Business Analysis And Management Of Change: Applying SSM To The CONFIRM Case Common App Essay Help

Executive Synopsis

The collapse of CONFIRM, a cutting-edge information system, was to be constructed by AMRIS, the IS division of AMR, American Airlines' parent company. They were the managing partners of a partnership consisting of four businesses. The remaining three companies were Hilton Hotels, Marriott, and Budget Rent-a-Car. AMRIS was tasked with designing and developing the new IS that would act as the one comprehensive reservation system for the three other companies, allowing them to increase their business and profitability while retaining their existing cost structures in terms of cost per reservation. However, once the project began, it was delayed. AMRIS was forced to terminate certain personnel, and the project was ultimately abandoned. The dissolution of Intrico led in lawsuits amongst the former partners. However, these lawsuits were settled out of court by the firms. Thus, despite the fact that this situation was similar to other IS development failures, it was unusual due to the enormous expenses and scope involved. There are numerous systems thinking methodologies that might be used to investigate the reasons for the failure and to collect information for future use in similar projects. Due to the predominance of human activity systems in the CONFIRM case and the undefined and complicated nature of the challenges, it is recommended that a soft or unstructured approach, such as Checkland's Soft System Methodology or SSM, be used to analyze the case. This study aims to apply SSM concepts to the case and develops a conceptual model that is distinct from the case's real-world context. The same are then provided as recommendations to the steering committee as a remedy for a number of the project's concerns.

Presentation of the CONFIRM Case

Organizations frequently feel the need to upgrade their information systems (IS). Depending on the size and structure of the company, creating and implementing new information systems incurs extensive labor, time, and expense. Frequently, however, IS initiatives are never completed, or if they are, the expenditures far exceed the budgets initially predicted. Intrico, a consortium composed of Hilton Hotels Corporation, Budget Rent-A-Car Corporation, and Marriott Corporation, attempted to build CONFIRM, an information system, but was unsuccessful. This IS was intended to be a modern, advanced, and complete reservation system that provides up-to-date information on hotel accommodations, vehicle rentals, and flight reservations. The IS project was really subcontracted to AMR Information Services Inc. (AMRIS), the IS division of AMR, American Airlines Corporation's parent company. The companies spanning three industries and the IS sector believed that such a system would facilitate a state-of-the-art, comprehensive new reservation system as part of a single computerized infrastructure that could be marketed globally, generate increased profits at current cost levels, and provide a competitive advantage to the company utilizing the system. AMRIS, which was designated as the managing partner in Intrico, believed it could capitalize on the existing demand for a single reservation system for the car rental, hotel lodging, and airline booking sectors in order to effectively expand and diversify its product line. AMRIS also hoped to generate consistent revenue while serving as the system's data processing arm.

Concerns and Duties

AMR was already proud of its excellent SABRE online flight reservation system. It intended to replicate this system on a grander scale. In May of 1988, AMRIS, the IS division of AMR, began work on the CONFIRM project as the managing partner of Intrico's four-member consortium. The project was to be completed in two phases (design and development) by the end of June 1992 at a cost of USD 55.7 million, with operational costs per reservation set at USD 1.05. By the time the project was shelved and the consortium was dissolved in July 1992, however, about USD 125 million had been spent on it. The case also resulted in lawsuits, which were ultimately settled by the firms outside of court.

The failure of CONFIRM IS generated unsettling concerns. One was the issue of ethics. Clearly, the managements of the companies who merged to establish Intrico were motivated by maximizing profits for their owners. However, the position of the firms' top executives in the CONFIRM case demonstrates their unethical behavior. Whatever the case may be, the personnel of AMRIS, the clients for the system (the three Intrico partners), and the management of AMRIS all failed to adhere to professional rules of behavior. According to Oz (Oct 1994, p. 34), there appeared to be three causes for the CONFIRM failure. First, there were unanticipated technological complications that could not be handled. Two, the cost and timeline predictions were unrealistic. Thirdly, the system developers could not comprehend the user requirements and were hindered by post-launch requirements changes.

