Impact of Information Technology on the Airline Industry - British Airways - Case Study Example

Impact of Information Technology on Airline Industry: A Case of British Airways Student’s Name Institutional Affiliation Course Name Date of Submission Executive Summary Information technology has become a critical tool that businesses use to help them gain a competitive advantage. Today, all forward-thinking businesses have adopted the use of various IT technologies, such as the internet and other modern technologies to enable them enhance service delivery to customers and to gain a competitive edge over rivals. Businesses are particularly benefiting from the use of IT in advertising, communicating, attending to customer and supplier issues, and speeding up business processes. British Airways is a classic example of an airline company that has benefited greatly from the adoption of various IT tools, such as the internet and use of social media among others. Despite the benefits associated with application of IT into businesses, managers must beware when introducing IT into business since the adoption of IT has some risks involved. Therefore, proper planning, including training staff, as well as protecting the IT infrastructure is needed to ensure successful adoption and use of IT for competitive advantage. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 Why Businesses Need Information Technology 4 IT for Business Survival 7 Things Required In Applying IT into Business 9 Type of Risks That IT Brings To Businesses 10 Benefits and Advantages that IT Bring To Business 11 Ways in Which Businesses Can Maintain and Monitor IT 12 How Businesses Use IT 13 Conclusion 13 Recommendations 14 Appendix 14 References 16 Introduction The world has witnessed rapid technological advancements in the recent past. The rapid proliferation of the internet coupled with the emergence of many other modern technologies has shaped the way businesses operate. Today, all forward-thinking organizations are fast implementing IT as a means of gaining a competitive edge over rivals in the industry. In fact, business gurus argue that no any business whatsoever can compete effectively in the present day business environment without being innovative and use of technologies. The airline industry is among the industries that have been impacted greatly by information technology (IT) that has greatly changed the way airline companies operate. This report seeks to examine the importance of IT on businesses with a particular focus of the impact of IT on the airline industry. The report will also discuss things that are required to apply IT into businesses, the way businesses use IT, risks involved in applying IT into businesses, as well as the ways in which businesses can maintain and monitor IT. Why Businesses Need Information Technology The world has witnessed rapid technological developments in the recent past. Today, technology impacts almost every aspect of human life. In fact, the technological advancements witnessed in the recent past, such as the internet development and usage has transformed the world into a global village. However, the question that puzzles the minds of many has to do with whether or not businesses need to apply information technology (IT). Reynolds (2009, p. 5), however, have noted that any business that intends to become competitive must consider applying IT. Firstly, Reynolds (2009, p. 5) argues that businesses need IT to help enhance the efficiency with which tasks are performed. Initially, certain tasks used to take so long to complete since they had to be done manually. This also resulted in many errors being made by employees because of the technical nature of some tasks. However, businesses have benefited greatly from the adoption of IT since IT has made performing certain tasks easy and faster (Reynolds, 2009, p. 5). For instance, managing a new accounting system used to be a very tedious and daunting task for most organizations in the past. However, the new accounting software used by businesses has greatly simplified not only the process involved in setting up accounts, but also the way daily transactions are posted. Additionally, the use of accounting software has helped many business managers in creating annual reports, thereby helping enhance the effectiveness of decision-making. Businesses also need IT to help them reach their targeted audiences faster and in a cost effective manner. The internet, in particular, has become a very important tool that businesses use to reach their targeted audience. Currently, businesses use the internet to market their products online, thereby enabling the businesses reach a wide range of audiences all over the world within a very short time. The airline industry, in particular has been impacted by the proliferation of the internet. Unlike in the past, where airline companies relied mainly on traditional forms of communication, currently, most airline companies use IT tools, such as the internet to market their products online (Papp 2001, p. 14). British Airways, which is the U.K’s largest airline company currently, operates a website where it markets its products and services. By visiting the website, any passenger wishing to use BA can get information about the products and services that the airline offer, the ticket prices, destinations and the departure times (Kollau 2013). Accordingly, this internet has enabled BA to reach a wide audience easily and in the most cost effective way. Other than the internet, BA also uses other IT communication tools