How Business Intelligence Enhanced the Decision Support, Performance Reporting in British Airways - Assignment Example

How Business Intelligence has enhanced the decision support, performance reporting and control in British Airways? Table of Contents S.No Heading Page No 1 Introduction 3 2 - How Business Intelligence can enhance the decision support, performance reporting and control in British Airways? 5 2.1 “Meaning of Business Intelligence” 5 2.2 Why BI is important to Airline Industry ? 6 2.3 Recognising areas in which BI Technology would be valuable 7 2.4 How BI can be used by British Airways to enhance its performance ? 11 2.5 How BA can learn from other corporates which are persuing BI 13 3 Conclusion 14 4 List of References 15 1-Introduction BA (British Airways) became a UK based company on 1 April, 1984, with the whole of its shares were owned by the UK government. In other words, British Airways (hereinafter will be referred as BA) has been privatised which renewed its vigour with strong support by its employees. Between 1982 and 1987, immediately after privatisation, BA posted a record turnover of £ 3 billion and there had been a substantial reduction in capital debt to less than £ 300 million from that of over £1 billion, while it had built-up reserves of in excess of £ 600 million. In 1987, there was a public issue of 720 million shares offered to 1.2 million shareholders and its shares are now listed with London, Toronto and New York stock exchanges. The public issue was a great success as BAs shares were oversubscribed more than 11times and its share price increased by 68% on the first day of trading. Today, BA is the number-one of the globe’s major premium airlines. Now, BA has flight operations to more than four hundred destinations globally. During the year 2013, BA reported a revenue of £ 11,421 million as compared to £ 10,827 million, which is an increase of 5.5%. Likewise, BAs profit after tax has also soared significantly in 2013 as it reported £ 284 million as compared to £ 114 million in the year 2012 which is an increase of 149.1%. Business Intelligence (BI) is one of the very few provinces in the IT sector to have stayed resilient even during the recent economic downturn, as business organisations like BA has employ the BI technology, mainly to minimise their costs and to optimise their flight operations. Thus, even during the phases of economic meltdown, BA has started to employ business intelligence tools to assist it to confront the economic turbulence. For instance, by using 3D visualisation, BA can recognise and remedy its inefficiencies. Further, BI helps BA to match its own data with that of external sources such as credit checks. During the current economic crisis , as a cost cut initiative , BA has reduced its spending on IT by a third in 2009 but its BI was one area, which was not touched upon and this shows the priority to BI by BA (Binning 2009). There is a compelling need on the part of BA to introduce BI technology to sort out the issues such as cut-throat competition , poor employee relations as represented by a number of flash cabin crew strikes , to address how to improve its cargo revenue as it fell by6. 5% due to prolonged weak cargo market in 2013 and is witnessing the impact due to both interest rate fluctuations and exchange rate fluctuations. BI can find solutions to the issues by demonstrating where BA can reduce its costs and improve its performance. Of late, nonetheless, BA witnessed a sharp decline in their aggregate revenues due to recent economic meltdown. So as to accomplish competitive advantage, BA is going to start employing a Business Intelligence (BI) Technology. The Business Intelligence consultancy firm namely, Trillium Technology has been advised to evaluate the specific requirements of BA and to offer an applicable BI technology to BA. Trillium Technology has been asked to present a report on how the deployment of appropriate Business Intelligence solutions could minimise their costs and to optimise their flight operations. In order to develop a good report it has been required to look at the particular attributes of BI technologies such as big data analytics ,OLAP databases, scenario planning, enterprise data warehousing, and RFID technology, which can be used by BA in developing its BI. This research essay will analyse in detail how BA by applying BI is able to enhance its organisational functions. 2- How Business Intelligence can enhance the decision support, performance reporting and control in British Airways? 2.1 “Meaning of Business Intelligence” Business Intelligence (BI) is a computer-oriented system employed in recognising, pulling and evaluating business data, such as sales revenues by products as in the case of BA, passenger revenues and cargo revenues or by products. BI offers historical, present and projected panoramas of business operations. BIs common functions include online analytical evaluation , reporting , data mining , analytics , process mining ,business performance management , intricate event processing , text-mining , bench-marking and predictive analytics (Loshin 2012:8). As per Lawlor (2007), success of the today’s globalisation can be attributed to advancement in information technology, which has become a key element of a company’s global business strategy. Globalisation facilitates the corporate headquarter to centralize all of its foreign operations. Subsidiaries situated in various nations of a multinational company can be interlinked through intranets, thereby expediting sharing of information and data instantly. The growth in the era of technology assists the free flow of knowledge and information throughout the company worldwide