and increasing operating cost, fuel cost and competition. Delta named Richard Anderson, former CEO of Northwest Airlines and executive at United Health Group, as a replacement for outgoing CEO Gerald Grinstein. On January 15, 2008, Delta Air Lines was reported to be in merger talks with Northwest Airlines and United Airlines.[52] Although each airline has declined to comment officially, many notable newspapers, as well as industry analysts, expect an announcement as early as mid-February 2008 as to which airline the Delta Board of Directors would like to pursue a merger with. Code sharing http://en.wikipedia.org/wiki/Delta_airlines Under a code sharing agreement participating airlines can present a common flight number for several reasons, including: Connecting flights - This provides clearer routing for the customer, allowing a customer to book travel from point A to C through point B under one carrier's code, instead of a customer booking from point A to B under one code, and from point B to C under another code. This is not only a superficial addition as cooperating airlines also strive to synchronize their schedules and coordinate luggage handling, which makes transfers between connecting flights less time-consuming. Flights from both airlines that fly the same route - This provides an apparent increase in the frequency of service on the route by one airline Perceived service to unserved markets - This provides a method for carriers who do not operate their own aircraft on a given route to gain exposure in the market through display of their flight numbers
- #29 Partnerships, diminishing returns and code sharing More Code Sharing with International and domestic airlines – cooperative services agreement between the major carriers to gain exposure in the market through display of their flight numbers. [1] Pros – Like Australian airline, Qantas Airways and the US's American Airlines to gain exposure in the market through display of their flight numbers like in 1990 when the trio created new business strategy. [1] Cons Tie-up with airlines that does not come at par with standards set by Delta. Possibility of losing Delta long standing customers to competition. [1] http://en.wikipedia.org/wiki/Delta_airlines Code sharing is a business term which was first originated in the airline industry in 1990 when the Australian airline, Qantas Airways and the US 's American Airlines combined services between an array of US domestic cities and Australian cities. The code share was part of a "cooperative services" agreement between the two carriers before the various airline alliances were formed. It refers to a practice where a flight operated by an airline is jointly marketed as a flight for one or more other airlines. Most major airlines today have code sharing partnerships with other airlines, and code sharing is a key feature of the major airline alliances.
- #30 Alter 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, notably five nations it dubs the BRICK countries -- Brazil, Russia, India, China, and South Korea. Pros Greater global presence and possibility of higher profits in future over international routes specially in emerging markets of BRICK nations. Cons Late entrant into the market Delta applied to serve a daily non-stop flight from Atlanta to Beijing, China starting in March, 2006, but rights were instead awarded to American Airlines operating from Chicago to Shanghai. Delta served several cities in Asia, including Hong Kong, Seoul and Bangkok, from Portland and Los Angeles, using L1011s with stops in Anchorage for refueling. The hub at Frankfurt would eventually be closed. Discontinued services have included Shreveport-Monroe and Birmingham-Jackson, Mississippi. Closure of the Dallas-Fort Worth hub, created after Braniff Airlines ceased operations in 1982, in 2005. http://en.wikipedia.org/wiki/Delta_airlines
- #31 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 centres workers Cons Face employee wrath, disatisfaction could lead to hostile takeover by a competitor like American Airlines. Source: Google www.Makemytrip.com, the leading online travel agency. Like Zuji, the leading online travel agency in the Asia Pacific region; lastminute.com, Europe’s leading online travel site SynXis Corporation, a privately-held provider of reservation management, distribution and technology services for hotels ShowTickets.com , Las Vegas-based All State Tours, Inc., a leading distributor of show tickets and tours in the entertainment capital of the world Site59, a leading online seller of last-minute merchant model air, hotel and rental car inventory. Source: http://www.cbsnews.com/elements/2005/09/15/in_depth_business/timeline846841_0_main.shtml Dec. 28, 2006 In its latest monthly operating report with a federal bankruptcy court, Delta says its loss in November was reduced to $49 million. The company lost $181 million during the same month last year. Oct. 27, 2004 Delta, pilots reach tentative agreement on pay cuts and other concessions that will save airline $1 billion a year. Around same time, Delta gets $1.1 billion in fresh financing from creditors. Sept. 8, 2004 Delta says it will cut up to 7,000 more jobs over 18-month period and shed its Dallas hub as part of a sweeping turn-around plan aimed at saving the airline. July 20, 2004 Pilots up concessions offer to airline, say they are willing to take a 23 percent pay cut. 2001 - 2003 Delta eliminates roughly 16,000 jobs, or 21 percent of its workforce compared to pre-Sept. 11 levels, by mid-2003.
