TIR: IT investment powers switch from automation to innovation

Travolution Innovation Report 2011The predicted growth in IT spend this year by the first Travolution Innovation Report has underscored the importance of technology to the travel sector, but how much does it tell us about actual innovation in the industry?

Increased IT expenditure is probably necessary but not sufficient to demonstrate innovation. It can also point to further moves toward greater automation of processes driven by the need to cut costs.

During February, Travolution conducted an online survey of 400 key decision makers and senior executives in the industry to gauge opinions and attitudes towards innovation. Asked to rate the level of innovation in the travel industry, opinion was fairly divided, although only a third said they thought it was “significantly” or “somewhat” ahead of other sectors.

Respondents were also asked to rank a selection of nine retail sectors, all of which have a significant online presence, in order of how advanced technologically they are perceived to be.
Travel fared well, coming, on aggregate, fourth behind media, music and financial services and ahead of motoring, clothing/fashion and groceries.

Within the industry online travel agents, airlines and metasearch companies were considered to be the most innovative, while retail travel agents, car-hire companies and tourist boards took the bottom three places.

Overall, nearly 60% of respondents said technology was becoming increasingly important to their organisation and nearly a third said it was already the most important factor. Ask any technology provider and they will tell you that training is a key component for any firm that is truly innovative as staff must be trained to get the best out of new systems.

Craig Dean, chief executive of Web Applications, said many firms approach his company looking to find ways to cut their salary bill, rather than using technology to drive up revenue.
“Automation is a good thing if it allows your staff to go off and be innovative. People are the driving force for innovation,” he said.

“You don’t put a new bit of technology in and then sit back and say we have been innovative. You put it in to allow people to be innovative. In travel there is this weird dichotomy; you have smaller companies who are naturally distrustful of technology and then you have companies who spend millions and millions on consultancy and get nothing delivered and that leads them to try to innovate without technology.”

Dean said the key to innovation is to welcome change and disruption and to make sure staff are fully trained and empowered to get the most out of any new technology. One telling statistic from sector skills body People First suggests the pendulum in travel tends to swing more towards automation than innovation.

The industry lags well behind the UK average for spend per head on training with just £200 spent compared to the UK average of £800. But is this picture changing? John McEwan, chairman of industry body Abta and chief executive of travel agency consortium Advantage certainly thinks so. “Historically, we have seen a lot of investment in IT around efficiency; speeding up booking processes, automating accounting and so on. That’s been the main driver,” he said.

“However, in recent years we have seen a switch to innovation. It doesn’t really matter if you’re a traditional travel agent or online, it’s all about getting your product to the customer.”

Dean said Web Applications spends around a quarter of its revenue each year on research and development and believes the potential for innovation in travel is huge. “In the travel sector every business is quite unique, there is no standard way of doing software,” he said.

“I can’t recall being in a sales meeting where someone hasn’t said ‘that’s the way everyone does it’, but the truth is that’s not true. One of the things I love about this industry is people come up with so many wild and wacky ways of doing the same thing, which creates an opportunity for bespoke software developers.”

McEwan said: “The travel industry is very diverse with 6,000 travel agents and 1,500 tour operators all of different shapes and sizes. The important thing that should drive your technology is what your customer proposition is, what’s the value that you as a company are trying to give to the customer?”

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