Before proceeding, reread Case 8, page 282, which introduces THL, Tourism Holdings Limited, a New Zealand-based company that owns and operates multiple businesses. In this case, we will examine how THL uses information systems to support vehicle leasing in its four camper-leasing business lines. Leasing camper vehicles to customers has three fundamental phases:
1. Matching customer requirements with vehicle availability
2. Reserving vehicles and operations support
3. Billing and customer service Online Reservations Systems Customers access a Web site for whichever brand of vehicle they wish to rent. On that site, they specify the dates and locations from which they want to rent and return a vehicle. THL information systems access the vehicle inventory to determine which vehicles might be available. That determination is complex.
THL may not have the wanted vehicle in the desired location, but it might have a higher-priced vehicle available and choose to offer the customer a free upgrade. Or, it might have the desired vehicle in a different city and choose to move the vehicle to that location. However, moving the vehicle might impact prior reservations for that vehicle, making such movement infeasible. Finally, this complexity is compounded because certain vehicles are not to be rented from particular locations.
(Two-wheel drive standard vehicles cannot be rented for the Australian outback, for example). And, of course, vehicles undergo both scheduled and unscheduled maintenance. Pricing is another complicated decision in the reservation process. Like hotels and airlines, THL engages in flex pricing, whereby prices are determined not only by the vehicle and rental period, but also by customer demand.
To accommodate this complexity, THL developed a rule-based availability information system known as Aurora. Business analysts create business rules like those shown in Figure 9-24. Figure 9-24 shows an example of rules that block vehicles from rental; Figure 9-25 shows a screen that is used to set up or modify a rule. All rules are stored in a SQL Server database, a database that also contains all of the vehicle reservation data. Application programs in the Aurora system access and process the business rules when determining vehicle availability. Because rules are set up and managed with easy-to-use interfaces like that in Figure 9-25, nonprogrammer business analysts are able to change reservation policy without the assistance of technical personnel.
THL also operates information systems for vehicle check-in and customer billing. The Aurora reservation system off-loads data to a second SQL Server database that operates a Report Server (see Figure 9-26). By off-loading the data, THL produces numerous sophisticated reports without impacting the performance of the online reservation system. Reports from the server guide both operational and managerial activities. One report, for example, shows the vehicles that are to be checked out and returned to each rental location.
Other reports show which vehicles need to be transferred to other locations, which vehicles are to be sent for maintenance, which vehicles are to be retired from the fleet, and so forth. Business Intelligence Information Systems "We know our operational data contains a wealth of information about our customers, their rental needs, trends in rental activity and vehicle needs, and other key business drivers," Grant Webster, CEO, stated. "We've already developed numerous OLAP cubes and we're working on other types of business intelligence applications."
As shown in Figure 9-26, data from the report server is downloaded to a third server that provides OLAP services. Operational data is processed, and OLAP cubes are created on a weekly basis. Figure 9-27 shows a cube that displays revenue earned from vehicle sales in 2005 (THL is, naturally, reluctant to publish current versions of such private data). OLAP, which stands for online analytical processing, refers to the production of reports whose structure can be changed dynamically by the user.
In Figure 9-10, the user could, for example, change the brand and geographic market columns, and the totals would be adjusted accordingly. Excel Pivot charts are an example of an OLAP report (or cube, as OLAP reports are called). The difference is that THL's report server produces reports based on thousands of transactions; such volume would be very difficult to process in Excel.
Questions
1. Considering the rule-based reservation system:
a. Summarize the benefits of having policy determined by rules rather than by computer code.
b. What are the consequences of someone entering an incorrect rule? Offer both mundane and drastic examples.
c. Considering your answer to part b, if you managed the reservation system at THL what process would you use for the modification of rules?
2. Examine the OLAP cube in Figure 9-27. The values in this report (or cube, as OLAP reports are called) are sums of rental revenue from vehicles.
a. Using your intuition and business knowledge, what do you think the value $3,697 means? What do $1,587 and $2,121 mean?
b. State three conclusions that you can make from this data.
c. The principal advantage of OLAP is that columns and rows can be switched and the report values will be recalculated automatically. Explain what would happen if the user of this report were to switch the first column (geographic area) with the third column (brand). You do not have sufficient data to compute values, but explain in words what will happen.
3. Considering customer reservation data, give an example of the use of each of the following: a. Reporting application (other than OLAP) b. Market-basket analysis c. Unsupervised data mining d. Supervised data mining e. Rank your answers to parts a-d on the basis of their desirability. Justify your ranking.
4. Suppose that THL decides to start a van rental business in the United States. Suppose that it is considering opening operations in Alaska, California, Arizona, New Mexico, or Florida.
a. Given the nature of THL's current camper-vehicle rental activities, which of those states do you think would be best? Justify your decision. Consider potential competition, market size, applicability of THL's experience, and other factors you deem relevant.
b. Summarize THL's competitive strengths for this new operation.
c. Summarize THL's competitive vulnerabilities for this new operation.
d. Describe how its reservation system adds value to this new operation.
e. Summarize the problems that you think THL might have in running a business 7,500 miles (or more) from its headquarters.
5. Name and describe information systems and technologies that THL could use to mitigate the problems in your answer to part e in question 4.
