Ai Editorial: Prioritising data and IT infrastructure for retailing
First published, 7th June 2016
Ai Editorial: How are airlines gearing up for retailing? The industry is gradually making moves in a way that IT is being linked to business value. Ai’s Ritesh Gupta identifies 3 core data and IT-related issues
Being a part of an industry that is often labelled as a “laggard” when it comes to being customer-centric is no fun. Full service airlines are often singled out for their archaic IT infrastructure, and it’s time they find ways to get rid of sluggishness on their part.
“If you look at other industries you can see that airlines are far behind in terms of retailing their products,” pointed out a source, referring to proficiency of some retail players in pre-empting questions like “When will a specific customer next make a purchase?” or “How best can we communicate to them to make it happen?”
“Airlines simply don’t have that information available,” added the source. As things stand today, airlines’ offerings aren’t personalised and importantly, the booking flow isn’t aligned to the way customers think. Also, once a flight booking is confirmed, post that there is no cross-sell longevity. And carriers try to sell everything at once.
This is where organizations like Ryanair are counting on digital transformation, looking at data and IT in a novel way.
Here we explore what modern retail infrastructure should look like in the era of omni-channel retailing:
· Flexibility - Platforms need to become more flexible, think of being retail-oriented rather than being “airline website” oriented, as Dara Brady, Ryanair’s head of digital experience, asserted during Ai’s Ancillary Merchandising Conference in Barcelona (held in April this year).
Delving deeper into this, Paul Byrne, Senior Vice President of Development at OpenJaw Technologies, says, “It implies focusing on all the major retailing principles required for a true omni-channel retailing. Websites are just one part of the overall jigsaw. A rich customer experience requires rich, curated content, targeted / tailored products, adequate pricing models and a seamless experience across all channels.”
“Airlines require core platforms that are highly flexible. Airlines are still using very inflexible platforms. These are either based on shared community models or platforms that require a lot of development/ programming to facilitate every change,” says Byrne. He says to create and manage rich omni-channel customer experience, airlines require platforms that provides extensive business model control (rules-based) plus strong product and channel management capabilities. “These platforms must have a modular open architecture that fosters a partner eco-system for collaborations. Structured and well defined APIs form a key requirement for collaboration and innovations.”
· Dealing with existing IT set up – IT strategy and business strategy are being seen as inseparable, especially with digital transformation coming to the fore. IT is being linked to business value.
This inevitably makes one think – how can airlines gear up for transformation?
One can’t discount airlines’ existing infrastructure that is already in place. Re-developing these old systems would cost a lot of money. There are already specialists that offer modern PSS systems, some already fully NDC compliant as they say. “But if you are running one of the old legacy PSS systems it’s indeed the right way to make sure that you gain the desired customer-centricity by implementing the necessary systems around or on top of your current IT landscape. There are already cloud-based solutions available that provide you with an offer- and order management including detailed rules engines. In the back they’ll connect to your internal IT (e.g. legacy PSS system, CRM, pricing engine, etc.) to get input for the offers they generate. This is also the way how the IT landscape would look like in an NDC world,” shared PROLOGIS’ Matthias Hansen.
IT needs to showcase its proficiency and power change. The digitization trends are social, mobile, cloud, big data and the Internet of Things.
In a recent blog post, referring to hybrid infrastructure, Hewlett Packard Enterprise highlighted that big data can also be used to improve the existing infrastructure. The role of big data in itself is to pave way for simplicity irrespective of the situation. “… and hybrid infrastructure is nothing if not complex, particularly when it's built atop virtual servers, storage, and networking architectures, and then populated with numerous mobile, sync/sharing, and data productivity apps.” The same post did acknowledge that optimizing hybrid infrastructure is an intricate part of transforming legacy infrastructure into a modern, abstract data environment. Yet the entire ecosystem “must be funneled through an intuitive albeit comprehensive user interface that allows knowledge workers to define their own data and infrastructure requirements (within limits, of course).”
· Being data-driven - To keep up with the pace of personalization and omni-channel retailing airlines will have to implement a system that can link all the data that is being gathered together to enable intelligent offer management capabilities based on the identification of customers and their preferences.
Airlines need to focus on how business functions create and use data in the context of day-to-day operations. For instance, how can e-commerce work on a use case for site traffic and conversion optimization? It could be about understanding my intent from the source I land up on an airline website or say I search on Google and then open an airline mobile app. “A lean experimentation approach would be beneficial initially. Firstly do enough homework to identify some of the low hanging fruits (short-term goals). Digital marketing and operation teams are key contributors at this stage. Identify and outline what you want to know from the data and to do what? Now identify the data sources needed to answer your queries and start aggregating / massaging the data sets,” said Byrne. “The point is that you might not initially require the Big Data storage and technologies. Try out small first and then hire a specialised vendor/ partner, when you are ready to go big. It’s a specialised area with high costs associated to it. A strong collaboration is needed between strategy, marketing, operations, analytics and IT teams for this to be successful.”
As for personalisation, there are still challenges that organization face when it comes to data: How to integrate different technologies involved in this industry’s value chain, so that they all work together for the same purpose. “It’s easy for one of the links (technologies) of the chain to fail. Although it is a challenge even for our direct channels, indirect channels are the biggest challenge for data collection, customer recognition and the effective use of the information,” shared Maria Cardenal, head of product development at Vueling Airlines, in a recent interview with us. She also referred to the high cost of implementing personalization, and customer acceptance i. e how much you can personalize before annoying customers.
Hear from experts about how to go about prioritising data and IT infrastructure for retailing at the upcoming 3rd Mega Event Asia-Pacific, scheduled to take place in Kuala Lumpur (23-24 August, 2016)
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