Taking the risk out of updating order management modernization
This has been a good year for commercial aviation. Finally, after three years I'm sure we're all very glad to put behind us, demand is up, passenger numbers are properly recovering — reaching 95.6% of their pre-COVID levels by September 2023  — and the industry is forecast to go back into profit .
What's not to love? Nothing, of course. This is all great news. And yet. As IATA noted in its forecast for 2023, our sector's total profits are expected to be US$4.7 billion, on revenues of almost US$1 trillion .
If the sector is to thrive in a market increasingly marked by shaky consumer confidence , rising inflation , rising fuel costs , ever more stringent emissions standards and a range of other risks and headwinds, then we need to find a way to reduce costs and increase profits.
Fortunately, we already know how to do this. By modernizing the core infrastructure on which the sector runs — updating and then replacing the tangle of platforms and systems that cluster around the PSS and GDS platforms with modern, flexible, intelligent, streamlined infrastructure.
The good news is, that there's way to do it without risk. You can start today, and very quickly realise tangible benefits.
The barriers to change
At this point, it's customary to rehearse the objections, or barriers, to change. The PSS and GDS platforms at the heart of airline operations often run on platforms developed as far back as the 70s. They cannot easily be adapted or upgraded.
Adding new functions to these means creating proprietary wrap-around systems that interface with the core in a way that's complex and customized. Over the course of decades — through incremental upgrades as well as acquisitions and mergers — many such workarounds have been added to the original, now aged, core systems.
The result is a highly complex patchwork. Making changes to such a system is, as the saying goes, like carrying out open-heart surgery on a patient who's not only still conscious but at his desk and doing his job. And his job is to ensure the safe arrival of millions of passengers and their baggage.
Plotting a safe course to a modernized operating model
Traditionally, this is seen as a massive disincentive to modernization. But it shouldn't be. The technology and methods exist today to overcome these challenges and to modernize offer management, order management, airline retailing and retail partnerships — and more.
With the right approach, the right technology and the right partner, it's possible to migrate operations to modern, flexible, modular and scalable systems, at your own pace, while mitigating and minimising risk to an acceptable level.
Here are the components of a best-practice migration strategy:
- Systems audit:carry out a complete systems audit, mapping all the workflows, dependencies and processes across your entire tech stack.
- Create a migration strategy: decide which functions you wish to migrate first and in what order others should follow. Then build a documented, modular migration strategy.
- Deploy and test: each new module will be deployed, and run, in parallel with the system it's replacing. Only after extensive testing and optimization will the new take over from the old.
During the 'deploy and test' phase, your engineers will work closely with your technology partner. With access to market-leading developers, systems engineers and other professionals, it's possible to stress test every aspect of each module, while it's still running in parallel with your existing systems.
Only when you're satisfied with the progress will your partner, in a highly controlled and planned process, bring each new module online. And only when you're ready, and happy with the stability of the new technology, will the process move on to the upgrade of the next module within the system.
When virtue isn't its own reward
By upgrading their offer and order management platforms, along with other core systems, airlines increase flexibility, cut running costs and reduce complexity. They can also add features and capabilities such as continuous, personalized and dynamic pricing, improved simplicity, and a better customer experience.
Modernizing their tech stack gives airlines the ability to achieve almost instant results. Even during the parallel running phase, they can take advantage of modern capabilities to collect a greater range of real-time customer data, helping them switch to data-driven marketing and product models faster.
New technologies also allow airlines to add new features almost instantly. Even while leaving core functions with legacy systems, during the 'test and optimize' phase, you can draw on the added capabilities of the new modules.
And as you retire legacy systems, costs start to drop, allowing profits to rise. In a recent survey, IATA found that modernising distribution increased revenue per passenger by around US$1.7 . Across the industry, that amounts to almost an extra US$5 billion a year revenue .
The time for airlines to upgrade is now. The need to cut costs, increase revenue and boost profits, is clear and pressing. And we have the tools, the technology and the know-how to take the risk out of the process and yield rapid results. There's no reason to delay and every reason not to.