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San Francisco International Airport and Quantum Secure's SAFE for Aviation System Case Solution

Solution Id Length Case Author Case Publisher
1387 2279 Words (12 Pages) Daniel Diermeier, Evan Meagher Kellogg School of Management : KEL720
This solution includes: A Word File A Word File and An Excel File An Excel File

This case is regarding the issue of installing a new system at the San Francisco Airport. The Airport authorities anticipate that the airport will have higher customer traffic in the next few years which is going to be a concern from the security issue. The existing system does have some merits such as people being comfortable with using it for regular operations. However, with the passage of time if the operations at airport require better resources in managing security issues, the existing system might not prove to work to advantage of the airport authorities.  

This report attempts to compare the two approaches of having the airport to continue with business as usual or to adopt the new system and use it to improve their operations. As obtained in the analysis, the installation of the new system is a feasible option as evident from a positive NPV of $5,236,002.85. Also the project has a positive and higher IRR than the discount rate of 10% which comes to 109%. Both these results show that the option of having a new system at the airport will be beneficial for the overall operations of the airport authorities.  

Following questions are answered in this case study solution

  1. Executive Summary

  2. Introduction

  3. Situation

  4. Scope and References

  5. Cost-benefit analysis

  6. Calculation of metrics and KPIs

  7. Comparison of alternatives

  8. Risks, assumptions and constraints

  9. Implementation plan

  10. Recommendation and conclusion

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Case Analysis for San Francisco International Airport and Quantum Secure's SAFE for Aviation System

2. Introduction

• Proposed action (strategy)

Implement Quantum Secures SAFE for Aviation software suite

• Business objectives

To increase efficiencies and time to process information and people as well as reduce operating costs

  • To reduce cost and time to process a badge

  • To make all information accessible to all those who need it

  • To ensure that one terminal is used throughout the terminal

  • To reduce number of errors and to ensure efficiencies in time management

  • To meet regulatory requirements

  • To enhance customer experience (both internal and external customers)

• Scenarios considered

The following scenarios were considered:

  1. Keep things as they are – status quo

  2. Purchase and implement the SAFE software suite as the terminal is undergoing renovations

• Document audience

Decision-makers and other impacted stakeholders such as customers, contractors and employees

• Document purpose
  1. To provide all the necessary information to decision makers in order for them to make an informed decision

  2. To provide cost and planning information

• Decision criteria
  1. ROI

  2. Payback period

  3. Operating Cost

  4. Desired functionality – the new system met all objectives

  5. Time to implement new software system and have it up and running

3. Situation

• Project history (problem statement)

SFO is currently using an antiquated security system. The current systems are not integrated with other systems being used in the airport. This impacts all employees and users of the airport as it wastes time and resources. An ideal solution would be for SFO to switch to a single notion user identity for use across the entire facility.

• Strategic alignment (opportunity statement)

The upcoming renovations of the airport provide an opportunity for an upgrade to the security system for the total facility to meet the growing needs of airport risks and comply with regulations from TSA.

• SWOT analysis
Strengths
  • Use of airport facility is scheduled to increase

  • Associate Airport Director of safety and security has a mandate to overhaul the security infrastructure of airport

Weaknesses
  • Employees are used to existing system and might show resistance to change

  • New system would not be used throughout the airport therefore any new system would have to be integrated into the old system

  • Cultural shift which can be difficult to implement if no one has the required experience

  • The airport does not have the people who have expertise to implement such a change aside from the system

Opportunities
  • Airport will be undergoing renovations and this would be a good time to implement a new security system that meets needs of its users

  • Since current system does not meet TSA regulations so it supports new system being installed

  • Airport expects increase in customer traffic which will require use of up to date systems for meeting needs

  • Current system cannot prevent from security threats such as terrorism

Threats
  • Incorrect implementation of the new system can jeopardize its benefits

  • If the system is not installed in line with old systems then it can prove difficult to integrate it into the airport environment

• Benchmarking analysis

Quantum Secure said that the SAFE aviation solution had improved Toronto Pearson’s compliance with various regulatory safety standards by as much as 60%. The same company also reported 90% reduction in activities related to checking of errors that previously wasted employees’ time.

