Optimizing your airline's cloud strategy for maximum business value extraction
As airlines continue to adapt to cope with rapidly changing market conditions and business needs spurred by the pandemic, the need to accelerate digital transformation is clear. While the cloud is a key component of any technology program, a comprehensive strategy is pivotal to building a resilient and future-proof digital foundation. Yet, many airlines still struggle with their cloud journeys and are not maximizing full value extraction.The processing power and cost advantages of shifting from a physical server landscape to a cloud-based architecture are clear. But to fully leverage the cloud´s benefits, a broader mindset must be adopted. Let's explore some of the recurring limitations I come across.
1. A fixation on cost reduction
Too often, airline executives approach cloud initiatives with a single-minded focus on costs. While cost-efficiency is an undisputed benefit of cloud architectures, solely focusing on this aspect is limiting. Simply migrating or re-hosting existing – often legacy – applications to the cloud dilutes the many additional advantages the new landscape has to offer. A more strategic approach would unlock many other benefits for full value extraction. True digital transformation needs to look beyond cost-efficiency to reimagining an airline's technology landscape. Cloud-native, versus cloud-migrated, solutions offer more opportunities to leverage new capabilities that simplify processes, optimize customer experiences, reduce technical debt, and provide more business agility.
2. Keeping to in-house skillsets
A common mistake organizations make when embarking on cloud initiatives is relying too heavily on newly trained in-house skills. This approach doesn't adequately consider the full breadth of cloud offerings and their required competencies and skillsets. The cloud ecosystem is evolving fast, with providers regularly releasing new capabilities and features. As with any transformational change, you need the right team with the right expertise to fully extract value from your cloud strategy. This is where technology partners that live and breathe digital transformation every day can bring advanced knowledge to your cloud journey.
3. Overlooking organizational change
Moving to the cloud isn't just a technology decision; the shift has a real business impact. Cloud-native applications offer many features that accelerate value delivery for businesses and their customers. Flexible platforms facilitate the agile launch of new business initiatives, products, services, and campaigns that can be quickly adapted to market responses. Both business and technology teams need to align objectives and embrace a new operational paradigm. Technology investments only truly deliver their full business potential when organizations are structured around common goals.
4. Conditioned by a legacy landscape
Airline ecosystems remain inherently complex, often due to the legacy systems and processes that underpin them. Airlines interface with multiple partners, vendors, and intermediaries to run their operations and service their customers across multiple touchpoints. Stacked monolithic systems across the industry remain a challenge as they are difficult to modernize. Changes to one system often have a domino-effect on others, requiring multiple interface updates for continued interconnectivity and performance. Their outdated nature translates into a shortage of skillsets that further increase customization and upgrade costs. All in all, these legacy systems and processes require a lot of heavy lifting as they don´t support modern tools and continuous development methodologies, limiting speed to market. Yet again, we need to reset and take a holistic perspective beyond these legacy systems, processes, and historical work methods to achieve the full potential benefits of a cloud strategy.
The road to digital nirvana
While an airline might be committed to digital transformation, the partners and suppliers in its complex ecosystem are often the Achilles heel to the pace of change. Addressing this challenge is key to deriving value from the cloud. A strategic approach needs to break down digital transformation into smaller logical components and analyze the real business and process benefits of a cloud-migration versus cloud-native strategy. It doesn´t have to be executed in one go, and fear of change should not translate into transformational paralysis. A phased transformation using various methodologies, such as lift and shift, is often the most recommended path forward. But what is clear is that the technological benefits of this journey are as important its business objectives.
Paul Pavlides is the VP and Head of Consulting and Digital Transformation for EMEA at IBS Software. He actively works with some of the biggest airlines, online travel agents, and cargo carriers on their digital transformation initiatives. Paul is passionate about leveraging technology as a business enabler, regularly advising IBS Software customers on how to drive business growth and enhance customer experiences through digital transformation. Paul holds a Bachelor of Technology Management degree from the Durban University of Technology and is based out of Eindhoven, The Netherlands.