Achieving Success in Automation

Businesses today face a stark reality: anticipate, respond, and react to the growing demands of the market place or perish. This is even more pressing in our travel and transportation industry. In a fiercely competitive environment, business strategy not only determines success, it governs business survival. Now, more than ever, effective business strategy centers on aggressive, efficient use of information technology. But time and again, we see massive failures and delays of automation projects in spite of a comprehensive plan and thought put into those projects. Having been through quite a lot of successful and a few of not so successful automation projects, I thought it’s time to pen my thoughts on the things that have worked in our industry. Here are my top 10 list of things to look out for before embarking on an IT project:

1.       Success – Defining success and figuring out how to measure it is arguably the most important aspect before finalizing the business case for a large scale project. Too often, we assume that success is defined as on time, on budget, and meeting the defined requirements. The project may still be considered a failure if it doesn't deliver the expected business value.

2.       Process – Buy into the processes associated with the software just as much as the software itself. Expect and plan for process changes as you implement the software, rather than applying layers of metaphorical duct tape to a package in order to support a “my way or the highway” approach that has killed many a project. During the software sales cycle, the process and “way of doing things” that the software assumes are just as important as the pretty screens and fancy features. Thinking you can drastically modify one or the other is a recipe for disaster.

3.       Champion – It’s very important for key stakeholders to remain in those positions until the value of the project is delivered. As a plan B, a buy-in from second in line leaders is also important. When projects are 6 months and longer, when the key stake holders leave, in most cases if the next in line don’t buy the vision, the project could get delayed, scope creep and scrapped.

4.       Decisions – As a team, be prepared to make tough decisions that were unpopular with your team, manager or customer to keep the projects on time and budget. Be it finding the right resources for the right roles, business process changes, or communicating in advance.

5.       Customization – Whenever possible, take the system as is – get to know it, use it and document the deficiencies. The customizations are a lot more meaningful and this will also keep the scope creep in check. If budget is the issue, bank some hours for customizations as phase 2.

6.       Define –Sometimes, the people involved in a project—the project manager, team members, steering committee members and sponsor(s)—don't understand their roles and responsibilities because no one defines them. Oversight, setting expectations and asking questions are part and parcel of the equation. Examples of project managers (PM) not showing up for meetings, sponsors not asking questions on scope creep, subject matter experts (SME) in full time jobs not being able to focus on projects. Similarly, vendor resources are over stretched, PMs and SMEs

7.       Documentation – While thinking about customizations, try to enforce transparency into the system. Try to get as much as the functional specifications into online help or a knowledge base. Move away from soft copies of documents. Key to have milestones on online help or knowledge base within the system. Users keep moving on and its key to have a central repository of information.

8.       “‘Til death do us apart’” – May sound obvious, but too often, systems implementations fail, because end users are overwhelmed with information and do not understand the system. Retraining after a few months post cutover and time spent hand holding goes a long way adopting the new system.

9.       Test – Quality assurance efforts such as integration testing, black box testing, functional testing and stress testing often get short drift on projects. Sometimes customers get the test scripts from the vendor – that may not be a lot of help!!

10.   Risks – Risk management should be part of any level of planning, whether initial project planning or phase- or stage planning for each new portion of a project. All too often it’s done upfront and then not revisited. Along with the critical success path, have a Plan B if things were to go wrong.

I am sure you have your ‘top 10’ as well and drop me a line if you’d like to share it.

Mukundh Parthasarathy

VP, Cargo Product Management & Marketing

(R)evolutions?

Being a business discipline, Revenue Management is an implement once, seldom change approach, right? But then a blog post of a colleague referencing his childhood got me casting my mind back over my time in the airline industry in general, and RM in particular, and thinking about how things have changed.

Yes, the basic principles remain, that of trying to extract the highest price that we can from a particular passenger without scaring them away. However, how this is done has changed significantly. In the old days we had limited competition, very well fenced fares, and in some instances operating subsidies and a booming economy. We were allowed to overbook (within reason) with only limited penalties for getting it wrong. Travel was fairly predictable, the businessman didn’t mind paying for convenience, and all was well in our world.

