Leading Header: Management Information Systems

Abstract

This paper discusses the business information systems at Lufthansa and British Airways and how some of the systems have been used to resolve various problems in both companies. In particular, the paper provides insights into how the two organizations use technology to exploit the most from the information they have at hand, The paper also focuses on the risks, software development, new technology, security, and ethical issues that the organization could be facing.

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Introduction

Management information systems are vital to an organization in the processes of tracking, storing, manipulating, and distributing information to the targeted people. It is essential in the creation of functional units which are cohesive by streamlining the operations of a business. The management information system concept was conceptualized in the 1960s when managers of large businesses discovered that computerization of record-keeping could result in an efficient process of running a business (Bocij, Chaffey, Hickie & Greasley, 2006).

Data from management information systems are used by decision-makers of the company to make sound decisions. In addition, management information systems reduce the costs of running a business through enhancing communication within and without the organization and reducing human labor.

They also support business goals (both long term and short term) and are used in the distribution of information which is complex. Computer hardware is an important part of a management information system in addition to the information to be tracked, entering and manipulating of data. Different aspects of business can be supported by management information systems. These sectors include data storage, technology resources, human resources, accounting functions, and financial functions (Bocij, Chaffey, Hickie & Greasley, 2006).

When the internet is incorporated into these information management systems, more benefits are accrued. These include faster and wider marketing, innovative organization, and outsourcing. Sellers using the internet reach many buyers within a short period. The internet makes the process of tracking and analyzing the needs of customers to be easier and on the other hand, the buyers have a wide range of suppliers to choose from by easily comparing the services provided and their respective prices (Curtis & Cobham, 2008).

Organizational innovation is catalyzed by both intangible inputs like new software development and intangible outputs like reduced time of delivery. These innovations in the organization ultimately result in productivity growth through reduced coordination costs, communication costs, and cost of processing. The changes also result in increased qualitative output by the company. It is easier to outsource using the internet since there are many companies that an organization can outsource from by comparing the services and goods they offer and respective prices (Curtis & Cobham, 2008).

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Background

Lufthansa has grown from the year 2011, following a group of changes brought about by several reconstruction programs implemented by the management. Following a three-phase procedure, that involved restructuring operations (sale of assets, reduction in workforce), structure (optimizing process orientation and reducing the stages of production), and strategic (full privatization & establishment of partnerships such as the star alliance ) the company has seen its profits rise on an annual basis beating forecast and thriving where other airlines have faltered (Curtis & Cobham, 2008).

Lufthansa has various forms of management due to the wide range of services that it offers and also due to its size. There are also instances where Lufthansa is managed by strategic business units which are just like departments under the parent company. Most of these strategic business units operate for the sole purpose of making the airline’s process more efficient. These strategic business units in the Lufthansa group are involved in the airline industry or are acting as supply backup in both the hospitality and ground handling businesses.

Fields covered by these businesses include logistics of goods, maintenance of planes in airports catering, or even Information technology service provision. The units are best described as autonomous profit centers within the parent company. Lufthansa is a big group that covers a multitude of other business functions covers a vast array of business functions.

The organization has implemented a variety of Information technological solutions that have enabled the organization to maintain profitability even in times when the airline industry was facing difficulty.

There are various issues that the company has to contend with to maintain its lead over others and also guarantee the provision of services to both internal and external stakeholders.

Security/ Threats

Information security is very important as physical and logical security should be put in place. Physical security has been implemented in the organization as regard access to the office room where all visitors do sign in and undergo a security check. Also inside the offices, access to the server room has been limited only to the information technology officer and his authorized support engineers. Physical security inside the server room has also been enhanced by the use of server cabinets that restrict access to the server unless one has the key to its lock. Logical security as regards information has been put in place through the operating system and also in various application programs via access controls (Grimshaw, D., 2000).

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Access controls provide restrictions and access rights to different individuals for different processes and data. Access rights to all staff were limited to their area of work jurisdiction but the Information technology officer is the only one with full access to the system. Other staff members do have read-only access rights hence cannot alter anything in the system.

Other technological aspects that have to pose a threat for the Lufthansa include the emergence of teleconferencing which has led to airline companies attempting to find other incentives to attract corporate clients.

However, technology has also led to the emergence of several key opportunities. This includes the opportunity to expand the services offered to consumers such as e-commerce sites which might be utilized as a means of creating personalized customer service facilities and more efficient transactions. Enhanced information systems also act as an opportunity by allowing organizations within the industry greater opportunities to collect and manage information about their consumers.

Lufthansa in general has been exposed to very sudden changes in legislation and regulation due to security protocols which may develop overnight in response to local security threats. This might represent a threat for the industry: Ensuring that organizations abide by new regulations is likely to amount to investment both in terms of finances and time. Additionally, greater regulations around airline security are likely to have a knock-on impact on passage perceptions related to air travel; if, for instance, potential passengers see greater legislation as an indication of the heightened nature of security threats, this will lead to a threat for the airline industry as revenue is ultimately reduced.

