Brad Boston, executive vice president of Product Development and Delivery for Sabre, the world's leading provider of information technology (IT) for the travel and transportation industries, says Sabre aims to partner with its customers in developing technology that moves the customers forward (at a good price plan) and improves the customers' overall business. That objective is central to the focus of most outsourcers at the outset of this millennium.
Boston believes there is a significant economic trend that will affect outsourcing this year. "As the costs of PC and network technology continue to go down--or provide a lot more capacity for the same amount of money--it will have a big effect on the approach to desktop outsourcing and network services. I think we will see an acceleration of more companies doing managed network services, as opposed to billing out their own private networks like many have done over the years," he says.
An excellent opportunity lies in the delivery of high-quality desktop support services. "With outstanding responsiveness and reasonable price structures," he says, "they can corner the market. No one does it particularly well today, and it is something that almost every company is desperately in need of." He adds, though, that he has yet to see anyone seize the high ground in this space.
ASPs and Web Hosting
Boston agrees with analysts that web hosting and ASPs are the high growth area for development during the year 2000. However, he believes they will face a big challenge in knowing how to operate highly scalable computer systems and avoid outages. "Some of the people building the sites and/or operating them do not have a good grasp on some of the basic design or operation principles necessary to maintain a high-volume, high-transaction site," he explains. There is going to be an opportunity for someone who can do a really good job on the operations side and provide rock-solid outsourcing of companies' web sites as the transactions volume grows by leaps and bounds."
In the airline outsourcing industry, Boston sees a great deal of change for the year 2000.
A lot of upcoming technology work will be the result of a need for sophisticated systems integration between airlines within an alliance, Boston says. Airline alliances (loose confederations of independent airlines) are trying to provide seamless customer service to all of the different airlines' customers flying on any airline within their alliance. To do that, they must be able to share data about their customers, which resides in their different computer systems.
"If I am flying one leg on United, for example," he says, "and then connecting to a Lufthanza flight, I want to be able, through check-in, to be recognized by both United and Lufthanza for my premier status as being a top customer of Air Canada." The objective is for a seamless transition when customers go from one airline to another in the course of their itineraries. Boston says that Sabre and its competitors are currently investing in technology and application systems to accommodate the needs of airline alliances in the future.
On the International Scene
A tremendous opportunity exists internationally, Boston says, for outsourcing technology for airports and airport authorities worldwide. The privatization of day-to-day operations of airports has a tendency to cause airports to seek opportunities for revenue from their tenants (the airlines). "We see the airport authorities looking to technology as a way to generate revenue," he says. "Once they make that decision, they look for a supplier to provide and operate that technology. So we think there are some opportunities there."
Changes to Satisfy Internet Shoppers
Part of the work of Sabre is to provide travel distribution to travel agencies and through the company's Internet spinout, Travelocity. Online reservations are an enormous business; thus the growing multitude of start-ups offering that service on the Net. Boston believes many of those .com companies will be consolidated because the big competitors (Travelocity, Expedia and Priceline) have a significant lead in the marketplace and considerably more resources to invest.
The capabilities of leading outsourcers are even more important. In the case of Sabre, it has the advantage of owning and operating the reservation system at the back end of the web site. "That is where the actual fares are stored, where the reservations are actually made, where the inventory and availability of flights and the schedules of flights are actually stored," he explains. "None of those .coms actually have any of that data and are dependent on someone else providing it."
More importantly, this means they cannot easily customize applications to meet the needs of Internet shoppers. For example, Travelocity launched a product called Best Fare Finder, which solves the difficult problems shoppers experience when searching for a published low fare. In order to deliver more functionality to customers, Boston says the outsourcer must be able to make changes to applications. It was not possible to develop Best Fare Finder, for example, without changing the reservations system that runs behind the web site.
Developing new products that allow one-to-one marketing to better mesh suppliers with buyers will be a growth area this year, Boston believes. Among other products, Sabre has developed "Sales Manager," which enables customization to the airlines' offering to customers. Based on point-of-sale information about the reservations shopper, the airlines using this tool could, for instance, offer bonus miles (or other incentives) to a particular customer to book a particular flight. "There is a lot more they can do to customize their offerings, based on a real-time knowledge of who the customer is and what the customer is looking for," comments Boston.
Improving a buyer's overall business so that it can satisfy its customers is the value offer that outsourcers will focus on in 2000, Boston believes; and a lot of new products will be developed this year.