To outsource or not to outsource? How do you choose a technology supplier to deliver real benefits to your business? Do I really need this solution? These are all questions that travel firms grapple with when considering ways to boost their bottom line or drive business efficiencies. Pamela Whitby examines the issues

There is no doubt that innovative technology can deliver huge benefits to travel firms but cutting through the hungry voices to choosing the right supplier is a challenge.

In the past, cutting costs would be a primary reason to implement a new technology or outsource a business process to a technology supplier. Very often, however, costs would spiral once the supplier came onboard. It was for this reason that FlightCentre decided to build its own content management system, rather than using a firm like WildFire to do it for them, Gregg Tilston, global social media leader at FlightCentre, told EyeforTravel in April.  For FlightCentre, which has so many brands in so many countries with so many unique requirements, very few vendors could match what they could do in house. And if they could it was just way too expensive, Tilston argues.

For Barbara Pezzi, director of analytics and search optimisation, Fairmont Raffles Hotels International, you definitely don’t have to go with a vendor to deliver a return on your social media & marketing investment. “By spending on an additional platform for analytics, you need to justify the cost of that platform,” says Pezzi, who was speaking at the TDS Europe. That isn’t always easy to do. Furthermore, the platform may deliver the data but then you need somebody to analyse and interpret it. It is not difficult to see how quickly costs can rise. For Pezzi then, it is much better to use free tools like Google Analytics. Neil Roberts, senior e-commerce manager at Eurostar, a company that has recently revamped its website, agrees: “When in doubt use free tools.”

Choosing wisely

So what should firms be looking for in an IT supplier? According to Dinesh Ramachandran, head of corporate business development at Sonata Software, who was a speaker and sponsor at TDS, Europe, today the IT services partnership must be about much more than cost reduction; it must also be measured by a company’s ability to understand the business challenges and processes at play. “A true IT partner,” he says, “should have a high degree of skill in core competencies in the technical areas for delivering good quality of deliverables in a time-bound fashion, and within given cost estimates.”

This last point is a crucial one. There is no point in agreeing to work with a supplier that is not going to deliver, or is going to blow the budget. It is for this reason that Sojern, which works with everything from big-name hotels to meta-search firms, airlines, car rental companies and tourist boards, aims first and foremost to put heads on beds and people behind steering wheels. This firm works primarily on a cost-per-acquisition, or even cost of revenue, performance basis (rather than a cost-per-mille model).  The simple truth is that if the technology doesn’t deliver, Sojern’s business doesn’t stack up, says the company’s Stephen Taylor, VP and international managing director, Sojern. 

In other words, the technology supplier must be a true partner – they must deliver tangible benefits. According to Ramachandran as the market place expects new features at such a rapid pace, it really important that IT firms understand the specific market dynamics of the travel industry.

This is particularly true for travel firms that are choosing a technology partner to deliver their frontend experience.  According to Bookassist chief executive Des O'Mahony in such cases, firms are putting the very essence of their brand in the hands of that supplier. “So it is critical that values are aligned, and of course that the supplier has the proven capabilities to deliver at the level you require,” he says, adding that, “it is crucial that suppliers have the same approach and the same appreciation of the market as you do”.

When it comes to choosing a mobile technology supplier, like Bookassist or Sound of Data, it is important to understand that mobile carries the service reputation of the hotel and needs to deliver the same quality of service as the hotel reception does, and as the website does. Says O’Mahony: “Critically mobile must tackle the primary information requirements for customers on the go, which is significantly different from desktop behaviour.”

Outsourcing benefits

The key parameter for outsourcing has long been related to costs. Though still it is one of the primary reasons why firms outsource, the industry has come a long way. According to Ramachandran, there are many benefits to be had from outsourcing, depending on the maturity of the outsourcing relationship and capabilities of the providers. These include:

·         The availability of specific competencies which could be upscaled or downscaled, within short periods of time, by the outsourcing provider

·         Freeing up precious cost, capacity and time of the firms to focus on core areas of business and improve competitiveness

·         Reaping long-term benefits of improved processes, resulting in better quality and service at a lower cost – which benefits customers.

·         Taking advantage of the technical partnerships from the outsourcing providers – this would complement the firms own technology change roadmaps

·         The ability to offer services and products in newer markets where the outsourcing providers have a presence and influence

·         Facilitating the developing new product and service ideas and solutions through joint R&D and innovation.

There is no right or wrong way. It very much depends on the travel company’s own unique requirements. Whichever you choose, it essential however, that you do your homework and choose wisely.

Sojern, Sound of Data and Sonata were all sponsors at the Travel Distribution Summit, Europe