BOX 3.1

The CONFIRM Hotel Reservation System

The CONFIRM hotel reservation system is one of the best-documented cases of system development failure in industry. The CONFIRM system was intended to be a state-of-the-art travel reservation system for Marriott Hotels, Hilton Hotels, and Budget Rent-A-Car. The three companies contracted with AMRIS, a subsidiary of American Airlines, to build the system. The four companies formed the Intrico consortium in 1988 to manage the development of the system. AMRIS originally estimated the cost of the project to be $55.7 million. By the time the project was canceled 4 years later, the Intrico consortium had already paid AMRIS $125 million, more than twice the original cost estimate.

AMRIS was unable to overcome the technical complexities involved in creating CONFIRM. One problem arose from the computer-aided software engineering (CASE) tool used to develop the database and the interface. The tool's purpose was to automatically create the database structure for the application, but the task ended up being too complex for the tool. As a result, the AMRIS development team was unable to integrate the two main components of CONFIRM—the interactive database component and the pricing and yield-management component. An AMRIS vice president involved in the development eventually conceded that integration was simply not possible. Another problem was that the developers could not make the system's database fault-tolerant, a necessity for the system. The database structure chosen was such that, if the database crashed, the data would be unrecoverable. In addition, the development team was unable to make booking reservations cost-effective for the participating firms. Originally, AMRIS estimated that booking a reservation would cost approximately $1.05, but the cost estimates rapidly grew to $2.00 per reservation.

The difficulties plaguing CONFIRM were exacerbated by problems with the project's management, both on AMRIS's side and on the side of the end users. Even though the Marriott, Hilton, and Budget executives considered CONFIRM to be a high priority, they spent little time involved directly with the project, meeting with the project team only once a month. An executive at AMRIS said, “CONFIRM's fatal flaw was a management structure. . . . You cannot manage a development effort of this magnitude by getting together once a month. . . . A system of this magnitude requires quintessential teamwork. We essentially had four different groups. . . . It was a formula for failure.”

The actions of AMRIS middle managers also contributed to the delays and eventual complete failure of CONFIRM. Some AMRIS managers communicated only good news to upper management. They refrained from passing on news of problems, delays, and cost overruns. There were allegations that “AMRIS forced employees to artificially change their timetable to reflect the new schedule, and those that refused either were reassigned to other projects, resigned, or were fired.” The project employees were so displeased with management actions that, by the middle of 1991 (1 year before the project was canceled), half of the AMRIS employees working on CONFIRM were seeking new jobs. Had developers at AMRIS informed upper AMRIS management or the other members of Intrico about the problems they faced with CONFIRM, it might have been possible to correct the problems. If not, then at least the end users would have had the opportunity to cancel the project before its budget exploded.

SOURCES: Ewusi-Mensah (1997), Oz (1997), and Davies (1998).

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