CASE STUDY ON INFORMATION SYSTEMS: PREMIER AUTOMOTIVE SERVICES

LIMITED
The Premier Automotive Services Limited (PAS) provides services to various companies
in Pune for maintaining the transport fleet run by the companies, for their use. Beside this, it
runs petrol pumps and spare parts shop too. The vehicle maintained by the Premier Automotive
Services are buses, trucks, and jeeps. The total strength of the Premier Automotive Services is
around 300 vehicles. The services charged are of two types- fixed monthly for the routine
maintenance and variable maintenance for other services like breakdown repairs, replacements,
petrol or diesel consumed, etc. The company seeking the services from the PAS are satisfied if
the vehicles are kept in good condition and down time is 2% of 25 days in a month.
The Premier Automotive Services finds difficulty in maintaining this service level even
though a large staff and sufficient inventory of spare parts are available. The probability of the
company is going down due to the low quality of service rendered to the customers. The
revenue earning departments of the Premier Automotive Services are the petrol pumps, the
spare parts shop, the garages and the paint shops.
The Premier automotive services are supposed to keep the schedule of the various
services, which are required for the vehicle to be in good condition. This calls upon the
replacements of the critical spares, testing of various systems, and regular servicing, etc. It is
observed that the vehicles are not called regularly and are not scheduled for such services
properly. It is the customer who complains or initiates a job and then the same is carried out.
The companies for moving their employees use the buses. The buses are, therefore, to be
kept in the good shapes so that no complaint is received. The trucks are used for a long
distance delivery of finished goods. The jeeps are used for the local transport requirements.
Since, all the vehicles are used for critical transport needs their availability become very
important. The turn around cycle time of the vehicles, once received in the Premier Automotive
Services, is very important.
Each vehicle needs to be treated as one servicing unit, for its maintenance and planning.
The planning caters for the general up-keep, the periodical replacements, based on some
parameters, either the period or kilometer run, and the expected breakdown. In each of the
vehicles the items like tyres, batteries, dynamo and fan belt, etc. are required to be replaced on
such a predetermined parameters. In order to service a vehicle, the PAS maintains a card for

each of the vehicle, where the logic information is maintained. The information is like a model,
the type, the owner and his residential or official address and so on. In addition to this, there is a
general list of the tasks such as the base servicing, cleaning topping, etc., which are given for
each of the vehicles within the stipulated period. It also maintains the history of the services
carried out on the vehicle for future planning.
The owner of the vehicle requires yearly report on the task carried out, the expenses
incurred and the forecast of the planned expenses based on the service required in the
following year. The general procedure followed by the PAS, for offering various services, is as
follows:
Each vehicle is scheduled for a show up every month for planning of the service tasks.
When the vehicle arrive in the PAS, the service manager takes the card of the vehicle, checks
the kilometers run and decide the replacement of the various spare parts, the activities like
tuning, overhauling, painting and the basic servicing. The time for the service is estimated and
the driver is given a service order card, with the date for leaving the vehicle in the garage. The
service order card also scheduled the activities in the garage in its order, so that each Service
center knows where the vehicle is to go next for it’s servicing.
At each of the service center, a delivery note is written with the service order number
mentioning the tasks carried out in terms of the skilled hours and replacement made. If the
recommended replacements are not made for non-availability of spare parts it is recorded for
the making up of the next scheduled turn. If the replacement is critical, the vehicle is kept under
a hold till the item is made available. Based on the delivery notes collected from each service
center, a consolidated bill is made for the vehicle, which is handed over to driver for payment.
If the time spend by each vehicle is analyzed, it is observed that 30% of the time is spend
on waiting. Beside, each vehicle is required to visit the service center twice for completing the
task-once for getting the service order and again for actual maintenance work.
The management of the PAS wants a system, which will provide all the information so that
the arrival of the vehicle can be planned to ensure the availability of all the garage facilities,
spare parts and other services. The PAS would like to maintain vehicle log book on the
computer which will provide such information instantaneously for planning and control of vehicle
servicing.
Questions

1. State the objective of the system.
2. What kind of information is necessary to improve the service level to the customer?
3.

Suggest a network system for data and information processing for the PAS for

improving the service quality and reduce turn around time?
4. Suggest the various outputs, the computer system should provide, so that:
a) The customer is informed; well in advance, about the servicing schedule.
b) The expected expenditure on the vehicle in the year can be budgeted by the customer.
c) The PAS can plan the inventory of the spares to ensure service with a controlled
inventory.
Source: Docstoc.com

CASE STUDY OF IBM: EMPLOYEE TRAINING THROUGH E-LEARNING
“E-learning is a technology area that often has both first-tier benefits, such as reduced
travel costs, and second-tier benefits, such as increased employee performance that directly
impacts profitability.” – Rebecca Wettemann, research director for Nucleus Research
In 2002, the International Business Machines Corporation (IBM) was ranked fourth by the
Training magazine on it’s “The 2002 Training Top 100”. The magazine ranked companies based
on their commitment towards workforce development and training imparted to employees even
during periods of financial uncertainty.

