Continental Airlines: Outsourcing IT to Support Business Transformation

Prepared by Neils Christensen and Keri Pearlson

As the Texas sun began to set, Janet Wejman, the Chief Information Officer for Continental Airlines looked out the window of her Houston-based office and considered what her next move should be. It was now November 1996 and while she had only been with the company for a few months, she faced a dilemma relating to the airline’s information technology outsourcing agreement with Electronic Data Systems (EDS). The ten-year contract was beginning to show some strains as a result of the dramatic changes that had taken place at Continental since the contract’s inception. Tensions had developed between some of the: …show more content…

For its part too, EDS was undergoing some changes. Bonnie Reitz, Vice President -Marketing and Sales for Continental, who had joined the airline in September of 1994 at Bethune’s request, suggested:

Both Continental and EDS were in transition. EDS traditionally provided high-volume transaction-oriented services and they were very strong at building and maintaining systems. They had some difficulty shifting to the consulting side but they are moving in that direction. In addition, many of the difficulties between Continental and EDS were due to changes in Continental. Because of improvements in our performance, we moved from an almost absolute focus on cost savings where we did not want to discuss IT and what it could do for us, to a setting where we wanted to use information technology, had ideas about some desired applications, and were prepared to invest in these systems. More discussion and partnership was necessary as we moved through these changes but ultimately the transition was expected to benefit both parties.

Transforming the Business: The Go Forward Plan

An all-encompassing initiative launched by Bethune and Brenneman was the Go Forward Plan. This plan was announced as the means to return Continental to profitability during 1995. The four central tenets of the plan were:

Stop doing things that lose money (Fly To Win)