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© 2012 IBM Corporation Tourism Cloud – Enabled Business Model Innovation Jen-Yao Chung IBM T. J. Watson Research Center
© 2012 IBM Corporation 2 Agenda Introduction and Industry Trend Tourism Ecosystem What is Cloud, Why Cloud – Rethink IT / Reinvent Business Enterprise Cloud Approach Cloud Adoption Patterns - Business Cloud Services Innovative Business Model for Cloud Summary
© 2012 IBM Corporation 3 The World Wide Tourist Market WTTC’s latest Economic Impact Research shows that world Travel & Tourism continues to grow in spite of continuing economic challenges. –Despite progressive downgrades to growth forecasts through 2011, the industry grew by 3% over the course of the year (in terms of Travel & Tourism’s contribution to GDP). –Tourism’s direct contribution to GDP in 2011 was US$2 trillion and the industry generated 98 million jobs. –Taking account of its direct, indirect and induced impacts, Travel & Tourism’s total contribution in 2011 was US$6.3 trillion in GDP, 255 million jobs, US$743 billion in investment and US$1.2 trillion in exports. This contribution represented 9% of GDP, 1 in 12 jobs, 5% of investment and 5% of exports. –Growth forecasts for 2012, although lower than anticipated a year ago, are still positive at 2.8% in terms of the industry’s contribution to GDP. –Longer-term prospects are even more positive with annual growth forecast to be 4.2% over the ten years to 2022. Source: World Travel & Tourism Council (WTTC) http://www.wttc.org/research/economic-impact-research/
© 2012 IBM Corporation 4 Tourist Industry Trend Internet continues impact on tourism Strong efforts in standardization and interoperability Increasing importance of mobile devices and geographical information systems –Always on –Integrated circuits (RFID) enter tourism industry Market segmentation will become more sophisticated and specific –Individualization/personalization as an ongoing trend –Travel agents reinvent themselves for personalized service –Promote customer centricity –Personalize with precision –Demographic changes and consequences Elderly people is increasing rapidly Further decrease in the average number of persons per household –Extend the experience the experience doesn’t begin at departure or end upon completion (e.g. virtual experience) Sustainable tourism –Global catastrophes as facts of daily life
© 2012 IBM Corporation 5 Barriers to e-business adoption The small size of the company Costs of e-business technologies Complexity of e-business technologies Lacking compatibility of technologies Security risks and concerns about privacy issues Perceived unsolved legal issues The difficulty to find reliable IT suppliers.
© 2012 IBM Corporation 6 Agenda Introduction and Industry Trend Tourism Ecosystem What is Cloud, Why Cloud – Rethink IT / Reinvent Business Enterprise Cloud Approach Cloud Adoption Patterns - Business Cloud Services Innovative Business Model for Cloud Summary
© 2012 IBM Corporation 7 The Travel Ecosystem Providers Global Dist Systems Distributors Travelers AirHotelCarOther TraditionalOther TA/OTAOther
© 2012 IBM Corporation 8 Traveler “Push” Brick & Mortar Agencies Distribution Networks Travel Providers Shifting paradigms in travel distribution… Suppliers once controlled data and used this to their advantage, but as customers gained access to the same data they became adept at meeting their own needs The continued flood of information is too complex and is adding to customer dissatisfaction with travel distribution Traveler Multiple Intermediaries “Pull” Distribution Networks Travel Providers “Swarm” Traveler Intermediaries Travel Provider s On/offline Agencies Social Networks Media & Advertisin g Online Forums Evolution of travel distributions
© 2012 IBM Corporation 9 Hot Issues and Key Questions to Focus Hot issues in travel technology: –exponential transaction growth / look to book ratios –explosive distribution channel growth –single view of customer / systems integration –cloud computing –mobile –green compliance / sustainability strategy –social networking / social media –dynamic packaging –descriptive/rich visual content For the tourism industry service providers, these are the key questions to focus: –Which distribution channels are most / least effective? –How does your travel distribution website compare to best-in-class websites? –How do customers view travel distribution and fulfillment? –Do current segmentation schemes match current and future needs? –How can partner data be used to formulate a more robust view of customers? –What capability gaps can partners fulfill more effectively?
