12Initiating
Objectives
After reading this chapter, you will be able to:
1. Understand the importance of initiating projects that add value to an
organization
2. Discuss the background of ResNet at Northwest Airlines
3. Distinguish among the three major projects involved in ResNet
4. Appreciate the importance of top management support on ResNet
5. Discuss key decisions made early in the project by the project manager
6. Relate some of the early events in ResNet to concepts described in
previous chapters
7. Discuss some of the major events early in the project that helped set the stage
for project success
F ay Beauchine became Vice President of Reservations at Northwest
Airlines (NWA) in 1992. One area that had continually lost
money for the company was the reservations call center. Fay
developed a new vision and philosophy for the reservations call center
that was instrumental in turning this area around. She persuaded
people to understand that they needed to focus on sales and not just
service.
Instead of monitoring the number of calls and length of calls, it was
much more important to focus on the number of sales made through
the call centers. If potential customers were calling NWA directly,
booking the sale at that time was in the best interest of both the
customer and the airline. Additionally, a direct sale with the customer
saved NWA 13 percent on the commission fees paid to travel agents
and another 18 percent for related overhead costs.
,362 ■ C H A P T E R 1
Fay knew that developing a new information system was critical
to implementing a vision that focused on sales rather than service,
and she wanted to sponsor this new information system. Although
the Information Services (IS) Department had worked to improve
the technology for call centers, past projects never went anywhere.
The new reservation system project, ResNet, would be managed by
business area leaders and not Information Services managers—a
first in NWA’s history and a major culture change for the company.
Fay made Peeter Kivestu, a marketing director, the project manager
for the ResNet Beta project in 1993. NWA was going through
tremen- dous business changes at that time, and the airline almost
went bankrupt in 1993. How could Fay and Peeter pull off the
project?
WHAT IS INVOLVED IN PROJECT INITIATION?
In project management, initiating is the process of recognizing and starting a
new project or project phase. This process seems simple enough, but a lot of
thought should go into it to ensure that the right kinds of projects are being
initiated for the right reasons. It is better to have moderate or even a small
amount of success on an important project than huge success on an
unimpor- tant one. The selection of projects for initiation, therefore, is crucial,
as is the selection of project managers.
Recall from Chapter 4, Project Scope Management, that strategic planning serves
as the foundation for deciding which of several projects to pursue. The
organiza- tion’s strategic plan expresses the vision, mission, goals, objectives,
and strate- gies of the organization. It also provides the basis for information
technology project planning. Information technology is usually a support
function in an organization, so it is critical that the people initiating information
technology projects understand how those projects relate to current and future
needs of the organization. For example, Northwest Airlines’ main business is
providing air transportation, not developing information systems. Information
systems, there- fore, must support the airline’s major business goals, such as
providing air trans- portation more effectively and efficiently.
Information technology projects are initiated for several reasons, but the
most important one is to support explicit business objectives. As mentioned in
the opening case, Northwest Airlines was having financial difficulties in the
early 1990s, so reducing costs was a key business objective. Providing an
infor- mation system to stop the financial drain caused by the reservation call
centers was the primary objective of the ResNet project.
,INITIATIN ■
Table 12-1 lists the knowledge areas, processes, and outputs that are
typically part of project initiation. Tasks often involved in the project initiation
process include the completion of a stakeholder analysis and preparation of a
feasibility study and an initial requirements document. The outputs or outcomes
of project initiation generally include a project charter of some sort, selection of
a project manager, and documentation of key project constraints and
assumptions. This chapter provides background information on Northwest
Airlines and ResNet and then describes the initiation tasks involved in this large
information tech- nology project.
You will find in this chapter, and the following process group chapters, that
real projects often do not follow all of the guidelines found in this or other
texts. For example, the initiating project management process group generally
only includes the process of initiation, part of project scope management, and
the outputs listed in Table 12-1. The first ResNet project, the ResNet Beta or
Prototype project, included some but not all of these outputs plus several
others as part of initiating and preproject planning. Many projects include
groundwork that is done before they are considered to be official projects.
Every project is unique, as is every organization, every project manager, and
every project team. These variations are part of what makes project manage-
ment such a diverse and challenging field.
Table 12-1: Initiating Processes and Outputs
KNOWLEDGE AREA PROCESS OUTPUTS
Scope Initiation Project Charter
Project Manager Identified/Assigned
Constraints
Assumptions
BACKGROUND ON NORTHWEST AIRLINES
Northwest Airlines is the world’s fourth largest airline and America’s oldest carrier.
Northwest began on October 1, 1926, flying mail between Minneapolis/St. Paul
and Chicago. Passenger service began the following year. On July 15, 1947,
Northwest pioneered the “Great Circle” route to Asia, with service to Tokyo,
Seoul, Shanghai, and Manila.
