Season 2, Episode 1: A Conversation about the Journey to Airline Digital Transformation

PROS Travel Podcast, Season 2, Episode 1:

Airlines are now dedicating upwards of 30-40% of their budgets towards digital transformation and 68% are looking to upgrade software and IT infrastructure. Those are big numbers and big changes. To help us talk about this change, successes and failures, and how airlines can tackle their technology dreams, we have Michael Brownfield, VP of Professional Services at PROS.

Michael talks about the teams at the airlines that drive technology innovation, how those teams must collaborate and keep the customer experience in mind. He points out that the airline industry helped with the innovation of ecommerce as far as customers starting to purchase plane tickets online during the first dot com wave, and now customers are keeping their wallets open for ancillary items like meals, seats, and entertainment.

You can listen to The View from 30,000 ft. on Apple Podcasts and Spotify. Or listen to the full audio version below.  

 

In This Episode

[03:09]: What makes the airline industry unique?
[05:00]: Innovation in the airline industry
[07:13]: When it comes to change, where should airlines focus?
[07:56]: What does change entail, and who is involved?
[09:48]: Who owns the strategy when it comes to change?
[11:02]: An example of success in airline innovation
[12:42]: Pitfalls when it comes to implementation and infrastructure changes
[13:55]: Leadership involvement in digital transformation
[16:20]: What will be the next wave of innovation for airlines?
[19:17]: 2020 initiatives with PROS Professional Services team

Full Transcript

Aditi Mehta: Hello, and welcome to the PROS travel podcast, The View from 30,000ft., a podcast series featuring airline industry experts tackling the real issues around airline digital transformation. This is our second season. I highly recommend listening to the last season if you haven't yet and we're focused on big and small changes around travel IT, data, products and retailing. Now sit back, relax, and enjoy the flight....

Aditi Mehta: Hi everyone, this is Aditi Mehta. It's 2020, a new year, a new decade. A lot of us have personal goals and resolutions we're aspiring to, and that's no different for many airlines. They all have strategic plans and initiatives that they are looking to kick off or accomplish in 2020.

Aditi Mehta: Last season, Stanislava and I spoke about digital transformation initiatives at airlines, how much investment, time, and resources they take. Airlines are now dedicating upwards of 30 to 40% of their budgets towards digital transformation, and 68% of them are looking to upgrade software and IT infrastructure. Those are big numbers and big changes.

Aditi Mehta: To help us talk about this change, successes and failures, and how airlines can tackle their technology dreams, we have Michael Brownfield, vice president of professional services at PROS. He works very closely with PROS airline customers around the world discussing not only the implementation and successes of PROS solutions, but also the big management pain points around change management, training, budgets, and time to value. Welcome, Michael.

Michael Brownfield: Thanks, Aditi. I'm really happy to be on The View from 30,000ft.

Aditi Mehta: We're glad to have you here. Can you tell us a little bit about your background and how you came into the airline industry?

Michael Brownfield: Yeah, happy to. It's slightly nontraditional, I guess, for people who've been in the airline industry for a while. I actually got my start not in the airline industry. I started out in strategy consulting. I spent about a decade at Accenture working with a host of different companies in a bunch of different industries, primarily around the concept of pricing, price optimization, and really understanding the fundamentals of consumer demand and how that influences pricing.

Michael Brownfield: I spent a lot of time working with retailers on topics ranging from competitive strategies to assortment optimization, even things like store layouts. And then I also spent a lot of time with some B2B clients focusing on commercial excellence strategy, so how companies actually negotiate better, how they price their contracts better and include all the terms and conditions that go along with that.

Michael Brownfield: And then I spent a little bit of time at McKinsey doing some similar stuff as they were trying to build out their digital practice, and then I came to PROS. I have to say I am a lifelong aviation geek, though. My mom has been showing me pictures of when I was a little kid at the airport watching planes take off, so I have to say being at PROS working in the travel industry specifically, it's kind of my dream job.

Aditi Mehta: Oh, that's great to hear. And a great breadth of experience across multiple industries, but as you know now working in the airline industry, it's a very unique space to be in. What do you think makes this industry so unique and so different from the ones that you've worked in in the past?