© 2012 IBM Corporation 10 To enable seamless travel: information aggregation and partner coordination must become top priorities in the travel industry Does the necessary data exist? Has it been stored for reuse? Can the data be shared? Can it be integrated with other data? Can the data be analyzed for travelers? Can the analysis be packaged? Can it be delivered efficiently? Can customers interact with the information? Will travelers be willing to pay for this service? Will the resulting analysis prove useful? The journey toward seamless travel
© 2012 IBM Corporation 11 Agenda Introduction and Industry Trend Tourism Ecosystem What is Cloud, Why Cloud – Rethink IT / Reinvent Business Enterprise Cloud Approach Cloud Adoption Patterns - Business Cloud Services Innovative Business Model for Cloud Summary
© 2012 IBM Corporation 12 Cloud Computing – A Business Value Cloud computing is a model for enabling cost effective business outcomes through the use of shared application and computing services. The value …. if possible …. is better economics in the execution of business processes. Cloud computing is a new consumption and delivery model inspired by consumer internet services. Key characteristics: On-demand self-service Ubiquitous network access Location independent resource pooling Rapid elasticity Flexible pricing models Virtualization Service Automation Usage Tracking Web 2.0 SOA End User Focused
© 2012 IBM Corporation 13 Flexible pricing Rapid provisioning Cloud Computing is a model of shared network-delivered services, both public and private, in which the user sees only the service, and need not worry about the implementation or infrastructure Infrastructure Services Platform Services Application Services Business Services People Services Built on radically scalable, manageable, virtualized IT resources Service layers separated by clean APIs, enabling composition. Important roles for both public and private clouds. Consumable web- delivered services requiring no installation, minimal setup Elastic scaling Advanced virtualization Standard Internet technologies Cloud: A Model for Shared Services
© 2012 IBM Corporation 14 Agents End Users Support Community Crowdsourcing Customer CarePaymentsInt. Risk Mgmt. Retail BankingTrade & SC FinanceSingle Euro PaymentsMobile Banking Front Office Optimization Infrastructure Services Platform Services Application Services Business Services People Services Data Mgmt.Virtualization Workload MgmtSLA & Capacity Provisioning Security Monitoring Dynamic Provisioning Process & Policy Mgmt. Problem & Change Mgmt. Service Cloud Business & Operations Support Fulfillment Assurance Billing Mashup Server User Manager Service/Software Catalogs Open SOA Foundation (WS Framework, Service Bus) CiC Design Space B2B Partnerships Experience Management. Industry Frameworks & Information Foundation Distributed Cloud Computing Services Cloud technologies offer operational expense reductions at all layers Clouds will be used at each layer, and stacked to easily create new solutions
© 2012 IBM Corporation 15 Rethink IT Reinvent Business Rapidly deliver services Integrate services across cloud environments Increase efficiency Business and IT are attracted to cloud for different reasons Efficiency Transformation Initiate new revenue streams Faster time to market for new services Focus on differentiated processes Meet changing customer expectations of CIOs plan to use cloud (up from 33% 2 years ago) 60% of business executives believe cloud enables business transformation and leaner, faster, more agile processes 55% Economics of Computing are Changing
© 2012 IBM Corporation 16 Businesses are seeing significant results Reduce IT labor cost by 50% in configuration, operations, management and monitoring. Improve capital utilization by 75%, significantly reducing license costs. Reduce provisioning from weeks to minutes and improve cycle times Eliminate 30% of software defects and improve quality. Reduce IT support costs by up to 40% for end users.
