Practical Assignment 1 – Due week 10 – Weight 20%
ACME Airlines Flies High With Its Real-Time Data Warehouse
As business intelligence (BI) becomes a critical component of daily operations, real-time data warehouses that provide end users with rapid updates and alerts generated from transactional systems are increasingly being deployed. Real-time data warehousing and BI, supporting its aggressive ‘Next Gen’ business plan, have helped ACME Airlines alter its industry status from “worst to first” and then from “first to favourite.” ACME Airlines is a leader in real-time BI. In 2004, ACME won the Data Warehousing Institute’s Best Practices and Leadership Award.
Problem(s)
ACME Airlines was founded in 1934, with a single-engine Lockheed aircraft in the southwestern United States. As of 2006, ACME was the fifth largest airline in the United States and the seventh largest in the world. ACME has the broadest global route network of any U.S. airline, with more than 2,300 daily departures to more than 227 destinations. Back in 1994, ACME was in deep financial trouble. It had filed for Chapter 11 bankruptcy protection twice and was heading for its third, and probably final, bankruptcy. Ticket sales were hurting because performance on factors that are important to customers was dismal, including a low percentage of on-time departures, frequent baggage arrival problems, and too many customers turned away due to overbooking.
Solution
The revival of ACME began in 1994 when Peter Gordon became CEO and initiated the ‘Next Gen’ plan, which consisted of four interrelated parts to be implemented simultaneously. Gordon targeted the need to improve customer-valued performance measures by better understanding customer needs as well as customer perceptions of the value of services that were and could be offered. Financial management practices were also targeted for a significant over- haul. As early as 1998, the airline had separate databases for marketing and operations, all hosted and managed by outside vendors. Processing queries and instigating marketing programs to its high-value customers were time consuming and ineffective. In addition, information that the workforce needed to make quick decisions was simply not available. In 1999, ACME chose to integrate its marketing, IT, revenue, and operational data sources into a single, in-house, EDW. The data warehouse provided a variety of early, major benefits. As soon as ACME returned to profitability and ranked first in the airline industry in many performance metrics, Gordon and his management team raised the bar by escalating the vision. Instead of just performing best, they wanted ACME to be their customers’ favourite airline. The ‘Next Gen’ plan established more actionable ways to move from first to favourite among customers. Technology became increasingly critical for supporting these new initiatives. In the early days, having access to historical, integrated information was sufficient. This produced substantial strategic value. But it became increasingly imperative for the data warehouse to provide real-time, actionable information to support enterprise-wide tactical decision making and business processes.
Luckily, the warehouse team had expected and arranged for the real-time shift. From the very beginning, the team had created an architecture to handle real-time data feeds into the warehouse, extracts of data from legacy systems into the warehouse, and tactical queries to the
Practical Assignment 1 – Due week 10 – Weight 20%
warehouse that required almost immediate response times. In 2001, real-time data became available from the warehouse, and the amount stored grew rapidly. ACME moves real-time data (ranging from to-the-minute to hourly) about customers, reservations, check-ins, operations, and flights from its main operational systems to the warehouse. ACME’s real-time applications include the following:
• Revenue management and accounting
• Customer relationship management (CRM)
• Crew operations and payroll
• Security and fraud
• Flight operations
Results
In the first year alone, after the data warehouse project was deployed, ACME identified and eliminated over $7 million in fraud and reduced costs by $41 million. With a $30 million investment in hardware and software over 6 years, ACME has reached over $500 million in increased revenues and cost savings in marketing, fraud detection, demand forecasting and tracking, and improved data centre management. The single, integrated, trusted view of the business (i.e., the single version of the truth) has led to better, faster decision making. ACME is now identified as a leader in real-time BI, based on its scalable and extensible architecture, practical decisions on what data are captured in real time, strong relationships with encl users, a small and highly competent data warehouse staff, sensible weighing of strategic and tactical decision support requirements, understanding of the synergies between decision support and operations, and changed business processes that use real-time data.
QUESTIONS FOR CASE STUDY (Approximately 2000 words)
1. Describe the benefits of implementing the ACME ‘Next Gen’ strategy.
2. Explain why it is important for an airline to use a real- time data warehouse.
3. Identify the major differences between the traditional data warehouse and a real-time data warehouse, as was implemented at ACME.
4. What strategic advantage can ACME derive from the real-time system as opposed to a traditional information system?
The above case study assignment must meet Williams Business College report writing guidelines.