Regardless of the causes for CONFIRM's failure, a review of the case can produce solid analytical results that can be used to predict and prevent similar IS development failures. Specifically, such colossal losses from a failed project akin to CONFIRM may only impede the management's capacity to minimize costs, increase profits, and constantly evolve and implement successful IS projects. While numerous systems approaches exist for analyzing difficulties faced by management inside businesses, this analysis analyzed the CONFIRM situation by employing Checkland's Soft System Methodology based on soft system ideas (1972, pp. 87-116)

Selecting an Analytical Model

Developments of Information Systems (IS) involve large investments of time, labor, and funds. Nonetheless, numerous IS projects are canceled prior to completion, as determined by numerous research studies. Moreover, even if they are completed, a large number of projects incur astronomical cost overruns. 31% of new IS initiatives are canceled prior to completion, while 52.7% of finished projects exceed their initial budget by a staggering 189%, according to one study (PC Week 16, Jan 1995, 68). Another analysis reveals that a staggering 75% of all information system development projects were never completed or even utilized when they were (Gladden, 1982, pp. 35-39). Perhaps the failure of CONFIRM is comparable to other incomplete organizational IS projects. In terms of financial waste, however, the failure of CONFIRM was gigantic, causing Intrico's partners to suffer a major setback and ultimately necessitating the dissolution of the partnership. Clearly, managers of businesses are constantly concerned with the need to control costs, meet project deadlines, and oversee the transition from old to new systems. Therefore, it is necessary to study unsuccessful IS projects in order to improve human learning for anticipating and preventing such failures.

While there are numerous methods for assessing information system failures, systems thinking has generally been viewed as difficult and incapable of resolving many of the organizations' real-world challenges. In this context, soft systems methodologies arose. Due to Checkland, one of the most prominent soft systems approaches was developed (1981). Checkland envisioned Soft Systems Methodology or SSM as a comprehensive approach that conceptualizes vivid images when describing issue scenarios.

According to Lyytinen (1987, pp. 5-46), the SSM is a system engineering methodology used in action research contexts to solve real-world problems. Other systems engineering methodologies applied to business problems, such as the Viable System Model (VSM), Business Process Reengineering (BPR), and Business Process Transformation (BPT), are fraught with their own intrinsic difficulties. For starters, these traditional methodologies could not be applied adequately to organizational challenges that were generated by deliberate human behavior, were susceptible to differing perspectives on the issue, and were unstructured and difficult to define. Two, the implementation of such methods themselves caused additional issues, as the method of inquiry interfered with the study's findings. Third, when problems were identified too early, it was difficult to identify more fundamental or distinct issues. Thus, in complicated real-world circumstances such as the CONFIRM example, a soft model like as the SSM is seen more suitable for investigating the nature, causes, and resolution of the problem situation. The CONFIRM case included a number of human participants or stakeholders. The challenge involved the human condition, necessitating deliberate action to resolve issues. Accordingly, SSM might be perceived as the most suitable approach for investigating the CONFIRM case, given that it involves an investigation of the human activity system (HAS) and that the many views of the numerous stakeholders must be examined in the broadest possible manner.

