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Tourism Cloud – Enabled Business Model Innovation

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1 Tourism Cloud – Enabled Business Model Innovation
Jen-Yao Chung IBM T. J. Watson Research Center

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

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)

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

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.

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

7 The Travel Ecosystem Providers Air Hotel Car Other Global Dist Systems
Traditional Other Distributors TA/OTA Other Travelers

8 Evolution of travel distributions
“Push” “Pull” “Swarm” Traveler Social Networks Travel Providers Media & Advertising Travel Providers Traveler Distribution Networks Multiple Intermediaries Online Forums Intermediaries On/offline Agencies Brick & Mortar Agencies Distribution Networks 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 Travel Providers

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?

10 To enable seamless travel: information aggregation and partner coordination must become top priorities in the travel industry The journey toward seamless travel Will travelers be willing to pay for this service? Will the resulting analysis prove useful? Can customers interact with the information? Can the data be shared? Can the data be analyzed for travelers? Can it be delivered efficiently? Does the necessary data exist? Has it been stored for reuse? Can it be integrated with other data? Can the analysis be packaged?

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

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. Usage Tracking Web 2.0 SOA 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 Business Services IT Services End User Focused Service Automation Virtualization

13 Infrastructure Services
Cloud: A Model for Shared Services 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 Consumable web-delivered services requiring no installation, minimal setup People Services Standard Internet technologies Important roles for both public and private clouds. Business Services Rapid provisioning Application Services Service layers separated by clean APIs, enabling composition. Flexible pricing Platform Services Built on radically scalable, manageable, virtualized IT resources Elastic scaling Infrastructure Services Advanced virtualization 13 13 13

14 Infrastructure Services
Clouds will be used at each layer, and stacked to easily create new solutions Cloud technologies offer operational expense reductions at all layers Agents End Users Support Community People Services Crowdsourcing Retail Banking Trade & SC Finance Single Euro Payments Mobile Banking Front Office Optimization Business Services Customer Care Payments Int. Risk Mgmt. Data Mgmt. Virtualization Workload Mgmt SLA & 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 Management. Experience Industry Frameworks & Information Foundation Distributed Cloud Computing Services Application Services Platform Services Infrastructure Services 14 14 14

15 Economics of Computing are Changing
Business and IT are attracted to cloud for different reasons Rethink IT Rapidly deliver services Integrate services across cloud environments Increase efficiency 55% of business executives believe cloud enables business transformation and leaner, faster, more agile processes 60% Transformation Efficiency of CIOs plan to use cloud (up from 33% 2 years ago) Initiate new revenue streams Faster time to market for new services Focus on differentiated processes Meet changing customer expectations Reinvent Business Economics of Computing are Changing 15

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. 16

17 Cloud perception is evolving
Enabling Things are possible which were not possible before Create new business models Triggers competitive advantage Disruptive Speeding Speed of transformation Lower barriers to innovate Reduce risks Increase productivity Transformational APIs New services Applications built for Cloud Brokering Optimizing Cost Savings Time to market CapEx to OpEx Reduced TCO Private Clouds Cloud Management Further Automation Efficient IaaS 2006 2007 2008 2009 2010 2011 2012 17 17

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

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 19

20 Traditional On-Premises
Key Consideration 1: What workloads to move to cloud and what application delivery model is best for that workload? Traditional On-Premises Infrastructure as a Service Platform as a Service Software as a Service Applications Applications Applications Applications Data Data Data Data Runtime Runtime Runtime Runtime Middleware Middleware Middleware Middleware O/S O/S O/S O/S Virtualization Virtualization Virtualization Virtualization Servers Servers Servers Servers Storage Storage Storage Storage Networking Networking Networking Networking Standardization; OPEX savings; faster time to value Vendor Manages in Cloud Client Manages *Capex: Capital Expenses, *Opex: Operating Expenses

