As Business Intelligence (BI) becomes a critical component of daily operations, real-time data warehouses (DW) that provide end users with rapid updates and alerts generated from transactional systems are increasingly being deployed. Real-time data warehousing and BI, supporting its aggressive Go Forward business plan, have helped Continental Airlines alter its industry status from “worst to first” and then from “first to favourite”. Continental Airlines is a leader in real-time BI. In 2004, Continental won the Data Warehousing Institute’s Best Practices and Leadership Award.
Big Problems
Continental Airlines was founded in 1934, with a single-engine Lockheed aircraft in the Southwestern U.S. As of 2006, Continental (Houston) is the fifth largest airline in the United States and the seventh largest in the world. Continental has the broadest global route network of any U.S. airline, with more than 2,300 daily departures to more than 227 destinations.
Back in 1994, Continental was in deep financial trouble. It had filed for Chapter 11 bankruptcy protection twice and was heading for its third, and probably final, bankruptcy. Ticket sales were hurting because performance on factors that are important to customers was dismal, including a low percentage of on-time departures, frequent baggage arrival problems, and too many customers turned away due to overbooking.
Solution
The revival of Continental began in 1994, when Gordon Bethune became CEO and initiated the Go Forward plan, which consisted of four interrelated parts to be implemented simultaneously. Bethune targeted the need to improve customer-valued performance measures by better understanding customer needs as well as customer perceptions of the value of services that were and could be offered. Financial management practices were also targeted for a significant overhaul. As early as 1998, the airline had separate databases for marketing and operations, all hosted and managed by outside vendors. Processing queries and instigating marketing programs to its high-value customers were time-consuming and ineffective. In addition, information that the workforce needed to make quick decisions was simply not available. In 1999, Continental chose to integrate its marketing, IT, revenue, and operational data sources into a single, in-house, enterprise data warehouse (EDW).
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The data warehouse provided a variety of early, major benefits.
As soon as Continental returned to profitability and ranked first in the airline industry in many performance metrics, Bethune and his management team raised the bar by escalating the vision. Instead of just performing best, they wanted Continental to be their customers’ favourite airline. The Go Forward plan established more actionable ways to move from first to favourite among customers. Technology became increasingly critical for supporting these new initiatives. In the early days, having access to historical, integrated information was sufficient. This produced substantial strategic value. But it became increasingly imperative for the data warehouse to provide real-time, actionable information to support enterprise-wise tactical decision making and business processes.
Luckily, the warehouse team had expected and arranged for the real-time shift. From the very beginning, the team had created an architecture to handle real-time data feeds into the warehouse, extracts of data from legacy systems into the warehouse, and tactical queries to the warehouse that required almost immediate response times. In 2001, real-time data became available from the warehouse, and the amount stored grew rapidly. Continental moves real-time data (ranging from to-the-minute to hourly) about customers, reservations, check-ins, operations, and flights from its main operational systems to the warehouse. Continental’s real-time applications include the following:
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• Revenue management and accounting
• Customer relationship management (CRM)
• Crew operations and payroll
• Security and fraud
• Flight operations
Benefits
In the first year alone, after the data warehouse project was deployed, Continental identified and eliminated over $7 million in fraud and reduced costs by $41 million. With a $30 million investment in hardware and software over six years, Continental has reached over $500 million in increased revenues and cost savings in marketing, fraud detection, demand forecasting and tracking, and improved data centre management. The single, integrated, trusted view of the business (i.e. the single version of the truth) has led to better, faster decision making.
Continental is now identified as a leader in real-time BI, based on its scalable and extensible architecture, practical decisions in what data are captured in real-time, strong relationships with end users, a small and highly competent data warehouse staff, sensible weighing of strategic and tactical decision support requirements, understanding of the synergies between decision support and operations, and changed business processes that use real-time data.
Questions
1.Describe the benefits of implementing the Continental Go Forward strategy.
2.Explain why it is important for an airline to use a real-time data warehouse.
3.Examine the following sample system output screen. Describe how it can assist the user in identifying problems and opportunities.
Extracted from http://www.teradata.com/t/page/139245/
4.Identify the major differences between the traditional data warehouse and a real-time data warehouse, as was implemented at Continental.
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5.What strategic advantage can Continental derive from the real-time system as opposed to a traditional information system?
Additional information on Continental Airlines extracted from http://www.teradata.com/t/page/139245/
Continental scores with Teradata and Hyperion
Continental Airlines, the world’s sixth largest airline, was recently named the “most admired global airline” by Fortune magazine. But Continental wasn’t always so highly acclaimed. In 1994, it ranked 10th out of 10 airlines assessed by U.S. Department of Transportation metrics. The airline knew little about its important customers, set fares and schedules using conventional industry assumptions, conducted contract negotiations blindly and fought fraud only after the damage was done. Continental’s turn around dramatically demonstrates how a data warehouse implementation and strategic use of BI—in this case, Teradata and Hyperion, respectively—can enable a company to attain competitive advantage. In fact, Continental’s earned it Gartner’s 2005 BI Excellence Award.
Continental developed an enterprise data model that simplifies the joining of different subject areas to provide a single view of information for the BI environment. The model can support any query a user asks. Twenty-seven source systems feed the data warehouse, including schedules, inventory, reservations, OnePass (Continental’s frequent flyer program) and employee/crew payroll. More than 1,100 people use Continental’s Teradata/Hyperion-based system. The single, integrated, trusted view of the business has produced benefits ranging from better, faster decision-making to more than $500 million in cost savings, as well as incremental revenue from many initiatives that required BI information. The CRM and marketing team at Continental offers a conservative estimate of $150 million in revenue gains and $25 million in cost savings and fraud prevention.