4. Scope and References

• Scope

The following costs were included in the cost-benefit analysis:

  • Upfront installation cost

  • Annual maintenance fee

The following benefits were included in the cost-benefit analysis:

  • Streamlined and accountable end to end badging operations

  • Automatic physical access provisioning and terminations based upon policies

  • Policy based access with audit trail

  • Compliance reporting

The following intangible benefits were not included in the analysis:

  • Increased employee productivity due to reduction in delays of credential processing

  • Increased customer satisfaction because of lower support cost due to automation

• Timeframe for analysis

The cost-benefit analysis will be based on a five-year timeframe. This is based on the fact that the technology changes occur rapidly and airport security will need further update to counteract security threats after five years and the maintenance costs of the SAFE system are only available for five years between 2009 and 2013.

• References

Cost and benefit estimates were based on the following data sources:

  • The costs of initial installation and annual maintenance were present in the information provided by SFO in the case.

  • The data source for the increased compliance has been obtained from cost per incidence of violation which is provided in the case

  • The data source for the cost savings in the badging process has been obtained from section of labor cost savings in the case

5. Cost-benefit analysis

• Full-value cash flow statement – proposed action

Proposed action will have the advantage of bringing cost savings in the badging process which is going to be a key area of concern for the airport. In addition, another benefit which will come is because of the lower cost of incidences in terms of security threats that the management will have to face in case they keep using the old system and customer traffic keeps increasing.

In US$

Proposal, Full Value Cash Flow

 

 

Year 1

Year 2

Year 3

Year 4

Year 5

Total

 

 

 

 

 

 

 

 

 

Benefits

 

 

 

 

 

 

 

 

Cost savings in badging process

 

 

70000

245000

420000

595000

770000

2,100,000

Total Benefits

 

 

70,000

245,000

420,000

595,000

770,000

2,100,000

 

 

 

 

 

 

 

 

 

Costs

 

 

 

 

 

 

 

 

Initial Installation Fees

 

 

(250,000)

-

-

-

-

(250,000)

Annual Maintenance fee

 

 

(25,000)

(25,000)

(25,000)

(25,000)

(25,000)

(125,000)

Material Costs

 

 

(14,000)

(28,000)

(56,000)

(70,000)

-

(168,000)

Fines Cost

 

 

(1,100,816)

(440,326)

(176,130)

(70,452)

(28,181)

(1,815,905)

Total Costs

 

 

(1,389,816)

(493,326)

(257,130)

(165,452)

(53,181)

(2,358,905)

 

 

 

 

 

 

 

 

 

Net Cash Flow

 

 

(1,319,816)

(248,326)

162,870

429,548

716,819

(258,905)

 

 

 

 

 

 

 

 

 

incidents

 

311

124.4

49.76

19.904

7.9616

3.18464

 

improvement

 

 

0.6

0.6

0.6

0.6

0.6

 

assumption is improvement by 60%

 

 

 

 

 

 

 

 
• Full-value cash flow statement – business as usual

Staying business as usual is an easy option for the airport. This is because it will not require additional resources and the employees were already used to incorporating the old system so there will be no resistance. However, the cost of higher incidences might prevent the airport from obtaining complete benefits.

Proposal, Full Value Cash Flow

 

Year 1

Year 2

Year 3

Year 4

Year 5

Total

 

 

 

 

 

 

 

 

Benefits

 

 

 

 

 

 

 

Cost savings on Installation and Annual Maintenance Fee

 

275,000

25,000

25,000

25,000

25,000

375,000

Total Benefits

 

275,000

25,000

25,000

25,000

25,000

375,000

 

 

 

 

 

 

 

 

Costs

 

 

 

 

 

 

 

Initial Installation Fees

 

-

-

-

-

-

-

Annual Maintenance fee

 

-

-

-

-

-

-

Material Costs

 

-

-

-

-

-

-

Fines Cost

 

(2,752,039)

(2,752,039)

(2,752,039)

(2,752,039)

(2,752,039)

(13,760,195)

Total Costs

 

(2,752,039)

(2,752,039)

(2,752,039)

(2,752,039)

(2,752,039)

(13,760,195)

 

 

 

 

 

 

 

 

Net Cash Flow

 

(2,477,039)

(2,727,039)

(2,727,039)

(2,727,039)

(2,727,039)

(13,385,195)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

incidents

311

 

 

 

 

 

-

 

 

 

 

 

 

 

 

since there are no benefits obtained other than saving on the installation and maintenance cost

             

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