such as television, and radio to advertise its products and services. Accordingly, this has enabled the company to build a strong brand image all over the world. Businesses also need IT to help build good customer relations. Business gurus have noted that, the biggest challenge to most businesses today is not attracting customer; rather maintaining customers. However, unlike in the past where building customer relations was not easy, presently, businesses are able to build strong customer relations easily, thanks to IT. Reynolds (2009, p. 19) noted that most businesses have taken advantage of the social media as a means of building customer relations. Social media provide businesses with a platform, where they can respond to customers’ complaints and complements real time, thereby giving businesses the opportunity to address customers concerns faster to ensure greater customer satisfaction and loyalty. Currently, British Airways operate different social media sites, including Twitter and Facebook (Figure 1), where the company responds to customer issues to ensure that customers are provided with quality services that meet their needs (Goodwin 2015). Other airline companies such as Virgin Atlantic, and Malaysian Airline also operates Twitter and Facebook accounts, where they address customer concerns to help build brand reputation and good customer relations. For example, when the Malaysian Airline disappeared on the skies, the management of the company used social media, including Twitter and Facebook to reach its stakeholders all over the world by briefing them of what happened and the efforts that the airline was taking to put the situation under control (Kollau 2013). Businesses also need IT to help increase efficiency in service delivery. The airline industry is a classical example of an industry, where the implementation of various IT has greatly improved customer service and efficiency. Currently, with the widespread use of the internet, almost all airline companies have introduced the online booking system that has greatly benefited airline companies and customers (Reynolds 2009, p. 41). Online bookings have enhanced the quality of customer service by doing away with the long queues that traditionally characterized ticket bookings. Online booking system has made it possible for travelers to book tickets within a click of a second from any part of the world without necessarily having to travel to the airline offices. BA, Virgin Atlantic, Malaysian Airline and the American Southwest airline have all introduced the online ticket booking system that has greatly improved customer service and reduced the cost to the airlines. IT for Business Survival Today, the business environment has become very competitive than ever before. The globalization and advancements in technologies has intensified the competition landscape as domestic companies not only have to compete with local firms, but also with foreign corporations. The increased competition has put many companies at the verge of collapse, especially those that cannot withstand strong competition. Khosrowpour (2006, p. 13) have shown that companies can use IT as a tool for business survival. Normally, for a company to survive, it must be able to generate profits in the long-term. Fortunately, the implementation of IT can help increase the competitiveness of a company that is under the threat of collapse to survive. Firstly, IT is important for business survival since it ensures the provision of high quality customer services, thereby helping build strong customer loyalty, thus competitive advantage. British Airways, which the leading implementer of IT in the airline industry has survived the strong competition it faces from rivals in the industry because of effective use of IT. Through IT system, BA has been able to improve the quality of customer service by ensuring that customers concerns are addressed in the fastest time possible (Goodwin 2015). Accordingly, this has made BA an attractive airline to fly for most travelers, thereby giving it a competitive edge over rivals, thus survive. Secondly, IT is important for business survival since it enhances the efficiency with which business activities are executed. Customers usually like associating with innovative companies capable of delivery quality products and services. Fortunately, the use of IT can help a business deliver quality products and services that meet customers’ needs, thus ensuring profitability in the long-term. For example, BA has benefited a great deal since it introduced the online ticketing services as this has minimized the long queues that used to inconvenience customers as services can now be delivered faster, thereby increasing the level of customer satisfaction and competitiveness (Kollau 2013). Additionally, IT is important for business survival since it minimizes the cost that a company has to incur producing a product or delivering a service. Normally, for a business to become competitive, it must keep the cost of doing business as low as possible to ensure greater profitability. Fortunately, the use of IT helps reduce cost by reducing the number of employees that have to do a certain task (Khosrowpour M 2006, p. 19). For instance, the use of accounting software in posting daily transaction helps reduce the cost by reducing the number of employees that would have otherwise performed the accounting work through manual system. Accordingly, cost reduction through IT translates to increased profitability, which in turn increases the survival chances of