Analyzing the Case's Problematic Situation, Key Findings

CONFIRM was the dream project of four industry-leading organizations. Development of an advanced multi-user, multi-industry reservation system was at issue. Once deployed, it would enable clients of Hilton Hotels Corporation, Budget Rent-A-Car Corporation, and Marriott Corporation with a single, complete reservation system. AMRIS, the IS division of AMR, the parent company of American Airlines, conceived the idea. AMR planned to capitalize on a perceived market demand for the product after discovering that just 20% of customers booked their hotel bookings online, but its airline reservation system SABRE serviced 80% of customers in that industry. AMRIS was the Managing Partner of the Intrico consortium, which was composed of four companies. While hotels and car rental agencies would use the IS for daily operations, the other three partners would assist AMRIS in marketing a customized version of the system to other potential enterprises. AMRIS would also be responsible for sustaining data processing processes. The entire undertaking was to be completed in two stages. The first phase was the design phase, and its completion would take seven months. The second phase would be the period of development, which would require a further 45 months to complete. Thus, the duration of the project would be 1988 to 1992. While AMRIS would help design and develop the IS, deploy it, and assist with process maintenance, the other three would receive a state-of-the-art reservation system that might help boost their bottom lines while maintaining present operational costs. In addition, there were returns from promoting the new IS system to prospective clients. The consortium partners would pay a total of $55.7 million for the project, and the cost per reservation would be $1.05. The partners agreed to keep a resident staff at AMRIS's Dallas headquarters, where the project would be designed.

AMRIS has consistently stated that the new IS will be vastly superior to existing systems and that the associated expenses would be lower than those of the current structure. However, despite assurances that the project would be completed on time, the project began falling behind schedule. Gradually, the expense of design began to skyrocket. The functional parameters also fell short of what each company desired. Particularly, Marriott objected to the parameters provided in the first development design. The AMR personnel who created the enormously successful SABRE system confirmed this by stating that the specs were insufficient for the developer to comprehend the user requirements. Thus, AMRIS's initial plan had to be altered, resulting in an increase in the estimated cost of creating the plan to USD 72,6 million, with the cost per reservation anticipated to be USD 1.30 in the first year of full operations and 0.72 and 0.40 in the fourth and fifth years, respectively. AMRIS provided the others the opportunity to withdraw from the project once completion for a USD 1 million penalty. Midway through 1989, Marriott discovered through an examination of AMRIS's pro forma financial statements that the company had misrepresented its number of reservations, understated operational costs, and derived an incorrect per reservation cost, which was one of the most crucial pieces of information for the project's viability for each of the three other partners. Despite estimating that each reservation would cost approximately $2, the corporations continued to participate in the project. In February 1990, the project was unable to meet the BAA deadline (a phase of the project). The developers then redefined the unfinished portion of the phase as part of the subsequent phase. AMRIS refused to provide Marriott with project details and asserted that the project was on pace as revised. AMRIS maintained to its partners that the project was on time and could be completed within the revised budget, despite the fact that the company's internal issues had begun to appear. Even after missing the January 1990 deadline for introducing the terminal screen, the company maintained that it could still make up for lost time. By March 1990, it was 13 months behind schedule. However, AMRIS's leadership asserted that the project was on track. Even AMRIS personnel questioned if the project could be completed on schedule. They also complained about how their bosses handled the situation. As soon as the company's leadership realized that the managers had misled to them about the project's specifics, they sacked eight top executives and then another fifteen employees. This occurred in Apr 1992. In July of 1992, the entire project expenses exceeded USD 125 million, significantly exceeding the initial predictions, and the project had to be abandoned. In actuality, the Intrico consortium was dissolved.

Additionally, the CONFIRM incident led to legal disputes between AMRIS and the other three firms. Each party maintained their account of the events leading up to the failure of CONFIRM. In this regard, it must be highlighted that the declared purpose of the project was explicitly defined in the agreement between the partners:

The CONFIRM would be an advanced IS that is created, produced, run, and maintained for profit, as well as distributed globally. The system would provide a centralized reservation system for booking hotel accommodations, vehicle rentals, and airline tickets. All interfaces would be created by AMRIS, which would also assist in the modernization of all partners' outdated information systems.

AMRIS bears all responsibility for design and development. Teams from each organization stationed at the AMRIS headquarters would contribute to functional development and evaluate the system as it was being designed. AMRIS in turn guaranteed to other partners that the project would be finished on time and under budget.

Despite AMRIS's fraudulent statements, Marriott still gave a gift.

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