The transformation of Alliance Airlines was a challenging and painstaking experience. The gray hairs on my head and in my beard are firm reminders of the long days and sleepless nights that were required to deliver the end result. I know a few people at SilverStream who feel the same way.

It's important to understand the underlying need to transform a business,whether it's a retailer at a mall or a retailer on the Internet; companies must change and differentiate themselves not only to suc-ceed, but also just to stay alive.

This has been especially true in the airline industry. We've seen deregulation open the world to everyday travel. Airlines began offering deals in hopes of luring the common traveler to fly. Frequent flier programs and advance purchases became the norm as a means to lock passengers into seats. With the emergence of low-cost operators the market became very clouded, as customers saw no difference between airlines: price was the key driver on the majority of seats sold. Mergers, acquisitions, and joint marketing efforts became the key to staying in business; suddenly once-fierce rivals were forced to work with each other just to stay alive. While airlines were fighting to put travelers in seats, the cargo divisions of these airlines were locked in a much more covert fight.

The Changing Business of the Airline Cargo Industry
The emergence of open skies agreements with the UK, Europe, and Far East prompted a globalization of accessible goods to consumers worldwide. We saw a surge in import products to the U.S. as consumers demanded lower prices. Unfortunately, this forced many American companies to move jobs and production onto foreign soil to take advantage of cheaper labor and to be closer to the source of raw material. The buzzword of this period in the mid '80s was "Just-In-Time" (JIT) inventory management. Companies no longer had the capital to house huge inventories and be stuck with excess supplies. FedEx, UPS, and Purolator (systems integrators) emerged as major players in the JIT movement. They laid the infrastructure to provide door-to-door service that enabled goods to be sent directly from manufacturing to the customer's door. A present example of this is Dell Computer, which ships its product directly to consumers.

The cargo divisions of the major international airlines had to do something to stop the bleeding; they were forced to cut costs at any turn. Folklore has it that Lord King, chairman of British Airways, referred to cargo as the ash on the end of his cigar. Outsourcing became the norm. On-airport facilities, high labor costs, ground-handling facilities, and equipment were being shed like snakeskin. The one key thing that many airlines failed to address was information exchange.

Alliance Airlines Fills a Market Need
Alliance Airlines saw this as an opportunity to establish itself as a major player in the air freight outsourcing movement. But like many other companies, Alliance needed to manage the tremendous growth it was facing. The company has reported double-digit growth every year since its conception in 1987. Projected statistics for the year ending 2001 have the company handling 20,000 aircraft movements, 700 million pounds, 220,000 consignments, and over 76 million pieces of air freight in more than seven locations throughout the U.S. The underlying philosophy of the company is to build facilities on major international airports and provide both cargo handling and road feeder services as a single source for its clients. Alliance Airlines has an impressive list of clients as well: Korean Air, EVA Airways, Lufthansa, Polar Air Cargo, Air New Zealand, Japan Airlines, and others all outsource their freight operations to that company.

Alliance faced a considerable challenge as these clients began moving massive tonnages in and out of the U.S. There was an immediate need to streamline operations and provide real-time information back to the airlines, as well as other suppliers in the chain. Inland trucking companies, freight forwarders, U.S. Customs, and other agencies all needed to be part of the information flow. Not only were clients demanding quality handling service, they were demanding quality information as well.

The Solution
Alliance soon realized that its DOS-based, Fox Pro system couldn't handle the massive volumes that were being generated so the company began looking for a solution. There was no "off-the-shelf" product that fit the immediate need, and time-to-market was critical. Alliance evaluated two products. The first was an Oracle-based solution. At the time, Oracle didn't have a clearly defined pricing model for Web deployment and the licensing fees were cost-prohibitive. The second was SilverStream eXtend. At that time, SilverStream had a simple, clearly defined pricing structure - a per processor license with unlimited users. In our initial meeting, SilverStream fired up its product and quickly put together a small, functional application. At that moment Alliance knew it had found a solution.

SilverStream dispatched three developers to Alliance and using a RAD approach with SilverStream's development environment, we delivered phase one of the project in less than six months. The application quickly became the change agent for Alliance Airlines. The company's internal business problems played into the strengths of the SilverStream eXtend integrated services environment.

