Hotspot 1: Importance of online channel
- Forget the crude upsell: airlines must do more with e-commerce – Eye for travel
- The digital reinvention of travel: Following travelers into a radically different tomorrow – IBM Institute of Business Value Report
- E-Commerce drives UPS 2Q shipments up 7.2 percent, UPS 2Q EPS increases 7.1 percent – UPS
Travel is the largest eCommerce category worldwide led by airline ticket sales. Social network, mobility, and search engine optimization (SEO) drive marketing and sales operations through loyalty programs, booking engines, and travel ancillaries’ services. To meet the growing demands for eCommerce services, airline and travel companies need systems and a delivery model that accelerates time-to-market, lowers cost, and improves efficiency. Cloud enabled payment check-out platform are one such solutions, travel companies should look-out for. It seamlessly integrate into web sites, mobile sites, smartphone apps, and call center tools and provides a fully localized and safe payment checkout experience with embedded fraud prevention capability.
Hotspot 2: Value from big data
- DHL uses big data for risk mitigation in logistics – DHL
- How big data is transforming the travel industry – Forbes
Data and insights have become a key driver for service excellence and competitive advantage for travel & transportation (T&T) companies. Companies need to exploit data to improve operational efficiency and increase customer satisfaction to grow. For instance, the ability to:
- Embed analytics into processes such as cash management, collections and spend management to achieve cost savings, efficiency improvements and commit to targeted business outcome
- Apply analytics and workforce insights to attract the best talent and drive workforce performance
- Use analytics to generate a single view of the customer, personalize marketing offers and promotions for travelers, thereby increasing customer loyalty.
Hotspot 3: Global Integration
- UPS predicts it needs to invest USD 1Bn in integrating the global network of TNT Express into its own operations – Post & Parcel
- 94% of globally integrated enterprises have nearly 2X CAGR; generate 63% more revenue growth than industry peers – IBM Institute of Business Value Report “Global Transformation from inside out” 2014
The operating model for travel and logistic companies is geographically distributed with strong local presence. Controlling operational costs across the network is now crucial to survive. Partnering with BPO service providers, clients are able to create a truly global service delivery model. By transforming functional operations such as finance and administration, workforce management, procurement and online commerce functions, outsourcing and shared services models help clients improve business agility and operational margins and support international business growth. BPO service providers such as IBM can commit to process transformation benefits, including:
- Upto 10% contracted “net realized” sourcing savings
- 25% working capital improvement
- Upto 40% savings through consolidation, standardization and automation
Hotspot 4: Regulatory Compliance
- New DOT rules: A boon to passengers or a bust for the airline industry? – The Washington Post
- 90% of acquirer’s airline business to be PCI compliant end 2015 – IATA
- Working Time Directive and its cost implications – TNT Express
T&T companies have to comply with regulatory requirements from different countries and regions. By combining strong consulting and process outsourcing capabilities, BPO services help clients develop rigorous and standardized compliance procedures at both the global and the local business levels. This involves compliance maturity assessments, improved governance models, and enhancing internal control through regular training, functional reviews and audits, and better regulatory reporting.
Hotspot 5: Cost Reduction
- United Airlines aims for $2 billion in annual cost cuts – The Wall Street Journal
- Airlines trim seat sizes, weights to boost capacity, reduce fuel costs – NY Daily News
- How can airlines reduce fuel costs? – Wired
Travel and logistics companies operate in a high-volume and low-margin business. The cyclical and seasonal nature of the business makes it crucial for companies to be more agile and sensitive to factors that impact cost of operation. Cloud delivery model, technology enabled process services, and ability to leverage global delivery centers provide T &T clients economies of scale, bring down operational costs, and optimize processes. Other benefits include improved working capital and enhanced expertise in planning and optimizing travel routes for different modes of transportation.
Start by looking closely at your current business issues:
- Are you struggling to meet the growing demands for eCommerce services and address fraud?
- Is your business expanding to new markets and require support to recruit top talent in local markets?
- Is your back office functions cost effective and do they provide the core business the appropriate level of support?
- Are your working capital levels competitive as your industry peers?
- Is your commercial business looking to reduce cost of sales and improve margins?
Today T & T companies across airlines, shipping, online travel service providers, cruise lines, logistic service providers and hospitality companies are deriving the benefits of business process outsourcing.
For more information, visit IBM Global Process Services –Travel & Transportation and contact our industry expert Stuart Fowler, Associate Partner IBM Europe, firstname.lastname@example.org