CHAPTER 11:
JETBLUE AND WESTJET: A TALE OF TWO
INFORMATION SYSTEM PROJECTS
- How important is the reservation system at airlines such as WestJet and JetBlue. How does it impact operational activities and decision making?
Airlines such as WestJet and JetBlue
promote low-cost and high-efficiency carriers by giving extremely competitive
fares and outstanding customer service. Reservation system for these airlines
are so important that when these companies need to make sweeping IT upgrades,
their relationships with customers and their brands can be tarnished if things
go awry. This can be seen when in 2009, both airlines upgraded their airline
reservation systems, SabreSonic CSS was launch, customers struggled to place
reservations, and the WestJet Web Site crashed repeatedly. WestJet’s call
centers were also overwhelmed, and customers experienced slowdowns at airports.
This delay provoked a deluge of customer dissatisfaction. In addition to the
increase in customer complaint calls, customers also took to the Internet to
express their displeasure. Angry flyers expressed outrage on Facebook and
flooded WestJet’s site, causing the repeated crashes.
These problems impact both of the
airlines operational activities and decision making to change their initial
carrier which had started out as a system designed for smaller start-up
airlines to a better carrier. Other than that, both airlines needed more
processing power to deal with a far greater volume of customers. They also needed
features like the ability to link prices and seat inventories to other airlines
with whom they cooperated. Both JetBlue and WestJet contracted with Sabre Holdings
to upgrade their airline reservation systems. The differences between WestJet
and JetBlue’s implementation of Sabre’s SabreSonic CSS reservation system
illustrate the dangers inherent in any large-scale IT overhaul. It also serves
as yet another reminder of how successfully planning for and implementing new
technology is just as valuable as the technology itself.
- Evaluate the risks of the projects to upgrade the reservation systems of WestJet and JetBlue and key risk factors.
Upgrading reservations systems carries
special risks. From a customer perspective, only one of two things can happen: either
the airline successfully completes its overhaul and the customer notices no
difference in the ability to book flights, or the implementation is botched,
angering customers and damaging the airline’s brand.
The key risk factors that should be
considered are the project size, project structure, and experience with
technology. The project size is indicated by cost, time, number of
organizational units affected, and issue of organizational complexity.
For WestJet, the critical issue that
they face was the transfer of its 840, 000 files containing data on transactions
for past WestJet customers who had already purchased flight, from its old
reservation system serves in Calgary to Sabre servers in Oklahoma. The
migration required WestJet agents to go through complex steps to process the
data. Since WestJet had not anticipated the transfer time required to move the
files, they had failed to reduce its passenger loads on flights operating
immediately after the charge over.
Next key risk factor is the project
structure. It is structured, defined requirements run lower risk. Hundreds of
thousands of bookings for future flights that were made before the charge over
were inaccessible during the file transfer from Calgary to Oklahoma. The files
still cannot be access for a period of time thereafter, because Sabre had to adjust
the flights using the new system.
Last but not least, they need to have
experience with technology to deal with the risk. JetBlue learned from
WestJet’s mistakes, and built a backup web site to prepare for the worst case
scenario. JetBlue made sure to switch its files over to Sabre’s serves on a
Friday night, because Saturday flight traffic is typically very low. JetBlue
also sold smaller numbers of seats on the flights that did take off that day.
JetBlue experienced a few glitches- call wait times increased and not all
airport kiosks and ticket printers came online right away. But compared to
WestJet, the company was extremely well prepared to handle problems and risk
such as these.
- Classify and describe the problems each airline faced in implementing its new reservation system. What people, organization, and technology factors caused those problems?
Both WestJet and JetBlue previously used
a system designed for start-up airlines with simpler needs. As the carries
grew, they needed more processing power to deal with increasing numbers of
customers. They also wanted additional functions, such as the ability to link
their prices and seat inventories to other airlines with whom they might wish
to cooperate.
WestJet and JetBlue independently
selected a system offered by Sabre holdings Corp. the system sells seats and
collects passengers payment but it also controls much of the passengers experience:
shopping on the airlines web site, interacting with reservation agents; using
airport kiosks; selecting seats; checking bags; boarding at the gate; rebooking
and getting refunds for cancellations.
The over might transitions of WestJet
840, 000 files didn’t go well. This is because the migration required WestJet
agents to go through complex steps to process the data, making matters worse,
WestJet didn’t reduce the number of passengers on the flights operating after
the cutover, nor did it tell customers of its upgrade plans until the day of
the switch. Westjet’s customer loyalty scores tumbled as a result of long waits
and booking difficulties. The airline sent apology letters, offered flight
credits to customers and bolstered call center with temporary staffers.
On the other hand, JetBlue make its
switch on Friday night because Saturday traffic tends to be low. It also sold
low numbers of seats on remaining flights with WesJet’s crashing web site issue,
JetBlue develop a backup site to counter the crashing web site problem.
