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As my friends mentioned, the company was not successful in meeting consumer needs in 1997. Plus, there was a Y2K crisis on the way. It was clear that the outdated system was unable to cope with these issues. As a result, the company decided to renew its old legacy system and in 1998-99, spent hundreds of millions of dollars for this purpose.

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The new system was called the Digital Nervous system. It was built around the firm s processes. The info. needed by these processes were captured in 9 central databases. A middleware was built around them so that new applications could access and update relevant data, if necessary. The most important difference of this system from an ERP system was that it used a Publish and subscribe method. In an ERP system, the information flows automatically among integrated applications. In this system, middleware is what links the applications to each other. This system enables real time information to be shared with the subscribers, including customers, that is whoever needs to know about it. For example, an information about a cancelled flight would be automatically shared with airports, reservation center, and customers via their cell phones, PDAs etc. As the CIO mentioned, DNS was a powerful engine for delivering info. to both employees and customers.

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This is the illustration of the system. It looks kind of complicated. The ones in the middle are the central databases. There are pipes that link those databases to the applications. In the upper side, you can see the operations. All things related to a flight to be performed are here: Allocate resources, prepare for departure, load aircraft, Departure and closeout, monitor flight, arrival and closeout, unload aircraft, Clean/service aircraft The bottom is related to customers.

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The project was run by an external company Feld Associates. After the system was constructed, the new applications were developed using a prototyping method. And the time was reduced significantly with the help of the DNS. The conversion from the old system was made following a phased approach. All the computing technology was renewed airport by airport starting from the busiest ones. The case did not mention how they handled the conversion in each airport. Our recommendation would be a direct cut-over with a backup team because a parallel approach would require duplication of effort plus time, which is a crucial matter in the airlines industry.

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To summarize this system, we can say that it is not just an enterprise system that links the functions to each other. But it also links the company to its customers. Therefore it included aspects of CRM systems. It was a prerequisite for the e-business. The company must have made sure that the operations ran smoothly before going online to attract more customers from different segments. We believe that although this system is mainly an Enterprise system, it primarily served the customer intimacy strategy, through improving operations in such ways like check-in and baggage handling, reservations and ticketing, and flight operations. As Ms. Escarra mentioned: The real power And it was all about the customers.

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After the IT infrastructure s renewal, Delta was ready to go into e-business; which acc. to the CEO, was godsend, when the company was lloking for new ways to do business. The company ran its e-business initatives under three areas: BUSINESS-TOCUSTOMERS, BUSINESS TO BUSINESS and BUSINESS TO EMPLOYEES.

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A B2C was essential for the company in order to reduce its sales and distribution costs. It might be difficult for us to imagine those days. However, in 97, 85% of the company s sales were done by travel agents. Just in 3 years it shrunk to 60% and by 2003 they planned to sell 50% of their seats online. These plans were not made for nothing: thinking about a cost reduction of almost $32 per each ticket, the company would be able to save $20 million in total if their customers preferred to buy online rather than from a travel agent. Delta used various channels to reach different customer segments as I will mention in the next slides. The main idea about this effort was about creating a loyal customer database which would buy the same quality whichever channel they used.

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Priceline.com was their first e-business initiative. This company offered to sell the excess inventory that is the excess seats on flights at discounted prices to people who decided whether or not to fly just by looking at the price. Delta was the first major airline to deal with this company, and the deal included Delta to have a 10% equity stake of priceline. Delta was able to turn these stakes into a large amount of cash later. Priceline sold 250 million $ worth tickets in 2000. Since Delta was the first-mover, the advantages that they gained were much larger than the competitors.

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The company also ran its own website, which exclusively sold Delta tickets. Bonus miles were offered to encourage customers to use this site. Sales from this channel increased by 250% from 99 to 2000. It was mainly preferred by loyal customers.

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As an effort to attract occasional customers, Delta came together with 4 other airlines to build Orbitz, a website that offered online travel service for customers who like to compare schedules and prices across airlines. Orbitz competed with Expedia and Travelocity. It would show all available flights on a given route. It also started selling tickets in 2001.

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In 2001, the company planned to reach the business travelers (which they thought was under-served) and offered a website that targeted to this customer group. The company expected benefits like The initiative was not really successful as it was actually closed in 2002, due to decline in business travel.

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As a B2B initiative, Delta joined a consortium of 30 airlines in order to reduce its supplying costs of $7 billion per year. This initiative was not successful at that time since it was not easy for 30 competitors to agree. B2E was tried to be established in order to enhance the productivity and job satisfaction of employees. The company built a Delta intranet in order to share the assignments and schedules to 9000 pilots and 18000 attendants. In order ti share the idea of high technology, the company distributed free personal computers to all employees.

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E-business needed full focus because it changed every minute. An e-business team was brought together rather than making functional leaders responsible as it was thought in the first place. The team included 50 full time members from various functions and they reported to their functional heads in order to ensure the integration btw. the business and the eside. The team was planned to be temporary because in a few years e-business would be a part of the firm s DNA. The team was responsible of launching the initiatives and functional areas then took over the job.

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E-business would bring a lot of benefits for Delta: The financial benefits would be huge: like a 20 times return on investment. E-business also supported customer intimacy by trying to reach all customer segments and meet their needs. E-business would also differentiate Delta from other airlines at it was one of the first to turn this opportunity into a strength.

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This whole case was actually a success story, as far as what was told to us. Therefore instead of recommendations, we can emphasize on What Delta did right throughout this time. As we learned in class, the first way to prevent failure was to get support from top management. And they managed to have this both financially and psychologically? The case did not mention, but we believe that they had an IS plan which moved the company from a laggard to a high-tech one in a few years step by step. The organization was done well. The company utilized an IT board and an e-business team to run the projects. We believe that the main point was that they did not jump into e-business before renewing the IT infrastructure. They also made use of partnerships with start-ups so that they would benefit from the expertise of dotcom companies. The company did not hesitate to take the risk of partially changing the business model from brick and mortar to online which was a requirement of the era. They were one of the first to see that and that was their greatest advantage. A high risk high return project should always be there in the portfolio as we discussed before and this was proved to be true as it paid off in a couple of years.

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