- #32 Only pictures copied from Images in Google, rest concept and diagram drawn using MS Power point are my own creation. Change process – Demand supply, distribution, marketing, Seat reservation like the renowned Sabre system. Strengthening Technology division and Tie – up / Acquire with Online travel websites Source: Google www.Makemytrip.com, the leading online travel agency. Like Zuji, the leading online travel agency in the Asia Pacific region; lastminute.com, Europe’s leading online travel site SynXis Corporation, a privately-held provider of reservation management, distribution and technology services for hotels ShowTickets.com , Las Vegas-based All State Tours, Inc., a leading distributor of show tickets and tours in the entertainment capital of the world Site59, a leading online seller of last-minute merchant model air, hotel and rental car inventory.
- #33 Sources: Like American Airlines, Delta can also get computer system support from consulting companies like Sabre. Sabre Online travel system is a world leader in developing and deploying Airlines systems and solutions. From shoot off of American airlines to an independent company which the parent company and one of the popular websites – Travelocity.com American Airlines began offering customer access to its electronic reservation system, SABRE , on the CompuServe Information Service in the 1980s , under the "Eaasy SABRE" [1][2] brand name. This service was extended to America Online in the 1990s . Travelocity was created in 1996 , as a subsidiary of Sabre Holdings , itself a subsidiary of American Airlines and was run by long-time Sabre I.T. executive Terrell B. "Terry" Jones. As one of the pioneers of web-based disintermediation , Travelocity.com was the first website that allowed consumers themselves not only to access Sabre's fare and schedule information, but also to reserve, book, and purchase tickets without the help of a travel agent or broker. In addition to airfares, the site also permits consumers to book hotel rooms, rental cars, cruises and packaged vacations.
- #34 Only pictures copied from Images in Google. Change process – Demand supply, distribution, marketing, Seat reservation like the renowned Sabre system. Strengthening Technology division and Tie – up / Acquire with Online travel websites http://www.sabre-holdings.com/aboutUs/history.html Sabre through history http://en.wikipedia.org/wiki/Delta_airlines I have tried to compare the systems Delta has vis-à-vis leader in Airlines Industry solution provider Sabre. Much of Delta woes can be solved with Information systems are adopted and Business Intelligence is gained via better analytical information these systems provide and at a click of a button. Here is historical perspective of developments in Airline systems. 1992 Sabre introduces the Sabre® AirFlite™ flight scheduling system. 1994 Sabre and SNCF (French National Railroad) install the RESARAIL™ rail reservations and distribution system for the TGV network. The system is subsequently extended to the English Channel Tunnel. 1996 The Sabre Group does an IPO of 18 percent of stock. Travelocity.com launches March 12, 1996. 1998 Sabre Airline Solutions completes the largest system migration in the airline industry's history when 200 U.S. Airways systems are shut down and shifted to Sabre systems. Sabre forms a joint venture with ABACUS International to establish the SabreSonic™ passenger solution as the CRS market leader in Asia. 1999 Sabre introduces Best Fare Finder pricing, which allows travel agents to search for flights based on fare, rather than schedule. Travelocity announces it will merge with Preview Travel – the third largest online travel site at the time. 2000s 2000 Sabre spins off from AMR 100 percent. Sabre purchases GetThere, an online corporate travel booking tool. Sabre® eVoya SM Webtop is introduced as the next generation of travel agency technology tools, making it simple for Sabre Connected SM agencies to become Internet ready.