Since its inception, IBM had been focusing on human resources development: The
company concentrated on the education and training of its employees as an integral part of their
development. During the mid 1990s, IBM reportedly spent about $1 billion for training its
employees. However, in the late 1990s, IBM undertook a cost cutting drive, and started looking
for ways to train its employees effectively at lower Costs. After considerable research, in 1999,
IBM decided to use e-Learning to train its employees. Initially, e-Learning was used to train
IBM’s newly recruited managers.
IBM saved millions of dollars by training employees through e-learning. E-Learning also
created a better learning environment for the company’s employees, compared to the traditional
training methods. The company reportedly saved about $166 million within one year of
implementing the e-learning program for training its employees all over the world. The figure
rose to $350 million in 2001. During this year, IBM reported a return on investment (ROI)’s of
2284 percent from its Basic Blue e-Learning program. This was mainly due to the significant
reduction in the company’s training costs and positive results reaped from e-learning. Andrew
Sadler, director of IBM Mindspan Solutions, explained the benefits of e-learning to IBM, “All
measures of effectiveness went up. It’s saving money and delivering more effective training,’
while at the same time providing five times more content than before.” By 2002, IBM had
emerged as the company with the largest number of employee’s who have enrolled into eLearning courses.
However, a section of analysts and some managers at IBM felt that e-Learning would
never be able to’ replace the traditional modes of training completely. Rick Horton, general
manager of learning services at IBM, said, “The classroom is still the best in a high-technology
environment, which requires hands-on laboratories and teaming, or a situation where it .is
important for the group to be together to take advantage of the equipment.”
Though there were varied opinions about the effectiveness of e-Learning as a training tool
for employees, IBM saw it as a major business opportunity and started offering e-learning
products to other organizations as well. Analysts estimated that the market for e-Learning
programs would grow from $2.1 billion in 2001 to $33.6 billion in 2005 representing a 100
percent compounded annual growth rate (CAGR).
Background Note
Since the inception of IBM, its top management laid great emphasis on respecting every
employee. It felt that every employee’s contribution was important for the organization. Thomas
J. Watson Sr. (Watson Sr.), the father of modern IBM had once said, “By the simple belief that if
we respected our people and helped them respect themselves, the company would certainly

profit.” The HR policies at IBM were employee-friendly. Employees were compensated well – as
they were paid above the industry average. in terms of wages. The company followed a ‘no
layoffs’ policy. Even during financially troubled periods, employees were relocated from the
plants, labs and headquarters, and were retrained for careers in sales, customer engineering,
field administration and programming.
IBM had emphasized on training its employees from the very beginning. In 1933 (after 15
years of its inception), the construction of the ‘IBM Schoolhouse’ to offer education and training
for employees, was completed. The building had Watson Sr.’s ‘Five Steps of Knowledge’ carved
on the front entrance. The five steps included ‘Read, Listen, Discuss, Observe and Think.’
Managers were trained at the school at regular intervals.
To widen their knowledge base and broaden their perspectives, managers were also sent
for educational programs to Harvard, the London School of Economics, MIT and Stanford.
Those who excelled in these programs were sent to the Advanced Managers School, a program
offered in about forty colleges including some in Harvard, Columbia, Virginia, Georgia and
Indiana. IBM’s highest-ranking executives were sent to executive seminars, organized at the
Brookings Institutions this program typically covered a broad range of subjects including,
international and domestic, political and econQll1ic affairs. IBM executives were exposed to
topical events with a special emphasis on their implications for the company.
In 1997, Louis Gerstner (Gerstner), the then CEO of IBM, conducted a research to identify
the unique characteristics of best executives and managers. The research revealed that the
ability to train employees was an essential skill, which differentiated best executives and
managers. Therefore, Gerstner aimed at improving the managers’ training skills. Gerstner
adopted a coaching methodology of Sir John Whitmore, which was taught to the managers
through training workshops.
However, after some time, Gerstner realized that the training workshops were not enough.
Moreover, these workshops were not ‘just-in-time.’ Managers had to wait for months before their
turn of attending the work shops came. Therefore, in most of the cases, during the initial weeks
at the job, the employees did not possess the knowledge of critical aspects like team building.
IBM trained about 5000 new managers in a year. There was a five-day training program
for all the new managers, where they were familiarized with the basic culture, strategy and
management of IBM. However, as the jobs became more complex, the five-day program turned
out to be insufficient for the managers to train them effectively. The company felt that the
training process had to be continuous and not a one-time event.