Michael Brownfield: I mean I think it's a weird industry because it's B2C, so it's consumer focused, but there's a bunch of intermediaries in the industry, and there's just a weird ecosystem that surrounds everything. It's kind of unlike any other industry that I've ever seen where retailers are, you know, they've got the consumer packaged goods companies who sell their goods to retailers who then curate them and sell them on to the end consumer.

Michael Brownfield: You've got B2B companies like oil companies that are selling stuff to other companies, but it's a weird industry because it's a B2C industry with a bunch of other stuff wrapped around it that makes it so complex.

Michael Brownfield: It's highly competitive and cooperative, which is also a weird dynamic in this industry. Airlines are competing fiercely with each other while they're also trying to cooperate where they can so that they're all maximizing profits. Yeah. It's just a weird industry.

Aditi Mehta: It is. And as you keep working in it, you learn more and more, I feel like.

Michael Brownfield: It's also really small, I mean, there's tens of thousands of B2B companies. There's countless numbers of retailers out there, big and small. Everyone talks about Amazon and Walmart. But I mean there's lots of different companies out there. I mean there's a finite number of airlines in the world and it's a relatively small industry. A lot of people know each other, which is great because I mean, it's an industry that a lot of people are passionate about. Some of the people on my team like to talk about the fact that it gets in your blood. It never gets out. Right?

Aditi Mehta: Yeah. Once you go to travel, you can't go back, right? Speaking of, when we talk to industry experts and we talk to people at conferences, the airline industry gets a lot of flack for not accelerating their digital transformation initiatives, that they're still behind in concepts like retailing and dynamic pricing and other operational efficiencies. Why do you think, or do you think, that they're behind?

Michael Brownfield: I mean, it's all relative, I guess. I've even said this a little bit. Some of the topics that we're discussing with airlines right now are topics that I was discussing with retailers in the early 2000s, right, around personalization and offer optimization. Those kinds of things. I kind of take exception to this, though, because people think that the airline industry isn't innovative, and that just doesn't stand up to scrutiny at all.

Michael Brownfield: I mean, by definition, the airline industry is innovative. They fly. They were the first industry to put people in the sky. I mean that in and of itself.

Aditi Mehta: It’s huge.

Michael Brownfield: It's an industry that marshaled in the jet age. I mean they created jets. That's amazing. And if you think back to the first dot com bubble or the real push to online commerce in the late '90s, early 2000s, the airline industry is the industry that really marshaled buying to the internet.

Michael Brownfield: I mean I asked these, this of a lot of different people. Think of the first thing that you bought online where you put in your credit card number and said, "Oh God, I hope this works." It was probably a plane ticket. It might have been a hotel reservation or a rental car reservation or something like that, but it was probably a plane ticket. It's an innovative industry.

Michael Brownfield: Now, if you believe everything that I just said, the innovation isn't linear. The airline industry, from my perspective, does these big step changes every, I don't know, 10 to 20 years and if you think about the first dot com wave in the late '90s we're about due for another big shift in the airline industry, and I think we're starting to see, and have for the last couple of years, we're starting to see some of the preliminary waves of that next step in innovation that's going to come from the airline industry.

Aditi Mehta: That's interesting. I might ask you later where you think that big wave of change is going to be. But one of the questions I wanted to hit upon is the reason why people think that the airline industry is behind, and I think a lot of it is just that we're our own worst critics, is that we have a lot of work to do in terms of mission critical systems. There's reservation systems, there's PSS. There's a lot of plumbing that airlines have to fix in order for them to do anything else. So where should airlines focus and how are they dealing with that change or that requirement?

Michael Brownfield: I mean it's kind of like when you buy a really old house and you want to do innovations, right? You start cracking open the walls, you start redoing the plumbing, rewiring the house, and you realize, "Oh wow, this is a lot to get into," and there's really no good place to start, right? But I think starting with some of the fundamentals is really the, the thing that a lot of airlines are realizing that they need to do. Making sure they've got the right infrastructure and foundation in place to be able to execute the next generation of strategies that they're going to in order to maximize their revenue.