an organization. Things Required In Applying IT into Business Although IT creates huge benefits to a business, it takes a lot to introducing and implements IT in the business. Firstly, implementing IT in a business is usually a costly venture. This is because the business must acquire the equipments that are needed to implement the technology, which is sometimes very costly to businesses, especially small businesses. For instance, in order to start using the internet technology to improve the business processes, a firm must invest in computers, laptops and iPads to be used by the management and the employees in the organization. However, this is usually costly to most organizations. Papp (2001, p. 28) observed that the high cost associated with the introduction of a new IT is the reason some companies fail to use certain technologies even if they believe that the use of the technology can be huge benefit to the company. Apart from the cost of acquiring the equipment, applying IT requires that the IT equipment be installed by an expert, suggests Papp (2001, p. 51). This is to ensure that the IT equipments work properly as intended. For instance, when introducing the internet technology in a business, there would be a need to hire an IT expert to install the internet, whether Local Area Network or Wide Area Network to ensure that the internet functions properly. Additionally, even after installing IT into a business, the managers must ensure that employees understand how to use it. As such, managers must ensure that employees are provided with enough training on how to use the newly introduced IT equipment and software since the majority of the employees may not have the knowledge on how to use them. For instance, before the introduction of the computers, most organizations relied on equipment such as typewriters, thus employees did not know how to use computers. As such, to ensure good use of the computers, employers had to arrange for training for their employees on how to use computers. Above all, application of IT into business requires proper planning. Planning in this case involves understanding the business needs and the type of IT infrastructure needed to address the business needs. Additionally, before introducing an IT, the managers must ensure that the staff and employees who will use the new IT understand the reasons it is being introduced to minimize resistance. Resistance to change normally presents a big challenge to management when introducing an IT since some managers and employees might attempt to resist the new technologies for fear of losing their jobs (Papp 2001, p. 86). Therefore, managers must have a proper planning on how to deal with resistance to change. Type of Risks That IT Brings To Businesses Although IT is beneficial to a business, the use of IT is associated with various risks that businesses need to understand before applying an IT to a business. The first major risk has to do with security breach. Businesses, both small and large usually store sensitive customer information, such as social security numbers, addresses, credit card and bank account numbers in the computer system. However, if a hacker successfully breaks into the company’s computer system, the hacker might steal the customer sensitive information, such as bank accounts or credit card numbers and stealing customer money. According to the Computer Security Institute 2007 survey report, businesses lost about $21.1 million because of financial fraud, $6.9 million of which was lost due to external intrusion and a further $5.7 million lost due to theft of confidential data (Reynolds 2009, p. 41). This might put a company at risk of being sued by customers, especially where it emerges that the business failed to implement effective security measures. Secondly, IT creates the risk of distractions. Despite the benefits associated with IT, evidence has shown that IT can result in reduction in employees’ productivity. This is because some employees might end up spending much of their time surfing the internet, playing computer games or chatting on social media instead of performing the duties for which they are hired. Accordingly, this might force a business to install internet security software to bar employees from surfing the internet. Additionally, businesses are increasingly creating policies of monitoring the activities of employees to prevent employees from engaging in illegal activities. However, most employees have often objected the idea of putting them under surveillance as they see is as an invasion of their privacy rights. As a result, this might put the business in an ethical dilemma of having to protect the privacy rights of employees while at the same time having to protect itself from illegal activities of employees. Benefits and Advantages that IT Bring To Business Information technology brings many benefits to a business. Firstly, applying IT into business has the benefit in the sense that it can result in increased revenue and profitability. This is because IT increased the efficiency with which services and products are provided to customers, which in turn increases revenue and profits (Reynolds 2009, p. 53). Secondly, IT is advantageous to businesses since it results in a significant reduction in cost. Social and communication technologies have made promotion and product launch highly affordable to businesses. Today, most businesses use social technologies to enhance their brand awareness and attract many customers at low cost. Additionally, IT has helped reduce cost of operation