Guest Post: Innovate or risk disappearing altogether

Guest Post: Innovate or risk disappearing altogether

Travolution Innovation Report 2018

New industry entrants and disruptors are united by their ability to exploit data, says Thierry Gnych of IBM

According to global technology giant IBM, nearly three-quarters of businesses believe they are susceptible to disruption in the next three years.

Of those, only 14% think they will be able to act quickly enough to do anything about it, and some firms believe they don’t need to react.

This is not a view shared by Thierry Gnych, IBM’s cognitive and industry solutions European lead for intelligent operations, who sees the potential for disruption all around.

“You can go anywhere, speak to anyone, look at every industry and see disruptive forces in action,” he says.

“When you look at the travel industry the very obvious thing is it is being disrupted.”

Gnych’s role at IBM covers the travel and transportation sectors and he sees two key factors driving disruption today.

The first is the fact that planning and booking travel remains a “painful and lengthy” customer experience.

The second is the role of intermediaries, which intervene between the service providers and the customer by getting closer to the customer.

This travel “ecosystem” is constantly evolving, but Gnych says what unites the new entrants and the disruptors is their capacity to use data.

“The reason why the ecosystem is able to interfere with the travel service providers is because they often know the consumer better,” he says.

“They have been extremely good at leveraging data. This has been collected to create an enriched customer profile.”

Disruptors are present at all stages of the travel researching, booking and experiencing journey, whether it’s TripAdvisor, Expedia, Booking.com or Google.

New entrants such as Uber and Airbnb have built multibillion-dollar firms based on owning no assets except the data which they use to hone the customer experience.

“Look at the forces driving this disruption,” says Gnych. “Data is becoming critical; we call it the new fuel of business. But only 20% of data generated can be used by traditional systems. You have a whole mass of data, 80%, which cannot be leveraged by traditional systems. That’s where the disruptors are playing.”

It is collecting and making sense of this huge amount of unstructured data that IBM is focused on with its cloud‑based IBM Watson cognitive computing technology.

It is estimated there will be 20 billion connected devices on the planet by 2020 as everything from your fridge to your car becomes web-enabled.

“Everyone will be producing data which can be collected and used for insight curation,” says Gnych.

Large corporations are starting to migrate applications and systems to the public cloud to take advantage of its increased flexibility and efficiency.

IBM is working with the likes of French rail operator SNCF and American Airlines on projects to put operational and customer service systems in the cloud.

Concerns about loss of control of data when it is migrated to the cloud abound, but Gnych says IBM assures clients it will be used only for the purposes they stipulate.

Data in the cloud can be protected to keep it for internal use only and integrated with business’s critical back-end systems that are not in the cloud.

Firm can also create hybrid systems with some cloud data made public so that third-party developers and start-ups can access it to spur innovation.

Gnych says: “Cloud data is becoming a real competitive advantage for companies because you can infuse it with artificial intelligence and build cognitive capabilities.

“By the way, we are only seeing the very beginning of this. Because of the Internet of Things, you can collect data from virtually everywhere.

“You need to be able to digest and analyse this data and that’s where Artificial Intelligence through machine learning is able to detect emerging trends from the vast amount of data.

“This can happen through physical and non-physical assets, as long as you collect the data.

“The way we look at this is we try to bring together cloud, analytics, mobile and security to enable digital transformation.”

According to Gnych, there are three key reasons why companies across all sectors are embracing digital transformation, all tied in with consumer experience.

“The first is personalisation,” he says. “People want to be treated as an individual not as a segment any more.

“The second is immediacy. When we ask for something, we need it most of the time now, not in 30 minutes.

“Third is choice of channels. This is not the choice of the travel service provider, it’s all about what the customer wants to use.

“And fourth, they expect true genuine customer experience. A consumer will remember a good or poor experience more than the brand that delivered it.”

Gnych cites a Forrester study that found providing a good experience is not just nice but good for business.

He said customer retention has been seen to improve by a factor of 2.7, and sales to existing customers increase by 3.6%, while the cost of acquiring new ones decreases.

Despite this Gnych believes the travel sector does not necessarily grasp the opportunity. “Travel tends to be conservative, I would say a little bit cautious. I feel like there’s fear about trying something new. We have some leaders moving very fast, especially among airlines, and the rail industry has been accelerating in the last few years.”

Gnych says there are four imperatives firms are facing in this new data-fuelled digital age.

The first is the need for fully fledged digital transformation that will see many business models challenged.

The second is the need to reinvent the customer experience, the third to re-engineer core processes, cognitive automation as IBM calls it, and the last is to innovate. Gnych adds:

“No innovation, no growth – or you might even disappear altogether.”

Travolution Innovation Report 2018

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