Technology

‘Decide exactly why you need tech before investing’

Posted by Ben Ireland on
‘Decide exactly why you need tech before investing’

An expert panel says it’s vital that companies clarify what they want new technology to do, before committing to ‘grandoise innovations’. Ben Ireland reports

Companies in the travel sector should evaluate how they use technology before they decide whether to invest in their own systems or off-the-shelf products from third-party suppliers.

A panel of experts discussing the findings of Travolution’s annual Innovation Report said it was critical for travel firms to identify what they want new technologies to do before committing to “grandiose” innovations.

The report found that travel companies’ IT spend rose 5% to £1.59 billion last year compared with 2016. Travel agents spent £593 million and operators £168 million, as the sector pumped more into technology than the UK average.

Steve Byrne, chief executive of Travel Counsellors, which provides support for 1,800 homeworkers from its Manchester HQ and turns over £600 million a year, said: “It sounds a bit grandiose, but we need to be clear about why we invest in technology. Do you want to introduce chatbots and artificial intelligence (AI) to drive down costs or improve the service? Once you are clear about that, you can use technology to enhance your business.”

He said it was difficult to compete with the budgets of tech giants such as Google and Expedia, so exploiting their innovations may prove “pragmatic”.

“If it’s core to your business, you want to be in control of the technology,” said Byrne. “But it would be self-defeating to say ‘now we’ve got our core product developed, we only develop in-house’. If outsourced solutions can improve the business quickly or cost-effectively, do that.”

Gareth Healy, partner at Inflexion, which owns Innovation Report sponsor Atcore and has invested in luxury operator Scott Dunn and online travel agency On the Beach, said: “Those that invest and stay ahead of the curve will keep accelerating and growing, but if you are not investing, it’s hard to keep up.”

He said On the Beach was a “good example” of a tech company in travel that should invest in its own systems.

Jon Pickles, The Travel Corporation’s global director for 360 engagement, said TTC has five reservations systems across 30 travel businesses, from river cruise to motor coach tours. All are “pretty legacy” with the “most-advanced” used for the Trafalgar, Insight and Contiki brands, he said.

Pickles said TTC is “always” looking at new solutions. “Off-shelf products help you get there without a major build,” he added.

TTC uses AI to send “hot leads” to call centres and agents with higher conversion averages, having added outsourced technology to its “stack”.

But Pickles said the “trade-off” was the integration of new products into legacy systems through APIs. “This always pulls you back,” he added. “We are trying to find creative ways to remove legacy systems.”

IBM’s Thierry Gnych, European lead for cognitive and industry solutions in travel, said: “Anyone can create a chatbot answering frequently‑asked questions and deflecting to the call centre. But without a business objective, AI will do little to help, in terms of customer satisfaction or customer growth.”

Byrne said a culture of innovation keeps firms ahead of the competition. “It’s in our DNA that we are never really happy,” he said. “We always want to do better; that constant sense of dissatisfaction means you’ve got to innovate. Businesses that had a really good position in the marketplace no longer exist because they got complacent.”

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