Worldspan Shifts IT Strategy To Focus On Tech ProductsWorldspan Shifts IT Strategy To Focus On Tech Products

Worldspan L.P., as part of a broad company strategy to focus more resources on developing technologies for its airline and hotel clients, is moving to a software-as-a-service model for three of its internal systems.

The company is in the process of replacing its internal Siebel Systems Inc. customer-relationship-management application with Siebel's CRM On Demand service. Soon after, it will move its human resources/payroll, and its travel and entertainment-expense management systems, to undetermined service providers. Worldspan plans to complete the entire migration within six months.

Worldspan serves up a global distribution system for the travel industry, but that's not its only business. The industry faces sweeping changes in how hotel rooms and airplane seats are distributed, and Worldspan says its clients will require the technologies to support those changes. At the same time, the company realizes some of its internal systems need updating.

And while on-demand software isn't a novel approach, Worldspan's decision to migrate three back-office systems almost simultaneously is ambitious. "Doing several apps is not the norm of [software-as-a-service] adoption," says Amy Konary, an analyst at IDC. Worldspan CIO Sue Powers says the dramatic shift in strategy stems from a goal to squeeze more efficiency out of IT, so that she can shift resources to developing new products for clients. "We've made a decision to focus on travel technology," says Powers.

The company anticipates that on-demand software will give it access to improved functionality and new features that otherwise would have required expensive and time-consuming upgrades. Worldspan has been running an older version of Siebel CRM, and outdated versions of the Geac Millennium HR and payroll system and Extensity travel/entertainment expense-management application (Geac acquired Extensity last year). "We really didn't invest a lot in internal systems," Powers says. "Service offerings provide an opportunity to significantly upgrade that technology."

Worldspan's technologies for clients include server-based airline-fare shopping tools, an electronic ticketing interchange, a ticket repricing application, and interactive hotel-mapping software, all delivered as XML Web services.

Worldspan plans to wrap up its CRM migration in March, after which it expects to recoup the costs of the move within a year, and then see a 50% reduction in CRM-related costs, Powers says.

Perhaps more important, the move is expected to give Worldspan more flexibility in how it serves customers. The company has been making changes in its sales force that will change the way it uses Siebel. For instance, it divided up its sales and service staff into more-specific roles, meaning fewer people will be day-to-day power users of the Siebel system. But when it's gearing up for a sales blitz, Worldspan may want to ratchet up the use rights of some of its service staffers so they can assist in the sales effort. The on-demand approach will allow it make such changes on the fly. The idea that internal management of IT resources doesn't necessarily provide a competitive edge is a concept that's gaining steam, Konary says. "There are some companies that very early on have gone gung-ho into software as a service, because they can really can see a lot of value," she says. "They look across their portfolio and decide there really is no advantage to running these applications in-house."

In Powers' mind, a simple equation drives the decision: "We're going to subscribe to any technology service that will help us improve our business."