Gerstner thus started looking for new ways of training managers. The company
specifically wanted its management training initiatives to address the following issues:
 Management of people across geographic borders
 Management of remote and mobile employees
 Digital collaboration issues
 Reductions in management development resources
 Limited management time for training and development
 Management’s low comfort level in accessing and searching online HR resources

The company required a continuous training program, without the costs and time
associated with bringing together 5000 managers from all over the world. After conducting a
research, IBM felt that online training would be an ideal solution to this problem. The company
planned to utilize the services of IBM Mindspan Solutions to design and support the company’s
manager training program. This was IBM’s first e-learning project on international training.
Online Training at IBM
In 1999, IBM launched the pilot Basic Blue management training program, which was fully
deployed in 2000. Basic Blue was an in-house management training program for new
managers. It imparted 75 percent of the training online and the remaining 25 percent through
the traditional classroom mode. The e-Learning part included articles, simulations, job aids and
short courses.
The founding principle of Basic Blue was that ‘learning is an extended process, not a onetime event.” Basic Blue was based on a ’4- Tier’ blended learning model’. The first three tiers
were delivered online and the fourth tier included one-week long traditional classroom training.
The program offered basic skills and knowledge to managers so that they can become effective
leaders and people-oriented managers.
The managers were provided access to a lot of information including a database of
questions, answers and sample scenarios called Manager QuickViews. This information
addressed the issues like evaluation, retention, and conflict resolution and so on, which
managers came across. A manager who faced a problem could either access the relevant topic
directly, or find the relevant information using a search engine. He/she had direct access to
materials on the computer’s desktop for online reading. The material also highlighted other
important web sites to be browsed for further information. IBM believed that its managers should
be aware of practices and policies followed in different countries. Hence, the groups were
foremen virtually by videoconferencing with team members from all over the world,”

In the second tier, the managers were provided with simulated situations. Senior
managers trained the managers online. The simulations enabled the managers to learn about
employee skill-building, compensation and benefits, multicultural issues, work/life balanceissues and business conduct in an interactive manner. Some of the content for [his tier was
offered by Harvard Business School and the simulations were created by Cognitive Arts of
Chicago. The online Coaching Simulator offered eight scenarios with 5000 scenes of action,
decision points and branching results. IBM Management Development’s web site, Going Global
offered as many as 300 interactive scenarios on culture clashes.
In the third tier, the members of the group started interacting with each other online. This
tier used IBM’s collaboration tools such as chats, and team rooms including IBM e-Learning
products like the Team-Room, Customer-Room and Lotus Learning Space. Using these tools,
employees could interact online with the instructors as well as with peers in their groups. This
tier also used virtual team exercises and included advanced technologies like application
sharing, live virtual classrooms and interactive presentation: on the web. In this tier, the
members of the group had to solve problems as a team by forming virtual groups, using these
products. Hence, this tier focused more on developing the collaborative skills of the learners.
Though training through e-Learning was very successful, IBM believed that classroom
training was also essential to develop people skills. Therefore, the fourth tier comprised a
classroom training program, own as ‘Learning Lab.’ By the time the managers reached this tire,
they all reached a similar level of knowledge by mastering the content in the first three tiers.
Managers had to pass an online test on the content provided in the above three tiers, before
entering the fourth tier. In the fourth tier, the managers had to master the information acquired in
the above three tiers and develop a deeper understanding and a broader skills set. There were
no lectures in these sessions, and the managers had to learn by doing and by coordinating
directly with others in the classroom.
The tremendous success of the Basic Blue initiative encouraged IBM to extend training
through e-Learning to its-sales personnel and experienced managers as well. The e-Learning
program for the sales personnel was known as ‘Sales Compass,’ and the one for the
experienced managers, as ‘Managing@ IBM.’ Prior to the implementation of the Sales Compass
e-Learning program, the sales personnel underwent live training at the company’s headquarters
and training campuses. They also attended field training program, national sales conferences
and other traditional methods of training. However, in most of the cases these methods proved
too expensive, ineffective and time-consuming. Apart from this, coordination problems also

