Etihad Airways Business Success - Case Study Example

ETIHAD AIRWAYS Name Course Tutor Institution Date Etihad Airways Etihad Airways started its operations in November 2003 and is the United Arab Emirates flag carrier airline. The airline was established in July 2003 by the royal decree and is based in Abu Dhabi. According to Cole (2011, p. 2), Etihad Airways has over one thousand flights in operation that fly weekly to ninety six cargo and passenger destinations in Africa, Asia, Middle East, America and Australia. The airline has a fleet of one hundred and one Boeing and airbus aircraft (Cole 2011, p. 12). In the United Arab Emirates, Etihad Airways is the second largest airline and the fourth largest in the Middle East. The corporate culture of Etihad Airways is built on measuring and refining the business, using various balanced scorecards that evaluate the most important key performance indicators of the airline (Cole 2011, p. 12). The management theme of “from good to great” has seen Etihad Airways become a major brand in the highly competitive aviation industry (Cole 2011, p. 2). Through financial, operational and commercial measures, Etihad Airways has portrayed phenomenon growth, not mainly focusing on top line growth, but using consistent commercial success and bottom line focus. During its eleven years of operations, Etihad Airways has been able to adopt best technology advancements that have enabled it to provide its customers with outstanding services (Umble, Haft & Umble 2003, p. 241). This report evaluates some of the technology features Etihad Airways has adopted, focusing mainly on Enterprise Resource Planning systems. The report reviews the ways in which Etihad has achieved success through the use of Enterprise Resource Planning systems, information and people. Furthermore, this report describes the various kinds of information employees at Etihad Airways require and store, and ways in which it can gain success, through implementation of an effective customer management system. Finally, this reports explains a strategy Etihad can formulate to use effective information technology metrics to improve its business success. Etihad Airway’s business success through the use of information, information technology and people Etihad has embraced the use of information technology in doing business and this has been a catalyst in creating new products, markets, areas of growth and revenues. Consequently, the change for the airline has been revolutionary. According to (Taneja 2011, p. 12), every business is a digital business because leading enterprises have been exploring the emerging opportunities provided by technology. Through advancements in information technology, Etihad Airways can acquire data, analyze it and act on it in real time. One of the information technology features Etihad Airways has acquired is the Enterprise Resource Planning system, which is one of the most important features of large businesses and influential technology developments in a corporate workplace (Umble, Haft & Umble 2003, p. 246). Some of the benefits of Enterprise Resource Planning systems are improvement of the process flow of an organization and provision of quality data to the senior leadership team (Umble, Haft & Umble 2003, p. 246). With such benefits, Etihad Airways is able to make strategic decisions with the purpose of acting in a flexible and timely manner, to the changes occurring in the business environment. According to (Umble, Haft & Umble 2003, p. 249), the Enterprise Resource Planning software is one of the fastest E-business software markets in growth. Etihad implemented its Enterprise Resource Planning System in 2006, forming a partnership with Oracle E-business suite (Cole 2011, p. 13). The implementation of the Enterprise Resource Planning system as a technology feature has been very beneficial to Etihad Airways. Firstly, it has enabled Etihad Airways to have an integration of systems that is closer to the applications of other business units increasing its success in business (Taneja 2011, p. 32). The implementation of the Enterprise Resource Planning System technology feature enabled the airline to have complete process automation and a user interface that is friendlier, and that which supports strong online interactions. Before its implementation, the finance and accounting systems in operation were outdated and there were no available technical updates (Taneja 2011, p. 32). Secondly, the existing software provider at the time, offered inadequate system support, which made maintenance very expensive. Consequently, Etihad Airways was spending a lot on a system that did not meet their organizational needs. According to Soh, Kien & Tay-Yap (2000, p. 48), information is data which is converted into useful and meaningful context to benefit an organization. The use of information in Etihad has contributed a lot to the success of Etihad Airways. The implementation of the Enterprise Resource Planning system technology feature has made major contributions to the ways in which information is achieved, analyzed and used in Etihad (Soh, Kien & Tay-Yap 2000, p. 48). Firstly, the integration of different functions in the financial and operational sections enabled better organization of the company’s processes in provision of information (Umble, Haft & Umble 2003, 250). Furthermore, it enabled Etihad Airways to conduct better profitability analyses on its routes, based on the information from the system. Soh, Kien & Tay-Yap (2000, p. 48) adds that the implementation of the Enterprise Resource Planning system enabled the airline to improve the yields gotten from their existing routes based on the information from the break even analysis. The Enterprise Resource Planning system provides the airline with useful information that enables good management of the organization. In