Aditi Mehta: I mentioned that earlier, that 68% of airlines say they're currently working on upgrading software and IT infrastructure, but what is this change entail? What are some of the things that you're seeing when you're working with customers, and who all is involved in this change? Who has a seat at the table?

Michael Brownfield: I mentioned earlier there's just this huge wacky ecosystem in the airline industry, so everyone has a part to play. I mean the GDS's, the PSS's, the technology providers like PROS that are providing more of the commerce solutions. And then there's the whole operation side of the house too. I mean, airlines are incredibly complex enterprises to operate. I mean they've got to get people from point A to point B, but there's any number of touch points that have to happen there before you even think about, ultimately, the customer experience, right, and core operations of the airline.

Michael Brownfield: I think the smarter airlines are realizing, like I mentioned earlier, that they've got to have the right infrastructure in place. So they've got to make the baseline investments in the right technology that underpins the enterprise to be able to even have a fighting chance on the commercial side of making sure that their customers have an amazing experience.

Michael Brownfield: The smart ones are starting with the customer in mind because at the end of the day that's who they're there to serve, and then working backwards from that to see what are all of the things that they need to do, where are the investments that they need to make, but a lot of is around having the right PSS system in place. A lot of this is around having the right pricing systems in place, revenue management systems in place, and all of that has to be underpinned by the right strategy, too.

Michael Brownfield: What do the airlines actually want to be? Who do they want to serve? What's their brand going to be about? I think the more successful ones that you read about in the industry are the ones who have really kind of figured that out. At least the more profitable ones are the ones who have figured out these are the markets we want to serve, this is the network we want to have. This is the fleet strategy that we have. This is the customer experience that we're going to drive, and then that strategy drives the technology and investments that they need to make.

Aditi Mehta: Who do you think within the airline owns that strategy? Does this come from a CIO, a CEO? What teams should be driving this?

Michael Brownfield: Well, every airline is a little bit different, but in this regard, I don't think airlines are that different from other industries, right? It has to be the executive team collectively making the right decision for their company. I guess every airline is slightly different as far as who controls the purse strings. In some airlines it's the CIO or the CTO. In other airlines, it's the chief revenue officer or chief commercial officer.

Michael Brownfield: Where I've seen this happen the most effectively is where there's really good collaboration between the business team and the technology team at airlines. Again, I don't think that's special for the airlines, necessarily, but you've got to have the right alignment between the business teams and the technology teams at the airlines to make sure to even have a chance of making sure that this is going to work out the right way.

Michael Brownfield: I would refer back to what I said earlier about having the customer in mind because the ones who have really figured this out are there in lock step between business and IT, if you will, on what they need to drive for their customers, and then that that's what drives their investment decisions.

Aditi Mehta: I think that's a really good point that everything should start with the customer experience in mind. Can you give an example of where you're seeing some of these projects be successful? Some of this change be successful?

Michael Brownfield: We've been working with one airline for many decades. I wish I could say their name, but I'll just give you some examples of what I've seen from them that I think is really impressive. We've been working with them for multiple decades, and I think they realized recently that they needed to really make a change in their core infrastructure to be able to do all of the innovation that that we jointly have been working on for multiple years.

Michael Brownfield: They just went through the difficult process of completely updating their PSS. It was a huge endeavor, but they recognize that that was what they needed in order to execute their innovation strategy around dynamic pricing, offer optimization, getting closer to what they know their customers ultimately want, which is a differentiated experience.

Michael Brownfield: A PSS migration is never fun. It's never cheap, and it's not something that has a rock solid business case underneath it that says it's going to drive X million dollars in incremental revenue or X million dollars in cost savings or whatever. Of course, there's some components of that, but it's just something you have to do, and I think they took the difficult decision to do it. They put the right investment behind it, they did a great job marshaling it across the finish line, and now that's unlocked them to be able to do, now, what they want to do, which I described earlier. I think they've got great plans for their digital transformation, if you will, on the commercial side now.