for businesses by minimizing the number of employees that have to do a certain job. Thirdly, IT is beneficial to organizations since it creates greater flexibility with which managers and employees do their work. Today, IT has enabled managers and employees to work remotely, including from their homes or in vehicles (Khosrowpour 2006, p. 52). This is advantageous since it allows employees to increase their productivity as they can work from anywhere without necessarily having to be physically present in the office. Additionally, IT is beneficial to businesses since it gives a company the resources it requires to communicate with customers and suppliers faster and effectively. Additionally, IT is advantageous to business since it enables businesses to automate some of their functions. Ways in Which Businesses Can Maintain and Monitor IT In order for a company to enjoy the advantages of IT, the IT managers must ensure that the IT equipment and infrastructure are properly maintain and monitored all the time to ensure that they are up to date and functions properly. Firstly, an organization can effectively maintain its IT system through preventive maintenance. This involves taking every measure possible to prevent failures or breakdowns of the IT infrastructure that might affect the functioning of the IT system (Khosrowpour 2006, p. 83). Secondly, a business can maintain IT system by ensuring that the software and hardware are constantly upgraded and updated to ensure that they function properly. Additionally, a business can effectively maintain and monitor its IT system by providing backup system to prevent catastrophic failures that might occur to the IT system in the event of an attack by external intruders or power surge. How Businesses Use IT Businesses use IT in a variety of ways. Firstly, the management might use IT to share information that is pertinent to the organization. For instance, whenever the management intends to share information with the staff, it might use email services, social media or share the information through phone calls. Apart from sharing information with staff, a business might use IT to communicate with its customers and suppliers. For instance, British Airways uses email, social media and phone calls to share information with its staff, customers whenever need arise. Secondly, a business might use IT for storing vital information about products or services in the databases. Thirdly, businesses use IT for posting and calculations to determine the costs and profits (Khosrowpour 2006, p. 102). BA, for instance, uses the spreadsheet to cost its products and services. Fourthly, businesses use IT for advertisement purposes. For instance, BA uses social media, and TV to advertise its products and services to its targeted customers all over the world (Goodwin 2015). The employees of a company also use IT, such as accounting software for easy posting of business transactions. Conclusion The world has experienced rapid proliferation of new technologies that have greatly impacted the world. The greatest impact of IT has particularly been felt in the business world, where the new technologies have greatly transformed how businesses are conducted. However, from the literature, it clearly emerged that every business that intends to become competitive today cannot ignore the power of IT. This is because IT has great potential of increasing a company’s competitiveness by enhancing the efficiency and speed with which products and services are delivered to customers. Additionally, businesses stand to benefit from IT in advertising, offering online services as has been seen with British Airways that has greatly benefited from the use of IT. Recommendations The literature has clearly showed that businesses stand to benefit a great deal from the adoption of various information technology tools that have emerged in the recent past. Therefore, any company that intends to succeed by becoming competitive should consider enhancing business processes and activities by applying various IT tools, such as the internet, social media, computers, mobile phones, and tablets among others. However, businesses must ensure that the risks associated with the adoption of various IT tools, such as security, privacy and confidentiality issues are effectively addressed to ensure that the IT tools are embraced by all company stakeholders. Additionally, before applying IT system, businesses must ensure proper planning to ensure that the IT system is not only embraced by the staff, but also perform its functions as required. Appendix British Airways Facebook Page Source: https://www.facebook.com/britishairways References Goodwin, B 2015, British Airways cites IT investment as key factor in 20% profit increase, viewed 18 June 2015 http://www.computerweekly.com/feature/British-Airways-cites-IT-investment-as-key-factor-in-20-profit-increase Khosrowpour, M 2006, Emerging trends and challenges in information technology management: 2006 information resources management association international conference, Washington, DC, USA, May 21-24, 2006, volume 1. Idea Group Inc (IGI), London. Kollau, R 2013, The in-flight passenger experience technological revolution, viewed 18 June 2015 http://www.futuretravelexperience.com/2013/06/the-in-flight-passenger-experience-technological-revolution-part-one/ Papp, R 2001, Strategic information technology: Opportunities for competitive advantage. Idea Group Inc (IGI), London. Reynolds, G 2009, Information technology for managers. Cengage Learning, Boston, MA. Read More