- #35 High maintenance cost, low fuel efficiency and big size not suitable for many routes. Lockheed L-1011 - for many years the workhorse of the Delta fleet. 3. On September 23, 2004, a Delta spokesperson confirmed plans to sell eight MD-11s to FedEx. The remainder MD-11s were sold to World Airways for charter use, and some were converted to freighters for UPS. Sources: http://www.centennialofflight.gov/essay/Commercial_Aviation/Dereg/Tran8.htm http://www.econlib.org/library/Enc/AirlineDeregulation.html http://www.gao.gov/archive/1999/rc99092.pdf http://www.gao.gov/archive/1999/rc99092.pdf http://www.econlib.org/library/Enc/AirlineDeregulation.html http://onlinepubs.trb.org/onlinepubs/sr/sr255/sr255toc.pdf In 1990, Delta became the first U.S. airline to operate the McDonnell Douglas MD-11 aircraft [14], leasing two from Mitsui. Delta operated 15 MD-11s. Delta's most dramatic expansion (at that time) came with its purchase of Pan Am's European routes in 1991 which included all north Atlantic routes except Miami to London and Paris, and the Frankfurt, Germany hub, after Pan Am declared bankruptcy. The purchase gave Delta the largest transatlantic route network, a fleet of 21 Airbus A310 aircraft, and the Worldport (Terminal 3) at JFK. Due to these acquisitions, Delta became and remains today the largest U.S. transatlantic carrier, in terms of passengers carried and number of flights operated. Delta also acquired Pan Am's northeastern shuttle, inheriting of a number of Boeing 727s, and forming what is today Delta Shuttle. In 1991, as one of the conditions for Delta's financial support of Pan Am, Delta had the rights to use the Pan Am name on flights across the Atlantic. Delta obtained all of Pan Am's remaining transatlantic rights, except Miami to Paris and London, in November, 1991, including the route from Detroit to London, despite Northwest Airlines' objections. It was an unusual route for Delta given its small presence in Detroit, and Northwest's correspondingly larger operations.[15] Northwest later attempted to buy US Air's (now US Airways) Baltimore-London route for $5 million and transfer the route to Detroit[16] but ended up buying the route from Delta in 1995[17] for a rumored $32 million. The naming right was never exercised even though the Pan Am name was a much more widely recognized name in Europe than Delta. Within weeks after the route and asset transfers were complete, Delta ended its financial support, leading to Pan Am ceasing operations on December 4, 1991.[18]
- #36 Stakeholders include all those involved or affected by the project Most of the source for this has been website: Source: http://www.cbsnews.com/elements/2005/09/15/in_depth_business/timeline846841_0_main.shtml 1997 - 2003 Leo F. Mullin, President and CEO Be part of session Brainstorming session with CIO, and with Delta Technology team, Make Delta a better IT governed organisation Organisational change processes from Brick to Click kind of organisation Human 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 Unit 4 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, 4 Delta 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 destination Lower fare. 1. Who. Name & Tile : 1997 - 2003, Leo F. Mullin, President and CEO 2. Role in the project Negotiator with Delta workers, Pilots, Grounds staff, Creditors, US Airways Management, Bankruptcy Court. 3. What his/her must accomplish a. Keep Delta surviving and running after Sept. 11, 2001 Terrorist attacks brought company to its knees. 2001 - 2003 b. Negotiate with Delta workers before deciding 22 percent pay cut for pilots & eliminating nearly 16,000 jobs, or 21 percent of its workforce compared to pre-Sept. 11 levels., by mid-2003. c. Use IBM rather than its own employees to maintain its computer systems 4. Current Presently what he/she is doing. a. 2001 - Bring Delta software and technology, which was outdated and facing Y2K crisis then, at par with competition like American Airlines who had introduced websites like Travelocity in 1996 and changed their processes using SABRE software systems and were starting to succeed in transforming organization using IT. 5. What he/she will be doing after the project: Maybe consulting job in airline industry or retire after a long career. Source: http://www.cbsnews.com/elements/2005/09/15/in_depth_business/timeline846841_0_main.shtml Who. Name & Tile: 2001-2003- Delta workers Role in the project: Negotiating between Delta workers, Union and Delta Management What his/her must accomplish: Negotiating with Delta