Article: Harrah’s Use of Business Intelligence Software to Improve Customer Loyalty and Operations

Harrah’s Entertainment, Inc. is the world’s largest gaming company having more than 80,000 employees. It operates several branded casino entertainment under the Harrah’s, Caesars, and Horseshoe brand names domestically and internationally. The company has grown through development of new properties, expansions, and acquisitions since it started in Reno, Nevada about 70 years ago. Harrah’s is committed to building loyalty and value with its customers through great service, operational excellence, and technical leadership. The need to attract and retain customers is critical to the success because customer loyalty can make or break a business. Harrah’s has succeeded in gathering data about its 40 million customers through its Total Rewards program that keeps track of guest gaming activities from restaurants to gaming tables and slot machines at any of its brand name casinos. It rewards guests and customer incentives through offering free room nights, free shows, free dining, and free gifts. Harrah’s already collects high volumes of transactions made by its customers. Harrah’s biggest challenge is to understand, analyze, and leverage raw data to maximize the lifetime value of their customers ultimately maximizing the return on investment, thus to better plan its strategic growth.

Harrah’s needed a system that could be managed from a central location and accessible from any of its properties and newly acquired companies. The solution needed to be user friendly for its corporate and property-level managers, and provide insights and analysis that could be applied to performance metrics at any of its properties.

As a result, the company chose to invest into Teradata and IBM Cognos Business Intelligence software to establish a closed-loop marketing system and to better achieve its marketing and customer loyalty and improve its business operations. Teradata is a single enterprise data warehouse and IBM Cognos business intelligence software allows users to drill further and deeper into customer data.
The company can now better profile and segment customers and use the data to develop targeted market strategies to drive customer behavior. For example, Harrah’s might reach out to customers who have not visited their property in more than six months and offer them incentives to bring them back to their favorite property. Through the use of IBM Cognos business intelligence solutions, managers can acquire detailed reporting and analysis capabilities that can be used to measure the effectiveness of new marketing campaigns against control groups. Specifically, the closed-loop system helps the organization with all aspects of the campaign such as indentifying and segmenting customers, implementing marketing strategies, tracking execution, documenting incentives, and measuring effectiveness.

Harrah’s has successfully deployed the IBM Cognos software from its corporate data center and provide access to the data from any property site. The intuitive interface made it easier for managers to interact with the software regardless of software experience. Thus, the company has developed standard marketing campaigns that drive activities for specific customer segments. Individual property managers can access these programs to determine which of the campaigns or combinations of campaigns can achieve their business operation goals for their specific location.

The implementation of this business intelligence software has resulted in a more focused communication and with customers, thus achieving better customer relationships. As a result of Harrah’s deployment of the system, customer spending has increased from 30 percent to nearly 50 percent. The outcome is that Harrah’s has cut down on employment costs by avoiding hiring new analyst on their properties. The centralized deployment strategy has made it easier for the company to identify new locations and support future growth and acquisitions. Harrah’s now has the ability to analyze historical data to predicting future performance of its marketing campaigns, which is a critical factor in sustaining a competitive market advantage.

Reference: IBM Case Study, Harrah's Entertainment, Inc., 27 February 2009.
Website: http://www-01.ibm.com/software/success/cssdb.nsf/cs/LWIS-7PNLEC?OpenDocument&Site=cognos&cty=en_us

Chapter 11 Case Study: Can Knowledge Systems Help Boeing Trounce Airbus?

Question #2: What is the relationship of knowledge management to Boeing's business strategy? How is Boeing using knowledge management systems to execute its business model and business strategy?