Enter low cost competitors, multitudes of startup carriers, economic downturns followed by true blue recession, withdrawal of subsidies and government imposed performance penalties.

Over the years the landscape has changed dramatically. Systems have evolved to take advantage of newer technologies and calculations. The internet has raised passenger’s understanding of pricing mechanisms and given them the opportunity to comparison shop from their living room. Booking habits have become less predictable and passengers seem to be leaving it until later to book.

Thus the reflection. All these things happened over time. We meet each challenge, identifying changes and solutions, and add them to our toolkit. If I had to walk in somewhere now knowing only what I did in the early 90’s, I could not expect anyone to take me seriously. However, as with most things, experience counts. Between me and my colleagues we have all seen these changes, lived through these changes, and found competitive solutions over the years.

So remember this when it comes to addressing the business issue: while the basic concepts may seldom change, the people (and the experience of those people) whom you choose to assist in addressing your challenges can make all the difference between success and failure.

Jason Codd

VP, Services

Overbooking - Friend or Foe?

What is overbooking? Although the term sometimes evokes a negative emotion, it is a core component of effective revenue management whereby the bottom line is enhanced through maximizing utilization of available space. It is a practice that is widely prevalent in everyday life. For e.g.: Doctors sometimes overbook appointments to accommodate the possibility of some patients not showing up. Restaurants do the same for reserving tables and so on. In the transportation space, overbooking is the practice of selling more seats than capacity in order to compensate for no-shows and cancellations. Airlines typically indulge in this practice in order to minimize lost opportunity by selling seats that would have otherwise gone empty owing to passenger no show rates.

Overbooking practices are typically implemented only in economy cabins as denying boarding to a premium first or business cabin passenger who happen to be their most profitable customers is a risk that most airlines are not willing to take. Given the sensitive nature of overbooking and the prospect of dealing with potential denied boardings, overbooking levels are not set randomly by airlines and involves the usage of historical showup patterns along with sophisticated modeling techniques. These models have the objective of not only maximizing utilization and hence the load factor, but also minimizing the  risk of a denied boarding. Getting the overbooking number wrong typically results in potential revenue downside to airlines in the form of vouchers along with the intangible effect of creating passenger ill-will. In spite of these models, depending on the market and scheduling criteria, passengers denied boardings are not as rare as they should be.

Overbooking, when done the right way can boost airline revenues upto 2%. However, if mismanaged, it can lead to severe negative repercussions including one scene I witnessed at an airport where the overbooked passenger (who happened to be a police inspector) threatened to arrest the check-in agent for not letting him board the aircraft. When a flight is overbooked, airlines typically have voluntary oversales mechanisms which are set in motion where passengers are incentivized to give up their seat and be reaccommodated on alternate itineraries in exchange for a travel voucher.

Overbooking in the cruise ferry space is not as prevalent as in the airline space.  The concept of leaving passengers in the port due to lack of space on the cruise ferry is quite alien and rightfully so, given that the schedules and frequency of sailings tend to be relatively limited. Having said that, cruise ferries are realizing that there is significant revenue being left on the table by not overbooking to compensate for cancellations and no-shows. Even though overbooking at the ship level is a no-no, cruise ferries are considering overbooking certain types of cabins with the understanding that if everybody shows up for that cabin, then some may be upgraded/moved to similar cabin types.

Does your company overbook? If yes, what kind of challenges do you face? If not, is it something you are considering and trying to figure out how this could potentially improve the bottom line. If you need to discuss more about how overbooking could help your company, please don’t hesitate to contact me at Pradeep.bandla@rtscorp.com.

Pradeep Bandla

VP, Product Management and Marketing

Business Analytics.....Old wine in a new bottle?