cropped up, as the sales team was spread across the world. Moreover, in a highly competitive
market, IBM could not afford to keep its sales team away from work for weeks together.
Though Sales Compass was originally started in 1997 on a trial basis to help the sales
team in selling business intelligence solutions to the retail and manufacturing industries, it-was
not implemented on a large scale. But with the success of Basic Blue, Sales Compass was
developed further. The content of the new Sales Compass was divided into five categories
including Solutions (13 courses), industries (23 courses), personal skills (2 courses), selling
skills (11 courses), and tools and job aid (4 aids).
The sales personnel of IBM across the globe could use the information from their
desktops using a web browser. Sales Compass provided critical information to the sales
personnel helping them to understand various industries (including automotive, banking,
government, insurance etc) in a much better manner. The information offered included industry
snapshot, industry trends, market segmentation, key processes, positioning and selling industry
solutions and identifying resources.
It also enabled the sales people to sell certain IBM products designed for Customer
Relationship Management (CRM), Enterprise Resource Planning (ERP), Business Intelligence
(BI), and so on. Sales Compass also trained the sales personnel on skills like negotiating and
selling services. Like the Basic Blue program, Sales Compass also had simulations for selling
products to a specific industry like banking, about how to close a deal, and so on. It also allowed
its users to ask questions and had links to information on other IBM sites and related websites.
Sales Compass was offered to 20,000 sales representatives, client relationship
representatives, territory representatives, sales specialists, and service professionals at IBM.
Brenda Toan (Toan), global skills and learning leader for IBM offices across the world, said,
“Sales Compass is a just-in-time, just-enough sales support information site. Most of our users
are mobile. So they are, most of the times, unable to get into a branch office and obtain
information on a specific industry or solution. IBM Sales Compass provides industry-specific
knowledge, advice on how to sell specific solutions, and selling tools that support our signature
selling methodology, which is convenient for these users.”
IBM also launched an e-Learning program called ‘Managing @ IBM’ for its experienced
managers, in late 2001. The program provided content related to leadership and people
management skills, and enabled the managers to meet their specific needs. Unlike the Basic
Blue program, this program enabled managers to choose information based on their
requirements. The program included the face-to-face Learning Lab, e-learning, and Edvisor, a

sophisticated Intelligent Web Agent. Edvisor offered three tracks offering various types of
information.
By implementing the above programs, IBM was able to reduce its training budget as well
as improve employee productivity significantly. In 2000, Basic Blue saved $16 million while
Sales Compass saved $21 million. In 2001, IBM saved $200 million and its cost of training peremployee reduced significantly – from $400 to $135. E-learning also resulted in a deeper
understanding of the learning content by the managers. It also enabled the managers to
complete their classroom training modules in lesser time, as compared to the traditional training
methods used earlier. The simulation modules and collaboration techniques created a richer
learning environment. The e-learning projects also enabled the company to leverage corporate
internal knowledge as most of the content they carried came from the internal content experts.
IBM’s cost savings through E-Learning
Program

Saving in 2000 (in US $million)

Basic Blue

16.0

Going global

0.6

Coaching simulators

0.8

Manager Quick-Views

6.6

Customer-Room

0.5

Sales Compass

21.0

The e-Learning projects of IBM had been successful right from the initial stages of their
implementation. These programs were appreciated by HR experts of IDM, and other
companies. The Basic Blue program bagged three awards of ‘Excellence in Practice’ from the
American Society for Training & Development (ASTD) in March 2000. It was also included
among the ten best ‘world-class implementations of corporate learning’ initiatives by the “ELearning across the Enterprise: The Benchmarking Study of Best Practices” (Brandon Hall) in
September 2000.
IBM continued its efforts to improve the visual information in all its e-Learning programs to
make them more effective. The company also encouraged its other employees to attend these
e-learning programs. Apart from this, IBM planned to update these programs on a continuous
basis, using feedback from its new and experienced managers, its sales force and other
employees.

IBM used e-Learning not only to train its employees, but also in other HR activities. In
November 2001, IBM employees received the benefits enrollment material online. The
employees could learn about the merits of various benefits and the criteria for availing these
benefits, such as cost, coverage, customer service or performance using an Intranet tool called
‘Path Finder.’ This tool also enabled the employees to know about the various health plans
offered by IBM. Besides, Pathfinder took information from the employees and returned a
preferred plan with ranks and graphs. This application enabled employees to see and manage
their benefits, deductions in their salaries, career changes and more. This obviously, increased
employee satisfaction. The company also automated its hiring process. The new tool on the
company’s intranet was capable of carrying out most of the employee hiring processes. Initially,
IBM used to take ten days to find a temporary engineer or consultant. Now, the company was
able to find such an employee in three days.
IBM also started exploring the evolving area of ‘mobile learning’ Analysts felt that for
mobile sales force of IBM, m-Learning was the next ideal step (after e-Learning). IBM leveraged
many new communication channels for offering its courses to employees. IBM also started
offering the courses to its customers and to the general public. In early 2002, American Airlines
(AA) used IBM’s e-Learning package, which enabled its flight attendants to log on to AA’s
website and complete the ‘safety and security training’ from any place, at any time. The content
included instruction clips, graphics, flash animation, and so on. This made the airlines annual
safety training certification program guides more effective. Shanta Hudson-Fields, AA’s manager
for line training and special projects, commented, “The full service package that IBM offers has
allowed us to develop an effective online course for our large group of busy attendants. In
addition to providing a flexible training certification experience for our attendants, American has
also brought efficiency and cost savings to our training processes using IBM’s e-Learning
solution.” The company had trained 24,000 flight attendants by November 2002.