Today, Northwest Airlines, with its global travel partners, serves more than
750 destinations in 120 countries on six continents. In 2001, it had more than
53,000 employees worldwide. The U.S. system spans 49 states and the District
of Columbia. Northwest has more than 2,600 daily flights and operates more
, 364 ■ C H A P T E R 1
than 200 nonstop flights between the United States and Asia each week. Hub
cities include Detroit, Memphis, Minneapolis/St. Paul, and Tokyo.
In the early 1990s, Northwest Airlines’ sales agents accessed a reservation
system by using approximately 3,000 dumb terminals—display monitors,
with no processing capabilities, connected to a mainframe computer. As the
airline business became more complicated and competitive, so did the reser-
vation process. Calls were taking longer to complete and few direct sales
were being made. Therefore, the airline was losing money by providing this
necessary function of the business. It was Fay Beauchine’s intent to turn
this situation around by initiating the ResNet project.
BACKGROUND ON RESNET
Arvid Lee had worked in the IS Department at Northwest Airlines since 1971.
One of the project ideas he and his colleagues had kicked around for several
years was improving the system interface for the sales agents in the call cen-
ters. Changes in the business were making the call center jobs more compli-
cated, and sales agents were complaining about the old Passenger Airline
Reservation System (PARS). The government had just deregulated the airline
industry, and new marketing initiatives such as frequent flier programs compli-
cated matters. The average length of calls in the call centers was increasing due
to the complexity of the job and the inflexibility of the information system
being used. The IS Department did some research on improving the interface of
the reservation system, but no improvements were ever implemented.
Figure 12-1 shows a sample screen from the PARS reservation system used
at Northwest Airlines in the early 1990s. Notice the unfriendly, character-based
interface. There was only one window with no help or menus to assist sales
agents in the reservation process. Sales agents attended special training classes
to learn all of the codes and procedures for using the PARS reservation system.
At times, the call center job would get very demanding as more and more
people called to obtain flight information, and the PARS information system
provided little flexibility in helping sales agents meet potential customers’
needs.
In 1992, Fay Beauchine became the Vice President of Reservations at
Northwest Airlines. She knew the call centers were losing money, and she knew
their focus on improving service was not working. Fay realized that a major
change was needed in the information systems used by the sales agents. They
needed a system that would help them quickly give potential customers complete
and accurate information and allow them to book flights directly with NWA. Fay
also knew that several competing airlines had successfully implemented new
reservation systems.
Objectives
After reading this chapter, you will be able to:
1. Understand the importance of initiating projects that add value to an
organization
2. Discuss the background of ResNet at Northwest Airlines
3. Distinguish among the three major projects involved in ResNet
4. Appreciate the importance of top management support on ResNet
5. Discuss key decisions made early in the project by the project manager
6. Relate some of the early events in ResNet to concepts described in
previous chapters
7. Discuss some of the major events early in the project that helped set the stage
for project success
F ay Beauchine became Vice President of Reservations at Northwest
Airlines (NWA) in 1992. One area that had continually lost
money for the company was the reservations call center. Fay
developed a new vision and philosophy for the reservations call center
that was instrumental in turning this area around. She persuaded
people to understand that they needed to focus on sales and not just
service.
Instead of monitoring the number of calls and length of calls, it was
much more important to focus on the number of sales made through
the call centers. If potential customers were calling NWA directly,
booking the sale at that time was in the best interest of both the
customer and the airline. Additionally, a direct sale with the customer
saved NWA 13 percent on the commission fees paid to travel agents
and another 18 percent for related overhead costs.
,362 ■ C H A P T E R 1
Fay knew that developing a new information system was critical
to implementing a vision that focused on sales rather than service,
and she wanted to sponsor this new information system. Although
the Information Services (IS) Department had worked to improve
the technology for call centers, past projects never went anywhere.
The new reservation system project, ResNet, would be managed by
business area leaders and not Information Services managers—a
first in NWA’s history and a major culture change for the company.
Fay made Peeter Kivestu, a marketing director, the project manager
for the ResNet Beta project in 1993. NWA was going through
tremen- dous business changes at that time, and the airline almost
went bankrupt in 1993. How could Fay and Peeter pull off the
project?
WHAT IS INVOLVED IN PROJECT INITIATION?
In project management, initiating is the process of recognizing and starting a
new project or project phase. This process seems simple enough, but a lot of
thought should go into it to ensure that the right kinds of projects are being
initiated for the right reasons. It is better to have moderate or even a small
amount of success on an important project than huge success on an
unimpor- tant one. The selection of projects for initiation, therefore, is crucial,
as is the selection of project managers.