© 2012 IBM Corporation 17 20062007 2008200920102011 Efficient Transformational Disruptive Cost Savings Time to market CapEx to OpEx Reduced TCO Speed of transformation Lower barriers to innovate Reduce risks Increase productivity Things are possible which were not possible before Create new business models Triggers competitive advantage o IaaS o Private Clouds o Cloud Management o Further Automation o APIs o New services o Applications built for Cloud o Brokering Cloud perception is evolving Optimizing Speeding Enabling 2012
© 2012 IBM Corporation 18 Agenda Introduction and Industry Trend Tourism Ecosystem What is Cloud, Why Cloud – Rethink IT / Reinvent Business Enterprise Cloud Approach Cloud Adoption Patterns - Business Cloud Services Innovative Business Model for Cloud Summary
© 2012 IBM Corporation 19 Enterprise Cloud Approach …workload optimization –Development and Test; Desktop; Collaboration; Analytics; Compute –Rapid return-on-investment and productivity gain …deployment choices –Public, private, hybrid …integrated service management –Service delivery, service request, service monitoring –Lowers operational costs, drives efficiency, enhances security
© 2012 IBM Corporation 20 Key Consideration 1: What workloads to move to cloud and what application delivery model is best for that workload? Networking Storage Servers Virtualization O/S Middleware Runtime Data Applications Traditional On-Premises Networking Storage Servers Virtualization O/S Middleware Runtime Data Applications Platform as a Service Networking Storage Servers Virtualization O/S Middleware Runtime Data Applications Software as a Service Vendor Manages in Cloud Client Manages Standardization; OPEX savings; faster time to value Networking Storage Servers Virtualization Middleware Runtime Data Applications Infrastructure as a Service O/S *Capex: Capital Expenses, *Opex: Operating Expenses
© 2012 IBM Corporation 21 Ready for Cloud Workloads Matter: Cloud adoption is driven by workloads May not yet be ready for Cloud … Sensitive Data Complex processes & transactions Regulation sensitive Not yet virtualized 3 rd party SW Highly customized Analytics Collaboration Development & Test Workplace, Desktop & Devices Infrastructure Storage Infrastructure Compute Business Processes Industry Applications Pre- production systems Information intensive Isolated workloads Mature workloads Batch processing New Industry workloads Collaborative Care Medical Imaging Financial Risk Energy Management
© 2012 IBM Corporation 22 Enterprise Data Center Private Cloud Managed Private Cloud Hosted Private Cloud Shared Cloud Services Public Cloud Services Enterprise Data Center Third-party operated Enterprise Third-party hosted and operated EnterprisesUsers Free Register Credit Card Click to contract Hybrid Internal and external service delivery methods are integrated PrivatePublic IT capabilities are provided “as a service,” over an intranet, within the enterprise and behind the firewall IT activities / functions are provided “as a service,” over the Internet Key Consideration 2: What deployment model is best for a given workload? 60% of CIOs plan to use cloud up from 33% two years ago …the majority being hybrid clouds
© 2012 IBM Corporation 23 Enterprise Cloud adoption presents unique challenges Integration of cloud and traditional IT Migration over time Security and compliance issues Global business process transformation In the enterprise cloud is an evolution, revolution and game changer An evolutionary transformation to cloud is typical for enterprises and provides unique challenges Virtualize Standardize Shared Resources Automate Cloud Traditional IT
© 2012 IBM Corporation 24 Transforming application development – end to end - for the cloud DesignDevelopmentDeploymentProduction Requirements Requirements Analysis Maintain Code Analysis & Reporting. ALM Tools Application Virtualization Performance Testing Services Defect Analysis Website & Mobile Application Performance Project Initiation Test Integration : Cloud-to-Cloud ; Cloud-to-Enterprise xCloud Testing Image/ & Services Mgnt/Monitoring Data Security Billing & Metering Services Optimizations Cloud Brokering / Deployment Cloud Deployment Topology & Security Modeling
© 2012 IBM Corporation 25 Agenda Introduction and Industry Trend Tourism Ecosystem What is Cloud, Why Cloud – Rethink IT / Reinvent Business Enterprise Cloud Approach Cloud Adoption Patterns - Business Cloud Services Innovative Business Model for Cloud Summary
© 2012 IBM Corporation 26 Infrastructure Services Platform Services Application Services Business Services 2000 2006 ‘People’ Services 2012 Service Cloud Layers Static, dedicated, outsourcedNetwork-delivered, off-premisesShared, automated, dynamic All clouds will not be the same … Does your people cloud use knowledge-enablement and social computing to create increased value? Does your business cloud have deep industry capability that lets me benefit from the increasing returns of sharing (e.g., information)? Can your application cloud easily function as a component in my application? Do you have platform and management technologies to overcome the potential complexities/downsides of multiple clouds. Can your cloud technologies to help solve “out-of- space, out-of-power” and lower costs? Quality of service? Questions to ask the Cloud Service Provider at every layer