I still remember the first day of my undergraduate class in ‘Introduction to Industrial Engineering’ back in 1975. As a young boy growing up in a town with open coal mine fields, power plants, and fertilizer plants, I was always fascinated by heavy machinery and wanted to be a mechanical engineer. All that changed completely right after I sat through my first lecture in Industrial Engineering. I was hooked on to it… forever. It was very simple—it just seemed to fit my personality. Industrial Engineering is about constantly finding ways to improve processes and systems. It is about optimizing the performance of people, processes, and systems.

As I continued to pursue my newly found interest, advanced courses and research on quantitative methods seemed to be the logical choice to get me prepared for the real world.  It is not surprising that I passionately love “Business Analytics” and its application to transportation and logistics. Business Analytics is no different than a combination of Industrial Engineering concepts and methods coupled with quantitative methods such as operations research and statistics. It is simply old wine in a new, attractive bottle: the best combination - looks pretty and tastes great.

Business Analytics (BA) refers to the skills, technologies, applications and practices for continuous iterative exploration and investigation of past business performance to gain insight and drive business planning (Beller, M.J.; Alan Barnett (2009-06-18). "Next Generation Business Analytics". Lightship Partners LLC). BA focuses on developing new insights and understanding business performance based on data and analytical methods and helps in better decision-making.

At Revenue Technology Services (RTS), we have the expertise, experience, and knowledge in Business Analytics for the Travel and Transportation industry. Business Analytics is at the core of everything we do at RTS. Our revenue management, pricing, and scheduling software solutions incorporate industry leading statistical forecasting models and network optimization models. We have successfully developed several advanced planning and operational systems using operations research based methodologies that have enabled our customers to make better decisions. Our people bring together a vast amount of expertise and experience in Business Analytics in terms of business knowledge, industry expertise, and IT which are the key components of our and our customers’ success.

Send us a note or give us a call. We will help you look for symptoms that need to be further researched in terms of causes and challenges and turn them into opportunities by analyzing your data, identifying your constraints, and recommending options.

Raja Kasilingam, Ph.D.

President

Socialization

The words “Social Media” conjure a collage of the most popular outlets available:  Facebook, Twitter, LinkedIn, Tumblr, Instagram, and Wordpress.  Companies in almost any industry cannot but maintain a presence on at least one of these sites for the endless benefits that have been proclaimed by many a social media expert. Ranging from social branding, to creating a global network, to generating leads, there is no doubt that social media is here to stay.

The question that arises to my mind is what would be an ideal tool from the social media treasure box? To make a case in point, let us take a look at a company like Revenue Technology Services that is very unique in its products and has a niche clientele.

“Revenue Technology Services (RTS) is a worldwide provider of profit enhancing revenue management and pricing software solutions for passenger and cargo transportation industries. Our offerings, aimed at the Airline, Cruise Ferry, Rail and Coach verticals include software solutions, consulting and education services, operations research capabilities, technology services and IT development support.”

The uniqueness of RTS’s products and clientele makes a case in point that companies such as these need to maintain an even more active presence to create an awareness of their business so that even if a follower on LinkedIn or Twitter may not necessarily fit the company’s description of an ideal client, they can tap into their network to help RTS reach its goal of lead generation. Most of RTS’s effective social media marketing has occurred through the professional network LinkedIn. Through this professional network, RTS has managed to grow its connections and reach potential clients all over the world by leveraging LinkedIn’s vast array of professionals.

The weekly blogs posted on LinkedIn are another effective tool to create a readership. RTS aims at establishing credibility as an informative contributor to social media world. They provide an effective outlet to talk about the company’s experience, opinions and ideas relating to the Travel & Transportation industry. The weekly blogs that are posted on LinkedIn, Twitter and Facebook have helped create a buzz around the company. While companies such as RTS need to work harder at maintaining their presence due to the sheer nature of its business, there is no denying that consistency will lead to brand awareness and eventually to lead generation. RTS highly values its followers comments with much respect and makes every attempt to provide timely feedback from their resident SME’s – our ultimate goal being improved products and services.