Management and minimizing Job elimination be it Ground Staff duty, Cargo, Customer Front Desk, Pilots, Engineers, Lineman, Support duty staff by mid-2003 Presently what he/she is doing: Ground Staff duty, Cargo, Customer Front Desk, Pilots, Engineers, Lineman, Support staff. What he/she will be doing after the project: Their job be save and not face elimination. Source: http://www.cbsnews.com/elements/2005/09/15/in_depth_business/timeline846841_0_main.shtml Who. Name & Title: Delta Technology Unit, 2. IBM Consultants for Computer system management Role in the project: Implementing new processes, initiatives taken up by Leo F. Mullin. What his/her must accomplish: Top management Use IBM rather than its own employees to maintain its computer systems. Delta Technology manage part of Computer systems, part to be managed by IBM consultants. Presently what he/she is doing: 1. Some employees in the Delta technology unit would be affected, though unclear how many might lose their jobs. 2. IBM gains business What he/she will be doing after the project: Delta technology unit and IBM aspire to Manage whole Delta systems, job security. Source: http://www.cbsnews.com/elements/2005/09/15/in_depth_business/timeline846841_0_main.shtml Who. Name & Title: 2004 Gerald Grinstein CEO Role in the project: Negotiator with Delta workers, Pilots, Grounds staff, Creditors, US Airways Management, Bankruptcy Court. What his/her must accomplish 1. Negotiate with Delta workers before deciding cut up to 7,000 more jobs over 18-month period and shed its Dallas hub. 2. Negotiate which company Delta should tie-up after Tempe-based US Airways' unsolicited offer to buy Delta in a hostile bid now worth $8.4 billion. Presently what he/she is doing. 1. Implement Delta filing for bankruptcy 2. Implement transformation plan, which includes cutting annual costs by $5 billion by the end of 2006. 3. Implement Delta five-year reorganization plan with the bankruptcy court. and rejected.[1] 4. Manage delta emergence from bankruptcy protection as an independent carrier after reorganization What he/she will be doing after the project Retire after a long career. Who. Name & Tile: Dec 2006 Delta Air Lines' pilots union, Pilots Union Role in the project: Flying planes, travel management with ground staff. What his/her must accomplish: Support the with Delta Management in their move to oppose takeover by American Airlines even if it required pay cut for pilots Presently what he/she is doing: Opposition rally to show its opposition to U-S Airways' hostile takeover bid. What he/she will be doing after the project: Fly planes, maybe get IT training.
- #37 Recommendations: With Delta’s increased agility in expanding market areas with robust technology, they have the opportunity to expand their international travel services into emerging markets and customer segments. As per To attract more international customers they can use localized flavor of services during flight. For example during flight travel from China to US, All personals in the flight may wear traditional Chinese clothes and offer Chinese food as alternative. International air travel from US is expected to grow at the rate of 33% within next 5 year as per US department of commerce. Reference: http://tinet.ita.doc.gov/ Delta can leverage unused cargo area of passenger services for transportation of shipping goods from UPS, DHL and FedEx. This service can be prime fit since Delta uses hub and spoke model for their airline trips. Moreover, growth in ecommerce industry caused constant increase in shipping goods in last decade. Delta can merge with major competitor which will allow them to gain a great competitive advantage against the other competitors with reduction in cost. Similarly Delta can acquire small competitor to gain specific demographic market share. This strategy is very helpful in current time of increasing resource costs and thinning profit margins. By creating partnerships with various cruise companies, Delta can offer discounted traveling of their passengers in prospective cities. Create new revenue model via leveraging recently renewed event based IT infrastructure "Digital Nervous System". Delta can offer IT services using their flexible IT infrastructure to other airlines. Delta can also use IT infrastructure to integrate with FAA and airport security and share customer information minimizing customer security check at airports. Customer security checkpoints are major hurdle for airline customers so introducing integrated environment would increase customer loyalty.
