Evolution of the cloud journey in the world of travel
It is next to impossible to have any technology-related discussion in today’s world without a direct or indirect reference to the cloud. However, the adoption journey in some industries such as travel has not been as rapid as in some other industries like Finance, Entertainment, Retail, or Manufacturing, just to name a few. In this post, I will shed some light on:
- The challenges faced by companies in the travel industry in their cloud journey.
- The elimination of the barriers to entry.
- The exciting new AWS services and methodologies that are making migration to the cloud easy for any travel company. It is important not just to take advantage of cost and performance efficiencies associated with cloud computing, but also to tap into the services that breed innovation, resulting in optimal travel business outcomes.
Early adopter challenges
When the cloud first started gaining traction as an IT operating model for customers, the travel industry was not exactly an enthusiastic early adopter. There were multiple concerns that contributed to this lethargy, which was also fueled by a healthy dose of skepticism. Some of them were:
- Data Security Concerns: Travel companies store large volumes of highly confidential data including customer profiles, their historical and future travel plans, credit card information.etc. These companies are mandated to secure this information and the prospect of storing this information on the cloud with potential access to it by third-party cloud providers made them nervous.
- Legacy IT Landscape – There was considerable doubt about the value and feasibility that a cloud adoption strategy would yield given the IT landscape in the travel industry, which involved extensive use of mainframe systems that were extremely reliable with the capability to robustly process large volumes of data. This IT ecosystem also tended to be self-contained for the most part and did not easily lend itself to the kind of open system framework more compatible with cloud technologies.
- Limited Business Value: In the early days of the cloud, cost reduction was the primary and often the sole motivation for companies to consider migration to the cloud. In the eyes of many travel companies, this pertained to a cloud strategy that revolved mainly around lift and shift capabilities. Benefits in terms of business outcomes were not expected as part of cloud adoption and this resulted in indifference from business stakeholders when it came to considering migration to the cloud.
The tide turns
However, as awareness in the travel industry increased about the capabilities of the cloud combined with adoption of newer technologies by travel IT departments, there was a realization that the cloud indeed held some inherent promise. Some of the key factors that helped alleviate these concerns included:
Emphasis on security
Cloud vendors understood security concerns of customers and placed the utmost emphasis on ensuring the cloud environment was completely secure (needless to say, AWS takes security seriously – after all, our mantra is security is job 0).
Evolution of the partner ecosystem
Historical concerns revolving around data transfer of huge volumes and systems integrations required as part of cloud migration also evaporated with the proliferation of an extensive partner network proficient in these activities. In fact, AWS has an extensive partner network to meet the data and integration requirements of any travel entity.
Cloud computing model
Moreover, the realization dawned that the Cloud Computing Model by its very nature was well suited for the travel industry. Passenger demands and by association computing power tends to be seasonal thus allowing companies to realize significant cost savings by using the cloud’s elasticity to pay for resources on a seasonal basis as required.
However even as the IT departments at travel providers started embracing the cloud, the business teams were generally agnostic about the choice of cloud provider. As long as the desired business objectives were being fulfilled, business stakeholders had no preference for a vendor regardless of how technologically advanced the offerings were.
The game changer
In the past, premium cloud providers were constantly making significant investments to improve compute, database, storage, performance, and security features among others and passed those cost savings to customers. But what really started moving the dial (slowly at first, but gathering momentum more recently), are the services and workloads that specifically target business outcomes through innovation. For the first time, in addition to IT, the business stakeholders are starting to realize the potential of moving to the cloud. One of the most frequently asked questions by organizations choosing their cloud provider is ‘How well do they know my line of business?’ At AWS, we hear this question loud and clear and are responding by having a laser sharp focus on industry-specific workloads to add value to our travel customers.
There are a number of areas in which the cloud can provide business advantages. The areas that have seen the most traction, and hold tremendous potential for the immediate term, involve:
- Enhancing the customer travel experience – including the use of AI/ML services to provide personalized recommendations.
- Linking various customer touchpoints to provide a connected traveler experience, and the use of chatbots, etc.
- Driving operational efficiencies to cut costs and increase utilization of assets, including aircraft turnaround time using video analytics at airports and advanced analytics for predictive maintenance.
- Enabling airlines to perform optimal merchandising by offering value-based targeted ancillary services to customers by leveraging AI/ML.
Data is the “oil” of today and the ability of cloud-based services to not just manage, but also analyze huge volumes of travel data in real-time to gain critical business insight to passenger behavior can provide huge benefits. AWS also has considerable experience with building data lakes both at a domain or an enterprise level that can then be leveraged by comprehensive business intelligence solutions.
Additionally, cloud services can be creatively leveraged in the marketing and planning domain to enhance existing solutions in areas such as revenue management, baggage management, scheduling, and loyalty. In fact, AWS has developed several reference architectures designed to address challenges facing the travel industry. We are also looking for potential opportunities to deploy workloads that have been successfully deployed in other industries (e.g.: Amazon Forecast, Amazon Personalize, etc.) and use that synergy to tailor those offerings to the travel vertical.
Back to the future
To summarize, the travel industry has progressed a long way since being reluctant early adopters. The explosion of internet-based travel search and the use of mobile phones to shop for itineraries has drastically transformed the travel landscape. And cloud computing gives companies the necessary tools to be able to not just handle the huge volumes of data in an efficient and secure manner, but also analyze the data in real-time to address the business challenges faced by the travel industry.
Margins continue to shrink in the travel industry, with airlines typically operating at 1-2% profitability. Leveraging innovation to drive business outcomes is no longer optional, but mandatory if a company wants to be profitable. This includes getting closer to the customer, reducing costs through optimized operations, and enabling additional revenue streams through intelligent merchandising.
I feel that as cloud computing starts to focus more on travel specific workloads and comes up with migration strategies that take a holistic view in terms of enhancing business outcomes along with optimizing technology capabilities, the benefits awaiting those travel companies that seek to take advantage of this approach cannot be underestimated.
At AWS, we use an operating model that defines how business and IT can align to reach strategic business objectives. AWS has a team of experts specifically for the travel industry and can provide the type of results travel companies desire. Learn more at aws.com/travel.
Please feel free to comment below. I would love to hear your thoughts on your company’s journey to the cloud and any business challenges that you think can be addressed by the cloud.