Global Connection through Technology - Case Study Example

Global Connection through Technology Name: Tutor: Course: Date: 1. Etihad Airways Business Model Digital airlines combine business resources, information and digital technologies to create unique customer experiences and deliver growth. This results in innovation that takes advantage of a full-on approach to digital transformation along with necessary cultural shifts. Etihad airlines intend to pursue a digital strategy that will create a competitive advantage and become a Digital Master in digital-rich and competitive world (Diaa, 2016) and as shown in the figure below. Figure 1: Sketch of Etihad airlines digital business model Etihad airlines digital infrastructure will consist of; actors, resources and the infrastructure as describe below; Actors: Etihad airlines have main actors being air traffic control (ATC), airports, and the airlines. Although the primary planning objective of the airline is to offer efficient transportation of cargo and passengers between various airports, it must provide services at airports as requested by customers. Etihad airlines will need to have an effective schedule and an appropriate fleet of aircraft flying most profitable routes and having the capacities to meet the needs of customers. Airports are the primary customers of airlines. Most of the airports in the Middle East, Europe, Asia and North America offer airport facilities such as landing and take-off for aircrafts alongside services such as parking spaces, shops and restaurants. A well developed support and infrastructure is necessary for the organization to create an effective flow of airplanes, cargo and passengers from and to airports (Monger, 2016). The main objective air traffic control authorities are to manage the total flow of aircraft and guarantee safe air traffic in order to reduce congestion and delays under air traffic management (ATM). Resources: Some of the resources used by Etihad airlines include time slots for landing and take-off, physical resources such as airlines, shops and restaurants. The key airline resources are the skills and expertise of employees and crew. Other resources include air traffic management team, airspace and runways, gates, food vehicles, fuel and baggage systems. In this perspective, a gigantic resource optimization is required as a control and planning tool for the air transportation system. Digital Infrastructure: Technological changes include customer relationship management (CRM) systems, website, SAP data centers, Partner data centers, customer data centers and elastic deployment. At the moment, Etihad airlines sit on an old infrastructure that is unable to maximize all the customer data into the customer journey touchpoint in an actionable environment. About 71 percent of airline anticipates major investments in passenger services using tables while 80 percent expect the same using smartphones. Etihad airlines should plan to deploy IoT project where passengers can know the duration of the journeys and use biometric travel tokens as an alternative to the existing identity documents. Transaction information flows: Etihad will experience the biggest transformation by way of customers or passengers. Through smartphones, customers can experience the convenience and ease of digitally-connected loyalty schemes, electronic ticketing and advanced booking. Etihad will find it easier to support electronic boarding passes and be able to find flights, carry boarding passes, check-in and out and make reservations. Moreover, Air miles can be redeemed through loyalty schemes made available using apps. With smartphones, customers can order drinks and duty free while flight attendants can check passenger needs and requests, confirm loyalty program statues and check passenger diets (Evans, 2016). New brand services will make use of huge quantities of available data through personalized for premium targeted services and regular travelers (MIT, 2014). Etihad airlines can develop self-service entertainment kiosks for travelers to purchase video guides, newspapers and movies by simply downloading to their devices such as memory cards and flash disks for a fee. Digital transformation will drive interdependence and connectivity among mobility services. 2. Etihad Unification Business Operating Model Figure 2: Etihad Unification Business Operating Model As shown in the figure above, Etihad airlines has high shared services as well as high operational and decision making processes in terms of business process integration and standardization. The vision is clarified by employee relationship management system, business reflexes, operational pipelines and customer experience. The way Etihad airlines touches the heart of its customers reflects its level of customer service. Maintenance of planes, unloading, moving and loading describes the operational pipeline while business reflexes involve financial processes, pricing and scheduling of flights (Evans, 2016). Etihad intends to develop a highly mobile workforce and it must do so by developing superior employee management systems mainly in compensation and scheduling. Nine databases as shown in the figure will be critical during process execution and aids core business processes, shared data, key customers, and key links and automation technologies. Etihad nervous system is designed to avail data on need-to-know basis among the company’s core processes, employees and customers. Three