Case Study of China Telecom: ERP Implementation

China Telecom Corporation, the world’s largest operator of fixed-line communications, was
formed when the state owned China Telecommunications Corporation reorganized. China
Telecom employs 350,000 workers throughout China, who attend to the company’s operations
in domestic and international fixed-line networks; fixed-line voice, data, and information
services; and the settlement of international telecommunications accounts. The company has
maintained steady growth despite heavy competition from mobile phone services.

In 2002, the company became a public company listed on the New York Stock Exchange
(NYSE). That same year, the United States (US) granted China Telecom a license to provide
international telephone and Internet service between the countries. These steps were part of a
transition from a traditional state-run enterprise to a modern enterprise based on larger profits
and a wider customer base. However, to succeed as an international telecommunications
powerhouse, China Telecom had to solve several problems. First, the company required a stateof-the-art IT infrastructure. Second, it needed to comply with international reporting regulations
for publicly traded companies. Third, it needed to integrate all of its business functions and
enable real-time management. Together, these initiatives would increase organizational
efficiency, tighten control over internal operations, and promote better collaboration among
different departments.
For a solution, China Telecom decided to invest in Enterprise Resource Planning (ERP)
software. The company could have written its own software to link its different business
functions and organizational units, but this would have been very costly and time-consuming. It
was much easier to use an ERP software package from a recognized vendor. The software is
based on best-practice business processes, which would help the company meet international
reporting requirements.
According to Shiping Liang, director of the application division at China Telecom, the
company chose MySAP ERP from SAP as the backbone system because of its powerful
functionality and integration capabilities. Among the core business processes that MySAP ERP

supports

for

China

Telecom

are

engineering

project

management,

finance, controlling, procurement, and human capital management. SAP’s ERP financials
module supports local currencies, markets, and languages, including Chinese. The SAP human
capital management module automates human resources processes and integrates them
across global operations. The software meets regulatory requirements for more than 50
countries.
To promote data integration, China Telecom also adopted two components of SAP
Netweaver: SAP Business Intelligence (SAP BI) and SAP Enterprise Portal (SAP EP). SAP
Netweaver uses XML and Web services to link the enterprise system with a company’s existing
systems to create new cross-functional applications. SAP Enterprise Portal provides a single
point of access to data from multiple systems, integrating the data in a single view for the user.
SAP Business Intelligence provides data warehousing capabilities to integrate business data
from multiple sources for company-wide reporting.
After considering a number of vendors, China Telecom selected Hewlett-Packard (HP)
hardware to run its ERP software because of its scalability, flexibility, low total cost of ownership,
and ability to support SAP. Specifically, China Telecom chose the HP 9000 server family to run
its SAP applications and HP StorageWorks XP128 Disk Array for its network storage
infrastructure. Eventually, more than 30,000 employees will use the SAP and HP solution at
more than 20 China Telecom subsidiaries. The deployment of the SAP software reflects the
needs of each subsidiary. For example, most of China Telecom’s business comes through
Guangzhou and Shanghai, so those offices will use the financial, operations, human capital
management, and analytic capabilities of MySAP ERP. The headquarters in Beijing will use
MySAP ERP to run human capital management functions to centralize human resources
management and consolidate enterprise-wide information.
The integration of data from MySAP ERP has accelerated the flow of information among
accounting,

procurement,

and

engineering

management

functions

and

encouraged

collaboration among departments. Integration of data between the human resources and
accounting functions facilitates analysis of personnel costs and performance- based
compensation plans, which were previously very time-consuming. The software provides users
with quick and easy access to unified data and applications through a Web browser. The
hardware platform has stood up to the test of making large volumes of critical data available
24/7.

Going forward, China Telecom will focus on using MySAP ERP to further integrate with
other systems so the company has a complete view of all its processes with customers,
employees, and supply chain partners.
Questions to Discuss:
1.

What problems did China Telecom face? How did these problems affect China

Telecom’s business? How has the company chosen to solve these problems?
2.

What other solutions might the company have tried? Analyze the solution that

China Telecom chose from the people, technology, and organization perspectives.
3.

Did China Telecom choose the best solution? Explain your answer.