Knowledge management, which is the set of business processes developed to create, store, transfer, and apply knowledge closely resembles Boeing's business strategy. Boeing's strategy is to fly travelers from their own city nonstop to their destination using smaller airplanes that will fly quickly and inexpensively, enabling passengers to fly nonstop from departure to destination, thus bypassing the larger hubs. Boeing sees a strong expansion of smaller jet sales rather than larger jumbo jets sales that Airbus is developing.
Boeing implemented a "paperless design" model to replace its manual design to computerize the design and production of its 777 aircraft. The Boeing 777 carries 300 to 400 passengers at lower operating and maintenance costs, lower fuel costs, and lighter materials. Boeing implemented the Dessault Systems CATIA computer-aided design software to enable engineers to access any of the airplanes parts modify them, fit them into the surrounding structure. This allows other engineers to make adjustments without making extensive modifications. The airplane was designed entirely on a computer screen and assembled without expensive mock-up models. The implementation of computer aided design (CAD) software is an example of a knowledge work system.


Question #3: Evaluate Boeing's new business strategy. What management, organization, and technology issues will Boeing face as it attempts to implement the strategy? What role will knowledge management play in this strategy. How successful will Boeing be in pursuing this strategy?

Boeing's new business strategy was to lower costs by using technology to reform inefficient business process. Boeing's plan was to roll out the 787 aircraft using a new production process of outsourcing the design and construction of about 80 percent of the aircraft to hundreds of other companies outside the United States. Boeing and its key suppliers are using software that allows designers to collaborate in designing components and manufacturing processes. Instead of airplanes being produced under one facility, the 787 is being built in a modular assembly process.
Although Boeing implemented the Dessault Systems to help manage its global supply chain, the system required additional features to its planning and design software. Boeing expanded its use of Dessault's version 5 Product Life Cycle Management software from 1,000 to 6,000 licenses. These software tools enable designers to use a single set of data and to simulate the digitally the plane's life cycle from design through production and modeling changes in design, thus, to reduce errors and eliminate redundancy of work. Outsourcing the 787 required Dessault to improve integration of its CAIA, Enovia, and Delmia modules for Boeing. Boeing need custom tools to handle designs with carbon-fiber composite materials. Thus, the role of knowledge management is to quickly resolve issues from significant technical and production problems that could threaten the delivery of the 787. Software programs designed by a variety of vendors had trouble "talking" to one another.
I am uncertain if Boeing will be be able to successfully implement their new business strategy of outsourcing their new airplane design and production because of the required software updates and the lack of communication among the vendor's software solutions.

Question #4: Using the facts presented in this case, what role has knowledge management played in Airbus's business strategy and business performance.

For Airbus, the role of knowledge management was to launch its A380 jumbo jet to meet the predicted demand of increased mass of passengers without increasing operational costs. It envisions a hub-and-spoke model of air travel where jumbo jets transport passengers to a small number of hub cities where passengers can transfer to smaller connecting flights to their destinations. However, the application of knowledge management was not fully implemented to better streamline the design and production of the A380. Airbus announced later delivery schedules due to the complexity required to wire the aircraft for in-flight entertainment and communication units requested by airlines. There appears to be issues with supply chain management of Airbus, because any design changes to wiring results in further delays. Airbus ran into other issues with design changes to the A350 to widen its cabin and windows and provide appropriate cabin humidity. The A350 is not expected to enter service until the year 2012, four years after the 787 is rolled out. Thus, Airbus did not adequately address knowledge management as adequately as Boeing. The outcome is that the business performance is not going to meet its customers expectations unless significant knowledge management is implemented to streamline the production process.

Article: MLB's Real Competitive Advantage by Jay Yarow, Business Week (2 September 2008).

The article describes how Major League Baseball Advanced Media (MLBAM), an interactive media and internet company, has helped Major League Baseball (MLB) to become a profitable business both through e-commerce and m-commerce. MLB makes about $450 million per year. About half of the income comes from fans that pay $120 per season to watch games live over the Internet. The rest of the income comes from advertising of free content related to major league baseball teams. The business has grown significantly for MLB which is roughly $6 billion in total revenues. The market strategy for MLB is the implementation of online content business. MLB.com offers fans complete baseball information on the web such as up-to-date statistics, game summaries, historical background of the ball players, MLB events and programs, ticket sales, baseball memorabilia and collectibles, fantasy games, video webcasts of every game, and real-time pitch-by-pitch enactments of every game. The MLB Website offers more live events on the Internet than any other game in the world. Bob Bowman who is chief executive at MLBAM said, “Somehow the strategy of putting baseball games on every device that has a plug or a battery has worked for the business partners. Even more important, it has worked for our fans.”

