How does a digital innovation platform fit into the enterprise IT ecosystem?

June 30, 2017

This is the second post in my series of blogs on delivering successful Airline Digital Transformations.  In this post, I will propose a manageable scope for an airline’s digital transformation.

Blog 1 : Introduction to Airline Digital Transformation
Blog 3: Capabilities of an Airline Digital Transformation -A digital innovation platform
Blog 4: Designing your organization for a successful digital transformation
Blog 5: Prioritizing Capabilities and Governing the Airline Digital Transformation

A mentor of mine, Charlie Feld, has said many times, “Everything is just ones and zeroes”.  Charlie would make this statement as a way of making a point to leaders that in the end, anything can be done when delivering an IT transformation. It all breaks down to ones and zeroes - simple, right? But knowing what the most important things to do are, and the sequence to deliver them, are not as easily identified when there are constraints on time, money and resources. These constraints always exist for an airline pursuing a digital transformation, so it is extremely important that the airline clearly defines the scope for its digital transformation.  The scope must be strategic and must identify and articulate the important capabilities for the enterprise. Important as it is to identify and document the scope of the digital transformation program, it is equally important to effectively communicate the scope to all business units, including the IT business unit. So if everything is truly just ones and zeroes, i.e. “digital”, should the airline’s digital transformation include all IT capabilities that are needed to support the airlines business? I have been in discussion with many airlines about what they intend to deliver through their digital transformation. In all of these conversations, the airline leaders do not expect the digital transformation to include the entire IT agenda for the enterprise. It then stands to reason that an airline’s digital transformation is actually a subset of the entire IT multi-year plan, not the entire plan. I have seen varying definitions of what actually makes up the scope of a digital transformation. There is no one size fits all, and the scope will vary slightly from one airline to another. I believe that defining the appropriate scope of a digital transformation transcends the airline industry and is a challenge across all industries. If the digital transformation scope is a subset of the airline’s multi-year plan, then it is imperative that the airline has a well-accepted multi-year plan.  It should be clearly understood how the digital transformation fits into this plan in order for the transformation to be successful in the eyes of all the functional leaders.

Now that we have established that a digital transformation scope does not include the entire IT agenda, what capabilities should it cover? Whenever I have engaged with an airline thinking about or delivering a digital transformation, one thing is consistent: the direct customer-facing products and capabilities of the airline are in scope. The digital transformation always includes improving the customer experience in the direct customer channels and almost always includes delivering capabilities into the channels that provided airline cost savings. These are through additional self service capabilities, added revenue opportunities and providing the customer with a better customer experience through consistent, real-time information in the channel where the customer and the airline interact.

scope_digital_transformation_Blog2.png

Scope of a digital transformation in the  context of an Airline capability model

 

The digital transformation also includes the ability to drive down distribution costs and capture more ancillary revenue from non-direct channels by converting them to direct channels, i.e., ensure the third parties selling their products engage directly with the airline for information and ‘content’ to sell. So we can establish that the digital transformation addresses the customer experience for the airline through its direct digital channels and converts non-direct channels to direct channels. Digital transformations are not just look and feel upgrades to the customer experience, but most importantly they bring value-added capabilities to the digital channels where the customer wishes to interact. The digital transformation must be omni-channel. So it’s table stakes for the digital transformation to include the customer-facing products in all channels, but should it include the crew-facing products that are used to service the customer, and in essence are part of the customer experience?  Examples of these crew-facing capabilities include the products that airport agents and inflight crew members use. Also, should other inflight capabilities like inflight entertainment be considered in scope? It is my recommendation that crew member products are in scope for the digital transformation simply due to the impact these products can have on the overall customer experience and the success of the products that are directly customer facing. I also recommend that the airline’s distribution strategy be included in the scope of the digital transformation. It may not be obvious that the distribution strategy would be in scope for a digital transformation. But without a concise distribution strategy, the digital transformation will fall short of achieving the desired revenue benefits. After all, the execution arm of the distribution strategy is the customer facing channels.

So in summary we have established that the airline’s functional scope for digital transformation is not the entire airline’s multi-year plan, it is a subset of overall plan.  The digital transformation should include the customer experience in the customer facing digital products and should also include the crew-facing products as well as the distribution strategy.  In essence, the digital transformation will become the delivery mechanism for the airlines distribution strategy and customer experience.  Airlines should ensure they do not try to become all things to all customers. They should define a scope for the digital products that really give them a competitive advantage over other content providers. Airlines should focus on the capabilities that will differentiate them from other third parties and provide a unique customer experience that only the airline can provide.  In my next blog post I will address some detailed capabilities that should be included within the high level scope I outlined in this post.

 

Blair Koch, Datalex CTO & President USA

 Read post 3 : "Capabilities of an airline digital transformation - A digital innovation platform" 

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