In addition to this, since 1981 the International Civil Aviation Organization (ICAO) has issued progressively stricter Standards and Recommended Practices for aircraft engine emissions. With regards to noise pollution the ICAO monitor emissions, and thus try to reduce them within four key areas; quieter aircraft, land-use planning and management, noise abatement operational procedures, and operating restrictions. Again more stringent regulations are likely to be a threat for the industry as a greater financial investment is required at a time when revenues are likely to be adversely affected by several external factors.

Risks

Risk management involves assessment of the risk, mitigation of the risk, and evaluation and assessment. Many airline organizations are exposed to many risks apart from the visible risks (Grimshaw, 2000). These include fluctuations in currency, political and economical instabilities in host countries, third-party outsourcing, and a lack of strong intellectual property rights laws. Lufthansa’s operations are under several risks.

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The unresolved issues and politics between countries present risks to Lufthansa (Grimshaw, D., 2000). Companies are continuously being asked by governments to improve their corporate governance to save guard the interests and rights of shareholders in addition to enhancing development (Abramowicz, 2009). This follows the scandals that have rocked many airline companies recently. Strategies of managing risks at the company target the international supply chain and logistics involved. The flexibility in the control of inventory by the company has drastically lowered the risks of the company.

The flexibility was achieved by abandoning the single-vendor policy and shifting to outsourcing its production sector to many different suppliers and vendors. There is a crisis mechanism at the company which was set up by the risk management team of the company which is charged with minimizing damages in case of occurrence of a crisis. This minimization of risks is aimed at ensuring continued management of the company during and after the potential crisis. In addition, the company’s operations are in line with the policy between countries.

New Technology

At first, Lufthansa was very slow in realizing the benefits of information management systems as a way of increasing efficiency in its operations. In the 1990s Lufthansa established a flexible and low-cost approach in the development of its global production networks (GPN). Their decentralized client-server model was flexible and responded faster to the changes which were taking place in technology and markets.

Up the to late 1990s, Lufthansa’s external communication still relied on informal information systems. The firm was forced to reorganize into different product lines which saw it begin to invest in formal information systems. These investments in information technology networks were to be used to resolve the weaknesses in the supply chain management and the control of internal processes (Eason 1998). The decentralized model of business at Lufthansa was used in the development of information systems where each business unit developed its information system that was fit for its operations.

This made the problems at the organization even worse since the top management could not tell what was happening at the individual business units. Exchange of information was also difficult between different business units. Thus as inventory and passengers increased and it was difficult to resolve the problems quickly (Curtis & Cobham, 2008). Strategic management and financial monitoring were difficult and since there was no sharing of resources among the units the costs of running the business were heightened. Lufthansa began introducing internet-based information systems in the late nineties to its business.

The introduction of internet based management systems has been focused on the relations with customers, supply chain management, Lufthansa’s GPN rationalization. To improve the supply chain management Lufthansa decided to put in place supply chain management systems. To implement these changes, The company adopted a new channel business model in the early 2000s which enables the company to outsource and encourages the joining of other suppliers and partners to Lufthansa. This model has increased the profitability of the company.

System Development

Lufthansa values its customers highly. To this end, they have developed several systems that have increased customer satisfaction and at the same time cut the support costs for the company. The systems are expected to help the company provide support services to its customers through the Web. The systems are interactive and diagnostic and do not require a person to intervene in the process of resolving customer support issues (Abramowicz, 2009).

The system offers the organization a competitive advantage over other related companies in customer support services. By developing this system, Lufthansa resolved the low-resolution rates which characterized the previous self-service systems which lacked diagnostic and interactive services (Bocij, Chaffey, Hickie & Greasley, 2006). The systems also take advantage of cross-selling opportunities which were missing in the previous self-service systems. The customer care system can capture a customer behavior matrix that can be acted upon during research and development and marketing. This part was also missing in the self-service systems which were previously used by the company.

These systems also allow the creation of new knowledge to be based on meaningful statistical feedback from the customers rather than using intuition which characterized the previously self-service systems. The systems are instrumental in the provision of customer insight and increasing online sales. The insights from customers are vital to the company in developing competitive products and strategizing on marketing. This system is more advantageous than search engines, chatbots, and menu-driven systems. Search engines are usually able to handle a single query at a time as opposed to the newly developed systems, which are both interactive and diagnostic.

Chatbots on the4 other hand lack the diagnostic ability and are limited to question and answer. The menu-driven systems’ interactivity is minimal and is inflexible even though they offer diagnostic services. Statistics have shown that deployment resulted in 55% deflection in a support contract, 584% returns on investment, and identification, resolution, and communication of issues related to customers are effectively handled using the information gotten from customer behavior metrics in addition to reducing customer support costs. Therefore, the system has been of great advantage to the organization.

