7 Benefits That Drive Airline Business Process Outsourcing
By Mercator Insights on 19 February 2015
Until rather recently, cost-cutting was seen as the biggest benefit - and in some cases the only significant benefit of outsourcing business processes. Now, as the global economy improves, airlines are far more interested in how outsourcing core services such as revenue accounting, cargo operations, customer relationship management, and loyalty programs can improve efficiencies and open new, sustainable revenue streams.
- 1. Jumpstart a Technical Strategy - Whether an airline is ready to expand or needs to reengineer its existing IT processes, outsourcing to a trusted industry partner will enable the airline to quickly ramp up its technical capacities and business efficiencies. Partnering with an outsourcer who serves a specific industry gives an airline fast access to best-of-breed technologies, systems, and processes. It also eliminates the need to deploy and maintain the new solution(s). There is no faster way to get up to speed than working with someone who specializes in knowing the needs of your industry.
- 2. Leverage Knowledge - Complex industries such as air transport are in the forefront of establishing strategic partnerships rather than looking at outsourcing service suppliers as vendors. This provides an airline with access to an industry-savvy business process expert who will work with them to address the challenges inherent in a rapidly changing industry. Outsource partners should bring actionable knowledge of the industry and technology to their partners, and share feedback, tested solutions, and best-practices. Don’t simply hand over a business process; look at outsourcing as hiring a specialist who is focused on delivering continuous improvements.
- 3. Simplify Compliance - Third party services are under the microscope now, examined as a source of potential regulatory, security, and governance problems. One should always perform due diligence when entering a partnership that involves core business processes. That said, partnering with a service provider with proven industry expertise opens access to a wealth of targeted information on how to address regulatory demands, protect data, and customer privacy, and heads-up alerts about emerging regulations, security issues, and business trends.
- 4. Refocus on Core Competencies - Having a capable partner to handle business processes enables internal IT to shift their attention to the airline’s specific needs, rather than wasting valuable time performing maintenance and monitoring chores that don’t require their skill set.
- 5. Improve Planning - Experienced outsourcing partners enable airlines to budget and plan more efficiently by offering out-of-the-box solutions as well as the ability to customize to fit the airline’s needs. This expertise enables airlines to onboard new services and capabilities significantly faster than they would be able to do on their own.
- 6. Consolidate - The airline industry increasingly depends on being able to integrate communications, customer service, planning, and partner information in order to operate more efficiently and gather data to drive better business decision making. Industry-invested partners are more likely to offer both a software platform and associated services, making it far easier to integrate new capabilities with existing applications internally and across the supply chain.
- 7. Realize ROI - As noted above, cutting costs is no longer the sole driver for outsourcing business processes. Cost will always be of great interest, but Return on Investment (ROI) is now just as important for many airlines. Bottom line benefits come not just from budget conscious pricing but equally from continuous improvements in essential processes, increased customer satisfaction, enhanced risk management, and more efficient use of existing resources.
The air transport industry faces a long list of challenges: commoditization, increased customer expectations and choice, price volatility, cost escalation, new regulatory demands within the global marketplace, along with evolving safety and security standards. By streamlining back office and financial processes, improving spend visibility, and reducing operational inefficiencies, trusted business partners can help airlines to transform these challenges into competitive differentiators.