How a cloud-native PSS drives scalability, business agility, and cost-efficiency
Airline business leaders have traditionally had a limited choice of suppliers when choosing their PSS platform. In a product-centric world that was focused on indirect distribution, little emphasis was placed on customer-centricity. Instead, the spotlight shone on high-volume transactions management on what were mainframe-based platforms.
With the evolution of the industry towards more direct relationships between airlines and their customers, new platforms emerged that no longer utilize mainframe technologies, enabling new capabilities that were previously unavailable. Customer and business data, coupled with flexible technology, are now the cornerstones of the retail transformation taking place across the industry. In addition to having the right infrastructure to create, personalize, deploy, and service a broader product catalogue of air and non-air offers, it´s also worth taking a fresh look at the KPIs that have been the bedrock of the industry for decades.
In the legacy world, the Look-to-Book ratio remains the primary KPI to safeguard a system, and an expression of how efficiently a system is operating. It monitors the number of transactions that are required to complete a booking, the typical commercial driver in the airline and IT supplier relationship. Consequently, the more looks required to complete a booking, the more inefficient the system and the more resources are needed to support the airline.
While Look-to-Book still indicates how efficiently an airline sells its product, it has become almost meaningless in a world of direct supplier-customer relationships, where the airline pushes its products primarily via its own web-based channels and APIs. Beyond seasonality and one-off events that can lead to surges in demand, packaging and personalizing a broader array of air and non-air components opens new technical dynamics. Newer metrics, like average shopping cart value, that go hand in hand with a shift to more proactive retailing ultimately also require more transaction capabilities.
To avoid over provisioning infrastructure, it is commercially and technically critical that modern platforms are cloud-native and utilize the benefits provided by the cloud. Beyond the checklist of what a piece of software can actually do, it´s often the "how" that unlocks the overall platforms multiplier effects.
Ten ways a cloud-native PSS delivers new capabilities in an increasingly disintermediated landscape
In the relentless drive to achieve competitive advantage, cloud vendors are continuously experimenting with new features, equipment, services, and platform designs. This competition benefits end-users because it unlocks new, innovative, and ever-evolving capabilities for business applications.
2. Artificial Intelligence and automation
The infrastructural benefits of cloud native technology make it easier to integrate AI and leverage its full capabilities. Advanced and cheaper data processing enables the system to deliver intelligent capabilities, like AI-based personalization. Cloud vendors typically provide a library of existing AI/ML tools, including algorithms, that can be integrated into a modern PSS platform. They also support an airline wanting to use their own AI/ML components. Using open standards and off-the-shelf capabilities, which are cheaper and faster to deploy, means that airlines can move toward experimentation and a fail-fast approach, something that the best retailers in eCommerce live and breathe.
3. Speed to market
Operating in the cloud allows organizations to quickly deploy multiple testing environments with off-the-shelf tools that can be spun up or down almost instantly. This allows airlines to be more agile in how they experiment with new products, services, and capabilities and track and learn from market responses. The ability to quickly launch new offers to market gives airlines valuable lead time to decide whether to embark in full scale deployments.
4. Massive interoperability gains
An API-first approach fully embraces the philosophy of cloud-native technologies and is fully in line with delivering on the industry vision of enhanced airline retailing and personalization. NDC, Offer Management, and One Order, some of IATA´s most significant recent initiatives, only truly come to life in a cloud deployment. Open API access and its corresponding management are totally controllable by an airline and can be accessed in seconds. Furthermore, it enables faster partner integration and the efficient management of an API ecosystem that complement existing functional capabilities and amplify distribution reach.
5. Cloud-native design
Adopting a cloud strategy is an opportunity for businesses to revisit their underlying operations. In that process there´s an important distinction between how cloud-native versus cloud-migrated applications can support business objectives. While shifting monolithic applications to the cloud can improve their performance, they fall short of leveraging the cloud´s full range of capabilities. Designed from the ground up using the latest architectures and methodologies, cloud-native applications are more flexible to configure, upgrade, and integrate with other systems, unlocking innovative features, faster.
6. Flexible scaling
Demand fluctuates over time, translating into transactions per second and the processing power required to process them. Cloud technology allows companies to scale infrastructure within seconds, flexibly, to peaks and troughs in demand resulting in lower processing costs and greater business agility. Self-servicing systems enable airlines to automatically determine when and how much extra capacity should be allowed to spool up or down. The cloud also delivers endless capacity to support airlines of all sizes, from a small 100,000 PB regional airline to massive players of 100m+ PBs.
The inherent flexibility of cloud platforms grants businesses more freedom to decide how much resiliency and Disaster Recovery capabilities they choose to deploy across their most critical commercial platforms. Multiple availability zones, hardened by multiple availability regions, can provide redundancy and reduce network latency, resulting in improved business resilience, faster disaster recovery, and improved business continuity. They also enable flexible organizational designs and better user experiences by ensuring core systems are accessible and closest to where they should be – customers and defined users.
8. SaaS delivery model
Airlines may argue that PSSs have always been deployed using a SaaS model. However, the underlying infrastructure was traditionally based on bespoke deployments. True SaaS delivery models, that utilize cloud-based infrastructures, are faster to deploy and more efficient to manage, delivering speed and flexibility to airlines compared to bespoke installations. They also ensure that users are always operating from the most recent version of the software and benefit from community enhancements.
9. Remote implementation
Cloud-native software has an additional advantage that it can be accessed from anywhere, meaning that its implementation can often be done remotely. This is an important consideration as it drastically reduces the costs and timeline associated to large-scale implementation teams often observed in traditional PSS deployments that must be performed on-site.
10. Lower total cost of ownership
Finally, cloud native systems that encompass the above benefits cumulatively result in a lower cost of ownership, while at the same time aligning the spend with the commercial benefits delivered to an airline. And this is a key driver to more and more companies moving their technology stack into the cloud. By simplifying systems development, deployment, integration, and maintenance, IT departments can spend more time focusing on value added services for their business partners. This essentially unlocks even more value and capabilities for the business while also reducing costs.
Moving towards a modern PSS and airline organization
Cloud-native technology inevitably unlocks new capabilities and business benefits. But simply migrating existing applications from on-premises servers to the cloud is a wasted opportunity. Adopting a cloud strategy is a golden opportunity to revisit an airline´s current processes, organization, and ways of working. After all, technology should support an airline´s business strategy, not determine it. Reducing costs, building resilience, and enabling greater agility through cloud infrastructures are important benefits, but the multiplier effect comes with a mindset shift across the business in tandem with a capability-rich platform, like iFly RES.