Southwest AirlinesSouthwest AirlinesOperating Model Analysis

MISST Project 6Sarah Stottsberry

StatisticsStatistics

Largest U.S. Airline in terms of Passengers Flown 32,000 Employees Based in Dallas Texas Corporate Structure

◦ Operations◦ Strategy, Procurement, and Technology◦ Internal Audit◦ Schedule Planning◦ Law, Airports, and Public Affairs◦ Finance◦ Revenue Management◦ Corporate Communications◦ Labor & Employee Relations◦ People &Leadership Development◦ Corporate Security◦ Customer Relations and Rapid Rewards◦ Marketing Sales & Distribution◦ Reservations◦ Customer Communications

Brief HistoryBrief History

1970’s use of Cash RegistersIT use is initially Low: Main focus was on

maximizing revenues1990’s Fuel Costs Spike and competition

increases. Efficiency is now more important.

Focus turned to IT to help improve efficiency by 2002

Before TransformationBefore Transformation

Silos were widespread throughout the organization

Multiple DatabasesVarious Technologies used by departmentsGroups of technologists were in business

areas◦Interactive marketing group who did

Southwest.com.Each group used their own technolgies, tools,

and languagesSystem Outages were common

Before Transformation Cont.Before Transformation Cont.

In the words of CEO Gary Kelly on the need to close the gap…◦“It was very logical things. We all had to agree

that we were going to have one foundation instead of ten. We needed one version of the truth, not multiple database full of fares, multiple copies of the schedule, multiple this, multiple that. We’d had all these siloed technologies that had been created over time and just sort of glued together”

The TransformationThe Transformation

Technology Changes◦Overhaul of the IT unit◦Design and Implementation of a Technology

Foundation◦Prioritization and Delivery of new systems

Fixing the Technology Fixing the Technology OrganizationOrganization

Centralized all technologists under CIOStaff numbers were reduced from 1200 to

890Job titles decrease from 140 to 30Staff performance monitored by standard

processesConverted to Standard Set of Tools and

Processes

Technology FoundationTechnology Foundation

Focus initially on key applications◦ New Testing methodology◦ Addressed needs like power, redundancy, and backup

Focus turns to Silos by identifying Styles and Stacks◦ Styles: Types of applications(transaction, historical,

analytical)◦ Stacks: Technology components, development that support

the “styles” Main Objective was to solve problems with a standard “stack”,

but to compromise when needed. Architecture Working Group under CTO has control to make the

decision. Renegotiated contracts with computer vendors Implemented a desktop refresh plan Analysis of Help desk call to identify needed application fixes.

Prioritization and Delivery.Prioritization and Delivery.

Focus turned to Sacred Transactions◦Two-year project to rewrite reservation system◦Engaged Business Managers since they could

help define IT priorities Business Strategy Teams(12-15 Senior Managers) By 2007, 80% of projects aligned with a team Business leaders were involved in delivery and

implementation process Tollgate Process: Phase-End review of project

progress with team

Changing SWAChanging SWA

“Change Initiatives” group initially reported to CEO

Goal was to drive major projects at SWATechnology leaders played dominant role

initiallyCore Systems

◦Booking Engine◦Crew Scheduling◦Internet Based Customer Service◦Employee Benefits

Changing SWA Cont.Changing SWA Cont.

Ownership of change initiatives moved to business leaders once foundation was in place

“Redefining Excellence”◦ Initiative of Ground Operations◦ Largest of the departments with 11,000 employees◦ Redesign of processes across airport

Ticket Counters Boarding Baggage handling Kicked off in Phoenix By 2007, Phoenix, Chicago, Baltimore, and Las Vegas were

on board Now the Team of 45 people works with 2 airports at a time

Changing SWA Cont.Changing SWA Cont.

Customer Relationship Management◦Umbrella project to consolidate the 40 icons to

1◦Collapse isolated systems into single modular

system with all capabilities +

The FutureThe Future

Technology Department considered implications of potential changes as company grows◦Assigned seating◦Codeshare agreements◦International Travel◦Industry standards in communication (ATA

Airlines)

ConclusionConclusion

Coordination Model◦Low Standardization, High Integration◦Core Processes are standardized

HR Processes Customer Relationship Management

◦Business Units have unique processes Try to use standard “stacks” but are not opposed to

allowing for unique systems◦IT Decisions, Prioritization, and Implementation

occur at business level◦Central IT department to support those decisions

ReferencesReferences

Building Business Agility at Southwest :Massachusetts Institute of Technology: http://dspace.mit.edu/handle/1721.1/39646

Information Systems Strategy in Air Transport: Naval Acadey Term Paper :http://oai.dtic.mil/oai/oai?verb=getRecord&metadataPrefix=html&identifier=ADA273125