Credit: Management Information Systems and Cases-MGU

Case Study of Air-Asia : Strategic Role of Information System in Business

Air Asia is established on 12 December 2001 by Mr. Tony Fernandes, the CEO of Air Asia
and expanding rapidly since that. Air Asia is the leading low fare airline in Asia and Air Asia
succeed to become the award winning, ‘Asia Pacific Airlines of the year 2003’ by Centre for Air
Pacific Aviation (CAPA) in 2003. Air Asia has successfully positioned itself in customers’ mind by
using the “ Now Everyone Can Fly” slogan. Air Asia had flown over 55 million guests across the
region and continually create more extensive route network through its associate companies. Air
Asia flies over 61 domestics and international destinations with 108 routes and operates over
400 flights daily from hubs located in Malaysia, Indonesia, and Thailand with a fleet of 72
aircrafts. Air Asia’s net profit for the second quarter ending 31 December 2004 was reported
RM44.4 million, a 323% increase over the previous quarter (Air Asia 2005). The vision of Air
Asia is to serve the 3 billion people who are currently underserved with poor connectivity and
high fare and to be the largest low cost airlines in Asia. Their mission is to create a globally

recognized ASEAN brand, to attain the lowest cost so that everyone can fly with Air Asia, to be
the best company to work for as employees are treated as part of a big family, and to maintain
the highest quality product, embracing technology to reduce cost and enhance service levels.

Roles of information system in Airline Business
Air Asia’s business strategy is centered on cost leadership and targets specific markets
which are price sensitive customers (including 1 st time fliers) who needing the short haul flights.
According to Porter’s generic strategies (1985), cost leadership is one of them. Air Asia has to
offer the lowest possible fare amongst all airlines in LCC (Low Cost Carrier) industry whom
compete on costs in order to win the competition in current markets as well as new markets.
The central objective of Air Asia is to achieve bigger cost advantages than the rivals by
continuously searching areas for cost reduction along its value chain.
Support of Information System
The operational environment of airline industry is complex due to the continuous daily
operation, larger network in supply chain and some external uncontrollable variables such as
government regulations and weather condition. These issues are giving big impacts on airlines’
performance. This show how important to implement advanced planning and scheduling as it
will be able to determine the success of airlines.
Air Asia has implemented APS (Advanced planning and scheduling) system which is
triggered off by Air Asia current market condition that saturated market with high degree of
rivalry among the existing competitors. APS system works as the brain supply chain activities
(Ahmed, 2004) by gearing activities in relation with customers and suppliers requirements. It
helps Air Asia to optimize its supply chain management as clusters and classifies customer
orders, forecasts future fulfillment requirements, set order priorities and checks resources

availability. APS system provides visibility across supply chain in term of cross functional
scheduling and planning with suppliers and customers. APS system will able to further improve
Air Asia’s processes performance and it also analysis the flying routes which optimal flying route
is imperative in deciding new destinations for Air Asia to serve in future.
Air Asia has implemented the Database Managing System in order to share the
centralized date amongst all functional areas to ensure daily operation is sufficient. Perriodot
system had been signed up to develop the travel itinerary gateway for Air Asia to process all
confirmed bookings with skylights Navitaire, where a final PDF processing will be handle
through their XML driven itinerary processing server At the same time, Air Asia has signed up
PEP (Process Flow Enterprise Portal) system for their internal intranet operation whereby
modules to be implemented including news and announcement, leave management, claims
processing lost luggage management and staff scheduling.
In order to successfully maintain process integrity, reduce financial month-end closing
processing times, and speed up reporting and retrieval processes (Microsoft Malaysia), Air Asia
had implemented a full fledged ERP (Enterprise Resource Planning) system powered by
Microsoft Business Solutions (MBS) on Microsoft technology platform recently (May 2005) by
Avanade consultants. ERP is the system that integrated comprehensive software to make the IT
system works more effectively and efficiently. ERP system helps Air Asia to collect data from
various key business processes in manufacturing and production, finance and accounting,
human resources, sales and marketing, and storing the date in a single central date repository.
Information is easily shared across the firm to help the different parts of business work together
closer and this lead a better decision making of management level.
Air Asia has implemented YMS (Yield Management System) to optimize prices and
allocate capacity to maximize expected Revenues. YMS helps Air Asia to understands,
anticipates and reacts to the behavior of customer to maximize the revenue of the organization.
The optimization is done on two levels:
 Route (By adjusting the prices for destinations that have higher demands in the market).
 Seat (Seat are available with various prices during different time. The reservation fee will

be higher for the same seat at the later date. Thus, every seat is considered an opportunity to
increase revenue).
Air Asia have actually lowered their revenue as YMS has given Air Asia the window to
increase their revenue by offering higher discounts, more frequently during off-peak times while
raising prices only marginally for peaks time. Air Asia was able to increase avenue (3-4%) for

