Rose: TMCs Should Migrate to the Cloud

Rather than running their own IT centers, TMCS should switch to cloud-based services, says a leading travel tech consultant who maintains that the IT center is a last-century concept that is no longer equal to the job.

“Is your company an IT company or a service company?” asked Norm Rose, senior technology and corporate market analyst for PhoCusWright during a recent webinar.

“If you are providing travel services to your clients, you should not be burdened by having to maintain your own data center and data system. It is expensive and it is distracting from your core business.”

Move to the cloud
TMCs should not be running their own data centers, Rose said. Just as TMCs provide cloud-based travel services to corporate clients with web-based booking tools, they should be using cloud-based services.  

Almost every IT task that once required a local data center can and should be moved to the cloud. That includes everything from client travel arrangements and analysis to internal HR, banking and payroll services, back office and CRM.

Migrating to the cloud does not mean scrapping the IT department, Rose said. It means refocusing IT from managing hardware to managing data and analysis. And for a TMC, few tasks have higher priority today than data analysis.

Profitability and survival
Moving to the cloud is a matter of both profitability and survival. As TMC margins shrink and competitive pressures increase, companies need a complete, integrated view of client revenues, costs and value. Moving IT to the cloud can be a shortcut to integrating what are usually disparate and incompatible programs that track revenues, back office expenses, agent productivity, client contacts and all the other data points that factor into profit and loss.

 It is not enough to know that Client A produces X revenue dollars and Client B produces X plus 150%, Rose explained.

In order to evaluate the overall profitability and viability of each client, the TMC must also know the costs in time, labor and other inputs. It could be that Client B produces less net revenue because of longer call times, more complex itineraries or other factors.

Top-line revenue may, or may not, translate into bottom line profits. The more integrated your view of both revenues and costs, the stronger your evaluation of each client’s contribution to overall profits.

A more holistic view
On a broader scale, how do different client sectors compare? Are legal clients more or less profitable than accounting clients? How does each compare to pharma or manufacturing or service firms?

Integrating your operations gives you a more holistic view of revenues and expenses,” Rose said. “As a TMC, you can evaluate the total value of a client, revenue, costs, resource utilization. Looking at the total cost and value of companies and client sectors, you can better understand and better manage your client base. Moving all of those IT functions to the cloud lets you focus on data and information, not system mechanics.”

Security concerns
And what about security in these days of highly publicized data theft and electronic break-ins? Cloud storage is more secure than local storage, Rose said. Cloud vendors have more resources and expertise to safeguard data more effectively than a single TMC or travel agency. And with multiple corporate clients, cloud vendors have a strong incentive to get security right.

“The security of customer information is the number one concern regardless of the business, not just in travel,” Rose said. “A cloud-based system gives you much more security than you can get in a local system that can be accessed physically or hacked remotely. Cloud vendors can lay on as much access security and encryption as you want.”