addition, the airline is able to make decisions on new flight routes (Umble, Haft & Umble 2003, 252). The airline is able to save considerable amount of time when preparing monthly and annual management reports. The budget creation process and the verification process of invoices have also been simplified due to the integration of the systems (Umble, Haft & Umble 2003, 254). The implementation of the Enterprise Resource Planning system has enabled the automation of the monthly accounting and revenue budgeting processes. Furthermore, the system allowed the integration of the previous monthly accounting and revenue budgeting systems in operation with the current systems in operation after the implementation of ERP system (Umble, Haft & Umble 2003, 250). The users now have a central storage of information. The users can, therefore, access the past reports and create customized reports to work effectively with the new system during their daily operations. The automation of the revenue budgeting and monthly accounting systems saved the users considerable amounts of time by reducing the manual inputs, hence increasing work efficiency by seventy five percent (Taneja 2011, p. 123). The implementation of the ERP system allowed users in the airline to access the relevant operational and financial information from any department or station within the airline (Taneja 2011, p. 34). The users can generate various report versions and transfer data between versions efficiently. Reduced manual input of data from users, during creation of reports, increased transparency in calculations and computations (Soh, Kien & Tay-Yap 2000, p. 48). There is reduced risks of errors, and in the event of an error, the company can easily retrace its steps and make corrections. Etihad Airways can now prepare key performance indicators and comparisons reports, to compare projected and actual expenditures from current and previous years (Soh, Kien & Tay-Yap 2000, p. 49). Despite the various advantages related to the implementation of information technology features such as ERP systems in Etihad Airways, there are a number of limitations involved. The limitations are associated to system users and the overall organization. The first and most pronounced setback is the prohibitive costs. According to Cole (2011, p. 13), Panorama Consulting Group discovered that the 6.2 million dollars is the average cost of implementing new Enterprise Planning System based on one thousand and six hundred worldwide implementations of the ERP (Cole 2011, p. 13). In addition to the initial cost during the first implementation, there are other associated costs, including training of end users and data transfer from the previous to the new system. Etihad Airways has, therefore, spent considerable amount of time and money during the implementation of the ERP system. Secondly, the ERP system is very complex, and therefore, Etihad has to make sure there is adequate training for users to be fully prepared. For the system to work, the users have to support the project and be ready to work with it. Etihad, therefore, had to invest a sufficient amount of time and money into user training for the success of the ERP system (Taneja 2011, p. 34). According to a study by Gartner Consulting, the companies that spent less than thirteen percent of the total cost of implementing the URP system are more likely to have a system that is unsuccessful as compared to the companies that have a training budget of seventeen percent or above of the total cost of implementing the ERP system (Taneja 2011, p. 32). The implications of the ERP system in Etihad have, however, been successful, from both the user and organizational perspective. Since the airline is still new, there can be various changes in its business processes in the future. There is, therefore, the risk that the current ERP system in use may not be flexible enough to cope with the changes in the aviation industry. Type of information staff at Etihad store and require Umble, Haft and Umble (2003, p. 246), in their studies, describes information as the data that an organizations converts into meaningful use. Etihad Airways has various departments that work independently and interdependently, while performing their activities. The human resource department handles information about employees enabling it to maintain plans, policies and procedures. Examples of information that the human resource department of Etihad handle include employee training materials, contract details and private employee information (Umble, Haft & Umble 2003, p. 246). Marketing and sales departments of Etihad Airways contains information that enables them to plan, price and promote their services. Employees of the said departments require and store information regarding the number of flights the airline has operated in a certain period (Umble, Haft & Umble 2003, p. 246). It also stores information regarding the percentage of flights that have been cancelled in a certain period and the reasons. Furthermore, marketing and sales employees require and store information of the performance rates of the airline annually. They also store information regarding the customers personal and pricing information. Accounting department employees store information concerning the airline’s monetary transactions. They also deal with contract details, financial performance information, tender details and audit information (Umble, Haft & Umble 2003, p. 246). Customer relationship management Customer relationship management is an important aspect in the success of Etihad Airways. Customer relationship management involves increasing customer retention and loyalty, through managing various aspects of an organization’s relationship with the customers. Managing customer relationship with an organization is mostly done to improve customer satisfaction and