MLBAM is now focused on the mobile phones as the next big opportunity for revenue. It has already built customized applications for a number of phones such as the BlackBerry from Research In Motion (RIMM). As of September 2008, MLBAM has implemented software that allowed individuals of the iPhone to acquire statistics from the Gameday Web site. This technology is likely to be followed by other similar applications for other phones such as Nokia, Motorola, and Sony-Ericsson. MLBAM hired a separate team to design mobile Web sites and applications. The MLB mobile site now receives about more than 10 million page views per day and it has more than 25 mobile applications. Right now the revenue generated from mobile phones is roughly $10 to $12 million so it is not a significant business for MLB. However, the revenue from mobile technology is expected to increase as Bowman mentioned, “I’m not sure it is for anyone, but those days will come.”

MLBAM understands that it could increase revenue from advertising if it develops a strategy for placing ads on its mobile Websites. However, it is still trying to determine the best course of action. They determined that advertising for wireless mobile phones is not robust because of the small screen, but as the technology becomes further developed, and the video becomes easier to use on all devices, then the technology will certainly become more profitable. Bowman’s strategy is that “If you serve the fans, you care of your business.” As a result, MLBAM will most likely become the lead in sports entertainment through m-commerce.

I like the article because I am a fan of Major League Baseball. I have made several trips to Dodgers Stadium. The technology described will certainly help me to better understand the significance of MLBAM through the internet to better provide mobile service to series fans.

Reference: Jay Yarow, "MLB's Real Competitive Advantage," Business Week Online, September 2, 2008, p26. Website: http://www.businessweek.com/technology/content/aug2008/tc20080828 _061722.htm.

Case Study: Limited Brands Consolidates Its Supply Chain Management

Question #1: Describe the supply chain management problems encountered by Limited Brands in this case. What wast their business impact?

One of the significant problems to the supply chain management occurred when a traffic jam of 400 merchandise trailers moved into a parking lot distribution center that was only designated to hold 150 trailers. This logistics problem caused a major bottleneck along a main highway. The problem also amplified when it created a public relations issue during the beginning of a sales period. The problem occurred because of poor planning systems, corporate executives made assumptions, and different segments of the enterprise were not communicating with each other. There was no accountability or tracking of the original inventory. The impact on business is the loss of sales revenue to the company. Another problem identified was that sixty major systems were already in place with hundreds of applications running a variety of platforms such as computers and servers from IBM, Hewlett-Packard, Sun Mircrosystems and Tandem. As a result it was difficult to make supply chain information flow between applications to coordinate with the supply chain of Limited Brands. The business impact was the lack of an enterprise-wide view of the supply chain.

Question #2: What management, organization, and technology factors were responsible for these problems?

Management factors include a lack of visibility of inventory, lack of adequate tracking of inventory, lack of adequate communications, and a lack of an enterprise view of the supply chain. Organizational factors were a lack of infrastructure flexibility such as scheduling issues and processing delays resulting from overly simple point-to-point interfaces that linked one system to another. For example, a shipping facility needs to be linked to a distribution center. The software interfaces were hard-wired point-by-point to different application programming interfaces (APIs). Information data was transmitted between one system and another on a batch schedule, thus lacking infrastructure flexibility. Technological factors included were a lack of real-time reporting and communications with delivery agents. Another technological factor was a broken segment of its brand’s technology operations under a central tracking system.

Question #3: How did Limited Brands solve these problems? What management, organization, and technology issues were addressed by the solution?

