Make or buy travel technology?

Travel companies, be it an inbound or an outbound travel company when decided to invest in technology – their biggest dilemma is to weather to procure the travel technology solutions from a 3^rd party provider or to set up their own software development team and develop the software from scratch?

This question can be easily answered if travel companies answer the following questions:

Scale of Operations:

This is one of the most important deciding factors when it comes down to deciding whether you would like to develop the travel technology solutions in-house or want to outsource to 3^rd party technology vendors.  

If the scale of operations is small to medium and concentrated in one location only be it inbound or outbound doesn’t matter, a wise decision would be to implement the ready-made technology solutions available in the market. All you have to look for a technology company that can full fill 60%-70% of your requirements and has a reliable solution and post-sales support. Also, if you get the technology company that is flexible to customize the solution as per your needs would be the best option to go for.

In case your operations are huge and located in multi-country and also may have different accounting books to be managed with product localization is required from country to country, it’s a complex operation. Advisable would be to search for a big travel technology company that can serve you globally and is also flexible to customize the solution. As it’s hard to find a single company that will fulfill your need so you can start with a good technology company and parallelly start investing in your own technology development or purchasing the code from the IT company or acquiring the stakes in the company and then developing and customizing the solution.

As working with an existing technology company will speed up your learning curve and cut down the time to go to the market and will give you enough time to develop a custom solution as per your specific need.

For large travel companies – this should be the ideal approach and eventually setting up your own software division providing the solution for your own company.  

Complexity of the operations:

If the travel companies’ operations are complex in nature and it’s not the usual trade practice it’s advisable to develop your own solution if you have the cost-benefit advantage, else find a technology company that has some part of your business ready and also flexible to customize the solution. You need to change the strategy from Product Based to Project-Based.

Right People to head the Initiative:

As this is the major challenge most of the travel companies failed in the successful implementation of travel technology. Doesn’t matter if they hire a 3rd party vendor or develop the in-house technology company if they don’t have a person who understands travel and technology at the same time they may end up with the failed solution.

The best approach is to hire a travel technology consultant to start with, as this person understands the travel and technology both on the top of it he has a good understanding travel technology companies available in the market.

He can help evaluate and document the requirements and then choosing the right company or he can help to hire the technology people to get the solutions developed from scratch. He will work on the business process flow and can get the project manager and software developers to develop the solution for him.

Control of Information & Technology:

This is one of the important business requirements, as data is one of the important factors for the success of any business, and in case there is any leak of such crucial information may result in the failure of the business or losing to competition.

Ownership of the technology can be an important deciding factor as if you own the technology you would have better control of its development rather than working with 3^rd party technology.

Availability of required software vendor:

Sometimes the decision to develop the technology in-house could just because of the lack of good local technology companies or any technology company that can fulfill the requirements.

In case the company wants to work with the local technology provider and couldn’t find one and they have resources and time to develop the solution advisably would develop the solution in house hire a qualified travel technology consultant for support.

Reliability of the software vendor:  

This could be one of the scenarios wherein the travel company is not able to find the technology provider who has a reliable product and post-sales support. The chances of failure are high if travel company signs with such travel technology companies available in the market.

Even if these companies have solutions that fulfill the requirements of the travel company but the reliability factor is very low – based on market feedback or post due diligence done by the travel companies then don’t sign with such companies.

Probably look for the software provider from a different region or purchase the code and manage it inhouse.

Time to go to Market:

If travel companies have limited time to launch the technology solution, the best approach is to finalize a good or decent technology provider and start working with them. Developing a travel technology inhouse will require huge cost investment in resources and infrastructure and time for developing the solution, bug fixing and making it stable.

So, it’s never advisable to develop a travel technology solution in a hurry.

Flexibility:

As this is the major challenge faced with most of the travel technology companies good or bad, you will come across this challenge with most of the travel tech providers. They work on the product based model, they have their product ready if that suits your requirements well if not they are very adamant to make changes or most of the case if very hard for travel technology companies to make changes as now their solution have become a legacy which cannot be changed. For Example: Very basic, If you want to combine multiple services booked for the same customer into 1 booking card – it becomes impossible for some companies to do it as their solution architecture is written in such a way, they become legacy, hard to make changes.

In such scenarios winner will be the one who has a base product ready and flexible to make the desired changes to fit the tailor-made requirements of the clients. So mixing the best of both the world – Product-Based Approach & Tailor-made Solution development.

Cost/Benefit Analysis

This is the most important deciding factor for developing the technology in-house or outsourcing it to any 3^rd party vendor.

In-house, technology may cost much more than hiring a 3rd party travel technology solutions provider as there is a huge cost for resources and infrastructure involved to develop the software plus the cost of time and also the risk of failure of the developed product as well.

But you have to attach a monetary value to cost as well as the benefits that you will get post the deployment of inhouse or 3^rd party software.

In House, developments are usually beneficial for large travel companies or modern travel companies whose business is majorly dependent on technology like OTA’s – Online Travel Agencies.

Pros of hiring a 3^rd party technology company:

• Stable Solutions
• Less Go to Market Time
• Cost Advantage
• Ready to deploy solution  
• Evolved Product  
• Optimized process

Cons of hiring 3^rd party solutions:

• Lack of personalization & Flexibility
• High dependency on the technology provider
• Low data security
• High cost for choosing the wrong technology provider
• Lack of control on technology
• Higher cost & Time for customization

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