15.571 Generating Business Value From Information TechnologyThe Delta Air Lines StoryDelta’s Unification Operating ModelDiscussion QuestionsComparative Financials for Continental and Delta Market Comparison for Delta and ContinentalContrasting Approaches to "Fixing" Operating DataKey Findings on the Information ExplosionMIT OpenCourseWarehttp://ocw.mit.edu 15.571 Generating Business Value from Information TechnologySpring 2009 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms.Center for Information Systems Research (CISR) © 2009 MIT Sloan CISR - RossCenter for Information Systems Research (CISR) © 2009 MIT Sloan CISR - RossJeanne W. RossDirector & Principal Research ScientistCenter for Information Systems Research (CISR)MIT Sloan School of Management 15.571 Class 8: The Data Driven OrganizationGenerating Business Value Generating Business Value From Information Technology15.571 From Information TechnologyCenter for Information Systems Research (CISR) © 2009 MIT Sloan CISR - RossCenter for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross11997 As-is 17 functional silos 17 IT units 17 major platforms 17 answers to a single customer question1997 To-be Process view of the firm Corporate infrastructure to support cross-functional processes Standardized environment Focus on customerSource: e-Business at Delta Air Lines, Jeanne W. Ross, MIT CISR Working Paper #317, 2001.In 1997, Delta was worst performing airline on key metrics, such as on-time performance,mishandled baggage, and customer complaintsThe Delta Air Lines StoryThe Delta Air Lines StoryCenter for Information Systems Research (CISR) © 2009 MIT Sloan CISR - RossCenter for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross2Source: Adapted from Delta Air Lines documents. Used with permission.Delta’s Unification Operating ModelDelta’s Unification Operating ModelBusinessReflexesEmployee RelationshipManagementDelta Nervous SystemElectronic EventsNine Core DatabasesLocationMaint.ScheduleFlightEquip. Employee Aircraft CustomerTicketClean/ServiceAircraftUnloadAircraftFlightArrival andCloseoutMonitorFlightFlightDepartureand CloseoutLoad AircraftPrepare for FlightDepartureAllocateResourcesBaggageInflightBoardingCrownRoomTicketCounterSkycapTravelAgentReservationsSkymilesSkylinksPersonalization Digital RelationshipsLoyalty ProgramsOperational PipelineReservationSystemsPDAsScannersLaptopsDesktopsCell PhonesVideoVoicePagersGate ReadersKiosksHand HeldsCustomer ExperienceCenter for Information Systems Research (CISR) © 2009 MIT Sloan CISR - RossCenter for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross3 What did Delta do right in its transformation efforts? What risks did Delta take on as a result of the Delta Nervous System project? How did Delta's approach to going from Worst to First compare with Continental's?Discussion QuestionsDiscussion QuestionsCenter for Information Systems Research (CISR) © 2009 MIT Sloan CISR - RossCenter for Information Systems Research (CISR) © 2009 MIT Sloan CISR - RossCurrent Market Cap:•Delta: $1.55 B•Continental: $1.24 B1Delta 2007 figures are for first 8 months of fiscal yearComparative Financials for Continental and Delta Comparative Financials for Continental and Delta 2007 2006 2005 2004 2003ContinentalOperating Revenue $14,232 $13,128 $11,208 $9,899 $9,001Operating Income 687 468 (39) (238) 188DeltaOperating Revenue $13,3581$17,532 $16,480 $15,235 $14,308Operating Income 796158 (2,001) (3,308) (785)Center for Information Systems Research (CISR) © 2009 MIT Sloan CISR - RossCenter for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross5Market Comparison for Delta and ContinentalMarket Comparison for Delta and Continental-100%604020-20%0%-40%-60%-80%0.0MillionsMay07 Sep07 Jan08 May08 Sep08 Jan09Delta Air Lines NewCALDALas of 27-Feb-2009VolumeFigure by MIT OpenCourseWare.Center for Information Systems Research (CISR) © 2009 MIT Sloan CISR - RossCenter for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross6 Ripping out legacy and installing new systems presents the challenge of the "big bang" (i.e. risky, high-cost implementation). Installing "fixes" like data warehouses and web services presents the challenge of constant maintenance (i.e., costly upkeep). Fixing applications provides opportunities for operational efficiencies. Fixing data warehouse provides opportunities for decision support. Both approaches allow a firm to operate the way it wants to operate. Both approaches demand business process changes to drive value.Contrasting Approaches to "Fixing" Operating DataContrasting Approaches to "Fixing" Operating DataCenter for Information Systems Research (CISR) © 2009 MIT Sloan CISR - RossCenter for Information Systems Research (CISR) © 2009 MIT Sloan CISR - Ross7 Data storage requirements are growing– Granular operating data– Unstructured data, video, wikis, email, images Technology solutions can manage costs and risks—but that's the easy part Don't assume that putting good information in the hands of smart people = business value– Identify what is sacred/core– Define clear business goals– Insist on definitive costs and benefits– Change somethingKey Findings on the Information ExplosionKey Findings on the Information
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