21 Workloads Matter: Cloud adoption is driven by workloads
Ready for Cloud New Industry workloads Collaborative Care Analytics Infrastructure Storage Medical Imaging Information intensive Industry Applications Financial Risk Isolated workloads Sensitive Data Collaboration Energy Management Highly customized Mature workloads Workplace, Desktop & Devices Not yet virtualized 3rd party SW Business Processes Pre- production systems Complex processes & transactions Development & Test May not yet be ready for Cloud … Infrastructure Compute Regulation sensitive Batch processing 21

22 Enterprise Data Center Enterprise Data Center Third-party hosted and
Key Consideration 2: What deployment model is best for a given workload? Private Cloud Managed Private Cloud Hosted Private Cloud Shared Cloud Services Public Cloud Services Enterprise Data Center Enterprise Data Center Enterprise Enterprises Users Third-party hosted and operated Free Register Credit Card Click to contract Third-party operated Private Public 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 Internal and external service delivery methods are integrated Hybrid 60% of CIOs plan to use cloud up from 33% two years ago …the majority being hybrid clouds

23 An evolutionary transformation to cloud is typical for enterprises and provides unique challenges
In the enterprise cloud is an evolution, revolution and game changer Enterprise Cloud adoption presents unique challenges Integration of cloud and traditional IT Migration over time Security and compliance issues Global business process transformation Cloud Shared Resources Automate Standardize Virtualize Traditional IT

24 Transforming application development – end to end - for the cloud
Defect Analysis ALM Tools Application Virtualization Requirements Cloud Deployment Topology & Security Modeling Image/ & Services Mgnt/Monitoring Billing & Metering Services Optimizations Cloud Brokering / Deployment Project Initiation Requirements Analysis Design Development Test Deployment Production Integration : Cloud-to-Cloud ; Cloud-to-Enterprise xCloud Testing Data Security Maintain Code Analysis & Reporting. Performance Testing Services Website & Mobile Application Performance

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

26 Questions to ask the Cloud Service Provider at every layer
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? ‘People’ Services Business Services Do you have platform and management technologies to overcome the potential complexities/downsides of multiple clouds. Application Services Service Cloud Layers Platform Services Can your cloud technologies to help solve “out-of-space, out-of-power” and lower costs? Quality of service? Infrastructure Services 2000 2006 2012 Static, dedicated, outsourced Network-delivered, off-premises Shared, automated, dynamic 26 26

27 New Cloud Computing Architecture and delivery models are already changing the application and business services ecosystem Key Future technologies: Extreme Automation Highly differentiated platform as a service Fine grained cloud security Seamless secure operations across private and public cloud DESKTOP AND DEVICES Storing files and applications remotely and pushing them to clients in real time. ANALYTICS Turning data into insight to anticipate business conditions, avoid risks and capture new opportunities. COLLABORATION Simplifying and improving daily business interactions with customers, partners and colleagues. STORAGE Putting rapidly increasing volumes of data in a location that is scalable and accessible from anywhere. DEVELOPMENT AND TEST Deploying virtual environments for the construction of software applications.

28 Cloud services Business Desktop Development and Test
Reduce the cost of desktop hardware and management Safeguard data and applications Increase business flexibility Reduce complexity and energy consumption 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 VPN or dedicated circuit Applications and data Systems (AD, DHCP, DNS) PCs Thin clients Virtual machines Connection Broker 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. 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 Remote Recovery Site Customer Location(s) Wide Area Network (WAN) Web conferencing Collaboration Messaging Server and PC Data Offsite Data Protection Remote Data Protection Service Platforms

29 Business Process as a Service
Software as a service coupled with deep industry insights, business process skills and analytics 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 Cloud Solutions Software and Business Process as a Service Social Business on Cloud Business Analytics & Optimization on Cloud Business Process as a Service Software as a Service Business Analytics and Optimization Social Business Commerce Smarter Cities Smarter Cities on Cloud 29

