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1. Introduce Cathay.

How did IT support Business in early days (upto 1990)


Cathay Pacific is the flag carrier of Hong Kong, with its head office and main hub located at Hong Kong International Airport. The airline's operations include scheduled passenger and cargo services to 114 destinations in 36 countries worldwide. The airline was founded on September 24, 1946 by American Roy C. Farrell and Australian Sydney H. de Kantzow Developed Most of its IT systems in-house IT functions included reservation, ticketing, cargo handling, passenger check-in, etc Data centers located in various locations Kai Tak International airport, harbors across Honk Kong Island. Later, Centralized dedicated facility for the Data center was established in Australia

2. What was outsourced before 1997? Why?


Business processes such as Building maintenance, lift maintenance, renovation, printing, transportation and Medical services were outsourced Cathays network was outsources to SITA

Outsourcing was done since the Cathays management thought that the company is highly vertically aligned. They thought that Cathay should rather focus on its core aviation competencies instead of spending resources and time on the aforementioned business processes

3. What is smartsourcing in Cathays vocabulary? Do you agree with the outsourcing decisions they took? Could they have done better?
By Smartsourcing, they mean outsourcing IT services of Cathay Pacific to selected vendors. These vendors had preference over the other vendors. This is done mainly for maintaining tensionless relationship between Cathay and the smartsourcing partners.

Yes, they took the right decision by outsourcing core IT services. IT is definitely not Cathays core competency. Given the growth of the airline sector, it would have been really difficult for Cathay to spend time and money on the IT services. But there are several questions raised on giving preference to the smartsourcing partners. First, it kills competition in pricing of the IT services delivered by these partners. This would result in excessive spending by Cathay Secondly, these partners were chosen though their proposals were not necessarily the best on the table Finally, Cathay didnt have a proper mechanism to develop pricing parameters. They neither had experts nor the benchmark information to quote the price that they were willing to pay. Rather they relied on material collected from IT conferences and research advisory firm Gartner to fix costs with IBM

4. Is it a good idea to switch to IT as a utility model and do nothing in house. Would culture and history of Cathay supported it?
It is not a good idea to do nothing in house. The outport workstations and the VIPs can be best serviced by Cathays IT engineers. Consideration should not only be given to the cost, but also to the quality of the service. Domain knowledge is highly important during direct interactions with the end users. The Cathay employees acquired the knowledge over the long run and best understand the requirement of the end users, which directly affects the day to day operations of the company In the history of Cathay, there was a steady shift in the organizational structure from highly vertical integration to increasing dependency on the external IT vendors. There has to be a balance between the two and there should not be complete dependency on the external vendors given the reputation of Cathays IM

5. How does IT strategy add value to bottom line?


The bottom line is to cut costs and increase operational efficiency with the help of IT IT enables Paperless tickets that save as much as $35 - $40 per ticket. This increases the operational income of the company IT in mobile based services is gaining momentum which is going to be a key factor in reducing costs in the following ways o 15% of the passengers to use mobiles to check-in thus minimizing check-in costs o 33% of the airlines today sell tickets through mobile apps to reduce ticket issuing costs