© 2012 IBM Corporation 27 New Cloud Computing Architecture and delivery models are already changing the application and business services ecosystem ANALYTICS Turning data into insight to anticipate business conditions, avoid risks and capture new opportunities. STORAGE Putting rapidly increasing volumes of data in a location that is scalable and accessible from anywhere. COLLABORATION Simplifying and improving daily business interactions with customers, partners and colleagues. DEVELOPMENT AND TEST Deploying virtual environments for the construction of software applications. DESKTOP AND DEVICES Storing files and applications remotely and pushing them to clients in real time. Key Future technologies: Extreme Automation Highly differentiated platform as a service Fine grained cloud security Seamless secure operations across private and public cloud
© 2012 IBM Corporation 28 Cloud services Business Desktop Reduce the cost of desktop hardware and management Safeguard data and applications Increase business flexibility Reduce complexity and energy consumption Real-Time Collaboration Work beyond the boundaries of an organization Share information more easily with customers, suppliers and Business Partners Lower upfront investment and operating costs Reduce/eliminate IT staff for implementation Acquire services extremely easily Provide work-ready integrated business applications Development and Test Access a security-rich, standardized test and development environment Reduce operational costs and large amounts of capital outlays, Improve cycle times for faster time-to-market Improve collaboration and quality Managed Backup Cloud Provide remote data protection with a managed, offsite data backup and recovery solution that is automatic, secure and reliable Reduce backup windows with automated, de- duplicated technologies. Shift to a pay-as-you-use pricing model that enables predictable monthly costs and requires no up-front capital investment. VPN or dedicated circuit Applications and data Systems (AD, DHCP, DNS) PCs Thin clients Virtual machines Connection Broker Remote Data Protection Service Platforms Server and PC Data Customer Location(s) Offsite Data Protection Remote Recovery Site Wide Area Network (WAN) MessagingCollaborationWeb conferencing
© 2012 IBM Corporation 29 E-Commerce on Cloud Helping companies transform how they buy, market, sell and service goods and services with customers and suppliers Helping companies accelerate their ability to turn information into insights Integrate the collective knowledge of people- centric networks to accelerate decision-making, strengthen business processes, and increase innovation Helping cities of all sizes leverage information, anticipate problems and coordinate resources to deliver exceptional service to their citizens Software as a service coupled with deep industry insights, business process skills and analytics Cloud Solutions Social Business on Cloud Business Analytics & Optimization on Cloud Smarter Cities on Cloud Software and Business Process as a Service Business Process as a Service Software as a Service Business Analytics and Optimization Social Business CommerceSmarter Cities
© 2012 IBM Corporation 30 Agenda Introduction and Industry Trend Tourism Ecosystem What is Cloud, Why Cloud – Rethink IT / Reinvent Business Enterprise Cloud Approach Cloud Adoption Patterns - Business Cloud Services Innovative Business Model for Cloud Summary
© 2012 IBM Corporation 31 Major Technology Trends driving Business Change Mobile revolution –Connectivity, access and participation are growing rapidly –Smart devices are becoming the primary route to get connected –Devices are getting smarter as they are increasingly enriched by mobile apps Social media explosion –Social media is quickly becoming the primary communication and collaboration format –“digital natives” use of technology and social media platforms is accelerating adoption –Enterprises are adopting social media but are struggling to realize the value and manage risk Hyper digitization –Digital content is produced and accessed more quickly than ever before –Internet traffic is growing globally driven by consumer use of video, mobile data, interconnectedness –An increasing number of connected devices and sensors is further driving growth The power of analytics –New capabilities for real time analysis, predictive analytics and micro-segmentation are emerging –Top performing companies use analytics to drive action and business value –Analytics are making information “consumable” and is transforming all parts of the organization, from customer intimacy to supply chain management
