To gain insight into the specific challenges faced by the travel and hospitality industry, it’s worth speaking to Gary Edwards, the group CIO of travel agent Thomas Cook.
Edwards faces the daunting challenge of updating the IT infrastructure of a company that’s been around for 170 years, and for an organisation with annual revenues approaching £9bn, 31,000 staff, 1200 IT suppliers and 32 different datacentres, it promises to be quite a task.
Like many consumer-facing, service-led organisations, Thomas Cook has had to adapt quickly to a world where new, more nimble entrants have burst onto the scene. The result has been rapid expansion through M&A activity mixed with a liberal dose of experimentation.
But now it’s time to consolidate, and Edwards joined the organisation two years ago to do just that. “We recognise this is the right time to invest in the group IT strategy to enable the next wave of business transformation,” he says.
Travel and tourism is a traditionally low-margin industry, meaning large-scale investment in support functions such as IT are less common than in other more IT-reliant sectors such as financial services. Instead, according to Edwards, Thomas Cook and its like, must sweat their assets in order to extract every pound of value from every pound of investment made.
Edwards is focusing his transformation efforts around four key strategic themes. The first is to simplify the group’s application usage, and Edwards says he can halve the 1000-plus sales, middle-and back-office applications. The second focus is on the technology infrastructure itself, including the consolidation of the group’s 32 datacentres into something more manageable. A third focus is on improving operational excellence – developing IT balanced scorecards, improving tools and people development. A final focus is supplier consolidation. “We’ve got more than 1200 IT suppliers across the group, and our supplier optimisation introduces a sourcing strategy that will ensure we look at what we have in-house and what we are capable of outsourcing, whether on/near or off-shore,” says Edwards. “It’s not just as simple as slicing off a third of them and saying, ‘Hooray, we’ve saved some money’ – it’s a lot deeper and broader than that.”
Although Edwards concedes that his role is currently an 80:20 mix of cost control and systems uptime against developing innovative new solutions, he is clearly a firm believer in the power of new thinking. Edwards believes that the immediate challenge is to apply retail-type customisation and CRM to the sector.
“Innovation is an area where we can get deeper and richer around CRM,” he says. “The people who work in our stores know their customers but it’s different when you’re in a contact centre or online. We need to ensure we have a more personalised relationship.”
It’s the type of common-sense approach that will allow established high-street travel agents like Thomas Cook and TUI to continue to compete with online rivals like Lastminute.com and Expedia, who have lower overheads.
But that’s not to say that Edwards – and by extension the traditional bricks and mortar travel companies – shouldn’t look to innovate in slightly more creative ways. He provides a tantalising glimpse into how Thomas Cook might take advantage of technology in the future. For him, content is a key part of the equation.
“I believe that content will be king,” he says. “For example, virtual tours of the beach, hotel or excursions will be very powerful in the sales proposition. In store, why not play videos? Using content and being more personal with the customer is where firms can differentiate themselves.”
Between ash clouds and recession, Thomas Cook has experienced its fair share of ups and downs, and three profit warnings and a share price in freefall saw Thomas Cook CEO Manny Fontenla-Novoa fall on his sword in early August.
Edwards clearly sees an opportunity to make a significant and lasting impact on a company built on fundamentally sound principles. While there has been debate about whether travel companies need a high-street presence, Edwards is busy thinking about how those assets can be better utilised. As analysts compare the broken agency model against the growth of independents, Edwards is focused on providing the infrastructure that can help cope with increasing the flexibility of what he calls an almost endless inventory of flights, hotels and excursions.