elements are required in the Etihad unification model; key processes to be integrated and standardize, and shared data to serve customers and key technologies to link or automate the processes. Customer and product data alongside application systems and infrastructure technology are quite high. Under unification model, Etihad airlines will have global data access and a single business with global process standards. Its key IT capabilities include the provision of global data access and enterprise systems that reinforce standard processes. Etihad airlines provide same services and products to similar category of customers by sharing information and standardizing the processes throughout the organization. The data needed to share and the core processes are defined by the management team (Diaa, 2016). By doing so, it will built a real-time digital nervous systems that not only ensures consistent customer experience but also shares information on need-to-know basis. The model should agree with the enterprise architectural framework before standardizing after which it cuts costs by consolidating technologies and establishes common processes. For example, Etihad airlines can cut costs by 40%, reduce more than 100 emails to one and shrink about 20 payroll systems into one. To win the benefits of standardization, Etihad airlines shown optimize resources to develop a wide view of business, streamline core transaction processes and eliminate data redundancy. This can be made possible by building on single package database where passengers can track their flight reservations. To expand efficiently and rapidly, Etihad can take full advantage of existing platforms using the plug-and-play capability so that the business remains agile and competitive in the new market. IT will be a huge asset to generate returns on investment (ROI) if the company is able to consolidate reservation systems, loyalty programs and employee management systems (Digital Airlines Whitepaper, 2016). By doing so, Etihad matures towards a strong enterprise architecture that supports growth strategies and the business model. With standardized process, Etihad resources such as employee skills and expertise are not wasted on routine tasks but freed to improve systematic information sharing, supplier management and customer service. The company will not only win new business opportunities but also optimize processes. Technological change is accelerating meaning that Etihad will need to standardize and integrate operations by focusing on a successful digital strategy of customer engagement, digitized support and a digital operational backbone. It will engage customers using multiple channels such as B2B channels and establish future revenue streams using digital support to its products and services. Underpinning the whole business is a digital operational backbone. 3. Etihad’s Digital and Leadership Capabilities Figure 3: Etihad’s Digital and Leadership Capabilities As shown in the figure above, Etihad airlines fall into the category of ‘Fashionistas seen as high in digital capability but low in terms of leadership capability. To start with, the company has an overarching digital vision that is still underdeveloped. However, Etihad exercises excess prudence that hinders it from building strong digital capabilities. Although it has partnered with Adobe systems to improve guest experience, the company finds it hard to mobilize the top management because of too much focus on control and uncertainty (Hamill, 2015). As a result, it creates a governance trap that instead of making progress, the organization sinks into more rules and controls. While it has useful digital leadership capabilities that are personalized and customized to individual requirements, the top management and the entire organization may need to look at the bigger prize of digital transformation. The company has many advanced digital features in silos such as social media and mobile required to boost on-board services. With no overarching vision, transformation intensity is required to shape the new future through IT/business relationships, engagement and governance. Etihad may have developed vision and governance before actually investing in new digital platforms. Their attention was on customer insight, customer engagement and experience design before improving on its operations such as process automation, connected systems and service innovation. However, it may have to develop a digital culture which still exists in the silos, digital worker enablement and build on digital skills. As well, coordination remains undeveloped but mobile and social media platforms have enabled the company to deliver communication to the right person at the right time across the channels. This helps the guests to engage with the airline and the company to understand their travel preferences. The digital culture is still in the silos with Etihad having experimented with a number of digital applications such as Adobe which may look good and expected to create value. The company has a vision of gaining synergies among the items and is motivated to bring on digitally-powered change. However, its digital transformation strategy is not founded real knowledge (Ross et al., 2006). At the corporate level, Etihad still finds herself lacking the enterprise level governance even with increased maturity of digital efforts in some units such as reservations and bookings. In the airline industry, digital has been turned upside down with opportunities existing on worker enablement. To jump to the Digital Master quadrant, Etihad airlines will have to build a level of excellence in transformation management including a transformational vision of the future to match their high digital intensity. 