Offshoring Helps Travel Outsourcer Develop Better Consumer Services and Remain Competitive | Article
Almost every industry has to deal with the issue of legacy software. Do you keep it or replace it?
That question is a big one in the travel industry. Transaction Processing Facility (TPF) is the open-source or legacy platform, which has been in existence since the 1950s. TPF supports Sabre and most of today’s banking transactional software.
But over the years, those intimately familiar with TPF have retired or are about to. So the number of programmers who understand the vagaries of the platform is shrinking. “I wrote my first line of TPF code in 1981,” says Jim Nelson, Director of Enterprise Technology Solutions for Worldspan, an outsourcer providing eCommerce and Internet products to travel agencies and travel services providers. “And it was 30 years old when I was introduced to it.”
Worldspan realized in 2003 it needed to augment its highly compensated TPF professionals with skilled resources through a sourcing arrangement that provides staffing flexibility and lower costs. So the outsourcer decided to outsource some of its applications, development, and maintenance (ADM) to India-based InterGlobe Technologies (IGT).
Offshoring’s impact to the firm’s bottom line and the quality of its deliverables is significantly better, according to Nelson. Using its internal productivity metric of “billable hours produced,” the combined output of the in-house staff and Worldspan’s outsourcing partners has improved by more than seven percent in the last year with a corresponding cost saving of nearly 25 percent.
Nelsen says he went offshore for IT help for three reasons: staffing flexibility, ease of integrating competencies when developing new products, and access to a skilled, lower-cost labor force.
The Outsourcer Who Outsources: Typical For the Travel Industry
Outsourcing relationships are more the rule than the exception in the travel business, according to Forrester Senior Travel Analyst Henry Harteveldt. “There is no question that the travel game is a lot harder, which explains why outsourcing in general, including offshoring, is a valuable business-technology strategy when it comes to offering products the market wants.”
Worldspan, which competes against the likes of Sabre/EDS, Amadeus, and Galileo, now has relationships with three multinational sourcing providers that are developing services on three continents in the areas of application development and maintenance, production support, quality control, project office, and order entry. Worldspan is developing products with the assistance of these providers on a variety of platforms that include legacy and Web-based distributed systems. Currently, its data services link approximately 800 travel suppliers around the world to a global customer base through several proprietary technology management services and remote hosted customized travel products.
“Best-practice organizations, regardless of industry, are establishing strong relationships with a few outsourcers,” says Julie Giera, IT Analyst at Forrester. “If the provider can bundle several of those services, all the better.”
More Than Just Cost Savings
This is the niche Michael Foliot, CEO of Delaware-based Travel Distribution Technology (TDT), envisioned when he began his representative firm a few years ago. “We started with an exclusive relationship with IGT based on my work with them when I was at Gallileo in the mid-90′s, and it’s grown from that.”
Foliot adds cost and domain knowledge are the keys for travel companies to remain competitive. “In this global economy, outsourcing is the only way to attain and maintain those two characteristics. Since we’re in a consumer-driven service industry, cost remains important, but we have to offer better, faster as well as cheaper, which is why providing outsourced domain knowledge to the companies we serve is now as equal a driver as cost,” Foliot concludes.
Worldspan’s Nelson couldn’t agree more. “The importance of domain knowledge cannot be overstated. In the case of outsourcing TPF, finding someone with three years of C++ experience and TPF is easy. But the sub-group that also understands regulations and complexities of the travel business isn’t nearly as large. This is why providers that have the right domain knowledge appeal to us. It’s a ‘warhorse,’ which underscores the value of TPF developmental projects.”
TPF-based services make up approximately 65 percent of Worldspan’s offerings. TPF’s main advantage is it’s less vulnerable to intrusion attacks than other platforms, according to Mary Jo Becker, TDT’s CIO. “In my many years in IT at major global distribution service providers, I can’t recall a virus breach in the TPF environment.” She adds that the proprietary nature of TPF’s data structures and operating system combine to make it fairly unattractive to hackers and malware developers.
Nelson sees her point. “The platform isn’t as dynamic as later platforms,” he says. “But it’s very effective in doing what it does. And as technology applications are further developed TPF is catching up.
Lessons from the Outsourcing Journal:
- With proprietary IT programs like TPF, the pool of competent professionals who also have travel industry backgrounds is shrinking. Outsourcing to these “on-demand” professionals is becoming the rule rather than the exception.
- The outsourcing “supply chain” in the travel information and technology sector often begins with offshore program developers, then goes through the onshore travel service providers, which offer end-user (consumer) access.
- In the travel industry, where “better, faster, cheaper” to the consumer is the foundation for success, outsourcing offers sophisticated domain knowledge at a significantly lower cost.