© 2012 IBM Corporation 32 “Game Changing” Cloud Business Enablers Source:IBV Analysis Cost Flexibility 1 Shifts fixed to variable cost Pay as and when needed Business Scalability 2 Provides limitless, cost- effective computing capacity to support growth Masked Complexity 4 Expands product sophistication Simpler for customers/users Context-driven Variability 5 User defined experiences Increases relevance Ecosystem Connectivity 6 New value nets Potential new businesses Market Adaptability Faster time to market Supports experimentation 3
© 2012 IBM Corporation 33 Cost Flexibility Cloud enables businesses to reduce fixed IT costs and shift to a more variable, “pay-as-you-go” cost structure 1 Characteristics Shifts CapEx to OpEx, when and as needed Shifts cost from fixed to variable Generates faster payback and higher ROI Example: An online marketplace company The cloud frees up capital by significantly reducing the need for IT investment An online marketplace company provides service to buy and sell travel-related goods. In addition to bringing buyers and sellers together, the marketplace offers product recommendations based on analysis of buyer preferences. The marketplace company uses cloud based analytics capabilities for its targeted marketing approach by renting hundreds of computers every night to analyze data from a billion views of its website. Cost flexibility of the cloud allows the marketplace company access to tools and compute power that only large retailers could afford.
© 2012 IBM Corporation 34 Business Scalability Cloud enables businesses to grow efficiently, expanding the range of business options 2 Characteristics Rapid / elastic provisioning of resources No scale limitations Benefit from scale economics without achieving large volumes on your own Example: An internet media company Cloud’s ubiquitous and nearly unlimited computing power drives scale economics and enables self-provisioning and peak/non-peak responsiveness An internet media company streams movies on- demand with large surges of capacity required at peak times. The company can use cloud to rapidly scale up its business without having to buy, support and operate infrastructure and resources to meet its growth requirements.
© 2012 IBM Corporation 35 Market Adaptability Cloud enables businesses to rapidly adjust processes, products and services to meet the changing needs of the market 3 Characteristics Facilitates prototyping Speeds time to market Supports rapid prototyping and innovation Example: An open application platform for TV Cloud-enabled services can be tuned for market dynamics and demand and then rapidly updated, revamped and deployed via web services An open application platform for TV allows content providers and distributors to react immediately to changing consumer demands and deliver what the consumers want. Cable, IP and Satellite TV providers can create and deliver interactive, on-demand content dynamically to consumers on any device. Content providers, TV programmers and web content developers can create or change an application – for entertainment, commerce, advertising, social media, gaming or news and sports – and deploy it all-at-once for all end-users.
© 2012 IBM Corporation 36 Masked Complexity Cloud enables businesses to attract a broader range of consumers with elegantly simple solutions 4 Characteristics Expands feasible range of sophistication in products and services Minimizes requirements of user to understand how product works or how to maintain it Example: the Mobile Print platform Cloud-enabled services leave the complexity to the experts, delivering only outcomes to the end-user The Mobile Print platform uses tools via a cloud to convert and process print requests from any mobile device (e.g. tablet, smart phone) to a printer. It can remove complexity for users – no need to understand / install / maintain printer device drivers for their mobile devices or targeted printers. It will reduce cost and management of supporting diverse end-user mobile devices, content-producing applications, network configurations and printer types.
© 2012 IBM Corporation 37 Context-driven Variability Cloud enables businesses to create personal experiences that adapt to subtle changes in user-defined context 5 Characteristics Supports context-driven, user- centric experiences (preferences, movements, behaviors) Example: A cloud-based, natural language assistant The computing power and capacity of cloud enables individualized, context-relevant customer experiences This is to support user defined preferences. Cloud can be used to store information about user preferences and enable the customization of product or service which is being delivered. A cloud-based, natural language “intelligent personal assistant and knowledge navigator” that relies on context to create a more personal, intimate interaction. Leveraging the computing capabilities and capacity of the cloud, the application “understands a wide variety of ways to ask a question, grasps the context and returns useful information in a friendly way, either audibly or by displaying results.