4. Major components of a “Playbook” for Etihad’s senior management In the previous section, Etihad airlines were described as a Fashionista. This means that the company has a digital culture existing in the silos and an undeveloped coordination. Meanwhile, it has no overarching vision and many of its digital features such as mobile and social media are still in silos. To become a Digital Master, Etihad will have to invest in digital capability and sound management. The four key transformation management practices ‘playbook’ are; engagement, digital governance, IT-Business relationships and transformative vision. To start with, the company has no overarching vision which means that a transformative vision is required while hiring new top management who can have a picture of the company’s strategic direction in the coming years. This means that the company will have to re-envision the business in the face of increasing rivalry from British Airways, Emirates, KLM and Air France. Employees will need to be made to understand that they do not just jet in and out passengers and cargo but creating great customer experiences. Destinations and hotel sector is heavily investing in customer experience of which the airline should align its strategy and vision along those goals (Wangsholm, 2016). This means that the company should build capabilities in employee skills and expertise and provide incentives and rewards for excellence. Moreover, the company should be able to measure, monitor and iterate human and financial performance. Secondly, Etihad airlines will need to improve its digital governance through rules and coordination mechanisms that focus digital efforts and improve efficiency. When launching the first digital transformation program, Etihad should establish a digital unit to assist and coordinate its digital businesses. For example, a chief digital officer may need to be appointed at a group level and reports to the CEO to stamp its significance. Local digital officers can be appointed at the local level to coordinate its activities to ensure that the model governs across the silos. Greater focus should be on building an investment case and a digital roadmap by setting up a governance model. The digital challenge can be framed to build awareness, define the starting point and craft a vision and align the top team (Ross, 2014). Thirdly, it is important to set new behaviors and evolve the digital culture across the organization that its digital culture is still in the silos. Etihad airlines will have to earn the right to engage and signal its ambitions. The company’s employees will make the vision a reality by engaging in a shared vision. Such employees identify new opportunities and offer less resistance to change not envisioned previously. Given the level of undeveloped coordination, employees will need to be engaged to develop a culture of change and innovation by launching innovation contest among employees. Finally, the company will need to develop IT-Business relationships in most of its parts such as bookings, crew and pilot training, procurement, corporate communications and top management. The Chief IT Officer may be the right person to steer digital initiatives instead of a joint IT-business teams. Critical to success is the shared understanding between business executives and IT department. In conclusion, Etihad’s senior management will need to develop a strong transformative vision to allow change to happen through employees. The company will also have to focus on control and alignment to ensure each employee plays their role within the rules. References Evans, J. (2016). Come fly with us: How the air transport industry embraced digital transformation. Blogs. http://www.orange-business.com/en/blogs/connecting-technology/industry/come-fly-with-us-how-the-air-transport-industryembraced-digital-transformation Diaa, S. (2016). Etihad airways to invest in digital infrastructure. Gulf News Aviation. http://gulfnews.com/business/aviation/etihad-airways-to-invest-in-digital-infrastructure-1.1912266 Digital Airlines Whitepaper (2016). Airlines in a Digital World. http://sapassets.edgesuite.net/sapcom/docs/2016/09/686b586a-887c-0010-82c7-eda71af511fa.pdf Hamill, S. (2015 October 26). Etihad airways soaring to new digital heights with Adobe. https://blogs.adobe.com/digitaldialogue/digital-marketing/etihad-airways-soaring-new-digital-heights-adobe/ MIT (2014). The Digital Advantage: How digital leaders outperform their peers in every industry. Capgemini Consulting. https://www.capgemini.com/resource-file-access/resource/pdf/The_Digital_Advantage__How_Digital_Leaders_Outperform_their_Peers_in_Every_Industry.pdf Monger, M. (2016). Digital Transformation: Business Models Supported by Real-time Enterprise Architecture. INSIGHT Information Management. Ross, J. Weill, P. & Robertson, D. (2006). Enterprise Architecture as Strategy: Creating a Foundation for Business Execution, HBS Press. Ross, R. (2014). Enterprise Architecture: Driving Business Benefits from IT, John Wiley and Sons Wangsholm, R. (2016). Leading Digital. Capgemini Consulting. https://www.bergen-chamber.no/visageimages/2016Januar/200116%20Rolf%20Wangsholm.pdf Read More