Well you have an interesting point of view! The absolute majority of you agreed that you believe its about time. Which outweighs the nay sayers 2:1, so thank you all for voting.
Here are the results.
Yes - it's about time
(53%)
No - what are they thinking
(25%)
Hmmm - Time will Tell
(17%)
I really cannot make up my mind now
(3%)
Cheers
Showing posts with label distribution strategy. Show all posts
Showing posts with label distribution strategy. Show all posts
29 November 2009
05 November 2009
New Age Direct Distribution aka IMD
Dear Reader….
So what is this thing Direct Distribution that seems to have created a bit of a buzz – what does it really mean?
While I would love to do a full primer on the subject – and perhaps I will one day – there are some important distinctions that both suppliers and intermediaries need to consider. So here are some - well lets just call them Cliff Notes For Distribution Dummies. And a special thanks to Professor CG for suggesting this article.
Firstly if I had to chose a term I would not have selected Direct Distribution. The environment has been opened and we are now in the new age of open distribution. Thus I would have preferred to use the alternative term - Independent Managed Distribution. And no this is not a semantic. The reason is that for me the big missing tool in all of this has been a supplier managed tool that allows the inventory owners and their distribution partners (up to “n” tiers) to work together. I have always said (and I have squillions of diagrams with the concept in it) that we need is a DCM – a Distribution Channel Manager - that sits within the Supplier’s environment or is a controllable hosted tool. In the main for airlines this capability went with the GDSs when there was the schism of Church (airlines) and State (GDSs). It should have properly stayed inside the Airlines house. The GDS have used this capability (or lack thereof) to obfuscate the issue.
Since that time, it has been used as a lever by the GDSs to control distribution and force it down the GDS pipe alone. While successful for some airlines – this has proved to be unsustainable. As witnessed by the LCCs bailing out of GDSs.
Secondly we need to be clear that not everything goes through airline.com. What smart airlines have been doing is building a set of DCM tools either directly into the PSS or via independent solutions such as Farelogix. The complexity of the fragmentation of distribution that is VERY real (and has been so for many years) demands a suite of distribution tools. These tools can no longer be one size fits everything. They must acknowledge that distribution via intermediaries is NOT A BAD THING. Thus a critical component of IMD is the tools to integrate supplier product into the workflow and environments of the intermediaries.
Sadly in my opinion, the PSS vendors who also are GDS vendors have a conflict here. Where these PSS vendors are failing to service their customers is in bolting on the legacy GDS commercial terms into the PSS agreement, and the lock in technology that accompanies it. I have personally reviewed several airline contracts that show at least one vendor (who is quite big in this space) is doing just that. More the fool the airline(s) who have or will have signed that contract.
Thirdly IMD has two parts to it. The reseller/intermediary has to have the tools in place on their side. The distribution model has moved from a ubiquitous single multilateral model with GDSs stuck in the middle to a more technology and (commercially realistic) based bilateral model between the airline and its intermediary partners - via any channel and any medium. Thus the Intermediaries now have an obligation and have to step up and make sure that they have access to all content. This cannot be just another bolt on – the Intermediaries need to have better ways to manage the relationships they have with their suppliers. The old single size multilateral market model cannot be exclusive. Content is and never has been full via the GDSs. One only needs to look at private fares to realize this fundamental truth.
Over the coming months as PCAs come up for renewal – I expect this debate to grow in intensity. I for one am not waiting for the next coming. My team and I have developed methodologies and tools to address this need for IMD. While this may be a shameless plug for my own consulting business, I think it is critically important that the suppliers and intermediaries work hard at developing IMD solutions that are the differentiators in their respective businesses. You’ll be sorry if you rely on the old ways and the old tools. You have been warned.
Cheers
So what is this thing Direct Distribution that seems to have created a bit of a buzz – what does it really mean?
While I would love to do a full primer on the subject – and perhaps I will one day – there are some important distinctions that both suppliers and intermediaries need to consider. So here are some - well lets just call them Cliff Notes For Distribution Dummies. And a special thanks to Professor CG for suggesting this article.
Firstly if I had to chose a term I would not have selected Direct Distribution. The environment has been opened and we are now in the new age of open distribution. Thus I would have preferred to use the alternative term - Independent Managed Distribution. And no this is not a semantic. The reason is that for me the big missing tool in all of this has been a supplier managed tool that allows the inventory owners and their distribution partners (up to “n” tiers) to work together. I have always said (and I have squillions of diagrams with the concept in it) that we need is a DCM – a Distribution Channel Manager - that sits within the Supplier’s environment or is a controllable hosted tool. In the main for airlines this capability went with the GDSs when there was the schism of Church (airlines) and State (GDSs). It should have properly stayed inside the Airlines house. The GDS have used this capability (or lack thereof) to obfuscate the issue.
Since that time, it has been used as a lever by the GDSs to control distribution and force it down the GDS pipe alone. While successful for some airlines – this has proved to be unsustainable. As witnessed by the LCCs bailing out of GDSs.
Secondly we need to be clear that not everything goes through airline.com. What smart airlines have been doing is building a set of DCM tools either directly into the PSS or via independent solutions such as Farelogix. The complexity of the fragmentation of distribution that is VERY real (and has been so for many years) demands a suite of distribution tools. These tools can no longer be one size fits everything. They must acknowledge that distribution via intermediaries is NOT A BAD THING. Thus a critical component of IMD is the tools to integrate supplier product into the workflow and environments of the intermediaries.
Sadly in my opinion, the PSS vendors who also are GDS vendors have a conflict here. Where these PSS vendors are failing to service their customers is in bolting on the legacy GDS commercial terms into the PSS agreement, and the lock in technology that accompanies it. I have personally reviewed several airline contracts that show at least one vendor (who is quite big in this space) is doing just that. More the fool the airline(s) who have or will have signed that contract.
Thirdly IMD has two parts to it. The reseller/intermediary has to have the tools in place on their side. The distribution model has moved from a ubiquitous single multilateral model with GDSs stuck in the middle to a more technology and (commercially realistic) based bilateral model between the airline and its intermediary partners - via any channel and any medium. Thus the Intermediaries now have an obligation and have to step up and make sure that they have access to all content. This cannot be just another bolt on – the Intermediaries need to have better ways to manage the relationships they have with their suppliers. The old single size multilateral market model cannot be exclusive. Content is and never has been full via the GDSs. One only needs to look at private fares to realize this fundamental truth.
Over the coming months as PCAs come up for renewal – I expect this debate to grow in intensity. I for one am not waiting for the next coming. My team and I have developed methodologies and tools to address this need for IMD. While this may be a shameless plug for my own consulting business, I think it is critically important that the suppliers and intermediaries work hard at developing IMD solutions that are the differentiators in their respective businesses. You’ll be sorry if you rely on the old ways and the old tools. You have been warned.
Cheers
01 November 2009
New Poll On Professor's Blog
I am going to ask you all to post your votes on American Airlines new aim for a 100% direct distribution model.
I have given you four possible options.
Yes - emphatic response
No - also an emphatic response
? - Not sure - think time will tell
I really cannot decide right now
Think carefully and all the best on your voting
Cheers
I have given you four possible options.
Yes - emphatic response
No - also an emphatic response
? - Not sure - think time will tell
I really cannot decide right now
Think carefully and all the best on your voting
Cheers
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