functions. The fast development in information technology has been related with a flattening of the organizational hierarchy and thereby pushing toward higher decentralisation and flow of information horizontally within the company. Through the provision of high quality, relevant, quality and relatively complete information to the managers of a company, electronic information offers the modern management information system which has minimised the necessity for top-management hierarchies (Christiansen 2013 :39). As per Boone & Kurtz (2003), MIS (Management information system) is a well-planned method of offering present, past, and projected data on internal operations and external intelligence to back decision making. As per Oz (2009) , multinational organisations have the onus of guaranteeing that their data and the information systems adapt with regulations , norms , cultures , laws and other elements, which are unique to nations and regions in which they function (Christiansen 2013 :39). As per Kocbek & Juric (2010), the following is the tools used in the business intelligence mechanism by a company. OLAP (Online Application Processing) is being used in business reporting such as sales, marketing, business forecasting, business process management, and financial reporting. Likewise, predictive analysis is being used in customer relationship management, fraud detection, cross-selling and customer relations. Process mining is being employed in the provinces such as enterprise resource planning (ERP), workflow management systems (WMS), supply-chain management systems (SCM) and Business-to-Business (B2B) functions. Text mining is being used in monitoring of social media, sentiment analysis, fraud detections and records management. CEP is being employed in the provinces such as RFID applications. All of the above BI techniques are helping the managers in their decision-making process, particularly in multi-national companies (Christiansen 2013:39). 2.2 Why BI is important to Airline Industry ? As per Oxford Erconomic Forecasting Center (1999) , civil aviation transportation largely stimulated the UK economy, which offered greater contribution than other forms of transportation. For instance, September 11 attack ended in unimaginable effects to airline businesses, but in specific, it wholly revamped business processes for the complete airline industry. Further, by employing Business Activity Monitoring (BAM) , predicting flight delays and baggage handling in airline industry can be improved. An airline can use BI to improve its marketing, to prevent frauds, to enhance its security, to offer high levels of customer service and its customer’s data can offer valuable information about its customer’s preferences and choices. Airline industry by using BI Technology can make informed, decisions, which are crucial to success. BI technology for airline industry assists to save money and time by not having to maintain and support these systems in-house. Mostly, airline’s data is securely available in any part of the globe, on any mobile device r or compute. It facilitates to speedily research and looking into specific data and consolidated data across the entire enterprise for strategic planning objectives. Also, it helps to increase income, minimised labor costs and cost savings, internally for the airline industry (Taneja 2012:5). 2.3 Recognising areas in which BI Technology would be valuable SWOT In order to search for an appropriate BI Technology for BA, both SWOT and a PEST analysis have been carried over (See Table 1 and Table 2). “Table 1: SWOT Analysis” STRENGTHS Largest international airline based from UK in terms of financial stability and size Flies more than 400 destinations around the globe as of 2013 Striking “customer loyalty schemes” BA remains as the second in Super brand survey after Apple BAs business alliance with United Airlines with the establishment of Oneworld airline which is the 3rd biggest in the globe WEAKNESESS Cut-throat competition with the subsidised fair offer by the competitors’ Restriction on market entry by host governments Increase in air-passenger duty by UK government may lower the revenue Heathrow airport which is owned by BA has limited capacity restricting further expansion A number of flash cabin crew strikes in BA mirrors its poor employee relations history OPPORTUNITIES BAs capital expenditure in 2013 stood at £ 1738 million for acquiring new jets for future expansion BA is aiming to introduce in 2017 Europe’s first-ever sustainable bio-jet plant with US Energy Company Solena to reduce the fuel costs in the near future. For short-haul flight operations at Heathrow Airport , BA was named as the quietest airline in 2013 Has in operation the strong customer loyalty programmes like frequent flyer schemes. THREATS BAs cargo revenue fell by 6.5% due to prolonged weak cargo market in 2013 Substantial debt outstanding which is to refinanced or repaid BA consumed 5.6 million tonnes of jet fuel in 2013, and any price variation in fuel may badly impact BA’s future operations Source: (BA Annual Report 2013) “Table 2: PEST Analysis” POLITICAL Tax Policies , governmental laws in which BA operates , environmental policies introduced by the host governments Labor Policies which may impact its employees’ cost in the market in which BA operates Environmental Policies Trade Policies introduced by host governments to protect their airline industry. Governmental regulations such as security, safety, airport slot access, route flying privileges and environmental controls impacts BAs operations. ECONOMIC Inflation Rates- UK government declared that the rate of Air Passenger Duty will be increased by the rate of inflation