the same number of aircrafts by charging a premium for late bookings and by taking advantage
of the forecast of the high/low demand period.
Furthermore, the other information system that Air Asia has implemented is CRS
(Customer Reservation System) which is the Open Skies by Navitaire. CRS has helped Air Asia
to grow at a dramatic pace. CRS is an integrated web-based reservation and inventory system
whereby it includes call center, internet, airport departure control etc. By implemented CRS that
works as a direct sales engine, Air Asia are able to eliminate the middleman and the sales
commission which need to pay to them initially. Open Skies maintained the centralized customer
data and helps Air Asia to track booking and schedule flight activities with real time, on demand
reporting feature. Open Skies is able to integrate with the already implemented YMS. Thus, the
systems be used in unison for pricing and revenue maximizations and driving down the costs of
operation. Air Asia is the first airlines to introduce ticketless travel option and provides advanced
boarding passes in addition to online booking as the result of CRS implementation. CRS satisfy
the unique needs of Air Asia implementing a low-cost business model to transform the business
process to efficiently streamline operations.
IT infrastructure
To power Air Asia website, www.airasia.com, it has selected the Dynamic Site Acceleration
solutions from Akamai for 10 years deal on this front. Air Asia was looking forwards to provide
the high quality services to the customers and features such as flight scheduling and easy to
make online bookings due to the heavy visiting load which is an average of one million unique
visitors per month. By handling the specific requirement, Akamai’s Dynamic Site Acceleration
solutions offer website performance up to five time faster than the origin web infrastructure and
it can be achieved without the costly hardware. Air Asia also make use of Akamai’s globallydistributed delivery network of 48,000 secure servers equipped with specialized software to
increase site speed and performance due to Akamai provides turnket managed service that
increases the scale, reach and performance of even the most complex Web sites and offers a
full set of tools for enterprises to monitor and control the online business of Air Asia.
Air Asia has collaborated with Microsoft by implemented the Air Asia sidebar gadget which
developed by TMS (The Media Shoppe Berhad), a Microsoft-certified independent solutions
provider, for the Window Vista Platform. The Vista Gadget is available for downloading purpose
at AirAsia.com. The gadget allows customer to access live travel information directly from the
Window Vista interface. This gadget helps Air Asia to boost up their e-commerce business as it
enable the customers to keep up to date with latest news and promotions, and continue to drive
traffic back to Air Asia website.

Case Study on Business Systems Planning And Implementation :
McDonald’s Corporation

McDonald’s has worked hard to be more than a restaurant chain. It has become a
marketing icon and is part of the routines of millions of people. Its success is so far reaching
that it has developed its own culture and identity. It has become a symbol of the success and
desirability of American popular culture.
McDonald’s operates more than 24,000 restaurants in 114 countries. It has a 21 percent
share of the very competitive US fast food industry. Overseas restaurants now account for half
of the company’s profits. McDonald’s plans to open 10,000 new restaurants by the year 2005.
It has been the forerunner in the recent industry trend of co-branding and satellite locations.

What has set McDonald’s apart from the average hamburger restaurant is its ability to
recognise customers’ needs and desires. It seems customers want fast, friendly service in a
clean and orderly environment. McDonald’s sees this as its main objective and addresses it as
its primary business function. One of McDonald’s most important critical success factors has
been the ability to apply manufacturing functions to service activities. McDonald’s has used this
approval to bridge the dichotomy between service and manufacturing.

The McDonald brothers identified simplicity as being important. Dick McDonald explained,
We said let’s get rid of it all. Out went dishes, glasses and silverware.
Out went service, the dishwashers and the long menu.
We decided to serve just hamburgers, drinks, and French fries on paper plates.
Everything prepared in advance, everything uniform.
All geared to heavy volume in a short amount of time.
This simple system was felt to be ideal for franchising as it was ideal to duplicate. A
strong system of operations was conceived. The system consists of four distinct parts:
1.

Develop supplier relationships.

2.

Train and monitor franchises.

3.

Improve products.

4.

Improve equipment through technology.

Networks are particularly important to McDonald’s because they provide a mechanism to
manage the franchises spread over large geographic areas.

Networks reinforce the

centralisation of power by enabling headquarters to communicate with the franchises. This
ensures standardisation and quality control through the analysis of inventories and franchises.
Networks achieve these functions at a comparatively low cost and without the time constraints
of more mainframe-based communications.
Both McDonald’s and Burger King are testing smart card technology in selected markets.
The cash value of each card is stored on a computer chip or a magnetic strip on the back of
each card. Value can be added to the card through machines that accept cash or through ATMlike machines that add value by transferring funds out of a customer’s bank account.
Customers can use the cards, instead of cash to make their food purchases. Corporate goals
for smart card implementation include cost savings in relation to money handling, reduced
shrinkage, and increased loyalty through incentives and premiums. Smart cards eliminate the
need for merchants to communicate with banks for the authorisation of purchases.
McDonald’s is testing this technology at 870 restaurants across Germany. McDonald’s
Deutschland continues to use smart card terminals in 55 stores. During the first 10 weeks of the
trial, 30 thousand transactions were conducted, using Hewlett-Packard Co.’s VeriFone unit,
which provides the terminals. McDonald’s is hoping to lead a trend toward the wide-scale
acceptance of smart cards in Germany. Technologically, smart cards were designed to function
in place of credit cards in the fast-food environment. Historically, credit card transactions were
too slow. Their associated costs were too high in the face of small margins. Smart cards are an
important step in resolving these issues. They enable restaurants to leverage sales and