Recall from Chapter 4, Project Scope Management, that strategic planning serves
as the foundation for deciding which of several projects to pursue. The
organiza- tion’s strategic plan expresses the vision, mission, goals, objectives,
and strate- gies of the organization. It also provides the basis for information
technology project planning. Information technology is usually a support
function in an organization, so it is critical that the people initiating information
technology projects understand how those projects relate to current and future
needs of the organization. For example, Northwest Airlines’ main business is
providing air transportation, not developing information systems. Information
systems, there- fore, must support the airline’s major business goals, such as
providing air trans- portation more effectively and efficiently.
Information technology projects are initiated for several reasons, but the
most important one is to support explicit business objectives. As mentioned in
the opening case, Northwest Airlines was having financial difficulties in the
early 1990s, so reducing costs was a key business objective. Providing an
infor- mation system to stop the financial drain caused by the reservation call
centers was the primary objective of the ResNet project.
,INITIATIN ■
Table 12-1 lists the knowledge areas, processes, and outputs that are
typically part of project initiation. Tasks often involved in the project initiation
process include the completion of a stakeholder analysis and preparation of a
feasibility study and an initial requirements document. The outputs or outcomes
of project initiation generally include a project charter of some sort, selection of
a project manager, and documentation of key project constraints and
assumptions. This chapter provides background information on Northwest
Airlines and ResNet and then describes the initiation tasks involved in this large
information tech- nology project.
You will find in this chapter, and the following process group chapters, that
real projects often do not follow all of the guidelines found in this or other
texts. For example, the initiating project management process group generally
only includes the process of initiation, part of project scope management, and
the outputs listed in Table 12-1. The first ResNet project, the ResNet Beta or
Prototype project, included some but not all of these outputs plus several
others as part of initiating and preproject planning. Many projects include
groundwork that is done before they are considered to be official projects.
Every project is unique, as is every organization, every project manager, and
every project team. These variations are part of what makes project manage-
ment such a diverse and challenging field.
Table 12-1: Initiating Processes and Outputs
KNOWLEDGE AREA PROCESS OUTPUTS
Scope Initiation Project Charter
Project Manager Identified/Assigned
Constraints
Assumptions
BACKGROUND ON NORTHWEST AIRLINES
Northwest Airlines is the world’s fourth largest airline and America’s oldest carrier.
Northwest began on October 1, 1926, flying mail between Minneapolis/St. Paul
and Chicago. Passenger service began the following year. On July 15, 1947,
Northwest pioneered the “Great Circle” route to Asia, with service to Tokyo,
Seoul, Shanghai, and Manila.
Today, Northwest Airlines, with its global travel partners, serves more than
750 destinations in 120 countries on six continents. In 2001, it had more than
53,000 employees worldwide. The U.S. system spans 49 states and the District
of Columbia. Northwest has more than 2,600 daily flights and operates more
, 364 ■ C H A P T E R 1
than 200 nonstop flights between the United States and Asia each week. Hub
cities include Detroit, Memphis, Minneapolis/St. Paul, and Tokyo.
In the early 1990s, Northwest Airlines’ sales agents accessed a reservation
system by using approximately 3,000 dumb terminals—display monitors,
with no processing capabilities, connected to a mainframe computer. As the
airline business became more complicated and competitive, so did the reser-
vation process. Calls were taking longer to complete and few direct sales
were being made. Therefore, the airline was losing money by providing this
necessary function of the business. It was Fay Beauchine’s intent to turn
this situation around by initiating the ResNet project.
BACKGROUND ON RESNET
Arvid Lee had worked in the IS Department at Northwest Airlines since 1971.
One of the project ideas he and his colleagues had kicked around for several
years was improving the system interface for the sales agents in the call cen-
ters. Changes in the business were making the call center jobs more compli-
cated, and sales agents were complaining about the old Passenger Airline
Reservation System (PARS). The government had just deregulated the airline
industry, and new marketing initiatives such as frequent flier programs compli-
cated matters. The average length of calls in the call centers was increasing due
to the complexity of the job and the inflexibility of the information system
being used. The IS Department did some research on improving the interface of
the reservation system, but no improvements were ever implemented.
Figure 12-1 shows a sample screen from the PARS reservation system used
at Northwest Airlines in the early 1990s. Notice the unfriendly, character-based
interface. There was only one window with no help or menus to assist sales
agents in the reservation process. Sales agents attended special training classes
to learn all of the codes and procedures for using the PARS reservation system.
At times, the call center job would get very demanding as more and more
people called to obtain flight information, and the PARS information system
provided little flexibility in helping sales agents meet potential customers’
needs.
In 1992, Fay Beauchine became the Vice President of Reservations at
Northwest Airlines. She knew the call centers were losing money, and she knew
their focus on improving service was not working. Fay realized that a major
change was needed in the information systems used by the sales agents. They
needed a system that would help them quickly give potential customers complete
and accurate information and allow them to book flights directly with NWA. Fay
also knew that several competing airlines had successfully implemented new
reservation systems.
