Create sustainable value in four areas
Migrating to a new generation Customer Management Solution enables you to create value in the following four areas:
- Use new added value features to transform your business and core processes and achieve both short- and longer-term transformation benefits
- Take into account productivity gain, cost reduction, direct revenue increase and indirect revenue increase due to higher customer loyalty or better business agility
Common platform value
- Integrate faster, better and at lower cost with your alliance, codeshare and interline partners who are already using the Amadeus common platform
IT services value
- Move to competitive IT variable costs
- Benefit from the Amadeus community development for free
- Enjoy superior service performance leading to lower cost of service outage
Network services value
- Benefit from the Amadeus economies of scale to cut some communication costs.
The opportunity to create value depends on an airline's level of sophistication, the scope of the solution, the IT model and current communication network.
As a guide, airlines have generally estimated an overall secure value of a migration to Amadeus (involving at least Altéa Reservation and Altéa Inventory) as being between US$1 and US$5 per passenger boarded.
Source: Amadeus Value Calculation Workshops
Some of this value is immediately captured in your bottom line (eg, network services value, part of the solution value), and some of it requires a ramp-up phase (up to three years, for example, for revenue increase based on customer loyalty improvement).
Minimise the cost of change
Achieving a technology enabled transformation entails some significant cost of change:
- Project management cost
- Specific development costs
- Significant training cost for all impacted employees
- Consulting cost (to build the transformation map and re-design the core processes)
- Potential cost of delay (solution, project delivery) or failure
- Potential cost of development underestimation
Leveraging its unique experience in transforming airlines and migrating their critical systems, Amadeus can help you control and minimise these costs:
- Amadeus can deliver faster migration
- Amadeus provides experienced project management resources, which can help to reduce the required airline resources
- The growing number of airlines joining the Amadeus common platform and community developments mean fewer specific development requirements
- Amadeus' new generation IT solutions are designed as much as possible around workflows and intuitive graphical user interfaces, generally cutting by half the required training time on a new system
- Amadeus' airline industry expertise and strong understanding of how our solution can add value to your business enables you to reduce your need for consulting to implement technology enabled transformation
- Amadeus also provides cost-effective consulting services through a team of consultants that offers expert solution knowledge
Risk of delay or.project delivery failure
- Amadeus' new generation IT solutions are already developed and in production
- Amadeus' unique expertise in migration projects guarantees the lowest level of risk in terms of implementation or delay
Risk of cost underestimation
- Amadeus' new generation IT solutions are already available
- Amadeus' expertise and volume of development minimises the risk of underestimation
For an airline, the cost of change depends on its size and current business environment as well as the scope of the Amadeus solution.
As a guide, airlines have generally estimated the average cost of change of migration to Amadeus Customer Management Solution to be somewhere between US$0.70 and US$3.00 per passenger boarded (one-shot cost).
Source: Amadeus estimates
Secure strong ROI
Although both the value created by a technology enabled transformation and the related cost of change varies from airline to airline, the payback period of such projects is generally less than 3 years.
Stand alone IT solutions tend to have a much shorter payback - often less than a year.
But the most important factor to remember is that, after a few years, such transformation projects can add several US$ per passenger boarded to your bottom line while at the same time providing a strategic ability to evolve in a continuously changing environment.
This is why Amadeus considers a new generation Customer Management Solution as the definitive source of unique competitive advantage for airlines.
Amadeus value calculation methodology
Over the years, Amadeus has identified a need among airlines to understand in detail the impact that a new generation IT solution can have on their business before making a sound decision.
All too often, while the value of a proposed solution is not fully quantified, the only clear element is the price.
For that reason Amadeus has developed (and successfully applied with numerous airlines) a unique proprietary value calculation methodology. This allows airlines to understand in as little as a few days the value of migration to the Amadeus platform and to create an initial financial benefit estimate.
The Amadeus value-calculation methodology is based on the following principles:
Quantification of all benefits
- Understanding the business impact and prioritise solution modules or transformation effort
- Even if some benefits might be difficult to quantify (like revenue impact of an increase in customer satisfaction)
Distinction between two levels of value
- The secure value to retain in an airline's business case (limited to the direct impact from the Amadeus solution and to easily quantifiable benefits).
- The total value of viewing the overall longer-term benefits of the transformation project
Analysis of the value for the four areas
- Solution value
- Common platform value
- IT service value
- Communication network value
Value calculation for each significant module or item
- Clear assessment of the added value compared with the airline's current situation
- Quantification, taking into account business parameters
- Value estimate per module, enabling the airline to eventually make a purchasing decision
Overall value analysis
- Aggregation of the overall value and adjustment
- Cross check with overall business figures
- Value calculation report
- Further simulation
Amadeus can offer value calculation workshops to any airline that wants to strengthen its business case and make its decision based on a detailed assessment of the value for money of the project.
Amadeus has successfully run these workshops with numerous airlines of all sizes, business environments and geographies. These workshops deliver a very high level of satisfaction, especially since they also enable airlines to save a lot of time on project evaluation.