Johnny Thorsen: The move from solution to services-oriented travel programmes

02 July 2018
Johnny ThorsenVP Global Travel Strategy & PartnershipsMezi

Current solutions have run their course; it's time for a new service-led technology lifecycle in business travel

Since the dawn of the online booking engine solutions more than 20 years ago, the corporate travel industry has been stuck in a Star Trek-like time warp with relatively little changes. That’s except for the constant slow growth in the overall online adoption rate and most recently with the addition of mobile booking as a new channel.

Before the arrival of the booking engine the typical travel programme was based on a simple model where the traveller (or travel assistant) would make a booking request using either phone, fax or email and then wait for a proposal (quote) to be returned before making a decision and then a booking would be made by the relevant consultant in the travel agency. Ironically this legacy model still exists for an estimated 25-50% of the overall corporate travel volume (the offline volume) subject to which country and company the value is measured within.

The reason for this situation is simply put that we probably have reached the end of the product improvement lifecycle for these booking engine solutions, similar to how most other technologies eventually reach a point where they are replaced by a new generation of products and finally become obsolete. We are about to enter an entirely new technology lifecycle where we no longer are buying, implementing and managing products (read solutions) but rather will select individual services for specific tasks and then configure how these services interact, while exchanging relevant data seamlessly.

This new world can best be described as a service-oriented architecture where each unique requirement (read component) is solved by a small piece of software developed to solve that specific task and nothing else.

For software developers this is known as a microservices architecture and is generally regarded as the most flexible and future-proof platform, so it only seems logical that the corporate travel industry will start adopting this principle.

What would a service-oriented travel programme look like?

Think about your typical corporate booking engine today; it generally includes a number of easily identifiable modules such as TMC profile, PNR format, traveller profile, travel policy, search preferences, payment information, travel request and reporting. Each of these are managed within the booking engine, in addition to similar information being stored in the TMC environment as they need to provide a consistent service for the offline bookings. This results in a never-ending battle of how to synchronise the online and offline systems – typically resulting in black holes where data is out of sync, as well as very complex data migrations when a decision has been made to change TMC or booking engine (which happens very rarely exactly because of the pain of change).

Now imagine a future model where each of these modules exists as a stand-alone service capable of interacting with other services via open APIs. The best example is the traveller profile which now can be provided as a ‘cloud-based on-demand service’ with each traveller controlling and managing their own data, while the corporate travel manager selects service providers capable of working with this new structure. There are many benefits associated with this model, but some of the most obvious ones are listed below

  • No need to migrate profiles when changing TMC
  • Travellers control their own data completely
  • GDPR compliance is an integral part of the service
  • Travellers decide how much details they provide
  • Suppliers must ask for permission to access the traveller’s data

Another obvious service is the travel policy module which today has to be maintained in a minimum of two solutions (online and offline). In the new structure the travel policy module will be a “cloud-based service” capable of analysing any booking made and determining the policy compliance status. The workflow associated with out of policy bookings can be configured by each customer and suppliers will agree to a given percentage of cancellations to ensure a relevant compliance level.

A third service is payment. This is where buyers can take advantage of entirely new capabilities linked to smart contracts where the price is determined by the contract and payment is managed without involvement of credit card and invoice. This in turn can eliminate the expense report as a result.

Once you start imagining this new service-oriented travel programme it becomes clear how outdated and inflexible the current structure is. Rather than enforcing a single booking and expense system worldwide, corporate travel managers will be able to combine the best microservices in each market and take advantage of new low-cost technology services designed to give the traveller a better experience without compromising the overall goals of the travel programme (and the ambitions of the CFO).

When can we expect to see the new model?

In many ways we are already seeing a number of these new travel microservices in the market as solutions like TroopTravel, Gaest, FairFly, Dufl, LuggageHero, Stabilitas, TripBam, Troovo and MySafeTravel to name a few are all addressing a “narrow but significant requirement”. But they are still seen as “secondary services” compared to the “dinosaur booking and expense” solutions. I believe we will have the first real alternatives for profiles, policy and payment before end of 2019 and by end of 2020 an exodus will begin from the established model.

The new services will probably be developed by entirely new start-ups, or by big players outside the travel industry – a few obvious candidates are the usual tech giants such as Google, Microsoft, Facebook and perhaps even Apple and Samsung – but looming in the corner is a gentle giant called Amazon Web Services (AWS). AWS has already disrupted the corporate IT landscape and there is no reason why it cannot expand into other global verticals; most recently it has added the health industry to its target list and is also making moves into the airline IT space.

What could prevent this from happening?

I only see one real scenario which can prevent travel microservices from entering the market place. That is a highly unlikely, but still potential, development where TMCs simply start breaking their existing services into separate components and start offering these as individual “on-demand” services. This is not very likely to happen and would require them to service customers without making their bookings, which will cause a significant revenue challenge as the TMC cost base still is significantly above the fee level requested by the corporate customers.

Eventually we might see a new pricing model evolve where services are provided against a fixed low monthly fee for an assumed 100% automation level (read self-service) and then the price increases as a direct correlation of the actual automation level achieved – by way of example a 50% automation level would cost twice as much as 25% automation level. This would enable the TMC and travel buyer to both focus on achieving the highest possible automation level - while also removing the strange pricing model related to domestic vs international and online vs offline bookings – another legacy result of the booking engines entry into the market 20 years ago.

So – in summary – it is time to go small to go big.

The statements and viewpoints in this article represents those of the author only and are not representative of any other organisation or third-party

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