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

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

32 “Game Changing” Cloud Business Enablers
Business Scalability 2 Provides limitless, cost-effective computing capacity to support growth Cost Flexibility 1 Shifts fixed to variable cost Pay as and when needed Market Adaptability Faster time to market Supports experimentation 3 Ecosystem Connectivity 6 New value nets Potential new businesses Masked Complexity 4 Expands product sophistication Simpler for customers/users Context-driven Variability 5 User defined experiences Increases relevance Source: IBV Analysis

33 Example: An online marketplace company
Cloud enables businesses to reduce fixed IT costs and shift to a more variable, “pay-as-you-go” cost structure Example: An online marketplace company 1 Cost Flexibility 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. Characteristics Shifts CapEx to OpEx, when and as needed Shifts cost from fixed to variable Generates faster payback and higher ROI The cloud frees up capital by significantly reducing the need for IT investment

34 Example: An internet media company
Cloud enables businesses to grow efficiently, expanding the range of business options Example: An internet media company 2 Business Scalability 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. Characteristics Rapid / elastic provisioning of resources No scale limitations Benefit from scale economics without achieving large volumes on your own Cloud’s ubiquitous and nearly unlimited computing power drives scale economics and enables self-provisioning and peak/non-peak responsiveness

35 Example: An open application platform for TV
Cloud enables businesses to rapidly adjust processes, products and services to meet the changing needs of the market Example: An open application platform for TV 3 Market Adaptability 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. Characteristics Facilitates prototyping Speeds time to market Supports rapid prototyping and innovation Cloud-enabled services can be tuned for market dynamics and demand and then rapidly updated, revamped and deployed via web services

36 Example: the Mobile Print platform
Cloud enables businesses to attract a broader range of consumers with elegantly simple solutions Example: the Mobile Print platform 4 Masked Complexity 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. Characteristics Expands feasible range of sophistication in products and services Minimizes requirements of user to understand how product works or how to maintain it Cloud-enabled services leave the complexity to the experts, delivering only outcomes to the end-user

37 Example: A cloud-based, natural language assistant
Cloud enables businesses to create personal experiences that adapt to subtle changes in user-defined context Example: A cloud-based, natural language assistant 5 Context-driven Variability 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. Characteristics Supports context-driven, user-centric experiences (preferences, movements, behaviors) The computing power and capacity of cloud enables individualized, context-relevant customer experiences

38 Example: tourism value chain
Facilitating engagement, alignment and innovation, cloud enables external collaboration with partners and customers Example: tourism value chain 6 Ecosystem Connectivity 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. Characteristics Facilitates new value nets of partners, customers and other external players More and more, companies are relying on collaborative ecosystems to provide the input for innovation that will drive their growth

39 Using cloud’s business enablers to optimize, innovate and disrupt business models
…that are fuelling innovations across enterprise value chains and customer value propositions… …empowering organizations to optimize, innovate or disrupt business models Cloud offers six “game changing” business enablers … Cloud’s Business Enablers Disruptors Create Business Scalability 2 Cost Flexibility 1 Market Adaptability 3 Value Chain Cloud Enablement Framework Value Chain Innovators Transform Ecosystem Connectivity 6 Masked Complexity 4 Optimizers Improve Customer Value Proposition Context-driven Variability 5 Enhance Extend Invent Customer Value Proposition Organizations need to assess themselves using the Cloud Enablement Framework and examine the potential to innovate by leveraging the cloud’s business enablers

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

41 Six Steps to Getting Started with Cloud
1 Develop the Strategic Direction Analyze Workloads , Collaboration Software Development Test and Pre-Production Data Intensive Processing Database ERP 2 Determine Delivery Models Enterprise Private Public Hybrid Trad IT 3 4 Define the Architectural Model Service Definition Tools Publishing Fulfillment & Config Tools Reporting & Analytics Service Planning Role Based Access OSS BSS Infrastructure Platform Software End Users, Operators Catalog Operational Console Cloud Services Cloud Platform Build the Business Case 5 6 Implement the Roadmap

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”.

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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