Alliance's infrastructure was comprised of many different platforms in the company's back office. The operations system didn't communicate with the billing system, and the billing system wasn't integrated with the GL package. Manual processes; keying and rekeying of data; and slow, inaccurate billing severely limited the vision and goals of the organization. By designing and developing a service-oriented architecture, back office integration became seamless. By the time phase two of the project was rolled out, SilverStream eXtend had enabled full integration of old data into the new environment. We witnessed firsthand the power of XML and Web services with SilverStream eXtend.

While Alliance was undergoing this transformation, the company realized that the other airlines' IT and IS infrastructure was nowhere near as sophisticated as Alliance's. Passenger-facing systems were fairly advanced, but the cargo industry had been left in the cold. Many airlines still think that EDI is new. With this in mind, SilverStream worked closely with Alliance to embed key, event-triggered EDI messages throughout the application. These messages are sent directly to the airline's host system in a predetermined format, allowing a meaningful flow of information in a cost-effective manner. Now Alliance was in a perfect position to leverage SilverStream eXtend and Web services to expand the flow of information between trading partners.

Operational Benefits
The internal transformation of Alliance continued with the deployment of SilverStream eXtend to create a front end for the application. End users throughout the organization had worked in a traditional Windows desktop environment. This front-end allowed them to "float" around and pick what they wanted to work on. Now all relevant services, data, and job functionality are presented to the end user. Work flow practices are invoked for all areas of the business and specific intranet kiosk portal screens are deployed to specific departments. Sales, operations, human resources, and accounting have completely different requirements on a daily basis, and now department heads and business analysts have complete control over the information flow within their divisions. The ease of use makes it possible for IT to take a back seat on day-to-day updates and focus on core development issues.

Interfaces with outside information sources are also no problem. Human resources can transmit employee information captured in an online application to background check companies over the Internet. Flight status of inbound aircraft is now streamed to key operational personnel in the warehouse and on the field via cell phones. Outsourced trucking suppliers communicate with Alliance Airlines via a Vendor Extranet. Status updates, billing, and dispatch are now performed via the Web. The biometric time and attendance application used by Alliance is now integrated with the operating application to produce daily P&Ls by airline and department. Manpower is managed on a proactive basis as opposed to the "bucket brigade" approach used in the past.

I would be remiss if I didn't describe the platform in which SilverStream eXtend is deployed within Alliance. In the early stages, Alliance had fat clients at the desktop, old grinding Pentium 133s (ouch!). All the cities were connected via a Frame relay terminating at their corporate headquarters in Chicago. When SilverStream was first deployed it chewed through those old Pentiums with no trouble; Java apps tend to do that. The decision was made to outsource the complete data and network infrastructure to Worknet Inc. of Naperville, IL. It turned out to be one of the best decisions we made and the network is now solid as a rock. The data center houses all six of Alliance's servers; they run Citrix over NT and deploy Wyse Terminal thin clients at the desktop. This provided the backbone for the rollout of SilverStream eXtend.

Return on Investment
While it's difficult to put specific numbers on radical business process redesign, there are a few key points that jump out regarding this project. The overall expenditure with SilverStream was approximately $1.5 million. It sounds like quite a bit of money, but if you look at the tremendous growth Alliance is experiencing we probably saved that much alone in manpower.

Manual processes need people to work them, so by automating processes, individuals can now concentrate on core business functions. Capital expenditure spending for a new phone system was postponed, although the phone system Alliance had in place could not keep up with the growth. All areas of the operation had been swamped with service calls but by Web-enabling information, customer service turned into self-service.

We also uncovered a new revenue stream. By having full control over the import product in the warehouse, Alliance can now strictly enforce terminal service and storage fees. Where freight used to sit for days before collection, the clock starts ticking the minute it's put on location. Customers can check customs clearance and storage fees via the Web prior coming to the airport to pick up goods. The list keeps on going. Needless to say, the investment has been worth it.

Alliance Airlines has leveraged the Internet to transform its business operations and become an industry leader through the close working relationship with SilverStream. The deployment of SilverStream eXtend has ensured Alliance Airlines' place in the logistics supply chain today and into the future.

Author Bio:
Larry Ellingson is a freelance consultant specializing in system architecture and integration, business process reengineering, supply chain logistics, and cultural changes. He previously served as the vice president of information services for Alliance Airlines. Larry has worked with SilverStream since the 1.0 release of the SilverStream eXtend Application Server in 1998. lellingson@biz-process.com