- #38 CEO Leo Mullin will be responsible to create vision and business objectives for partnerships with Cargo business providers for possibility of getting business from them. However defining weight limitations and possibility of safety regulations may be an issue with further progress in this direction. Vicki Escarra will be responsible for identifying revenue recognition milestones and leverage existing resources to target new market areas . However customer service are may get impacted due to resources are allocated to pursue new business and may impact on Delta’s loyal customer base. Within 3-6 months Leo Mullin and Vince Caminti need to come up with various strategies with improving existing employee experience at Delta. CIO Bob Derodes will work with business partners to promote Delta’s new IT Infrastructure in an airline industry, at the same time they would need to provide interface for customers so they can check schedules, book ticket online using mobile devices available in market. Right now there is very small customer base who would utilize this feature, however Delta can be very ahead of offering such services in marketplace. Not only that most of users are expected to be business executives who are also loyal to Delta.
- #39 Leo Mullin will need to work with business and IT executives to form a eBusiness projects portfolio committee and come up with a prioritized list of eBusiness initiatives. Since it is relatively new area in Airline industry it would be hard to assign matrices. Vicki and Vince will work together to start talk with various US and Europe based cruise services to transport their passengers to starting point of cruise. Also travel via Delta can be a part of package offered from Cruise companies. Since most of these cities are already covered by Delta they don’t see any major issue with this imitative.
- #42 Table of Contents Abstract____________________________________________________2 Company Background__________________________________________3 Objectives__________________________________________________7 Major Opportunities_________________________________________8 Major Problems______________________________________________9 Goals______________________________________________________10 Ansoff Matrix______________________________________________11 Porter's Five Forces_______________________________________12 Porter's Additional Forces_________________________________13 Super SWOT_________________________________________________14 Methods____________________________________________________15 Customer Relationship Management______________________15 Generic Value Chain___________________________________16 Business Planning Model_______________________________17 5 Level of Leadership_________________________________18 Strategic Alignment Maturity Summary_______________________19 Business Strategy__________________________________________21 Business Infrastructure____________________________________23 IT Strategy________________________________________________24 IT Infrastructure__________________________________________25 Alternatives_______________________________________________26 Stakeholders_______________________________________________35 Recommendations____________________________________________36 Next Steps_________________________________________________37 Appendix___________________________________________________41 References_________________________________________________42
- #43 References American Airlines, http://en.wikipedia.org/wiki/American_airlines Delta Air gets lift-off , http://www.theage.com.au/news/business/delta-air-gets-liftoff/ 2007/05/01/1177788105524.html Delta Air Lines, http://en.wikipedia.org/wiki/Delta_Airlines Delta Air Lines, http://www.delta.com/about_delta/index.jsp eBusiness Definition, http://www.wisegeek.com/what-is-ebusiness.htm http://biz.yahoo.com/e/080208/dal8-k.html http://www.cbsnews.com/elements/2005/09/15/in_depth_business/timeline846841_0_main.shtml http://en.wikipedia.org/wiki/Priceline.com http://www.freep.com/apps/pbcs.dll/article?AID=/20080219/COL06/802190400/1019/BUSINESS http://www.greenbiz.com/news/reviews_third.cfm?NewsID=36561 http://www.kiplinger.com/features/archives/2006/03/travelsites.html http://www.m-travel.com/news/2007/05/2007_will_be_ab.html Luftman, Jerry N. Managing the Information Technology Resource. New Jersey: Person Education, Inc., 2004 Maxwell, John C. “Developing the Leader Within You”, Thomas Nelson, 2002 Mintzberg, H., “Strategy-making in Three Modes”, California Management Review, (1973) MIS760 Class Notes, Terry Savage (2008) Ross, Jeanne, “E-Business at Delta Air Lines: Extracting Value from a Multi-Faceted Approach” CISR Working Paper No. 317, MIT Sloan, Aug 2001 Sabre through history, http://www.sabre-holdings.com/aboutUs/history.html South West Airlines, http://en.wikipedia.org/wiki/Southwest_Airlines US Airline Cost Index, 3rd Quarter 2005; Air Transport Association; www.airlines.org/files/cost.pdf Value Chain, http://en.wikipedia.org/wiki/Value_Chain Winer, Russell S. (2001), “A Framework for Customer Relationship Management,” California Management Review, 43 (Summer), 89-105.