Digital Transformation

Digital Transformation

Over the next few weeks, I will be organising Travel Technology Initiative’s Autumn conference.  The title of the event is Digital Transformation.  This has got me thinking about what does Digital Transformation really mean and are there any travel industry players undergoing a digital transformation?

To understand what Digital Transformation might mean, you can turn to Wikpedia, which says it “refers to the changes associated with the application of digital technology in all aspects of human society.  Digital transformation may be thought as the third stage of embracing digital technologies; the first two being digital competence and digital literacy. Digital transformation means that digital usages inherently enable new types of innovation and creativity in a particular domain, rather than simply enhance and support the traditional methods.”

So it is not enough to simply understand and apply digital technologies to your existing business processes.  Transformation is about wholesale change to the basic components of a business: from its operating model to its infrastructure.  A transformation programme would touch every function of a business; from purchasing, finance, human resource, through to operations, sales and marketing.

There are three key drivers of digital transformation: changing consumer demand, changing technology and changing competition.  These three are not isolated from each other but go hand in hand.  Changing technology affects consumer demand which is then addressed by new competitors entering the market.  An obvious example is Uber, whose business model absolutely depends on the current technology of GPS-enabled smartphones.  This has allowed it to compete ultra-effectively in the taxi market.  Going back to the early days of the Internet, we had businesses such as easyJet that its founder, Stelios, described as an ‘Internet Airline’, only made possible by his faith that the internet would take off and so drastically cut distribution costs compared to other airlines.  In the accommodation sector, businesses such as HotelTonight have taken advantage of consumers who are constantly connected to provide a market for their ultra-last-minute booking services.

Of course, the example businesses I have mentioned were start-ups, able to build their operations unencumbered by legacy business models.  They did not need to go through any painful process of digital transformation but were able to take a blue sky approach to building their new digitally enabled businesses.

There are many existing travel businesses that have become digitally competent.  They have great mobile apps, sophisticated websites and are embracing personalisation driven by big data analytics.  They are doing a good job at embracing the digital age.

So two questions come to mind: can existing businesses actually transform organisationally to be as digitally adept as their new entrant competitors?  If not, does it matter?  What do you think?

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Paul Richer is Senior Partner of Genesys, a management consultancy specialising in providing advice on technology for the travel, tourism and hospitality industries. Genesys has built a worldwide reputation for its knowledge and experience of new system procurement, online technology and strategies including website audits and online booking systems, reviewing and formulating companies’ IT strategies and more. Clients include many of the best known names in travel. Paul has co-authored several reports examining the impact of technology on the distribution of travel, including “Distribution Technology in the Travel Industry” originally published by Financial Times Retail and “Marketing Destinations Online – Strategies for the Information Age” published by the World Tourism Organisation. He has presented at and chaired many online travel conferences, is regularly quoted in the press and has also been invited to make several appearances on television to debate the subject. Prior to founding Genesys in 1994, Paul was Business Development Director of Finite Group plc and Head of the Group’s IT strategy consultancy. He holds an MBA from Cranfield School of Management, is a Fellow of the Institute of Travel & Tourism and Member of the Chartered Institute of Marketing. More information at http://www.genesys.net/

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