The current situation is scary. It’s making us all think! Overnight, we are all faced with the fact that nobody knows what will happen next.
Will you need to downsize? If so, how much and for how long? When will your airline start to grow again?
Will you need to change? If so, how much change? New features, new products, new solutions or even new business models?
I’m not here to tell you the answers to those problems. But I can say one thing: for most of you, your airline technology stack and setup is most likely not ready for a big change.
Every digital survey I do (and we do many), every time I ask you about your key challenges – airline technology and flexibility are on the top of the list.
So what can you do about it?
How can you build a future-proof airline technology stack that will be up to the task when the next “change wave” hits us?
To get you some answers, I talked with a person who knows a thing or two about how to build modern, future-proof technology.
How can you build a future-proof and airline technology stack that will be up to for the task when the next “change wave” will hit us?
To get you some answers, I talked with a person who knows a thing or to about how to build modern, future-proof technology.
I started following Miha Kralj’s work way back in my IT days when he worked for Microsoft. Microsoft organized the biggest IT conference here in Slovenia, and they would bring Miha to talk about future trends. His talks were always inspiring, and they were the only reason I attended the conference, even after I moved from IT to marketing and ecommerce.
After his 15-year career at Microsoft, Miha worked for Amazon Web Services for two years and then moved to Accenture. At Accenture, he works with global clients on big IT and digital transformation projects. His clients include airlines and some of the travel giants of the world.
You can listen to my full talk with Miha here:
Or listen to the talk in your preferred podcast app:
We talked about the newest digital trends, technologies that will have the biggest impact and the airline technology 2020-2025 outlook.
Maybe some of you will ask me, why is agile airline technology so important? You could say you’re not a tech company, a digital company, or that you are “only” in the passenger transport business.
Well, Miha said one thing in particular about this when talking about digital transformation projects:
Every business is becoming a software business.
He certainly is not the only one thinking that way. Airlines like Eurowings, Ryanair and AirAsia are openly talking about becoming digital platforms.
Diggintravel has covered some airlines’ digital transformation cases in detail: Wizz Air’s airline digital trends, EL AL’s airline digital strategy, and the Eurowings airline digital transformation case.
However, talking about digital transformation is one thing; actually becoming a digital platform to sell more than your airline seats and ancillaries is another story.
When I asked Miha about the plans some airlines have to become more digital platforms, he offered an interesting view:
That’s a really, really tough world because airlines already fell asleep probably a decade ago. You already have, for example, Booking.com. Then you have Google with their own reservation and flight hunting engines. You have Amadeus and Navitaire that is in that space.
He also pointed out an interesting paradox: airlines are trying to become like some of the digital platforms, which were built in the first place because of the airlines’ past failures.
You have a whole travel industry that was built because none of the airlines was very successful in the past at making a good integrated, easy-to-use, easy-to-track direct to consumer experience. Everybody is trying to catch up, but we need to be very frank here: this is a catch-up game. First you need to be at least close to as good as Expedia Group is, or as good as any of the companies that are offering that direct, integrated experience. Most airlines today, if you book directly with them, are going to try to upsell you a car, a hotel room, or maybe even a vacation package, but nobody really thinks about airlines in that way. Airlines are seen as a single tasking tool. You go there only if you really want to fly.
You can probably agree that airlines are playing a catch-up game, especially when it comes to airline technology and digital maturity.
My next logical question for Miha was: how can we catch up?
How can airlines look into the future and build airline technology that will allow them to not only catch up, but maybe even run faster?
Miha offered another interesting point when talking about how to plan your future-proof airline technology. Before looking into the future, you need to look into your past:
One [the first] part is looking into their own past and trying to figure out how to minimize their existing technical debt. Some of my clients are still having mainframes that they couldn’t modernize or upgrade or refresh to actually be relevant.
Why do airlines have so much “technology debt”?
Airlines are a very interesting industry, particularly because a huge amount of stuff needs to be regulated, and it is not possible just to drop an old system because it’s old and say, oh, we found another supplier or another development house or another startup that is completely replacing, for example, the reservation system or the tracking system or buying a new system that is going to certify compliance of an aircraft just before takeoff.