Rick Jackson, Executive Vice President of Limited Logistics Services (LLS), which supplies global logistics management and leadership for the supply chains used by Limited Brand’s, launched several cross-functional projects to enhance their credibility. They built regional docking centers on the East Coast and the West Coast to distribute products directly to stores, thus reducing costs and time by as much as 10 days. Tibco, the leading vendor of enterprise application integration software was contracted to develop a global application platform for Limited Brands. The outcome is that the newly developed technology helped to improve the company’s ability to track and manage the flow of information through its worldwide supply chain. Another solution was that Tibco worked in coordination with Limited Brands to install real-time reporting and communications with delivery agents. They integrated the supply chain accountability and reporting (OSCAR) application with the logistics applications. This allowed new delivery agents to enter the supply chain, thus allowing for better flexibility of the network. This technology allowed for enhanced shipment tracking and order visibility of Limited Brand’s partners using a booking information module.

The management, organizational, and technology issues were resolved through these solutions. The impact to the supply chain was that it was better aligned with the goals of the board members and with the share holders. The outcome was that the supply chain became more focused on the needs of the customers, thus improving overall profitability.

Article: U.S. Government Calls for Better RFID Security by Jon Brodkin, PC World

In this article appearing in PC World, the U.S. Government stated that the use of RFID devices by firms can create security and privacy risks. Thus, best practices should be implemented for retailers, manufacturers, hospitals, and federal agencies to alleviate security risks. The primary concern is that unlike desktop computers or other devices overseen by a company's network security crew, an RFID tag may be used by a multiple firms. That is, firms may use a different techniques to maintain their chain-of-custody than other firms. The National Institute of Standards (NIST) of the Department of Commerce released a report that mentions how suppliers, manufactures, retailers, and different organizations acquire the same data from RFID tags throughout its lifecycle, but do not implement an adequate security policy to protect the data from unauthorized personnel. This situation raises privacy and security risks.

The released publication is called, "Guidelines for Security Radio Frequency Identification (RFID) Systems." The following recommendations are: (1) Organizations should use Firewalls to separate RFID databases from other databases and IT Systems; (2) Encrypt radio signals when possible; (3) Authenticate approved users of RFID systems; (4)Shield RFID tags or tag reading areas with metal screens or films to prevent unauthorized access of tag readers; (5) Use managed audit procedures, logging and time stamping to help detect a breach of security (6) Implement a procedure for tag disposal and recycling that permanently disables or destroys sensitive data.

The report was mandated by Congress under the Federal Information Security Management Act of 2002. Besides the retail industry, RFID devices are used in hospitals to match patients to lab test results. This raises a concern about unauthorized personnel who can capture sensitive data. During handling and transportation of hazardous materials, RFID tags are handled by a number of organizations to track the materials. However, the risks are rather significant because of potential threats to target vehicles containing hazardous materials; eavesdrop on tag transactions to gather information on the characteristics of the materials; damage or disable a tag, making it easier to steal or change manifest data stored on the tag. Ultimately, this risk to security of hazardous material transport could be devastating to the organization or to the community.

As a result, the recommendation is to shield vehicles and containers from electromagnetic emissions, establish a 300 ft perimeter around storage locations, and use passwords to prevent unauthorized personnel from reading tags or changing information on the tags. The report states that is a general rule, tagged items should be identified only before products are transported out to their destinations and when products are received at their destination and inventory storage, but not during vehicle transport. The challenge to supply chain management is that only authorized personnel should have access to RFID information and that specialized training is required to sustain security of the contents.

I like the article because the recommendations are closely related to the Case Study in Chapter 8 of Laudon and Laudon where the Department of Veteran Affairs failed to implement a fail safe method to protect valuable data from being stolen. Millions of sensitive records were stolen from former veterans. A VA financial analyst took home a laptop computer having millions of records of sensitive data to work on a project, but the laptop and records were stolen from the employee's home. The VA required to implement a policy to safeguard all sensitive records. My place of employment, the NAVFAC Engineering Service Center, takes special precautions to safeguard classified materials. We employees take extensive security awareness training to become aware of our responsibilities to handle sensitive information. RFID technology has certainly made supply chain management more efficient, but security and privacy issues are always a concern.