© 2012 IBM Corporation 38 Ecosystem Connectivity Facilitating engagement, alignment and innovation, cloud enables external collaboration with partners and customers 6 Characteristics Facilitates new value nets of partners, customers and other external players Example: tourism value chain More and more, companies are relying on collaborative ecosystems to provide the input for innovation that will drive their growth New value nets can be created including subject matter experts (SMEs), shared infrastructure and services from cloud service providers. Productivity can be enhanced through customer and partner interactions. In tourism value chain, cloud based platforms can support sharing of resources, processes and workforce between companies, hence it can also enable joint marketing and collaboration. The ecosystem connectivity enables efficiencies required in an emerging market to deliver quality tourism at low cost.
© 2012 IBM Corporation 39 Using cloud’s business enablers to optimize, innovate and disrupt business models Improve Transform Create EnhanceExtendInvent Value Chain Customer Value Proposition Optimizers Disruptors Innovators Customer Value Proposition Value Chain Cloud Enablement Framework Context-driven Variability 5 Masked Complexity 4 Market Adaptability 3 Business Scalability 2 Ecosystem Connectivity 6 Cost Flexibility 1 Cloud’s Business Enablers Cloud offers six “game changing” business enablers … …that are fuelling innovations across enterprise value chains and customer value propositions… …empowering organizations to optimize, innovate or disrupt business models Organizations need to assess themselves using the Cloud Enablement Framework and examine the potential to innovate by leveraging the cloud’s business enablers
© 2012 IBM Corporation 40 Agenda Introduction and Industry Trend Tourism Ecosystem What is Cloud, Why Cloud – Rethink IT / Reinvent Business Enterprise Cloud Approach Cloud Adoption Patterns - Business Cloud Services Innovative Business Model for Cloud Summary
© 2012 IBM Corporation 41 Six Steps to Getting Started with Cloud 1 Develop the Strategic Direction Analyze Workloads E-Mail, Collaboration Software Development Test and Pre- Production Data Intensive Processing DatabaseERP 2 Determine Delivery Models Enterprise PrivatePublic Hybrid Trad IT 3 4 Define the Architectural Model Service Definition Tools Service Publishing Tools Service Fulfillment & Config Tools Service Reporting & Analytics Service Planning Role Based Access OSS BSS Infrastructure Platform Software End Users, Operators Service Catalog Operational Console Cloud Services Cloud Platform Build the Business Case 56 Implement the Roadmap
© 2012 IBM Corporation 42 Business Cloud Summary Cloud Computing is a model of shared network-delivered services, both public and private, in which the user sees only the service, and need not worry about the implementation or infrastructure The Cloud has 5 distinct layers and value propositions. Very significant opportunities exist above the infrastructure level, where much of the cloud discussion has been focused previously. The Cloud model can be truly disruptive if it can reduce the IT operational expenses of enterprises: development, management, integration, and energy consumption. By reducing expenses and increasing efficiency and flexibility, the Cloud model of services can improve the way we manage travel, transport, airline, finance, mobile information, and more. In the long run, development of an enterprise will depend on composable web-delivered services on flexible infrastructure: that is, the Cloud. Moving to higher value business services with focus on “data”, “analytics” and “people”.
© 2012 IBM Corporation 43 Summary Travel industry was expected to be among the greatest beneficiaries of new, low-cost, information-rich distribution opportunities. More than a decade later, however, online channels have mostly focus on price. Now the new internet and cloud computing technologies and business models can offer the potential for online differentiation and the provision of value-added services and features for which tourists will pay for the services. To capitalize on these developments, enhance the tourists travel experience and create opportunities for improved financial performance, –the tourism ecosystem must learn to use the new cloud computing to “play well” with all the others in the ecosystem.
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