The opening case in Chapter 5, ‘EasyJet Flies High with Cloud Computing’, discusses the company’s use of cloud computing to compete in the airline industry while meeting its business strategy of providing good customer experiences with low prices. After reviewing the opening case and the information in Chapter 5, discuss the characteristics of cloud computing. In what ways can cloud computing benefit a company? How is cloud computing changing the way companies do business? Discuss the positive and negative impacts of cloud computing for consumers and businesses. Do you think the positive outweighs the negative? Why or why not?
EasyJet Flies High with Cloud Computing
EasyJet is the largest airline in the United Kingdom and the second-largest short-haul airline carrier in the world (behind Ryanair) with more than 800 domestic and international routes in 32 countries. Based in Luton, England, EasyJet has expanded rapidly since its founding in 1995, propelled by a series of acquisitions as well as fulfilling an important market need for low-cost airline services. EasyJet carries more than 70 million passengers per year. Obviously, having a reliable and robust system for booking and managing reservations while keeping costs low is a key business requirement.
EasyJet’s customers, like those of other airlines, like the idea of being able to select their seats on a given flight when they made their reservations online. However, EasyJet’s existing reservation system did not have the capability to add this new feature, which required investing in an additional computer center and modifying its IT infrastructure.
EasyJet’s IT department found a better solution. It retained the core reservation system as is and hosted the seat allocation service in the cloud using Microsoft’s Azure cloud service. EasyJet had tried other public cloud computing platforms, but Microsoft’s offered a better integration of on-premises and cloud services. EasyJet had used the Microsoft Azure cloud service to build services that communicate wirelessly at airports without running up major airport charges for new services desks.
Microsoft’s Azure cloud enabled EasyJet’s information system developers to write their own software program code for seat allocation and use as much or as little processing power as needed to test the service. It then turned out to be much faster and cost-effective to have the public cloud actually host the new seat allocation service rather than use EasyJet’s internal IT infrastructure.
EasyJet is adopting a hybrid cloud strategy. It is not moving its entire IT infrastructure to the cloud, only specific functions that its internal IT infrastructure can’t easily handle. The new capabilities are integrated with the company’s existing IT Infrastructure. By enhancing its systems by adding new features in the cloud, the company is able to get more value out of its earlier IT investments, which amounted to many millions of dollars.
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When an EasyJet customer books a reservation, EasyJet’s information systems integrate three different technologies. EasyJet’s web servers handle the process of customers entering their desired travel dates and destinations for flight bookings. The company’s reservation system residing in a different computer center presents data on alternative times and prices of flights for customers to choose from. Finally, the aircraft diagram where users can select their seats is fully hosted on Microsoft’s Azure cloud service. The entire experience appears seamless to users.
By enhancing its systems to offer allocated seating, EasyJet was able to increase customer satisfaction by 5 percent and add 7 percent to its revenue growth according to the company’s 2013 annual earnings report. In the following two years, the company increased customer conversion to its website by 13 percent. Selecting seats and boarding flights have become much more pleasant.
EasyJet’s management believes that good customer experience combined with low prices clearly differentiates the company from competitors. The business benefits of offering online seat selection using cloud computing services have made it possible for EasyJet to continue this strategy because it can keep operating costs low while offering customers top-notch services in searching for and booking flights. Airlines on average spend 2 percent of their revenue on IT infrastructure; EasyJet spends only half a percent of its revenue on IT.
What if the new seat allocation system enhancement had failed to improve customer service and revenue? EasyJet could have easily turned off the cloud service for online seat selection if it so chose. It is much easier to eliminate a cloud service than to remove the functionality from the company’s core internal system.