Is your company in a niche industry like RTS? What are your effective social media tools? Drop us a line in the comments section and connect with us on LinkedIn or follow us @RTSProfitOpt. 

Charmi Ramchandani

Account Manager

Trust your Klout

Travel and Transportation Industries are undergoing dynamic changes with respect to scalability, information accessibility and customer knowledge. To be competitive these players will have to continuously innovate ways to ensure better customer service as well as reduce operational costs through effective use of information technology. The huge effect of social media in the Travel Transportation and Logistics industry, just like the recent Klout score giving you access to the Admirals Club at American Airlines, makes you wonder how legit and authentic the data is. Shouts out for all the more reason for perfect analysis and testing of data (Big data) and other influential scores. The algorithms comb through social media data within the airlines systems to ensure the passenger's authentic travel. Klout is starting to infiltrate more and more of our everyday transactions and specially in this domain.

At RTS, we bring over our vast experience of supporting various mission critical applications of leading travel and transportation providers. We help them achieve their goals of quality customer experience with clear cost merits and continual process improvement. With a large resource pool of technical and functional consultants, we support this practice around the clock which makes us unique in the travel and transportation vertical.

Our domain knowledge coupled with technological proficiency has helped our customers address operational, quality, and cost challenges. We bridge the gap between business and technology, with intent to optimize costs and improve customer experience given the advent of social media in our everyday lives.

Give us a shout... network with us.. so we can help you reach your objectives.

Deeshi Gandhi

Technical Manager

Price Sensitive Revenue Management (Stretching the Benefits of Price Elasticity)

A couple of years ago I was asked what would be the most significant changes for our passenger product for Cruise Ferry clients over the next few years. With an ever more competitive market place, the need to better understand the customer’s willingness to pay, and a desire to simplify the pricing structure and booking process, I’d answered Price Sensitive Revenue Management (PSRM).

As usual there may be resistance to adopting such a change. So what are some of the additional benefits of Price Sensitive RM other than the potential revenue gains and a better understanding of the price elasticity of your customers?

The simplification of the fare class structure by moving to a more ‘transparent’ single fare should provide benefits in a range of areas and business processes.  It will reduce the number of brochure fares/tariffs significantly, immediately improving the workload for those responsible for their administration and maintenance in systems support. This in turn should improve the booking process and ideally provide a quicker website response for online purchases, which of course is an ever growing and seemingly unstoppable portion of the business.

With a single price point, the individual departure review and decision making times for Revenue Analysts should be reduced, increasing their productivity. It will be much easier for agents and customers to compare a single price offering on a range of sailings and make bookings at a price and time to meet their travel requirements. Comparison with competitors will be more straight-forward making commercial pricing decisions easier at the wider market level.  From a marketing perspective, this can now really be seen as ‘From Pricing’ without those hidden conditions, again improving the customer booking process and experience.

A common concern within management is that the removal of the discounted period fares is not seen as preventing the possibility of lower fares and that the price sensitive customers are still given an option.  This is of course a main objective of adopting PE, with, where price elasticity dictates, even greater protection for the most popular departures, whilst giving the price sensitive customer an increased number of viable alternative sailings to choose from. In addition the option to have a non-decreasing fare policy exists, so that for certain sailings, markets, or periods, a system setting will prevent the current price from ever going back down. A hybrid PSRM model can be used so that certain classes/products (such as tour operator allocations) or markets could be simultaneously managed by traditional demand and optimisation.

In addition to a successful launch of PSRM in our ProfitOpt solution at Brittany Ferries, RTS has been conducting a Price Elasticity simulation study for a client interested in understanding the potential revenue improvements associated with PE in a restriction free pricing structure, compared to the current traditional period return/length of stay restrictions. With these initial results looking positive I believe that Price Elasticity will continue to play an increasingly important role with our current and future client base.

Patrick Allen

Project Manager and Consultant