Aditi Mehta: That's really interesting. What would be some of the typical pitfalls when it comes to implementing new software and making key infrastructure changes?

Michael Brownfield: I think the first one would be not having alignment. Remember we talked about that. I mean, if you're not oriented toward the customer you're almost setting yourself up for failure. If the business team who is ultimately responsible for executing the commercial strategy and the IT team who are responsible for enabling that from a technology perspective aren't aligned, that's setting yourself up for failure. If you have vendors who are constantly fighting with each other, that's a nightmare. If you have weird regulatory stances that causes pitfalls. I mean there's lots of things that I think the better airlines who really structure clear strategies around what they want to do have gotten around. I mean, they avoid these pitfalls.

Aditi Mehta: So for any of these initiatives, there's a lot of conversation, especially at the decision table, of time to value and making sure leadership truly understands why change needs to happen and how it's going to impact the bottom line. Do you think there's clear buy in when it comes to digital transformation, especially from leadership, and then are department leads doing a good job in convincing their leadership about the digital transformation that airlines need to do?

Michael Brownfield: I think it's getting better. I mean, like any transformation in any industry, there's going to be leaders and there's going to be laggards. I think the leaders are starting to figure that out and starting to put some money behind digital transformation that's going to make a difference for their bottom line. The airlines that do this really well have figured out what their strategy needs to be, and they've then defined their technology investments that align with that. That’s the good ones that are doing that.

Michael Brownfield: I think executives at airlines, at least from my experience, are thinking about this a lot. I mean they really are. It's not like it's something that they have to be convinced that this needs to happen. I mean they're thinking about, because they're constantly keeping an eye on the competition, the next wave of innovation. They're thinking about this a lot. I think where they tend to get stuck is on pulling all the pieces together. It's not easy to go through some of these digital transformations, and without the right program in place, without the right strategy, et cetera, like we talked about, it just doesn't happen.

Michael Brownfield: It's like any industry in that there's new people coming into this industry all the time. People catch the travel bug that want to go work for an airline. You've got this macro trend that we're seeing in other industries as well where there's people who were born between 1980 and 2000 who are now entering the workforce, and they're the ones who are pushing. They're not only consumers, but they're workers at these airlines as well, and they're really pushing the airlines to innovate and use new technology and update the plumbing, as you called it, that that's been around in the industry since, in some cases, the '50s.

Aditi Mehta: Yeah, exactly. I don't know very many, I guess gen Z'ers, if that's what we're calling them now as wanting to log into a blue screen and plug away at their day-to-day job.

Michael Brownfield: Yeah, exactly. They want this experience across all the platforms that they're used to using. I don't think that every airline system can look like Facebook and Instagram, but that should be something that people are thinking about is what does the internal experience for their employees look like? What does the external experience for their customers need to look like, and those two need to kind of go hand in hand using modern technology, using the next wave of innovation.

Aditi Mehta: Exactly. So then going back to your point about the next wave of innovation, what do you think that's going to be in the next 10 years for airlines?

Michael Brownfield: I would go back to my retail experience where it's really about personalization. I think consumers want an experience that's relevant for them, and airlines have got to get behind all of the things that need to happen in order for customers to get that experience. Gone are the days, this is long gone, I mean it's not like this is still out there, but gone are the days where it's like a full service plane ticket A to B, but it's not differentiated.

Michael Brownfield: Consumers want a travel experience. They don't even just want an airline experience, and that's going to be complex. It's really hard to manage those things, but that doesn't mean it's impossible. I mean there's real opportunity there. Yes, people want to get from a to B safely. That's just table stakes in the industry, right?

Michael Brownfield: But they want to get to the airport, through the airport, have a good experience at the airport. They want to get on the plane, sit in the seat that they want, bring on board or not what they want, eat onboard, drink onboard what they want, get to their destination, pick up their rental car, have a hotel, have good experiences at their destination, whether it's for work or for pleasure.

