Traveltek chief operating officer Stuart Cotterell spoke about how the Netflixisation of Travel in the B2C sector will permeate B2B at the event in London earlier this month
Travolution Summit 2022: Why and how disruptive cloud migration will happen in travel tech
Travel technology suppliers shifting from a product-based to subscription-based models face a triple whammy of technological, financial and talent recruitment barriers.
Speaking in a session on the Netflixisation of Travel, Stuart Cotterell, chief operating officer at Traveltek, said he was confident the shift towards the subscriber economy will continue.
But he warned the necessary technological shift to adopt cloud computing should not be a “corporate box ticking” exercise and requires a commitment to disrupt your own business.
He said just as consumers are now used to engaging with brands on a subscription basis, like streaming content with Netflix, so too this will become common in the B2B sector.
“You cannot be a consumer these days without engaging on some kind of subscription service, it pervades most industries” Cotterell said.
“Let’s not pretend it’s a new thing…but over the last ten years it’s really pervaded many industries it’s not touched before.
“It’s not just a new way of taking payment, it’s a much more fundamental change in the way we work and operate.
“The old model, the product economy model, is where engagement with the consumer is understanding what product they want, building it, selling it to them and shipping it.
“At that point the engagement with the customer kind of stops. You don’t really want to be hearing from your customer once you’ve sold it because it’s probably because they’ve got a problem or want to return it.
“In the subscription economy model it puts the consumer at the heart of it as a subscriber and it lengthens and strengthens the engagement between the consumer and the corporation.
“There’s still a product there, that’s not gone away, it still has to be a good product but the way that the consumer engages with that is ongoing and sustained and it’s two-way as well.”
Subscriptions mean the consumer is constantly using the product and providing feedback to the provider meaning companies must have much deeper relationships with customers to maintain predictable ongoing revenues.
Although this model has been growing ahead of more traditional models in the B2C world over the last decade, it is still relatively uncommon in B2B, Cotterell said.
He identified three reasons for this: the need to become truly cloud native and re-engineer core technology; an initial hit on revenues as companies transition to the new subscription model; and difficulty recruiting the right digital skills.
“I’m a huge proponent of the cloud and what it can di and what is has done, but I think it is holding back some businesses.
“There’s a box to tick around being on the cloud. A lot of organisations can say they are ono the cloud because they’ve moved some services onto a cloud data centre.
“There is a real difference between being on the cloud and being cloud native which is realty what drives the differential performance of these subscriber economy businesses.
“The likes of Netflix and Spotify and Tido, they are all built cloud natively and they leverage cloud components from the ground up they haven’t built them outside the cloud and moved them in.”
Having already migrated to the cloud, Traveltek itself is currently undergoing a cloud-rebuild project and is already seeing some of the “transformational benefits” of doing that easy to use out of the box AI, machine learning and bid data processing.
Cotterell said cloud migration is a “big fish to swallow” because revenues will initially dip as companies move from the “big bang” sales model alongside increased investment in building the new subscription model.
“For incumbents in the market who have done well out of the old product economy model it’s hard to adopt. It requires patience, it requires vision and it requires supportive investors and a lot do not have all those things that are required.”
Cotterell described navigating the cloud is “insanely complicated” and requires deep expertise to access all the advantages that can transform businesses.
“Getting hold of technologists that can navigate this stuff is really difficult, so if you can find them you’ll be doing well to attract them to your business and if you can attract then to your business you’ll be doing well to retain them.
“Even is you accept that building cloud native is the way to go it’s challenges to find the resource to do it.
“But I think it will happen. These challenges are challenges but they will be solved. It’s a matter of how and when.
“The truth of most industries is if we don’t disrupt ourselves as providers in this space someone else will come in and do it for is for us so it’s incumbent on us to find solutions in this space and move towards this model.”