Reference: Jon Brodkin, U.S. Government Calls for Better RFID Security, Department of Commerce report says RFID raises unique security concerns. Network World, PC World, May 1, 2007.

Chapter 8 Case Study: A Stolen Laptop at the Department of Veterans Affairs: The Worst Data Theft Ever?

A financial analyst from the Department of Veteran Affairs brought sensitive personal electronic files from 26.5 million veterans’ home to work on a project, but the personal files had been stolen on May 22, 2006. The data included names, social security numbers, and birth dates of veterans who were discharged from the military starting in 1975. The data was not encrypted. The VA breach was the second largest unauthorized disclosure of social security identification data.

Question #1: List and describe the security weaknesses at the Department of Veteran Affairs.

One weakness is that the Department of Veteran Affairs (VA) failed to implement a policy that strictly prevents employees from taking home classified or sensitive financial data of veterans. It was not clear initially whether the employee was authorized to take home the files. This clearly indicates that there was a lack of a security policy that is required to protect information assets. The data stolen was not encrypted.

A second weakness is that there was a lack of disaster disaster recovery planning where a company focuses on how it can restore business operations after a disaster strikes. There was no plan of action of how to backup any lost data.

A third weakness is that there was a lack of a communication protocol on what to do if the data is lost or stolen. That is, the data was not reported in a sufficient amount of time. The department did not report the incident to law enforcement until two weeks after the incident. The Department of Justice and the Federal Bureau of Investigation stated that the delay may have allowed a more thorough investigation to solve the case.

Question #2: What management, organizational, and technology factors contributed to these weaknesses?

In reference to management factors, decentralized management exists at the agency and that it was difficult to change. Former CIO, John Gauss, stated that that the agency experience “cultural impediments” as reasons why he was unable to implement a central management of IT at the department level or a strong information security programs.

In reference to organizational factors, per recommendations of the VA audit, the VA failed to implement a centralized IT security program to ensure that employee job descriptions contained proper rules about what data they could access and to complete work on intrusion detection systems, infrastructure protection actions, and better access controls. There was a failure to implement a security policy for preventing the employee from taking home sensitive or classified data. According to a document obtained from the Veterans Affairs Committee, the employee did have authorization to take home a laptop and use a software package to work with the data. The documents revealed that the analyst was authorized to use home special software to manipulate data, to accesses social security numbers of veterans, and to remove a laptop and other accessories from the VA building for outside work. It is not clear how stringent the documents were written, but the employee violated the security policy. Apparently, the employee routinely had been transporting data to his home for three years, but unknown to his supervisors.

In reference to technological factors, the company did not implement a security policy of access control where all policies and procedures a company uses to prevent improper access to systems by unauthorized users. To gain access a user must by authorized and authenticated. It is not clear how competent the employee was on the security policy implemented by the VA. It is not clear how much training the employee received on handling classified information. It is not clear whether the employee used special passwords to access the information. Since the data was not encrypted, then the VA failed to implement an encryption policy where plain text or data is transformed into cipher text that cannot be read by anyone other than the user.

Question #3: How effectively did the VA deal with these problems?

Although the VA acknowledged recommendations from the House Committee on Veteran, the CIOs from the VA agreed that a centralized management of all IT programs and activities is required. One of the CIOs wanted a structure where there would be less susceptible to delays, budget overruns, and performance failures. The VA divided its IT operations into two domains. Thus, Congress passed a bill that gave a single executive control over the entire department’s IT spending. The CIO would be raised to rank to undersecretary and the chief information security officer be raised to the assistant secretary level. The VA planned on merging its IT domains to finally centralize IT programs and activities. It is not clear as to how these changes to a new “federated” IT management system based on reducing costs and making the department more efficient will help resolve security issues. The VA made no recommendations of making substantial changes to their security policy so the incident will never happen again. Thus, the effectiveness of how the VA dealt with the problem still vague. The VA needs to make a complete revision of their security policy to prevent any future loss of data from human or technological factors.