from 1 April 14 BA is vulnerable to fluctuations in interest rates on floating rate on its debts. A 50 basis point increase in interest rates would likely result in an additional cost increase of £1 million to BA There was an increase of £ 174 million in fuel cost in 2013 to BA, mainly due to the unfavourable effect of foreign-currency exchange rates. SOCIAL Age Demographic and this has impacted BA’s ability to generate more business Global economic meltdown resulted in high unemployment in UK in the last decade European Union Emissions Trading scheme and other environmental taxes levied by other governments, which will impact BAs operating revenues. TECHNOLOGICAL Huge investment on emerging technologies to remain competitive Challenges from hostile technologies BA regularly supervises its customer satisfaction through the global monthly Customer Voice survey and engaged in constant research & Development strategies for promoting its brand. Source: (BA Annual Report 2013) From the above SWOT analysis, we can understand that BA witnessed many numbers of flash cabin crew strikes which mirrors its poor employee Relations’ history. BI may offer a solution to avoid such flash strikes in future and to enhance the employer-employee relations in BA. Further, BAs cargo revenue fell by 6.5% due to prolonged weak cargo market in 2013. BI can offer a solution from the past data how to improve the revenues from cargo services. Moreover , BA consumed 5.6 million tonnes of jet fuel in 2013, and BI may offer a solution how to reduce the BAs fuel cost . From the PEST analysis, we can understand that a 50 basis point increase in interest rates would likely result in an additional cost increase of £1 million to BA. BI may offer a solution to this issue by analysing BA’s competitor’s fuel data. Further, we can understand that there was an increase of £ 174 million in fuel cost in 2013 to BA, mainly due to the unfavourable effect of foreign-currency exchange rates. BI can offer a solution to BA how to avoid loss due to fluctuations in foreign currency by analysing big data and by indulging in scenario planning. 2.4 How BI can be used by British Airways to enhance its performance ? British Airways (BA) can use BI, mainly to enhance its performance by employing the available business information. The data offers BA to make informed decision-making and to derive better performance management across its business. Thus, BI can help the BA to access the information which is easy to use, being focused, cost-effective, trusted, timely and actionable. BA can use BI tools, which are in the guise of dashboards, reports, alerts, scorecards, very deeper evaluation searching into further visions in the data and advanced evaluation such as forecasting and data mining (BA.com 2013). The top management of British Airways doubted that it was incurring revenue losses due to a high magnitude of ticket fraud. BI was used by BA to find out the modus operandi the ticketing fraud. BA managers finally found that the problem was relating to process issues or data quality issues and ticket fraud. BA found that its BI deployment has resulted in about $ 100 million in new sources of revenues and in cost savings (Christiansen 2013:40). BA can dramatically minimise its processing costs and got better evaluating capabilities by employing OLAP databases in conjunction with its new general ledger. BA can use routinely scenario planning as a chief grand strategic effort to remain competitive in the market. A scenario planning is conjectural sequences of incidents designed for the purpose of spotlighting focus on decision points and casual process. BAs scenario planning can illustrate the significance and relevance of scenarios or stories constructed and later , it can be employed in the company to offer an aroma of contents of the scenarios and to exchange the achievements and lessons learned during the phase of the project. As the BA is one of the largest airways with more than 400 destinations and convalesced from losses and it can maintain a sustainable development, mainly through scenario planning. BA can use big data analytics as BI to re-design its operations in the incidents like a volcano eruption which is likely to hold-up its flight schedules. With the data on the hand about grounded planes, passengers and crew which is available to BA at its fingertips and with the help of BI , it can plan an alternate schedule and route. BA is generating huge volume of data during its regular processes such as ticketing, check-in, and allocation of seat to passengers and data pertaining to demand estimation, pricing and capacity and route planning. BA carried over an internal data quality assurance appraisal and noticed that the organisation’s legacy data was warehoused in many varied formats, in varied standards in spite of present data quality practices. To improve its data warehousing, BA invested in the Trillium Software System which is a business intelligence software mainly to enhance data analysis across the BA. The salient feature of Trillium BI is that it scales to hundreds of millions of BAs data and is able to function across multiple data formats and systems. Thus, Trillium is able to cleanse data across the BA and BA is well-positioned to update its mission-critical Transaction Processing Facility and this runs processes such as billing, seat reservations, booking and ticketing (Sahota 2011). BA can engage the services of Opera solution, BI consultants, for benefiting from Big Data where it is feasible to extract extrapolative patterns from data and transforms them into business results. In the last two years, BAs majority of the corporate processes are iPad- compatible, and it has actually revolutionised the outlook of its IT department (Mari 2015). With the help of “ The know me” program, which is aimed at making the majority of the customer data originated from their buying behaviour, BA is trying to enhance its service thereby improving its sales. The know me programme is aiming the optimisation and marketing of the information BA has on its customer and passenger social media data. This will really help BA to focus on ancillary selling, which is to comprehend how BA can increase the quantum of money it generates from a flight, either by upgrading or by offering another product like car rentals or hotels (Mari 2015). 