You can’t just switch that easily, and that’s why you can see that the airline industry has an extremely long tail of highly diverse generations of technologies. So when my teams are working, particularly – actually, the whole hospitality industry is interesting. It’s something that I call IT archeology. We have the most fun time in those industries that cannot simply rotate on a dime, and we can dig out all of those different layers. You’re almost digging out the system and going, ‘Oh, I know! This is exactly from 1987’ type of thing. Then you can find another one that is highly digital and highly modern and fully mobile, and everything else in between as well.
So, once you understand the past, what is the next step? How can you start building your modern, agile and future-proof airline technology?
After we go through identifying which capacities we need to improve, the majority of the time, almost always, these capabilities are locked in old legacy systems. They were sometimes bolted on as an afterthought. Let’s say the airline initially started just as a people carrier, and most f the systems are counting seats but not capable of doing cargo really well and things like that.
So we need to find the right capability, and the best approach that we have is to extract that one capability or couple, a few capabilities out from the legacy systems and just focus on development of that one or those few. We call it digital decoupling. We decouple one or a few capabilities and build them on the side on the new platform with new technologies.
Once decoupled, you then need to build them on new, modern principles and architecture?
Correct, and integrate back into the legacy. One example that we have exactly for the airline industry is what we did for one airline. We digitally decoupled the whole alerting and signaling of changes. For example, if you’re going today to a traditional airport, the time when the airport gets the notification, either on a delay of a flight, change of a gate or anything like that, it’s most common, at least in the U.S., you’re going to get that at least two minutes later on the airport notification system compared to your mobile app.
The mobile app is attached much closer to the source of streams of events that the main system of the airline is producing, let’s say rerouting information, delays, or mechanical failures. Very frequently we will see that passengers are staring at their mobile phones, the gate change is announced, they get it on the mobile phone, and they start walking. The rest of the people that rely on the traditional signaling of the airport are looking confused, they’re going to stewardesses, to people at the gate, and people at the gate are typing into their own system and going, ‘No, I see no change.’ ‘Why are half of those business travelers moving, why are they leaving?’ And suddenly the announcement hits them as well.
So that real-time, reactive, event-driven type of string of events instead of waiting till some database gets a record changed and then somebody is, in 10 second intervals, scanning that record of which gate which flight is going to be on, and when the change is announced, then slowly propagate all of the change throughout the rest of the signaling systems – that is a very, very old approach. Going to much more reactive, event-driven systems is something that we see airlines are embracing quite extensively.
Once you do the first digital decoupling, how do you follow up? How do you build the new platforms going forward?
One of the key problems is where to find the funding to modernize everything. Every CIO that I talk to or every owner of technology, they would like to modernize everything immediately. But there is no money for that.
If we’re looking into how we’re going to fund this, we need to define where the money in the future is coming from. The easiest way to do that is actually to make a total cost of ownership projection and say, look, if you’re moving everything let’s say to the public cloud, you’re going to save – and again, I’m just going to throw random numbers – you’re going to say $100 million per year as a run rate after you did that move.
So out of those great savings – let’s say in 5 years you’re going to get half a billion dollars of savings – we need to eat some of that just in order to really move you to the cloud. Let’s say that half of that goes into the migration project itself. But then you still freed up $250 million for any new investment.
Then there is the question, look, if we cut your cost of IT, what could you do with that money? Because every normal CFO, after they see solid savings projections, they’re going to allow borrowing from the future savings. That’s how you fuel the modernization programs. Every modernization program needs to be fueled out from potential savings that the program is going to generate.
Up till now we’ve talked a lot about why you need agile and modern airline technology. You’ve also seen the first steps you need to take to start building your digital foundations on future-proof concepts and principles.
But what are these principles exactly? Can we predict future technology and digital trends?
