White Paper Data The Fuel of the 21st Century
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1 Data The Fuel of the 21st Century How data experience (DX) will shape the travel of tomorrow 1
2 Data The Fuel of the 21st Century How data experience (DX) will shape the travel of tomorrow The airline industry is in the calm eye of an escalating storm of disruption. For 70 years a buffer of artificial constraints has protected it, but that s about to change. The past decade has seen major disruptions in travel, with the advent of start-ups such as Uber and Airbnb. The retail, music, entertainment and banking industries have all been disrupted and forced to transform. Disruption is booming, with one notable exception: air travel. Start-ups with simple, yet sophisticated, IT solutions are unencumbered by the massive capital investment or government restrictions that hamper legacy industries. And while the airline industry has had to accommodate an influx of disruptive lowcost carriers, large legacy operators remain mostly unchanged. What does the future hold? The two major areas of impact for airlines will be selling tickets and the regulation of flying. 1. New companies will emerge that will curate the customer journey from doorstep to destination. They will collect data from hundreds of millions of travellers and use it to further customise and adapt to our fickle wants and desires. Airlines will no longer be in control of distribution. As telecommunication companies have been relegated to pipelines for hire, airlines will become the vehicle fleet in external supply chains. These data rich platforms have already emerged in Apps by Google, Facebook, Uber, Airbnb and Amazon year-old ownership and control rules govern international market access, protect incumbents and prevent rationalisation in the industry. This entrenched system will be overwhelmed by an escalation in cross-border equity ownership plays and joint ventures that will force transformation. Consumer empowerment, driven by advances in technology, will transform the process of buying and selling tickets. At the same time Asia particularly China as it expands its global presence will be the biggest disruptor in the area of ownership and control as its growth fuels innovation. Conventional means won t work Consider Delta Air Lines, 93-years-old yet virtually unknown outside the United States due to regulation. It has the largest market capitalisation of any airline (US$35 billion), but its value is on a par with Airbnb an eight-year-old self-service App that focuses on accommodation, but has no real-estate holdings or traditional infrastructures. Delta is confined by regulation that prevents it from becoming truly global and is further hamstrung by an inability to access data for the entire customer journey. Unencumbered by these constraints, Amazon by comparison, has a market capitalisation of US$474 billion, a burgeoning global presence and is feared by traditional retailers. In view of this comparison, airlines with their buying and flying of expensive equipment could easily be relegated to the role of wholesalers; just one part of the end-to-end traveller experience. 2
3 What is happening right now? Airbnb now offers tourism products within its App, such as guided tours or a boat trip close to the traveller s Airbnb accommodation. It sounds trivial but Airbnb estimate that this new, high-margin venture will become much larger than its accommodation sharing business. They re exploiting their data to grow into other sectors. Will travel be their next target? Booking.com released two high priced data insight tools to its more than one million member hotels. These hotels could never aggregate this rich data on their own, and the tools have improved revenues of all hotels that have adopted them. Significantly, Booking. com is owned by Priceline, a retail corporation with cutting edge data analytics. We live in a world where hotels are now dependent on the all encompassing data from a retailer. IATA s New Distribution Capability (NDC) is set to end the dependency on current Global Distribution Systems (GDS) and provide airlines with greater access to rich passenger data. This will empower airlines to differentiate on products, improve time to-market and increase transparency. Adoption requires investment and time, but it is happening. To help expedite the process and change behaviour, the Lufthansa Group now charges 16 for booking through a GDS rather than their own system. Air France, KLM and Emirates are following suit. The integration and management of IoT technologies such as mobility solutions designed to track luggage from the terminal to the flight increases customer satisfaction, reduces lost luggage, decreases aircraft turnaround time, reduces costs and improves on time performance. Low cost carriers in Asia Pacific are innovating to push the boundary of ownership and control rules by expanding their brands across borders through joint ventures. For example, AirAsia, as the home brand, engages a local equity owner to take a majority share in that country. This allows AirAsia to apply their brand as a local airline in multiple markets, gain operation efficiencies and amplify its access to rich data. What to do about it? There are more young and leisure travellers than ever before, and they expect to plan and manage their travel via a mobile device. Airlines need to invest in improving the mobile customer experience. Companies with the data will be selling travel from door to destination. Airlines will have to innovate to catch-up with the likes of Google, Apple and Amazon as distribution shifts to real-time, data driven, end-to-end travel reservations. Airlines must start thinking now about improving their ability to access data and learn how to capitalise on it. NDC is key to improving data availability but airlines also need to invest in the consumer experience. After all, empowered consumers drive the greatest disruptions. 3
4 Unlocking the power of the Matrix When considering our central nervous system, there are parallels between what it does for us and what the Matrix does for enterprises. The Matrix in this case being the powerful combination of the Internet of Things (IoT), fifth generation mobile networks (5G), and machine learning which, if allowed to reach its full potential, will redefine how enterprises operate. Machine Learning IOT 5G The central nervous system is made up of three basic components: nerve endings that collect data; nerves that transport data; and, the brain that processes, learns and stores data. In much the same way for an enterprise Matrix : IoT collects data; 5G transports data; and, machine learning processes, learns and stores data. A challenge for enterprises today is an overload of data and technology options. From mobile to social media to enterprise applications, there is no shortage of enterprise data to make informed decisions. Likewise, the market is flooded with Big Data engines from industrial machine intelligence to cognitive machine learning. There is no one-size-fits-all solution so enterprises must understand what they are trying to achieve before embarking on significant big data investments. Optimisation of processes tends to be the recommended starting-point. However, processes can be large, complex and require the monitoring of billions of data points. Meanwhile, methodologies such as, Theory of Constraints, Six Sigma Lean and Total Quality Management teach us that our focus should be on bottlenecks. The thinking goes: regardless of improvements made, a system is only as efficient as its bottleneck. Indeed, any system is only as strong as its weakest link. 4
