New Generation of Travel Management Companies
New Generation Travel Management Companies, with an integrated Software+Agency model: Who are these TMCs? How does it shake up the existing model? What are the advantages? What are the limitations?
Our CEO, Saad Berrada, gave an interview to Axys Odyssey, to answer these questions.
[Kathleen] : Hello everyone! Welcome to this new part of our Inside TMC web series, whose goal is to discover professions or tools that are unknown to travel agencies, but which are very important to guarantee an optimal service and operation. Today we will zoom in on one of the disruptive models that has been in the news for a few years now, that of integrating agency and tools, putting technology back at the heart of the value proposition and focusing on flexibility. These publishers are facing many challenges and important strategic choices. Let's meet Saad Berrada, founder of the FairJungle tool. Here we go! Hello Saad.
[Saad Berrada]: Hello.
[Kathleen]: We're at FairJungle's offices in Station F and we're here to find out a little more about the integrated model of agencies and tools, and in particular what are the advantages and challenges of this model? Can you tell us a little bit more about the genesis?
[Saad Berrada]: We started with a simple observation: today, travel agencies are evolving in a world that is becoming more and more complex. There is more and more data to manage, data related to inventory, to the price of different services, but also data related to the carbon footprint, data related to the safety of employees. We find ourselves with a lot of information to process, but the value proposition remains very much centered around the travel agency and not the tool. The tool serves the agency and not the other way around. And so, in a world where complexity is growing, where data is becoming central, the idea of FairJungle is to say, we're going to reverse the paradigm, and we're going to work on the technological solution to process this data in the most relevant way. The agency part becomes the service of the techno solution and not the other way around.
[Kathleen]: So now that you've explained to us how this model materializes, can you tell us a little bit more about the advantages that this model includes?
[Saad Berrada]: The most natural benefit is cost competitiveness. Obviously, when you invest in technology, you invest in automating the simplest tasks, so you'll be operationally more efficient. And we can be more competitive in terms of cost for customers. Then there is the whole question of implementation. Today, we know that implementation cycles can take three to twelve months to go from one agency to another. When we master this technology, we are much more agile, and we can, typically what we do with our customers, propose to set up pilots, POCs very quickly to test the technology before deploying something larger. Then, there is also a more global paradigm shift, which is when you master your own technology, you can free yourself from old systems. So there are a lot of criticisms that are made of the GDS. We know that we can't get past the GDS, that we are still dependent on the GDS. But there is this whole mechanism around the travel agency that has to go through the GDS because the agents are trained in the GDS, and so we find ourselves in this vicious circle. We can't become independent of a system that has existed for years, and we don't have the agility to innovate when we develop our own technology. The first thing is that we develop our own architecture, our own APIs, our own connectivity, we become masters of the customer's journey from A to Z.
In other words, today we are able to train agents on our tools rather than training them on old world tools. Finally, more globally, this allows us to unleash innovation. Today, a tool that is mastered, a tool that is proprietary, is a tool that can be plugged into any other system in the ecosystem. We are no longer dependent on the will of the systems, we have been working with for several years. We are becoming completely free, and today this is our philosophy, which is to say that we are linked to the best players, we are sensitive to the new innovations in the ecosystem and above all, we provide a solution to our customers and not a generic product. We try to meet their specific needs, and we go in their direction.
[Kathleen]: So you're tailoring somewhere in each context, there might be a different configuration or even if there is a different ecosystem.
[Saad Berrada]: So that's exactly it, with a small limit, which is that you shouldn't go overboard with customization either, because you quickly find yourself with costs that are prohibitive and no more competitive for the clients. So you need to have the agility to adapt to the customer's needs, while having an architecture that is relatively solid, flexible and relatively generic. To go into a little more detail today, our starting point is that our customers are looking for a solution and not a product, they want to meet business needs and gain in productivity, ensure the eco-responsibility of travel management, the comfort of employees. They are not looking for functionality. When we come up with a generic product and tell them this is what the tool does, we end up modeling the travel policy and employee behavior to what the tool allows. Our policy is completely reversed, i.e., we listen to the customer, understand his or her needs, and develop a tool that meets those needs.
