What Are the Contributions of Information Technology to Business - Coursework Example

CONTRIBUTION OF INFORMATION TECHNOLOGY TO BUSINESS The case of two companies BACKGROUND & IT INFRASTRUCTURE: Wyndham International Inc. Wyndham hotels had humble beginnings in 1981, when renowned builder Trammel Crow founded to manage and franchise Wyndham brand. The hotel steadily grew. In 1996, when the firm filed for its first IPO, it had 66 hotels and resorts with 17398 rooms in 22 states, the District of Columbia and four Caribbean islands. In 1997 it was acquired by Patriot American Hospitality Inc, a Paired Share Real Estate Investment Trust as an operating company with an established brand. Due to the likely repeal of the tax benefits provided to paired share REIT and under increasing pressure from the stake holders, the company became a C-corporation after dropping its REIT status. As a part of the restructuring plan, non strategic assets were sold and Wyndham International focused on its three branded products; Wyndham Hotels and Resorts, Wyndham Luxury Resorts and Summerfield suites (Applegate & Piccoli, 2002). Wyndham International, Inc. today has al line of offerings in up-market hotel and resort accommodations leveraging its proprietary lodging brands and with an apex management services division in Dallas. Wyndham International activities encompass leasing, owning and managing franchises hotels in the United States, Canada, Mexico, the Caribbean, and Europe. Its proprietary Website carries the guarantees of the best rates for its properties. Being a founding member of the Global Hotel Alliance, a worldwide union of hospitality companies, the company provides guests with personalized and unique guest services (Computer Honors Case Study 2002). The Newsweek magazine ranks Wyndham Company amongst the top 100 greenest companies in America (Wyndham World Wide Home Page). Wyndham implemented “Wyndham by Request”, a novel guest recognition system and a customer loyalty program. This was envisaged to provide popular perks such as registration, free check in, room upgrades, late checkout, free telecom services and complementary products according to guest preferences. The IT architecture of Wyndham hotels comprised; Foundation layer of Property Management System at the property division and OPERA Property Management System, Central Reservation System and Customer Information System at the Dallas Data Center. Information Management Layer comprising ByRequest Transactional Database and Global Data Warehouse. Communication Layer comprising Dallas Data Center connected by LAN to Property Divisions Access Layer with End User Tools. . The ByRequest data warehouse married guest profiles with guest-stay information extracted from the Property Management System (PMS). The customized software by the in-house IT group could be accessed from any property through a standard web browser. This was to enable all the affiliated properties to access the system at their convenience without any barriers and with user friendly software. A Wyndham ByRequest manager was put in charge of execution of the program in each property reporting to the general manager. The ByRequest software provided support for knowledge sharing among the ByRequest managers. Managers were to seek feedback from the guest before departure (Applegate & Piccoli, 2002). Cessna Aircrafts Co. Cessna began in a small way over eight decades ago in Wichita, Kan. to meet a big commitment. Named after its founder Clyde Cessna, the small aircraft company had an impelling dream to accomplish a seemingly impossible mission – to construct a monoplane that used a wing without supporting struts or braces. The achievement of this dream changed the global aviation arena forever, when the Cessna All Purpose took off on August 13, 1927. Indeed, Clyde Cessna’s cantilever design has been the standard ever since (Cessna.com Home Page). Cessna has been a pioneer in its segment in the aviation market. Cessna Aircraft Company has sustained its leadership position in designing and manufacture of light and midsize utility turboprops, business jets and single engine aircraft, having sold and delivered over 190,000 aircrafts. The company today, has 15,000-plus dedicated employees worldwide and billions of dollars in orders for some of the world’s most advanced aircraft (Cessna.com Home Page). The U.S. Federal Aviation Administration (FAA) or the equivalent civil aviation authority in different countries has stringent maintenance guidelines to be conformed to for an aircraft to be considered airworthy. The most intimidating and time consuming part of maintenance for aircraft owners is to ensure compliance with these guidelines and upcoming maintenance milestones. In addition, non compliance with any maintenance requirement would prevent the plane from flying. Cessna Aircraft Company with over half the aircraft carrying its brand flying in the world has established a subscription based service entitled Cessna Computerized Maintenance System (CESCOM). This was envisaged to facilitate its customers ensure the airworthiness of their planes. CESCOM began 25 years ago producing paper reports mailed