The impact of legacy systems in travel: what tech companies must understand
To outsiders, legacy systems used by travel and hospitality businesses might seem outdated, inefficient and lacking in innovation. But if they’re working well in a particular context, these systems also bring benefits to their users.
Although digital transformation and Cloud technology is gaining traction in the industry, moving away from legacy systems isn’t necessarily straightforward. Here are some of the complexities tech companies must navigate when selling into travel and hospitality businesses using legacy systems.
Travel and hospitality is behind other industries when it comes to the adoption of technology. The reasons for this vary, but it’s mainly put down to a fear of change, the disruption it may cause, and the cost of properly implementing new technologies – particularly in the current economic climate.
Often dramatic tech stack changes require cultural and organisational change, robust L&D training programmes and buy-in from the workforce. Where businesses like hospitality can be spread across multiple locations, there’s challenges in facilitating such a change.
Legacy systems are often cast as being a hindrance to the businesses using them, with high profile media stories perpetuating this, such as the Southwest Airlines dated scheduling system grounding hundreds of flights (New York Times). Yet the legacy systems that have evolved and invested in do still deliver a valuable service. As such, some travel and hospitality businesses want to get the most out of their current tech as they can.
That’s not to say that the world of travel and hospitality isn’t interested in new technology, digital transformation and migrating to new systems. A recent survey by Skift and Amazon Web Services (AWS) found that 72% of travel and hospitality industry experts consider digital transformation as being ‘very important’ to their business.
And there is growing pressure from travel and hospitality customers, who expect their technological interactions to be on a par with those in other industries. Rising digital maturity across all industries is reshaping expectations,
says Roger Tabbal, VP Global Guest Technology and Innovation at Accor. Guests expect a seamless journey from other industries.
The key for tech companies is understanding the environment they are selling into, and finding out what is really important to their prospective customers. So what do tech companies need to understand about selling into the travel and hospitality sector?
Legacy systems are not always bad
Legacy systems are those that have been around for a long time and were traditionally installed on-site. Some still remain in the same state, although many legacy systems have migrated fully to the cloud. In travel, systems such as Property Management Systems, Central Reservations Systems, and Global Distribution Systems have been legacy. Much of the new tech on the market is cloud-native, and therefore considered more agile for today's digital environment.
But that alone cannot make legacy systems obsolete, particularly if legacy companies have continued to evolve, and adapt to the changing market needs and tech demands. Often legacy systems are steeped in credibility and stability. While they may not be at the cutting edge of innovation, they provide something essential to the businesses they serve - reliability.
Innovation isn’t everything
Some legacy systems built specifically for the travel and hospitality industry, such as Property Management Systems, were created up to 50 years ago. Compared to the more recent business apps that can be used by any type of business, crafted by businesses known for innovation, such as Amazon, Google or Apple – these legacy systems are not at the cutting edge by comparison.
But innovation is not everything to travel and hospitality customers. Perhaps their legacy products are reliable, stable and robust. They may have invested in their infrastructure, and it may have fully scaled. Their legacy provider may have given opportunities to add additional features and functionalities that have been well-tested before being deployed. And they may have integrations and connectivity between systems. If all of this is in place, a travel or hospitality provider will be resistant to change, especially where they may feel the system has been customised to their business.
The challenge for younger, innovative rivals is that they might not have the scalability, reliability or consistency their older legacy competitor has.
Ultimately, the more innovative a company is, the smaller their audience size is likely to be, because investing in bleeding edge tech can be riskier. It can be costly for travel and hospitality companies to be early adopters, where they invest in tech and don’t necessarily see the return. Many in this sector prefer tried and tested technology that will be reliable.
Are you actually solving a customer’s problem?
Tech companies wanting to partner with hospitality and travel clients should therefore focus less on getting rid of legacy systems, or selling innovation as a concept. Instead, tech companies must ensure they are reliable, credible and trustworthy businesses, providing solutions that customers need.
Take some time to understand what solutions the prospective client already has in place. What is and isn’t working about this? Does your technology have the ability to solve the pain points? And would it be able to integrate with the technologies already in place, if the client wants to keep them?
Addressing this and the benefits that the customer will experience, rather than pandering to innovation and having to be cutting edge just for the sake of it, is the real key to a successful partnership. Also consider how flexible the technology can be, and if there are opportunities to work on a solution together that will deliver on a client’s needs.
The cost of buying new technology will always be an issue for travel and hospitality businesses too – even more now given the current economic climate. Tech companies should focus on explaining the return on investment, and how the tech will make them more profitable.
Consider the integration process
If they do adopt a new technology, something travel and hospitality clients are nervous about is the disruption it may cause. They cannot afford to have any downtime, and staff need to be able to pick up new systems speedily. Any IT integration is a big project for a travel or hospitality client and it must go right. After all, downtime or loss of data can considerably impact their business performance.
It is therefore essential to offer a detailed plan of how the technology will be implemented and integrated, and a team should be in place to manage the project from start to finish. Aspects such as the cloud and open APIs are expected with any new tech adoption nowadays, so it’s important to demonstrate the benefits this will bring too.
Legacy systems are very important to many industries, and they are particularly important to the travel and hospitality sector. Understanding this is key to successful partnerships involving new technologies.
If you’re a decision maker for a travel or hospitality business, interrogate the credibility, reliability and scalability of new tech solutions before committing. And if you’re a tech company, define your audience, what their needs are, and what return you can expect on partnering with them. From both sides, innovation might sound exciting and powerful, but base decisions on what makes most sense to your specific business.
For more on this subject, check out an article from Hospitality Investor - Why hotel investors should be wary about cloud migration - with input from hoteliers on the challenges and risks of migrating from on-premise solutions.
If you’re a tech buyer or a tech seller and need some help navigating the process, get in touch with Haynes MarComs today to help.
Ryan Haynes
Director | Lead Consultant
Haynes MarComs Ltd