5 Digital, Collaborative, Data-Driven Manufacturing Value Chain A changing market landscape is forcing businesses to revise their core business models and supporting capabilities to maintain competitive advantage across their extended value chain. Market leaders, including large manufacturers are utilising the power of big data and analytics for a supply chain competitive advantage incorporating a vast array of technologies to choose from to improve their operations. Transforming into a digitally savvy manufacturer will turn shopfloor data into business-critical information, where analytics provides a far greater understanding of customer trends and influences product design and marketing. Manufacturing generates vast amounts of data. However, harnessing this data for valuable customer, supply chain and marketing insights has become essential to remain competitive. The pace of change is accelerating and next-generation analytics, artificial intelligence and product simulation are already producing new data-derived enterprise insights from initiatives such as industrial machine learning and automation. Insights from real-time process and product data, including location monitoring, sensors and diagnostics information, are already changing the face of manufacturing as large manufacturers use the information to optimise factory operations and improve equipment efficiency and product quality. Big data and cloud computing solutions allow suppliers to collaborate much faster and more efficiently than they ever did before. For example, vehicle manufacturers can share three-dimensional models of their engines and bodies with all suppliers, who can then share information about the availability of parts, delivery times and pricing. This greatly reduces the time and labour required to make design changes using older and lesssophisticated solutions. Boeing developed its two most recent airframes, for the 777 and 787 models, using all-virtual designs. The company said this reduced its time-to-market by more than 50 per cent. 5
6 Industrial IoT (IIoT) connecting the supply chain By reducing the aircraft turnaround time of post-flight engineering and maintenance through IIoT analytics systems, airlines can streamline maintenance times reducing costs, improving aircraft performance and unifying billions of traditionally siloed data points across aviation and air traffic management to increase awareness, discover new business insights, improve operations and asset performance. With digital technologies continuing to evolve at pace, the innovation these technologies are generating is changing the nature of industrial asset-centric industries such as transportation, manufacturing, utilities and mining. The heightened connectivity of physical assets, machines, smart devices and smart products among consumers, suppliers, partners and workers across every link in the industry value chains continues to unlock large amounts of value. With this connectivity, assets and machines are able to understand each other and provide, consume and interact with digital services providing adaptable and optimised operations. For example, providing real-time autonomous track and trace capabilities for shipment and delivery by transport providers, predicting the movement and interface of people, vehicles, and analytics to optimise logistics. The ability to have control over multiple heterogonous processes by integrating advanced IoT platforms and digital solutions will provide the ability to automate operations across the value chain. This co-ordination will create an efficient and seamless integrated production, maintenance and logistics processes across the operations, suppliers, service partners and consumers alike. Augmented reality (AR) is transforming the future of work While AR has been available in various guises for many years, the breakthrough for enterprises has been the commercial availability of industrial wearables. These devices are now practical work tools, robust enough to meet required safety standards and reliable enough for day-to-day use and they re fast being deployed in the field. AR marks a step-change in the workplace through connected business platforms and AR devices transform the way we work, the changes in key areas like productivity, maintenance, safety and training will be significant. Productivity improvements through heads-up data overlay capabilities will place information and expertise at workers fingertips, eliminating delays, increasing the ease of collaboration, minimising disruptions and optimising workforce management. Field workers time on tools can be doubled and the expert staff who support them will see similar improvements. Operational productivity will also climb as a result of better utilisation. Technology is a key enabler of improved productivity and businesses must transform and streamline their operations or risk losing out to global competitors. The adoption of AR devices connected to digital business platforms is a critical factor for boosting productivity and maintaining competitive advantage. This greatly reduces the time and labour required to make design changes over using older and lesssophisticated solutions. 6
7 For further information contact: Tania Jollie General Manager & Director, Consumer, Retail, Travel & Transport DXC Technology We re on the brink of the fourth industrial revolution and it s making change the new norm. The possibilities of billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge, are unlimited. And these possibilities will be multiplied by emerging technology breakthroughs in fields such as artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3-D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing. For travel, it means equipment processes from manufacturing to maintenance are being reimagined and passenger services from door to destination are going to see more personalisation, fierce competition and power moving to the connected consumer. We need to dream big and we need to act now because the speed of change is unprecedented in human history. The storm of disruption is upon us, but the opportunities are massive as we guild the evolution of travel in these interesting times. 7
8 Learn more at services About DXC Technology DXC Technology (DXC: NYSE) is the world s leading independent, end-to-end IT services company, helping clients harness the power of innovation to thrive on change. Created by the merger of CSC and the Enterprise Services business of Hewlett Packard Enterprise, DXC Technology serves nearly 6,000 private and public sector clients across 70 countries. The company s technology independence, global talent, and extensive partner network combine to deliver powerful next-generation IT services and solutions. DXC Technology is recognized among the best corporate citizens globally. For more information, visit DXC Technology Company. All rights reserved. MD_7176a-18. October 2017
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