Investing in modern business software is expensive. But not investing in the modernization of IT tools in time can cost your organisation! In the final days of 2022, a major US-based airline hard-handedly came to know this truth.
The company’s outdated scheduling software was the cause of massive problems, which led to frustrated travellers, a significant loss of loyalty and brand preference and, finally, financial disaster.
How old are your current core systems? Do you already have plans for modernisation? How well prepared are you for special situations if new solutions are unavailable?
Between December 19 and December 28, 2022, the airline was forced to cancel more than 16,000 flights, leaving thousands stranded for days. This was in part due to bad weather, but it was largely due to the use of outdated software. The financial impact was huge!
Analysts said that fourth-quarter earnings for the airline could take a 3% to 5% hit. That’s the equivalent of $ 15 to 25 million. The company’s outdated IT systems and infrastructure were primarily to blame. This included various components, from phones and computers to processors.
The CEO of the airline apologized for the airline’s struggle to operate during the busy holiday travel week amid winter weather woes. He claimed that ‘these tools worked 99% of the time’. However, they were also older and in need of major system upgrades, with many systems implemented somewhere in the 1990s.
Although the company had plans in place to upgrade the tools, they were not carried out in time to prevent the December disaster. As a result, when weather-related delays occurred, the systems couldn’t handle new and unexpected demands.
Here are a few interesting questions that come up:
- How good is a scheduling solution if it works well 99% of the time but can cause huge problems in exceptional cases?
- How many new software implementations would they have been able to pay out of the total cost of this disaster?
- How often would they have postponed the implementation of modern scheduling software in recent times ‘since it wasn’t the right moment’?
- Did their internal teams include the ‘Cost of Doing Nothing’ in the business case they presented to the board?
Expecting outdated legacy systems to keep your company competitive, responsive and relevant is a risky move, no matter what industry you’re in. This ERP failure reveals what can happen when a company fails to invest in digital technology in time.
What plans do you have for 2023 to modernize your business software before you run into these kinds of problems yourself? Get in touch today to take your first step towards modernization.