Ethical consideration

Ethical considerations are important in determining the direction the organization takes and the way stakeholders will view the organization. Perception is an important component in determining the success of an organization, and Lufthansa appreciates the provision of such conditions. Information technology is vulnerable to unethical factors and thus the airline organization has incorporated strategies that champion ethical conditions. Lufthansa encourages ethical consideration in the way that the company accomplishes its duties. Different type of information and data is stored in the computer and server systems, which means that personal data is stored in such systems. Thus, ethical consideration is implemented by Lufthansa. includes the way sensitive information and the way devices and equipment are utilized.

Therefore, information should be stored in that privacy and confidentiality are encouraged. For example, human resource data should be only accessible to specific persons so that unauthorized personnel cannot use such information. This applies to financial details, operations, and generally, it means data should be accessible to specified personnel only. In the case of equipment, especially those that can access specific personal details such as cameras should be stored afar. Cameras should not take videos and pictures without consideration of privacy and confidentiality.

British Airways

Security Consideration

Security consideration is a factor that is analyzed by numerous organizations ranging from physical security to electronic strategies. In the case of information systems, security can be in terms of physical security and software systems. Sarcoma has ensured that their information system is protected against any vandalism while appropriate software is in place that protects intrusion. In the case of physical security, steel bars have been placed around the server while other movable parts are protected by either being bolted to the walls or the equipment being buddle with other equipment so that a thief will be forced to disable all equipment.

Moreover, human security e.g. watchmen and security guards have been employed to monitor the entire organization’s security. In the case of software, the most evident security measure is the CCTV technology in which daily recordings are analyzed and appropriate security measures are instituted, if they were lacking. The computers and data communications have been protected against intrusion and hacking with the help of malware e.g. antivirus and firewalls (Curtis & Cobham, 2008).

These technologies ensure the databases and applications are safeguarded against people who want to utilize information or are determined to spoil the reputation of the organization. Moreover, the employees are required to utilize passwords and usernames, this limits the extent to which the staff access any information from the information system (Green, 2004).

British Airways, has an antivirus system that prevents virus attacks. The system also cleans the infected files in case of attack. The antivirus used is Kaspersky and has a network monitoring module that scans all incoming downloads from the internet. The company has forbidden the use of any foreign disks on its premises.

The company has no written down security policy but in the finance and accounting manual organization information security has been recognized as critical, and it has been stated that it is the duty of the finance and administration manager via the Information technology officer to enhance the security of the organization data and information.

Also noted in the organization is the fact that they do have a business continuity and backup manual which has given the IT officer the responsibility of ensuring that daily backups are taken in all organization servers and kept in an external fireproof storage location. This business continuity document also indicates the steps to be taken in case a files server goes down.

Software Development

The firm has segmented its inventory based on traveler type and geographic region. The firm has its IT solutions been supplied by Mercator (Green, 2004). This helps the airline to meet and satisfy its IT needs. Some of the innovative IT products that the airline uses to manage its inventory include passenger and airport solutions, logistic and air cargo solutions, financial solutions, airline business consultancy work, and airline process outsourcing (Campbell, & Brians, 2009). The IT-based inventory management enables Emirates to schedule changes, manage inventory control, passenger re-accommodation, yield management, and special service requests (British Airways, 2011). The decision-making capabilities of the organization have increased revenue generation while reducing operational costs.

New Technology

The airline provides its cabin crew with real-time customer information (Green, 2004). The crew can also access the airline’s CRIS CRM system via a digital device called knowledge-based in-flight service that helps the crew to learn about passengers preferences, register possible complaints and let passengers pay for a last-minute in-flight upgrade with miles (Campbell & Brians, 2009).

Conclusion

The two Organizations implement information systems to ensure that they operate efficiently and within organizational requirements. Information systems bring together many different types of equipment and tools. Hardware is the most important equipment that is assisted by the use of software to operate efficiently. Sarcoma has implemented an information system that incorporates diverse equipment that includes software and hardware. Other essentials include internal and external data communication, databases, managerial considerations, security considerations, and ethical considerations. The two airline organizations have incorporated this equipment and tools to ensure they run smoothly. Generally, information system that is employed by the two airline giants ensure and champion effective completion and operation of duties and responsibilities.

Reference

Abramowicz, W (2009) Business Information Systems: 12th International Conference, BIS 2009, Poznan, Poland, Proceedings. New York: Springer Publishers.

Bocij, P., Chaffey, D., Hickie, S. & Greasley, A. (2006) Business information systems: technology, development, and management for the e-business, 3rd Ed. New York, Financial Times/Prentice Hall.

Campbell, B. & Brians, V. (2009) Information systems: Leading Firms in The World. Michigan, Butterworth.

Curtis, G. & Cobham, D. (2008) Business information systems: analysis, design and practice, 6th Ed. New York: Financial Times/Prentice Hall.

Eason, E (1998) Information Technology and Organisational Change. New York, CRC Press.

Green, S. (2004) Information Systems Development: Methodologies, Techniques, and Tools. New Jersey, John Wiley & Sons, Inc.

Grimshaw, D. (2000) Bringing geographical information systems into business, 2nd Ed. New York: John Wiley and Sons.

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