No-one will be particularly surprised with the news this morning that British Airways is looking outsource a major part of its flagship website ba.com.
What may have pushed an eyebrow in the upward direction, however, was the revelation that the website currently costs close to £30 million a year to run - a figure confirmed by three independent sources.
So what do we think of BA's decision to outsource?
What are the pitfalls, if any, of handing over control to a third party?
Is it likely that BA would seek to bring such services as ecommerce back in-house once the economy picks up?
Ultimately this demonstrates that competitive advantage can't be driven via booking engine functionality, whatever usability consultants like to say.
However, if a company like ITA software win the pitch then what happens if someone like Kayak buy ITA software? Would leave BA in a very tricky position.
So upsides and downsides.
CRM and marketing, no doubt, will be kept in house.
At first glance, you might argue that the services they are outsourcing are utilities to some extent. However when you are talking about the volumes that BA.com process there must be huge financial impacts from small % improvements on drop-out rates through the booking process. Optimising this is surely a marketing role? I would also argue that the user experience through the process is part of the branding experience. Or are booking processes / shopping carts so standardized they are now purely functional?
30 Million - OMG! And there I was thinking my website and booking system was expensive and complicated.
They have already started outsourcing marketing websites - see www.metrotwin.com for example.
@ Ben
In my humble opinion....
Usability in a supplier booking engine is about keeping a customer on the web channel (vs offline channel). (Only true for where you are the ultimate supplier - if you are a hotel selling tour operator - although you are the supplier - the same product is still available elsewhere)
Usability in an agent booking engine is about keeping the long term customer believing your site offers the smartest way of solving their product searching and booking dilemmas. (If you have a single purchase style site - you need to convince short term customers too!)
I have written about this before... res systems struggle to deliver competitive advantage - but a bad one can certainly deliver competitive disadvantage.
Conclusion: standardised (Ben you went all US on us) is the way to go! Besides remember the golden rule - people spend more time on other people's sites than they do yours..... hence the more you make your site like theirs - the better for everyone. (Otherwise why do you put your logo in the top left hand corner of a web page?)
[I thought my comments had got shorter since being on twitter.... obviously not]
@Alex
That makes sense, and you've certainly got more experience than I on this. Completely agree it's not about competitive advantage it's about avoiding a bad one (or ultimately converting more browsers to buyers). I was drawing on what I know about credit card applications - removing a field here or there on an application form has surprisingly dramatic impacts on response rates, likewise the nomenclature used throughout the forms.
You'll have to excuse my Americanization (sic), too many years working for US companies coupled with a prodigious lack of spelling ability.
Interesting. Since travel agent bookings now cost effectively zippo, the cost per booking on the website for BA is about £4.15 a pop, through a travel agent/ TMC - 0.12p. No wonder they want to outsource it. Unless I have my figures wrong. BA love selling off bits. After all, they originally had Travicom, which begat Gallileo which they sold... and then found it too expensive so they picked up the appalling bad and primitive Amadeus system (having worked on Gal, Sabre (the best of the lot) and Amadeus which is only marginally better than the really hopeless Worldspan, I can say this!) so they want to outsource what is now a hoplessly expensive distribution model; the internet. Suddenly, more agents are getting net fares from BA. I wonder why? Strange how the circle turns....
The news is very interesting and it will open a lot of opportunities to foreign laborers. Although, let's hope they could find competitive and productive workers so outsourcing industry will not be again blamed if they failed to deliver a good service. Before a certain company go through outsourcing, I advice if they review and study the flow of outsourcing. It is better to go through it geared up.