The Top IS Job
Lecture 4

2-1


Summary of Previous Lecture

2-2


Summary.. The Top is Job


The responsibilities of the head of the IS
function now go far beyond operating highly
efficient “production programming shops.”
These executives must understand the
goals of the enterprise and work in
partnership with line executives to deploy IT
to attain the organization’s goals

2-3


Summary .. The Top is Job


We shall discuss in next lectures the top
IS executive’s job, looking first at the top
job itself by summarizing six major

responsibilities, and then exploring several
ways the information systems function is
evolving in organizations

2-4


Summary … The Top is Job


The SABRE system, Lifescan, BP, Aetna
Life and Casualty, Duke Energy
International, Wal-Mart Vs. Kmart, AXA
Financial, and Rexam provide examples of
how the role of information systems
management is changing

2-5


Today’s Lecture


Introduction



Where is the IS Organization headed?
 The


Escalating Benefits of Information Technology
 Case Studies SABRE International,
 BERGEN BRUNSWIG
 Wal Mart

2-6


Introduction


Management of IT has changed drastically in the past 50
years



Early days = manage the technology:






Get it to work
Keep it running
Reduce cost of doing business

Then = manage the information resources



Support (management) decision making




Delivering information when and where it was needed

Now = IT is pervasive and is a mandatory link between
enterprises
2-7


Introduction cont.
• Responsibilities of the head of IS now go far
beyond operating highly efficient ‘production
programming shops’
• These executives are now part of top
management and help form the goals of the
enterprise in partnership with the CEO, CFO
and other members of top management

2-8


Where Is The IS Organization Headed?
•

•

The Escalating Benefits of Information Technology

– Kenneth Primozic, Edward Primozic, and Joe
Leben introduce the notion of “Waves of
Innovation” which they define as how IT is used by
industries and enterprises.
There are five Waves of Innovation (Figure 2-1):
5. Reaching the consumer
4. Enhancing executive decision making
3. Enhancing products and services
……………………………………………………………………………………

2. Leveraging investments
1. Reducing cost

2-9


Where Is the IS Organization Headed?
Escalating Benefits of IT

2-10


CASE STUDY
THE SABRE SYSTEM

2-11


SABRE
 Semi






Automated
Business
Research
Environment
Source : American Airlines, Simon Forty, 1997 


SABRE : What is it?


SABRE is a completely automatic ,
centralized , electronic airlines
reservations
   system developed by IBM for
American Airlines.

 

                                                
                         
 

Source : IBM Corporate Archives, New York 



Overview








Size of company : $ 2.1 billion revenue in 2001
Employee : Approximately 5,500 employees in 45
countries
Major Product : Airline ticket
Customers : Travelers and Travel agents
Headquartered : Southlake, Texas
SABRE connects more than 59,000 travel agents
around the world, providing content from 450 airlines,
53,000 hotels, 54 car rental companies, eight cruise
lines, 33 railroads and 228 tour operators

Source : www.sabre.com and Business and Company Resource Center, www.infotrac.galegroup.com


$3.00
$2.50
$2.00
$1.50

Revenues in
Billions


$1.00

Data as of March 14, 2002

$0.50
$0.00

1997 1998 1999 2000 2001

Revenue from SABRE Inc. declined 19% from 2000 to
2001 and has grown a total of 18% since 1997
Source : Goldman Sachs, PrimeAccess Research


Organization Chart
William J. Hannigan
CEO

Sam Gilliand
CMO

Carol Kelly
CIO

Michael Haefner
HR

Source : www.sabre.com


Jeffery Jackson
CFO


What prompted
change?



Needed a system to
regulate the flow of
passengers due to
the increasing
number of people
who want to travel
by plane.



Lost millions of
dollars due to the
manual reservation
system.

Source : High Technology Business, Wheeler Helen, Boston, 1987
              Historical Dictionary of Data Processing Technology p.331­332, James W. Cortada, New York


The History of
“SABRE”



SABRE 1959-1969
1959

- American Airlines and IBM signed
contract for the development of a
communications-bases reservation
system

1960

- The first SABRE system is installed. SABRE
becomes one of the first of the large , online ,
real-time applications using computer
developed in the United States.


SABRE 1959-1969
1964

- SABRE system is complete.
­ The initial research, development and 
installation investment in this system 
took a 400 person staff and cost almost 
$40 million

Source : Historical Dictionary of Data Processing Technology p.331­332, James W. Cortada, New York
              www.sabre.com



SABRE 1959-1969
Initial startup success
Once the system was complete in 1964, AA
saved 30% on its investments in staff alone.
 Average time required to complete the
processing of reservations transaction reduce
from 45 minutes to 3 seconds.
 Error rate reduce to less than 1%
 Automatically reminds AA agents at various
locations to advise their scheduled
passengers of any changes affecting them.



SABRE 1959-1969
Initial startup success
More airline seats will be available to the
customers.
 Automatically advise agents to check on
passengers who have not picked up their tickets
within the time limit.
 Maintain and automatically process waiting lists
of passengers desiring space on fully-booked
flights.
 Automatically supply fare quotations for most
flights.
 Automatically supply information on arrival and
departure time for the current day’s flight.




SABRE 1970-1979
1975
1976

-

-

-

AA began marketing SABRE to travel
agencies and airlines throughout the US.
The SABRE system is installed in a travel
agency for the first time. Passengers can
also ask for hotel reservations, car rentals,
special meals etc.
86% of the top 100 agency accounts
located in highly competitive markets elect
to use SABRE system.
United Airlines introduces their Apollo
System.


SABRE 1970-1979
Customers
Competitors
Competitive
Advantage


-

-

-

Internal Users, Travel
Agents, Travelers and
External Users.
United Airlines with the
Apollo Computer Reservation
System (CRS).
Being a first mover with
products and services


SABRE 1980-1989
1981

-

-

1982
1985
1987

-


SABRE had 41% of the market share &
Apollo had 39%, started offering computer
terminals to travel agents.
Started to market a travel awards program
AADVANTAGE
Unveiled AAirpass with 5 year to lifetime
options
Reorganized to AMR Corporation
10,000 travel agencies were now using
SABRE
AMR builds worlds largest private data base
in Tulsa Ok.
Source : Business Week, Transportation, August 1982
              www.sabre.com