improve the organizations profitability (Taneja, 2014, p. 23). Etihad Airways, just like most airlines, faces an escalating dilemma on the ways in which to adapt to the changing market place and uncertainties (Taneja, 2014, p. 23). The changes are related to a business which is currently internet driven, has formidable competitors and changes in expectations and buying behavior of passengers. The purpose of customer relationship management for Etihad Airways is to help them gain insight in what their customers wants so that they can develop and implement an efficient policy. Firstly, it is necessary for the Etihad Airways to align the interests of passengers, workforce and the shareholders during strategizing and execution stages of a customer relationship management system. Etihad recognizes the fact that passengers have gone mobile and digital, and can now access information and connect through information technology. Etihad, therefore, has to develop technology management systems that allow passengers to access personalized and differentiated services at a low price for them to give feedback and make decisions. Etihad has to adopt technology, which allows for effective customer relationship management system, for it to focus on cost leadership, and product differentiation. Efficient customer relationship management will also enable Etihad to concentrate on customer intimacy, operational excellence and product leadership. In the discipline of product leadership, Etihad has made sure that features such as on-board Wi-Fi, global networks and lie-flat seats are available in every flight to increase their satisfaction (Taneja, 2014, p. 23). Etihad needs to give every customer an individualized attention, by tracking every communication between the customer and the airline. The organization should review the many means through which a customer contacts the organization, such as through web access, emails, direct sale, faxes and call centers. An efficient customer relationship management system will track the conversations, with the purpose of getting a clear understanding of an individual’s needs and preferences. By tracking the conversations between the airline and the customers and reviewing customers’ feedback, Etihad will gain a clear understanding of who their customers are, what they want and the times they want to do business with the airline. During the time of making decisions, the implementations of a successful customer relations management system will allow customers to be engaged. The airline will, therefore, be able to deliver personalized experiences through various channels, and in return, it will achieve a lasting customer loyalty. Gaining a well informed view of its customers and gaining their unprecedented insights will enable the airline to make wise marketing decisions (Taneja, 2014, p. 23). Strategy for effective use of efficient IT metrics to improve Etihad Airway’s business For Etihad to improve its business, it has to adopt effective use of information technology metrics by adopting advanced technologies. By adopting SAP technologies, Etihad can operate more profitably, have continuous adaptation and experience sustainable growth (Teuber, Weidmann & Will 2013, p. 12). To ensure the smooth implementation of the SAP technology, which offers efficient information technology metrics, a number of success factors have to be present in Etihad Airways. The first stage in the formulation of the implementation strategy is to make sure there is strong leadership. The senior leaders have to convince other members of the organization that the adoption of the system will be beneficial to the organization (Teuber, Weidmann & Will 2013, p. 12). The adoption of the SAP technology applications will then be aligned to the market needs to enable the airline to thrive in the current business environment. The next step in the strategy will be to seek the approval of the key stakeholders and opinion leaders in Etihad to avoid resistance to the changes the system will bring. Furthermore, there will be strong continuing communication with the employees and users to make sure there is a strong understanding of the system. The employees will be kept up to date through thorough training to understand the progress of the new systems. This is important to avoid any confusions leading to errors and employee resistance (Teuber, Weidmann & Will 2013, p. 12). Conclusion Etihad Airways has experienced sustained growth ever since its establishment in July 2003. The adoption of the best technology advancement such as the ERP systems has enabled Etihad Airways to provide its customers with immediate needs. The ERP system has improved the process flow in Etihad and provision of quality and accurate information necessary for the management of the organization. Furthermore, the employees of the airline can now access the necessary operational and financial information from any station or department within the airline. The adoption of SAP technologies will enable Etihad to operate more profitably and have a continuous adaptation and growth. Reference List Cole, A, 2011, ‘Analysis of the Etihad Airways.’ Soh, C, Kien, SS, & Tay-Yap, J, 2000, ‘Enterprise resource planning: cultural fits and misfits: is ERP a universal solution?’ Communications of the ACM, 43(4), pp. 47-51. Taneja, NK, 2011, ‘The Passenger Has Gone Digital and Mobile: Accessing and Connecting Through Information and Technology’ Ashgate Publishing, Ltd.. Taneja, NK, 2014, ‘Designing Future-Oriented Airline Businesses’ Ashgate Publishing, Ltd.. Teuber, L, Weidmann, C, & Will, L, 2013, ‘Monitoring and Operations with SAP Solution Manager’ Umble, EJ, Haft, RR, & Umble, MM. 2003, ‘Enterprise resource planning: Implementation procedures and critical success factors’ European journal of operational research, 146(2), pp. 241-257. Read More