However, there are still glitches call wait times increased and not all of the
airport kiosks and ticket printers came online right away. But JetBlue had also
experienced similar customer service debacles in the past. In February 2007,
JetBlue tried to operate flights during a blizzard when all other major
airlines had already canceled their flights. This turn out to be a poor
decision, as the weather conditions prevented the flights from taking off and
passengers were stranded for as long as 10 hours. JetBlue had to continue
canceling flights for days afterwards, reaching a total of 1,100 flights
canceled and loss of $30 million. JetBlue management realized in the wake of
the crisis that the airline’s IT infrastructure, although sufficient to deal
with normal day-to-day conditions, was not robust enough to handle a crisis of
this magnitude. This experience, coupled with the observation of WestJet’s
struggles when implementing its new system, motivated JetBlue’s cautious
approach to its own IT implementation.
- Describe the steps you would have taken to control the risk in these projects?
The steps to control the risk / managing
project risk involves identifying nature and level of risk of project; each
project can then be managed with tools and risk-management approaches geared to
level of risk; managing technical complexity which involves internal
integration tools.
Next, inventory can also help control
risk. The step is to inventory the situation. That is, identify all of the
risks possible in the project. The inventory should include all internal
factors for the project such as resource changes, assumption failures, and
sponsor availability. It should also include all external factors such as a
change in company direction or a change of technology direction. Most of all,
however, it should include the things that are new in the project. If the
project is working with a new technology, is using a new development
methodology, or even if there are new, relatively unknown team members, these
need to be listed as potential risks to the project. The purpose of the
inventory phase isn’t to classify the risk or identify its importance. That
step happens later. The goal is to collect all the risks. Once a list of potential risks is
completed, it’s time to evaluate them. Each risk should be evaluated based both
on its probability and on the impact that it would cause if it happens. The
loss of a key team member may have a low probability; however, the impact to
the project can be great. Some people struggle with the evaluation step because
both of the numbers, percentage and impact, are guesses. They recognize that
even subtle changes in the values for these numbers can have a huge impact on
the total risk of the project. However, in general, the objective here isn’t to
come up with a single number that represents each risk. The objective is to
develop a framework for evaluating the various risks against one another. Although
precision in the estimating process is useful it's not essential. The other
factor to evaluate when looking at a risk is its duration--how long that it can
have a potential impact on the project. For instance, the loss of a subject
matter expert early in the project is a risk because their input is still
needed. However, later in the project they may not have much input and
therefore aren't a risk if they leave. The risk of a functional analyst leaving
is greatest in the initial phases of the project when they are intensively
interacting with the customer. Later on in the project, the loss of the
functional analyst has a smaller potential impact for the project. In order to
get a consistent number for all of the risks, multiply the probability which
should be per interval of duration by the impact and finally multiply that by
the duration. The resulting number is a single number, a risk quotient, which
can be used to prioritize risks within the project. For instance, if the
probability of the risk happening in a given week is 10%, the number of weeks
the risk may happen is 10 weeks, and the impact is $1000, the overall risk is
$1000. (.10*10*1000 = 1000)
Prioritize
Now that risk quotient for the
various risks is identified, it's possible to prioritize the risks for the
project. It’ll give a clear vision of what the risks are and which ones that’ll
ultimately need to be concerned about. This is also a part of the process that
typically helps validate the estimates made above. For instance, if the greatest
risk is personnel turnover (as it usually is) then, the probability may have to
be evaluated more objectively. If the average person stays at the organization
for three years it can be assume a probability of them leaving in a given week
is 1/156 (3x52 weeks/year) which is a 0.00641 percent chance.
Control and
mitigate
Once the risks are prioritized, go
through the list and identify which risks are controllable, which risks are
things that can be mitigated, and which risks must be accepted. For instance,
the risk of losing key personnel can be mitigated by providing completion
bonuses or even just monitoring their happiness more closely. Technical risks
can be controlled by moving them forward in the project so that they are proven
out nearly immediately. In general, the fastest way to reduce the overall risk
quotient for a project is to tackle the controllable risks early in the
project. The more quickly the risk associated with an item to be validated the
more quickly the risk is no longer a risk (so its probability can be zeroed
out.) Focusing on controllable risks won't completely eliminate risk but it
will quickly cut it down. The next step is to develop mitigation strategies for
those risks that can’t be controlled. Completion bonuses are a routine way that
organizations which are closing down operations mitigate the risk that the
people participating will leave before the project is ready to let them go. Not
every mitigation strategy needs to involve money. Simply getting a verbal,
personal commitment to finish the project is often enough to further reduce the
probability that a person will leave during the project. Most people value
their own sense of self-worth and they believe that their ability to meet their
personal commitments is a part of the admirable part of their self.
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