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ERP Modernization

Header quotes Keeping an Eye on Costs and Risks Header quotes

The outdated ERP System as a Risk Factor What you can learn from
the South­west Airlines
Software Disaster

In the final days of 2022, things went haywire at US carrier Southwest Airlines. With the company’s out­dated software causing massive problems, resulting in frustrated travelers, a significant loss of loyalty and brand preference, and ultimately a financial disaster. How long have you been working with your IT systems? Have you already planned modernizations? And how well are you prepared for such situations by then?

Southwest Airlines: outdated ERP Software caused major Chaos

Between December 19 and 28, 2022, Southwest Airlines was forced to cancel more than 16,000 flights. Thousands of people were stranded for days. Some of this was due to bad weather. But above all, this planning disaster was due to the airline’s outdated software with IT systems and infrastructure in need of modernization.

Imminent Losses in the Double-digit Million Range

The financial impact of this mess is enormous. Analysts predicted that the airline’s profits could fall by three to five percent in the fourth quarter. That’s the equivalent of 15 to 25 million US dollars.

IT Systems from the 1990s could not cope with unexpected Demands

CEO Robert Jordan apologized for the airline’s problems during the holiday week, when winter weather conditions prevailed. He claimed that “these tools work 99 percent of the time”.

However, these were older systems that needed extensive system upgrades, as many systems had been introduced in the 1990s. Although Southwest Airlines had had plans to upgrade the software, these had not been implemented in time, so the disaster in December could not be prevented. When the weather-related delays occurred, the systems simply could not handle the new and unexpected demands. As a result, Southwest Airlines was forced to create flight plans manually.

This Example raises the following Questions:

  • How good is a scheduling solution really if it works well 99 percent of the time, but can cause major problems in exceptional cases?

  • How many new software implementations could Southwest Airlines have funded with the total cost of this disaster?

  • How many times recently has the company postponed implementation of modern ERP software “because it wasn’t the right time”?

  • Did the internal teams include the “cost of doing nothing” in the business case they presented to the management?

When will you modernize your Software?

Investing in modern business software is expensive. But not investing in modernizing IT tools in time can cost your company a lot more money.

Expecting your company to remain competitive and responsive is risky - no matter what industry you’re in. In any case, the failure of Southwest Airlines’ ERP system shows very clearly what can happen when a company doesn’t invest in digital technology in time.

What plans do you have for modernizing your business software in 2023 - before you face similar problems as Southwest Airlines last December?

Southwest Airlines Software Disaster
Do you want to take the risk of working with an outdated ERP system?