Main issue
In 1994, there were ten major U.S. Airlines, and Continental ranked tenth in on-time performance, mishandled baggage, customer complaints, and denied boarding because of overbooking (Brown, et al 284). It had filed for Chapter 11 bankruptcy protection twice in the previous ten years and was heading for a third, and likely final, bankruptcy.
Why occurred
The airline lacked the corporate data infrastructure for employees access the information if need arose. Historically, Continental had outsourced its operational systems (e.g., reservations, payroll, and billing) to EDS, and employees have very limited access to data from these systems (Brown, et al 284). Data was locked away in systems that could support operations, but not decision-making. Each department had its own approach to data management and reporting. There was no support for ad hoc queries. Employees had to make decisions based on intuition rather than on information.
Management problems
Continental had gone through ten CEOs in ten years; it could not keep a consistent leader, which made it difficult to implement policy. Every time, there was a change in leadership, correspondingly he/she made new policies or changes. Continuous changes would cause Continental to lose its direction (Brown, et al 284). Data was not considered an asset at Continental, and was not governed for the good of the enterprise. It outsourced its operational systems to EDS, which resulted in there being no data to support operations. Besides that, each department had its own approach to data management and reporting. There was no connection between different departments, which lead to low efficiency.
Problems in the future
Even after continental airline got back to its feet, it has faced several challenges that have resulted to loss of profit and disappointing customers. This happened in the year 2002 when the airline lost roughly 60,000 customer reservations (Brown, et al 284). These losses happened in hours. The situation reoccurred in recent times when the airline system had a glitch in the reservation system. The trouble manifested itself when its system did not send information about reservations to other airlines and when the customers came in to book their flights; they found themselves stranded due to lack of seats. The issue of fraudsters impersonating agents has also occurred in the airline. Such a case was of an agent who made fake tickets and presented them to the airline in exchange for first class tickets (Brown, et al 285). Such situations are inevitable in such a successful airline.
Alternative cause of action on leadership
When the airline was facing the financial problems on a consistently for a period of ten years, many strategies were considered and some even implemented. The most obvious was giving leadership to new individuals. This proved to be a problem itself rather than being a solution. Every so often the company changed its CEO, the airline lost control even more (Brown, et al 284). This option was expensive and ineffective. Despite the fact that every new leadership came with fresh ideas and was very qualified, the problem was not with the leadership but the infrastructure. The company had neglected over the years to invest on technology and this come back to affect them in the future. Negligence in the name of cutting down cost is never a wise business solution.
Alternative cause of action on data management
The company had several options to curb the recurring problems. The most obvious was making the data available to all employees through creating their own IT department instead of outsourcing this part of the company. Another solution would be to embark in an active programming based algorithm to sideline the problem inevitably. This would make use of real data and information and instead of forwarding it all to the outsourcing company; they would save that information in their system and use it for booking purposes. However, the latter solution is rather expensive and it would require a large amount of IT support. The real time data could also be a problem in that problems could troubleshoot anytime at any time of the day due to the bulk resulting to clotting of data in the system.
Alternative cause of action on customer relation management
Continental airline major losses were however not all caused due to lack of data, but also the loss of customer luggage. This was a problem caused by poor employee management, employee and training. Another root cause could be the lack of enough employees. The solution at hand would be to employ more staff. This however would have been very poor method since the company was already deep in debt and no financial institution would have agreed to invest in the sinking ship. The only other solution was to engage in better customer relationship management.
Alternative cause of action on fraud
Fraud on the other hand was a problem that was bound to happen despite the fact that the company was performing impeccably and impressing all its shareholders. The ever improving of technology and the poor morals of the society promoted this vice. The company had a chance of dealing with this problem internally or externally. Internally, the company would have to put up very expensive and complicated programs that would help detect duplicitous activities in the website and delivering the suspects to the company or embarking on a nationwide education program that would show the disadvantages of engaging in morally ill activities (Brown, et al 289). This strategy however had a very high probability of failing however cheap it would seem.
Best cause of action on leadership
The most important policies that have put the airline to be among the best in the industry have been the two policies that have proved priceless every single year of successful business. The first is that data should not be real-time. This is a very expensive affair since the company would require twice the resources in hardware to run this kind of data compared to other forms of IT intelligence management. The second is to have the perfect position occupied by the most qualified individual. An example would be having tech educated and excelled individual filling the position of the CEO since the company is very IT oriented (Brown, et al 293). The company management made these mistakes over the years.
Best cause of action on data management
However, the IT intelligence is the factor that saved the company when it had no hope of ever becoming an excellent company. The company in the year 1998 embarked on the warehouse technology. The company invested $ 30 million into the real-time data warehouse project through a period of six years (Brown, et al 292). $ 20 million was invested in hardware and software whiles the remaining in support personnel (Brown, et al 292). At first, this kind of investment to a company that had already filed for bankruptcy seemed quite ridiculous. However, the company made $ 500 million in profits and realized over 1000% in ROI (Brown, et al 292). The company thereafter saved a total of $ 20 million in capital and $ 15 million in recurring data center caused by real-time data (Brown, et al 292).
Best cause of action on fraud
The best cause of action regarding to the fraudulent activities was also technology oriented. The company after acknowledging this problem installed software that identified individuals engaging in these activities and sent them an email issuing them with the company’s document that showed them the lawsuits they faced. This method saved the company from enormous losses that it was likely to incur in case the activity went unidentified (Brown, et al 286). So far, continental airlines has recovered 7million dollars of cash collected from the fraudsters and prevented a whopping 30 million dollars (Brown, et al 292).
Best cause of action on customer relation management
Proper customer relation management (CRM) has resulted to 150million dollars in revenue addition (Brown, et al 287). The company has kept a personal touch with the customers by sending them handwritten notes to them and whenever a customer makes a call to the offices, the system notes the address and gives the name and that way they customer and employees relate on a more personal note. This strategy is responsible of recurrent customers since they feel recognized by the company no matter the frequency of their travel.
Conclusion
Notably, continental airline has shocked the whole world at its ability to rise from the ashes to being a major shareholder in the very competitive airline industry. This however has not been an easy transition but a period of sacrifice and persistence by the whole employee family. In most situations, the company would have not survived but due to amazing leadership and strategic use of resources, the airline was able to do better that even where it had been in the earlier past. This does not mean that it just a smooth ride for the company, problems will be present. The difference will be how the management will handle them.
References
Brown, Carol, et al. Managing Information Technology. 2012