Chapter 6 Case Study: Panasonic Creates a Single Version of the Truth from Its Data

Question #1: How did Panasonic's information management problems affect its business performance and ability to execute its strategy? What management organization and technology factors were responsible for those problems?

Panasonic’s operations expanded rapidly throughout Europe, Asia, and North America. In Europe, the company has 15 subsidiaries, 14 manufacturing facilities, and five research and development centers, and seven administrative offices. As a result of having so many different sources of data, the company was unable to manage its data effectively. The product and customer data was inconsistent, duplicate, or incomplete. Different segments of Panasonic used their own data management operations that were isolated or different from other locations within the company. Ultimately, this resulted in a decrease in operational efficiency and higher costs from the company. The data required to launch new products in the market are photos, product specification and description, manuals, pricing data, and point-of-sale marketing information. The employees use this data to select product information that suits the needs of the region or country. As a result, with a lack of an adequate database to manage product data, the company was unable to sustain a substantial profit and strategically market new products.

The CEO’s and managers at Panasonic did not anticipate a substantial market demand for their products. They did not seek their employee feedback to determine how the product data and inventory of services could be better managed to seek the needs of the employees, suppliers, and customers. They did not make a thorough analysis of their 5-year business strategy to access whether the company requires new services or capabilities to achieve their strategic goals. They did not perform an adequate IT strategy, infrastructure, and IT infrastructure cost to determine whether the IT strategy takes into account the firm’s five-year strategic plan. Thus, making an assessment to determine where necessary changes in data management need to be done to improve the company’s efficiency.

Question #2: How did master data management address these problems? How effective was this solution?

Panasonic implemented a “push” model to replace a “pull” model to interpret and sort data. Using a push model, a centralized data bank sends the requested information to employees in marketing and sales instantaneously and consistently. Retail partners and e-commerce vendors who are recipients of the data can view the data at all phases of a product rollout. Thus, specific employees can have better visibility of their products and services. The outcome of this push model is that customers are less likely to become confused while researching Panasonic products. Panasonic’s Europe’s data management was upgraded with master-data-management (MDM) software from IBM’s WebSphere line. The software enabled Panasonic Europe to gain better control of their data and better streamline the business process. The MDM implementation includes the business process analysis, data assessment, data cleansing, and a master data service layer. The MDM allows employees with access to view the company’s data and activities throughout the organization. The outcome of the MDM implementation is that Panasonic Europe could expedite its products to customers much faster than before. The system resulted in an increase in company sales and profits.

Question #3: What challenges did Panasonic face in implementing this solution?

Although Panasonic Europe succeeded in gaining profits, Panasonic North America had challenges of reorganizing workflow and consolidating product information. Panasonics investigated product information for Wal-Mart. Panasonic looked closely at its legacy system to determine its required data. Panasonic worked with IBM to develop an interface apparatus to acquire the data for its repository. Since the information produced by legacy systems were not available in the legacy systems, then Panasonic needed to add newer interfaces then build an application-integration layer for Wal-Mart that could be proven successful.

Another challenge was that the company had multiple facilities that made its own new products. The facilities had their own culture and information infrastructure so they were not necessarily willing to share their data with a centralized database. However, Bob Schwartz made a strong case to the corporate office in Japan that integrating a data management strategy globally would be a major benefit to the company’s infrastructure. Schwartz also needed its manufacturer partners to agree with implementing the MDM technology. Schwartz succeeded in gaining substantial profits by integrating shared data inventory among the vendors such as Best Buy and Circuit City. As a result of the implementation of the MDM, Panasonic has become more competitive and can produce new products for their global market.