to the customers from a mainframe. This was then modified and ushered in as an online system in 2004 (Computer Honors Case Study, 2005). The application uses PowerBuilder (Sybase’s rapid application development tool) and EAServer (Sybase’s application server) to enhance its legacy CESCOM system and render it web-enabled. This project was implemented by a project team of two dedicated developers toiling over six months. The enabling technology that empowers CESCOM Online is user friendly and transparent whose prime requirement is that the users have access to the internet and possess basic familiarity in using a Web browser (Computer Honors Case Study, 2005 ). BENEFITS DERIVED FROM INFORMATION TECHNOLOGY: Wyndham International Inc. The ICT based products and processes help the hotels to enhance the operating efficiency, improve the service experience as well as provide a means to access markets on a global basis (Hoontrakul & Sahadev, 2005). At Wyndham, it provided highest level of customization. Further it was a strategic initiative that defined Wyndham brand. Built on individual customization and a technology foundation, Wyndham by request was a vehicle to create a comfortable and memorable guest experience. This initiative had a most important component which differentiated from the rest. The power was accorded to the guests to convey exactly what they wanted in their hotel stay. The managers at the property were also empowered to take better care of the guest. This allowed the company to ensure chain wide implantation. The standardization with the development of a custom developed software application enabled extraction of guest folios directly from each property’s PMS. This enabled consolidation of guest-stay information, determination of booking sources and the access by travel buyers of folio data (Applegate & Piccoli, 2002). The ByRequest initiative fulfilled its objectives. It is suggested that the company could enhance its relationship with the ByRequest members further by providing the following significant values: The member centric additional service information can be mailed to them and also could figure in the website Greetings can be mailed by Wyndham on special occasions. Information of new facilities could be provided A referral program could be introduced to enhance clientele Critical data on customer satisfaction should figure in the customer perspective in the balanced score card and any adverse variances should be escalated to the top management. Cessna Aircrafts Co. The customers of CESCOM Online are armed with a very efficient way to monitor their maintenance records in real time, around the clock, via the Internet. While simplifying aircraft budget planning, CESCOM pares aircraft maintenance downtime, while helping conform to aviation safety regulations (Computer Honors Case Study, 2005). Its real-time functionality enables customers to act on maintenance prescribed by the FAA, its global counterpart and other authorities and ensures timely submission of mandated reports that serves both their business interests and the overarching aviation safety imperatives. Quantitative evidence of the efficacy and efficiency of the new system is borne out by the reduction in the time taken for Cessna customers to receive their monthly reports from an average of 30 days to two minutes, and the time to process maintenance transaction reports from 27 days to less than nine hours. It also enables customers to create required reports for submission to the FAA in as little as 30 seconds. CESCOM Online benefited the company in yielding savings of $500,000 in annual mailing costs. Cessna has ensured this return on its investment, while keeping the cost of this subscription service at the same level as the predecessor paper-based system. In contrast, competitors have priced their online maintenance services higher and also needing more work on the part of subscribers. CESCOM Online enjoys high Customer satisfaction with nearly 70% of Cessna’s 4100 Citation business jet operators already subscribing to the service and this number is augmenting each day. Further, this offering is highly affordable. The increase in the subscribers base bear a testimony to the customer preference to the ease-of- use, functionality and 24x7 access the maintenance information (Computer Honors Case Study, 2005). CESCOM Online also encourages members to give suggestions for improvement. Going by the tremendous response, CESCOM Online meets the objectives. PITFALLS TO AVOID IN SYSTEMS IMPLEMENTATION Wyndham International Inc. There were several pitfalls, which Wyndham had to address. Though IT was a critical tool supporting day-to-day operations of the hotel properties like checking guests in and out, managing supplies and distributing room inventory, the investment for IT was treated like those for physical assets and formed a part of the capital budget which was left to the discretion of the owners. Therefore IT investment did not receive the degree of emphasis. The IT systems in the company were not standardized. There were diverse hardware and software platforms, applications and interfaces. Multiple versions of PMS were