So as not to fall into over-customization, either. What we do is create homogeneous unitary bricks that we can connect together so that, in the end, we have the agility and flexibility to meet the customer's needs. If the customer needs to play with his validation workflow because it has to go through a very specific system, he has the validation workflow brick that can connect to these different systems and build his own process that corresponds to his needs.
[Kathleen]: So, will your role also be to challenge things, that is to say, when you have an existing system and not only to say to yourself, I'm going to try to reproduce what there is to meet this need as closely as possible, but perhaps also to re-challenge it, because in a much more global way and by taking a step back, it makes sense?
[Saad Berrada]: Completely, in fact, we learn as we go along with our clients, and we develop best practices for certain users. We don't think that we should apply the methodology of one client to another. However, we know that if a client has had a good idea in terms of redesigning its travel policy or its interconnection between its various systems, it may be relevant for clients in the same sector. We have a consultancy role, in fact, a prescriptive role, saying that we will be more limited in the possibilities of the tool. We will code, with our customers, what is the best way to manage your travel? And we'll let the technological solution stick to those needs.
[Kathleen]: When you explain it to us, it sounds like the ideal model. But necessarily, there must be some choices that you're going to have to make in taking this route and adopting this strategy, what are they?
[Saad Berrada]: Well, there are some pretty big challenges in this industry. The first one is essentially the technology part. It's like you can imagine if we need to customize the product, just to take what the industry has been doing for the last 20 years and build that in terms of tech products. It's a big challenge and there's a pretty big barrier to entry. If you don't have the global inventory, you are not relevant in this system. The first challenge is that it takes several years of R&D to be competitive on the market and to meet the needs of customers. The second challenge will be in recruitment, because the profiles of the agents are changing. As I said earlier, we have agents who support the product and not the other way around. This is not a competitive service for online services. You need a different kind of technicality, and the advantage/disadvantage is that we are looking for more technical profiles. But at the same time, we no longer need to look for people who have been in the business travel business for 20 years and we know that this is a rare commodity today. We are going to broaden the pool of profiles that we can go after, even if we get industry experts, there is still a human expertise that we have to recreate. One of the difficulties we may have is to re-educate them to a new model, to change their habits and to tell them that there is another way of working in the business, other than the one they have been working with for the last ten years.
[Kathleen]: And just the fact that you have this flexibility that allows you to connect to a lot of players in the market. Doesn't that also limit you in the choice of players you can have? Because there are potentially some who don't have the technology that is either flexible or robust enough to do this. Does that force you to make choices about who you're going to work with?
[Saad Berrada]: Absolutely, we are dependent on the state of the market, on our suppliers. That is to say, we can have the best idea that perfectly matches the client's needs, but if the suppliers don't offer the necessary data or connectivity, we can't meet the client's needs. The second difficulty we encounter at this level is that we have to recreate the entire middle office and back office. Where the industry has worked for the last 30 years on GDS web services that are in fact prefabricated, we are going to load the traveler profiles. It's plug and play, we've been working with that for a long time. We had to recreate all the billing, payment, and travel policy loading modules, and everything that exists and that is normally accessible to travel agencies, we had to recreate it internally precisely to gain flexibility. So the temptation is to say "I'm going to marinate with the supplier who gives me the most stuff". But sometimes, you have to give up that to get the most relevant things for the client. And that can be a pretty time-consuming effort.
[Kathleen]: I can imagine. Thank you so much because I think that really shed some light on that model and the challenges that you face. Obviously, there are choices to be made that are a bit disruptive. Thank you very much for having us here.
[Saad Berrada]: Thank you very much.
Other related articles you may be interested in include:
• Fairjungle CEO to discuss the future of business travel distribution at #FBTLive event
• Fairjungle is in the TOP 30 startups of STATION F 2020!
• Introducing Fairjungle's Covid travel reboot kit