Michael Brownfield: I think the airlines, as kind of the key piece of that travel experience have a lot to gain from making sure that those customers have an awesome experience. It's okay to make money out of that, too. I think it's not like customers aren't willing to pay for this stuff, right? I mean you, there might be some grumbling along the way about, "Oh, well, it used to be this way," or not, but I mean customers really are voting with their wallets. They're willing to pay for a better experience, and airlines stand to gain from that.

Michael Brownfield: I think the smart ones are really going to be able to capitalize on that and accomplish, ultimately, what we all want to accomplish, which is a great customer experience, which generates a loyal customer base and making money, and that's okay. I mean at the end of the day I think that's okay.

Michael Brownfield: Like I said, the good airlines are going to figure that out, and they're going to continue to innovate, continue to make money, continue to invest in their business. And it's going to be like any other industry where the laggards get left behind and then there's an industry shift, right? I mean some of these airlines are going to go out of business. There'll be new ones coming up that, that push the next wave of innovation maybe 15 or 20 years from now.

Aditi Mehta: That's really fascinating. I think there is going to be a huge shift into all of these concepts that I feel like we've been talking about forever, and it's just about time that we bring personalization and offer optimization, enhancing every single customer touch point out there. Like you said, data shows that passengers are willing to pay for a better experience at the end of the day.

Michael Brownfield: Yeah, absolutely.

Aditi Mehta: We started this podcast talking about 2020 initiatives, resolutions. Do you mind sharing what you have for your team in terms of goals and how you want to serve the airlines, our airline customers, around the world?

Michael Brownfield: Absolutely. I'm incredibly excited about 2020 at PROS and with our professional services team because we're going to continue to invest, really, around making sure that we accelerate the time to value for our customers. It's about making our solutions easy to adopt, easy to trial, easy to adopt, easy to roll out and shortening that time to value window so that our customers, the airlines of the world, and really the travel providers of the world, can accomplish their business cases. They make an investment in PROS and we need to make that investment an easy decision to make and an easy thing to adopt and roll out.

Michael Brownfield: So a couple of things that we're doing. One thing that I'm really excited about in 2020, we're launching this concept called global practices where we're going to take some subject matter experts and real industry veterans and put them in these global practices where they will be responsible for making sure we drive standardization in our implementations, better documentation, better training, better enablement. But also being out there in the industry, writing white papers, going to conferences, talking to people about all the great innovation that PROS is doing.

Michael Brownfield: We're also going to be partnering across PROS to make sure that we're bringing the best experience for our customers because, again, we're a service provider as well, just like the airlines are. We want to make sure that our customers have a delightful experience when they work with PROS and my team, the professional services team for travel, is one of the key customer-facing organizations here.

Michael Brownfield: I want to make sure that we're constantly making it better for our customers to have confidence in the investment that they're making in PROS.

Aditi Mehta: Michael, thank you so much for joining us. We had a great time talking to you. I want to ask you one last question. Can you tell us about your worst or best travel experience?

Michael Brownfield: My best travel experience, hands down, has to be when I went on my honeymoon. I mentioned I'm a bit of an aviation geek. I'm also a points and miles aficionado, I suppose. I'd saved up a bunch of points and we cashed into fly first-class to Asia, spent four weeks in southeast Asia traveling around. Being the geek that I am, I actually constructed the awards itinerary so that we could spend the entire day in the first class terminal at Frankfurt airport, which anybody else would say, "Wait, why do you want to spend the entire day at the airport?" I said, "It's the first class terminal." It was pretty fun.

Michael Brownfield: After was my honeymoon. I mean, you know, better, right? So that was definitely hands down my best experience.

Aditi Mehta: I think that's a dream for a lot of people is to experience first-class. Great. Well, again, thank you Michael. We appreciate having you and would love to see you again.

Michael Brownfield: Yeah, likewise. Happy 2020.

Automated Voice: Thanks for listening to the PROS travel podcast, The View from 30,000ft. Special thanks to our guests and our producer Genevieve Todd. We hope you've enjoyed this episode. If you have any feedback, a burning idea, or know of an industry expert we should feature, shoot us an email at amehta@pros.com. That's A-M-E-H-T-A@pros.com. You're now free to move about the cabin.

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