running. There was no dominant vendor of hospitality IT. The properties were reflagged frequently. Innumerable legacy systems operated in the industry and within a firm. The brand owners and operators differed in opinion regarding ownership of data. Technology was feared to depersonalize the service which was a very important factor in the industry (Applegate & Piccoli, 2002). Cessna Aircrafts Co. The pitfall was the non availability of the technology to create the online version of CESCOM, when it was visualized by the company. The company had to overcome the urge to rip out the old CESCOM system and create CESCOM Online from scratch. This would have been a costly option both in terms of investment required and time required. Instead, Cessna revitalized the legacy CESCOM system and saved on costs needed to deliver the system yielding substantial benefits to its customers. Though the company formulated the plan to have online offering in 1999, they could not implement it till 2004. This was because in 1999, the Cessna development team felt that the contemporary Web technology was not geared for robust transaction intensive online system. In addition, Cessna desired that all data including those from paper reports still in use by substantial number of customers to enter in the same fashion. They aimed to collect the same information from all customers irrespective of whether they were inputting directly in real time or submitting filled in paper forms for Cessna key punching staff (Computer Honors Case Study, 2005). RECOMMENDATIONS TO CEO The period after the mid 90s is marked by a strong and growing link between technology and competition. Apparently, the competitive landscape in those sectors investing high on Information Technology has witnessed dynamic changes, even while the other factors are controlled. (McAfee & Brynjolfsson, 2008). Therefore it seems beyond doubt that Information Technology is a great enabler to score sustainable competitive advantage. From the two case studies it can be inferred that investments in Information Technology confers sources of competitive advantage to the companies. In both the companies studied, the closeness to the customer was enhanced through IT initiatives. Consequently it enhanced the revenue inflows and improved the profitability of the companies. Information Technology enables companies to use data more effectively and optimize processes. IT, for instance, would be crucial to manage supply chains by enhancing inventory management and logistics. In addition, better data would sharpen intuitive understanding of the market segments exposing opportunities to increase margin on sales with greater focused sales efforts. In over a year to year and a half, these projects could yield up to ten times the earnings impact of simple IT cost reductions (Kaplan & Sikes, 2008). In view of these cases, it is recommended that each source of competitive advantage in the company should be studied with reference to its potential to be enhanced with Information Technology. Irrespective of the size of the company, there is a need to manage through a single database all the software applications, which are critical for success (Brown, 2008). The following imperatives should be borne in mind while leveraging Information Technology: Evolve a plan including the goals for the IT project Be clear about the scope right at the outset. Changing the scope midway would be costly and time consuming. Involve all the user departments right from project inception In the absence of in-house expertise available, outsource the expertise Ensure realism in cost estimates. Sometimes the cost overrun makes the project unviable Look closely at the maintenance costs Evaluate the vendor from all angles. Upgrade cycles, Customization assistance and Training provided. CONCLUSION: In the contemporary business landscape, leveraging the power of information technology is a necessary but not sufficient condition for scoring sustainable competitive advantage. IT has permeated all activities of the value chain irrespective of the industry. It is a great enabler to stay close to the customer and reap the benefits in terms of revenues and the bottomline. References Applegate, Lynda, M & Piccoli, Gabriele, (2002). Wyndham International – Fostering High Touch with High Tech, Harvard Business Publication, Dec 12, 2002. Brown, Warren, (2008), Software Technology, Do’s and Don’ts’, National Society of Professional Engineers, Oct 2008. CESCOM Online, (2005), Computer Honors Case Study Cessna.com Home Page, http://www.cessna.com/about-cessna.html Hoontrakul, Pongsak, Dr. & Sahadev, Sunil, (2005), ICT Adoption Propensity in the Hotel Industry: An Empirical Study, Dec 15, 2005 Kaplan, James M & Sikes, Johnson, (2008), Managing IT Spending, Mckinsey Quarterly, Dec.2008. McAfee, Andrew & Brynjolfsson, Erik, (2008), Investing in IT that Makes a Competitive Difference , Harvard Business Review, Jul 2008 Stafford, Jan, (2005), The top 20 ERP Implementation tips, SearchOpenSource.com, 22 Jan 2005 Wyndham International Hotels, (2005), Computer Honors Case Study. Wyndham World Wide Home Page, http://www.wyndhamworldwide.com/ Read More