2.5 How BA can learn from other corporates which are persuing BI BI is being employed by Vodafone to make wise business decisions footed upon real-time knowledge of its competitors, market and its customers. Further, Vodafone use enterprise data warehouse to have a single panorama of all of the data in the organisation as it facilitates the Vodafone to generate insights instead of managing data. BA can use its enterprise data warehouse to manipulate the data as being done by Vodafone. As per Turban, Sharda, & Delen (2011), Coca-Cola fitted new self-serve soft drink dispensers with RFID technology in chosen fast-food restaurants. Customers’ of Coca-Cola used the dispensers by selecting a brand and flavouring choices available on the dispenser’s LCD panel which is being run on the Windows CE operating system. The RFID technology facilitated Coca-Cola to examine new drink perceptions and aroma, find out what aroma and mixture which the customer prefers, recognise the regional choices and to keep an eye on the quantum that the customer drink. BA can use RFID technology to find out which food is preferred by its passengers and to serve them on the board to enhance its customer satisfaction. Volkswagen which is one of the automobiles giants employ BI to track, comprehend and administer data in each and every department starting from finance, development, production and to have research on marketing and sales and buying. BI can follow Volkswagen for deriving MIS from its vast data. Shell, an international oil major, uses BI to gather data about revenues relating to its non-fuel and fuel business. It helped shell to understand that 20% of its products were offering 80% of their sales. Due to this, shell is able to make noteworthy improvements in turnover and margin. BA can follow Shell and can use BI to know about its passenger revenues and cargo revenues and how to improve the cargo revenues. . Pizza Hut by using BI has enhanced its sales revenue dramatically. Footed upon the last two decades of warehoused data, Pizza Hut is able to find out what type of pizza which its customer favour, how their choices differ on demographics, what type of coupons that its customer use and the chronological sales trends. By employing BI tools to predict its future sales, BA can follow Pizza Hut by establishing marketing future strategies to better influence its customers (Turban 2008:256). 3- Conclusion Already , BI deployment has resulted in about $ 100 million in new sources of revenues and in cost savings to BA. By using BI, BA can able to make informed decision-making and to derive better performance management across its business. BA can use BI tools, which are in the guise of dashboards, reports, alerts, scorecards, very deeper evaluation searching into further visions in the data and advanced evaluation such as forecasting and data mining. BA can dramatically minimise its processing costs and can get better evaluating capabilities by employing OLAP databases. BA can use routinely scenario planning and it can maintain a sustainable development, mainly through scenario planning. BA can use big data analytics as BI to re-design its operations in the incidents like a volcano eruption. BA with the help of Big Data as BI, it is feasible to extract extrapolative patterns from data and transforms them into business results. Thus , by applying BI , BA can reduce its fuel cost , to offer a competitive pricing , to know about the competitors’s strategy , to minimise its losses due to fluctuations both in interest rates and foreign exchange rates , and to bring cordial employer and employee relations by avoiding flash strikes thereby avoiding distress and dissatisfaction to its loyal customers. List of References BA.com. (2013) Annual Report 2013. [online] available from [accessed 5 May 2015] BA.com. (2013) Business Intelligence. [Online] available from < www.britishairways.com/careers/business_service.shtml> [accessed 5 May 2015] Binning, D. (2009) Using Business Intelligence steering through the economic meltdown. [online] available from [accessed 5 May 2015] Christiansen, B. (2013) Cultural and Technological Influences on Global Business. New York: IGI Global Loshin, D. (2012) Business Intelligence: The Savvy Manager’s Guide. New York: Newnes Mari, A. (2013) CIO Interview: Mike Croucher, head of IT architecture and delivery, British Airways. [online] available from [accessed 5 May 2015] Rashid, M. A., Riaz, Z., Turan, E., Haskilic, V., Sunje, A., & Khan, N. (2012, July). Smart factory: E-business perspective of enhanced ERP in aircraft manufacturing industry. In Technology Management for Emerging Technologies (PICMET), 2012 Proceedings of PICMET’12, pp. 3262-3275 Sahota, D. (2011) BA Improves BI with software package. [online] available from [accessed 5 May 2015] Taneja , N ,K.(2012) Looking Beyond the Runway : Airlines are Innovating with the Best Practices. New Delhi : Ashgate Publishing Turban. (2008) Decision Support and Business Intelligence Systems. New Delhi: Pearson Publishing India Read More