Software as a Service, or SaaS, it is believed will accelerate the democratisation of travel where offers are co-produced in collaboration with ecosystem participants. Three experts share their views on how SaaS is bringing about tremendous change even in the tourism business.
The tourism and hospitality industry is going through one of the most challenging periods now. It is beyond any question, that the industry be dynamic in response to emerging situations whilst keeping a tight leash on the operating costs as much as possible. Adopting a SaaS platform to power business operations pro- vides the perfect solution for this situation – with flexibility being made possible from a transaction scale perspective and with the ability to strictly manage costs based on the revenues accrued by the travel company.
Explaining this, Jerrin Jos, Founder and CEO of Verteil Technologies, says, “SaaS-based solution reduces the financial burden on travel agents as it typically does not involve up- front fees, at least it is usually a low value. There are no monthly or annual maintenance fees. So, it’s extremely cost-effective, especially in an industry like travel where travel agents need to have rolling capital which makes any fixed investment really difficult.”
India’s SaaS firms worth $1 trillion?
India’s software-as-a-service industry could reach $1 trillion in value and create nearly half million new jobs by 2030 as businesses around the world accelerate digitization and automation, according to a new study. There are more than a thousand funded start-ups and 10 unicorns in the country’s SaaS sector, generating as much as $3 billion in annual subscription revenues, according to a report released by SaaSBoomi, a community of industry founders and builders, alongside consultancy McKinsey & Co and the country’s software industry trade group, Nasscom. The number of unicorns could increase 10-fold by 2030, reaching $1 trillion in value, it predicts.
SaaS, by its very nature, provides multiple benefits. For starters, the software is typically made avail- able in a cloud environment (such as AWS). What this means is that the software is up and running. Setting up new users can be done very quickly, as well as the ability to support tremendous increase in transaction volumes very quickly. The commercial model is structure on a pay-per-use basis. This means that huge upfront investments in infrastructure are not required, as well as the costs incurred are proportionate only to the revenues generated.
Jos feels that his product that is SaaS-based is helping the travel businesses tremendously. “Travel, especially air travel, is evolving considerably, especially from a technology angle with NDC initiative from IATA. This would mean travel agents and any travel sellers in general will be forced to adopt new technologies to leverage the commercial benefits airlines are pushing on NDC distribution channel as well as access to real-time and transparent communication from airlines which is so critical during this pandemic phase (change in COVID guidelines, etc),” he says.
Technology-driven differentiation Changes in consumer behaviour are the key forces driving fundamental changes in the structure and business model of travel distribution in the future. Travel suppliers and intermediaries alike need to redefine their roles vis à vis the customer and need to answer how they can establish a sustainable business model with attractive growth and margins. “Unfortunately, most players in the industry seem to be finding answers that appear to be highly similar, moving everyone into the same potential ‘sweet spot’. Travel companies need technology-driven differentiation to be successful in the future,” says Asish Z Koshy, VP & Head - Tour and Cruise Business, IBS Software.
SaaS can help the industry get access to best-in-class technology and therefore be an enabler in their efforts to differentiate. SaaS brings a host of innovation and growth opportunities for tour- ism and hospitality companies. SaaS is a relatively hassle-free and cost-effective alternative that offers new possibilities, flexible costs as well as easy maintenance and deployment. SaaS encourages launch of start-ups in the industry as they can get to market quickly with minimum up-front investment. Industry will be able to provide a degree of flexibility to travellers to tailor-make their itineraries.
Koshy adds, “Start-ups can le- verage the quick-to-deploy SaaS applications to build up their busi- ness idea from concept, to pro- duction, to scaling. SaaS applica- tions enable travel companies to focus more on their business by eliminating the need to buy, install and operate hardware.”
Rakesh Ramchandani, Vice President & Head – Travel & Hospitality, Cybage, says, “Building applications around the varying business needs, the tourism/ hospitality industry landed up with many scattered, off-the- shelf and on-premise applications. This resulted in operational hassles as well as increased software and datacentre costs. SaaS model has been a bliss to overcome this challenge. It now allows travel technology companies to consolidate various contextual business requirements as well as new functionalities and tools on the platform benefiting multiple travel companies. The SaaS standardisation has provided travel businesses with a wide choice of tools to efficiently integrate applications. This integration enables operating and pricing information to be exchanged across industry and incorporated in final products. A collaboration of knowledge, expertise and precise information has resulted in unique travel products, competitively priced but with margins that reflect the value created for the customer.”
Ramchandani sees lot of SaaS- based applications being consolidated under a single hood which will allow travel and hospitality companies to source a packaged product for their business needs from single vendor. This is going to reduce the overall operational hiccups and cost that will eventually lead to smoother business operations. He also believes that as the industry recovers, there will be high demand for tools/ applications focused on con- tactless travel as well as the health and security of guests.
“Implementation at individual level will be a costly affair which business would want to avoid; so SaaS is going to flourish and play a key role in the recovery path by developing the needed tools and applications,” he says.
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