The IT industry has a relatively predictable wave, like ebbs and flows, of how we can plan, predict, and then prepare for the upcoming technology waves. During the old nice Java times and client-server, we already knew that service-oriented architecture was going to come. During the service-oriented architecture, we were already thinking about what is wrong with SOA and what we need to change to go to the next generation and next wave of technologies and implementations and architectures.
Then, which is where we are right now, microservices that are kind of ruling the world on top of containers, built with the DevOps practices – we already know what is coming next. We’re looking into no-code and low-code type of technologies that are making developers a little bit more obsolete. We see the change in persistence and database stores, how that is switching.
But then looking for the longer term, if you want to have those discussions, we can totally talk about how quantum computing is going to change the world, what AI engines are going to take over from the traditional algorithms.
We can see about 5 years ahead, and one of the crucial decisions is: when are we flipping internally and when are we starting to tell clients that it’s time to flip the switch?
I must admit, some of the trends Miha talked about sounded too “techy,” too geeky to me. Even scary. But what really intrigued me, and something he’d talked about in some of his prior talks, is the transition from DevOps to BizOps.
This is something, along with the democratization of technology (transition from low-code to no-code) that should be really interesting for the CEOs, the marketing people, and the digital people.
This is what digital transformation is actually all about – to empower them to be even more flexible and agile down the road.
I asked Miha, did I get this right? Is this what this transition is about?
Yes, you did. Almost perfect. Working down the stack, right? Whenever we see a shift in the IT industry, that shift usually starts with a shift in the architectural space. Then it percolates – when some crazy architects decide there is a new way of either thinking about information, doing execution, or whatever, we need to create a new process to make that new craziness actually work.
First, after you get the change in architecture, then you get the change in processes. For example, we are going from traditional agile slowly towards a more and more lean type of engineering and software development. Then developers have the new processes, the new way of putting that new architecture together; they need new tools. So DevOps and then DevSecOps was one of those trends where they started to look into, how do we make things cleaner, leaner, better automation, better tooling? That one is also getting that evolution, and that’s very much where BizOps kicks in.
Today, a typical DevOps and DevSecOps tooling is very specialized, and it requires an extreme level of expertise and a very, very progressive type of nerdy thinking in order to make it work well. That’s why you can see it most successfully implemented in unicorns, which would be like in billion dollar startups in the Silicon Valley. But it doesn’t go much beyond that. Every bank, every insurance, every even airline will try to do their own DevOps, DevSecOps automation to a different degree of success.
Now, BizOps is the one that is clearly coming down the chute for a very obvious reason: we need more people making apps. Cloud providers need more people making apps in order to sustain that accelerated growth of cloud computing and using the machines that are sitting in data centers across the planet.
BizOps is the trend of how to make tooling much more close to non-specialized, non-developers, non-professional IT people so they can either visually, with a drag-and-drop or with a simple scripting, but ideally making a new application shouldn’t be much more complex than making a calculation inside an Excel spreadsheet. So BizOps is definitely one of those trends.
Now, below that is always an execution platform, and that’s what you mentioned as well. We went from VMs towards containers, and we are now slowly moving towards serverless.
How can one understand all the trends Miha just talked about? How are they connected and how do they add up into your future airline technology setup?
All of these things are connected. If you want to talk about the future trends:
Architecturally, we are looking into reactive, event-driven architectures.
When it comes to process, we are looking into lean software engineering.
When we are talking about tooling, we are going toward BizOps.
And when we’re talking about what the new execution platform is going to be, it’s going to be serverless.
These four things will go hand-in-hand in order to make the next generation of modern systems work as well as possible.
Finally, what is Miha’s advice for airlines when it comes to digital transformation:
I would say that they should be bold enough to start thinking about is I understand the regulations and I understand the zero risk tolerance policy of every airline, but being a little bit more bold and trying to get rid of technical debt faster, that would actually be – I’m not saying change the direction.
I would say change the speed, change the acceleration of the modernization of systems of the airline industry.
If you really want to learn more about how to plan your future-proof airline technology stack, then you should definitely listen to the full Diggintravel Podcast interview with Miha.
You can find the Diggintravel Podcast at the links below.
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