December 4, 2015

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Business Consolidation in Travel & Logistics – Simple yet Challenging

In today’s dynamic and disruptive business environment, it is extremely crucial to have a consolidated IT environment that enables the business by offering a single source of truth. I know what I am saying here, even though radical, is really not “discovery”. One would probably say that that is what we have been doing since ages. I agree! However, the external complexities and challenges have grown manifold. We have overcomplicated our lives and correspondingly, our support systems.

In most cases related to Travel, Transport and Logistics organizations, there is a need for a base minimum solution that amalgamates the common elements. Once built (read bought as COTS or constructed from scratch), this engine should be treated as a constant and ideally not be touched thereafter, though could undergo minimal changes, if and only if required. Any component that requires frequent changes should necessarily sit outside the core engine and be treated as an enabler gear. This mechanism not only allows a smooth and simple functioning of the individual constituents, but also provides a smooth and definite upgrade path for each, thereby ensuring strong user adoption and investment leverage and therefore a higher ROI.

In the case of the Logistics vertical, experience tells us that this nucleus delivers to the wants of the business best when built from scratch. The emulation of transporting goods from multiple sources to multiple destinations in a complex end-customer supply and demand chain IT environment is the bane of several IT Operations Managers. Several organizations have tried implementing readymade solutions and I am not sure how many have been successful. There may be a few though who have seen the light at the end of the tunnel. I use the word ‘may’ because I am yet to come across one. Most seem to have written off millions of Euros and Dollars! On the contrary, I know there is at least one that has successfully built a Global Operating Platform with the objective to drive nx growth.

Travel is a very interesting vertical. It is extremely cyclic in nature, with peaks and troughs. The excitement increases further with the fact that the peaks can be predicted but the trenches can be encountered any time. Travel businesses therefore need to be extremely agile, more so given the extremely responsive nature of their business and their close proximity to end-consumers. Therefore, organizations that are long-established need to be almost “reborn” digital. Whilst the IT enablement in this domain is driven primarily by a lot of COTS solutions, the need to ensure tight and seamless integration between the various elements is of paramount importance. Having said the above, the concept of a consolidated environment nevertheless merits a substantial position. There are common KPI’s, business processes, events, business rules, services, regulations, inventories, data elements, etc. that can, in a conjoint manner, deliver huge business benefits. I agree though that this is much easier said than done. The critical success factor is the process consolidation at the business level before IT can lay its hands on the functional design. The next step is to design the final Target Operating Model (i.e. ask the last question first) and work backwards to develop the core engine and the associated elements.

To summarize, the Travel, Transport and Logistics world can reap significant benefits from adopting a unified IT operating model. This is not an overnight transformation, but really a journey. The end of the journey is the beginning of a new unmatched experience (for employees and customers). This experience shall in turn define the course of the organization in the long run.