enhance the ease of credit card use. Authorisation and settlement technology are rapidly
improving. The costs of network connectivity are decreasing.
McDonald’s first announced a web presence in 1994 with McDonald’s interactive, an area
in NBC Online on America Online. In 1995, the company developed and implemented a web
site called McFamily (www.mcdonalds.com). It is aimed at families, perceived by McDonald’s
as its most important target market. The site features “seasonal ideas for fun family activities
such as block parties, travel games, and household safety information.” The Auditorium
sponsors monthly guest speakers, including celebrities and parenting experts, and a Hey Kids
area houses a gallery with McArt submitted by children with downloadable games and contests.
The goal of all these web pages is to enhance the brand image that McDonald’s is for families.
McFamily includes a section on “helping others”. This section features information on Ronald
McDonald House and other related children’s charities. This section also features information
on McDonald’s efforts to preserve the environment.
The McDonald’s web site cannot be used to sell food. However, it can capture revenue
through sales of merchandise related to McDonald’s sponsorships. The “McStuff for You”
section offers gear from McDonald’s racing teams and the Olympic Games. The web site is
used to collect customer information and profiles through on-line surveys.
Decision makers at McDonald’s Corporation realise that customer preference is
paramount. The chain is implementing a restaurant-level planning system, dubbed “Made For
You.” This enables each restaurant to eliminate its inventory of foods prepared in advance.
Instead, workers make sandwiches based on actual demand without sacrificing any of the
efficiency.
About 800 McDonald’s restaurants use the system, which consists of PC-based cash
registers running in-house software. Orders are routed to monitors at different food preparation
tables to balance the workload among employees. In McDonald’s restaurants without the new
system, workers must anticipate demand for each type of sandwich in advance and place them
in bins. When a customer wants a sandwich that is not ready-made or one with a different
topping, the person at the register shouts out the order and workers move out of the assembly
line for the special request. This slows the process and extends the customer’s wait.
McDonald’s introduced the new system in March at a meeting for its franchisees. The
company is encouraging its 12,400 US restaurants to incorporate the system, but the actual
decision is left to each franchise. The technology eases the workload and could add up to a
percentage point to the company’s profit margin because it enables it to sell more food faster.

Wal-Mart and McDonald’s have jointed together to share retail space. These two
companies have been partners since 1993, with over 800 restaurants in Wal-Mart stores around
the US. Now, McDonald’s has taken this one step further. It actually uses Wal-Mart clerks and
registers to sell McDonald’s food. In several test locations, when Wal-Mart shoppers pull their
carts up to the checkout, there is a mat on the counter displaying the McDonald’s products,
much like what you would see at one of the restaurants. Each product, from hamburgers to
Happy Meals, has a code number that the clerk scans into the Wal-Mart system while ringing up
the customer’s purchases. The orders are automatically relayed from the register to the kitchen
using software jointly developed by McDonald’s and Wal-Mart. The food is brought to the
customers as they leave the store. Since the food appears on Wal-Mart’s registers and
receipts, customers can pay for it with a single credit card purchase. At the end of the day, the
companies balance McDonald’s portion of the proceeds. Individual organisations are starting to
use one another’s environments and skills to reach as many potential customers as possible.
To better manage its inventory, McDonald’s has implemented supply-chain software that
enables better management of inventory by sharing demand and supply information among its
restaurants, suppliers and distributors.
McDonald’s appears to be at a crossroad. The company can continue on its traditional
(and very successful) path of consistency and quality through standardisation, or it can alter the
basic strategies by allowing franchisee autonomy and continuing to provide a variety of offerings
and service. As a company noted for standardisation, emphasis on flexibility is quite a feat.
This new outlook includes granting more freedom for franchisees to experiment with food and
marketing, test new venues, such as satellite locations and co-branding, and develop new menu
items.
These changes are innovative and risky. Current management is not considering minor
adjustments. Experimenting with the much copied system of operations is a gamble. The
system is a precisely organised machine; by introducing flexibility, the machine is in danger of
becoming mired down with complexity. The danger lies in straying too far from what
McDonald’s has done in the past.
(Source: Adapted and condensed from Anderson, D. 2000, Managing Information
Systems, Prentice Hall, NJ)