Transition from PSS to OOSD (08/24)

Market readiness and scope risk

OOSD functional scope larger than PSS Scope: to-be model

Transition projects preparation : recommendations to airlines, IT suppliers and consultants

August, 2024

Key objectives

Assess the market readiness to transition (airlines, suppliers, consulting companies, system integrators) and main missing or immature pieces.

Focus on the functional building blocks for current PSS world and emerging OOSD world

• Clarify the high-level structure of an efficient OOSD or new generation PSS, with highlight on the necessary building blocks to cover a full new generation merchandising practice

• List what airlines have already built in complement to their PSS to support end to end retailing practices, position those functions in the target OOSD as a guide towards application landscape simplification

• Acknowledge the absence of a complete referential for airline retailing practices, and the necessity of a functionality correspondence between current PSS+complements and target OOSD

Recommend a hi level methodology to be used by airlines, consultants and OOSD suppliers to better secure transition projects.

1 - Transition from PSS to OOSD: market readiness, missing pieces and main risks

Summer 2024 is as usual a period when most airlines are dedicated to operational matters and have put a pause mode in their Commercial digital, Distribution and retailing projects.

KIVECA remains involved by different means in such projects with small, midsize and major airlines, it is time for us , as we do regularly, to bring our contribution to the current trend in the airline IT market which we call transition to Newgen PSS, and which is now qualified in the market as transition from PSS (Passenger Service System) to OOSD (Offer, Order, Settle, Deliver)

What we see is that transition has started in some major airlines, that the major Airline IT suppliers (major PSS with a transition roadmap, smaller PSS and new entrants issued from offer optimization or order accounting) are now clearly positioning in the market on the full scope , while vertical retailing suppliers continue to face difficulties to disrupt the current airline overall commercial application landscape.

In the meantime, it is very clear that the smaller airlines are in standby mode vis a vis the core system transition but are very active in completing their system landscape around their PSS to effectively develop new retailing practices.

This is something that major traditional airlines had started since long, using complementary applications connected to their PSS:

• Internal or productized data/event agility platforms, based on the PSS passenger experience data feeds, on top of which they had developed, on their own or with digital start-ups, plenty of merchandising use cases beyond the search and initial selling process supported by their PSS and/or e commerce platform: up-sells at airport or connecting points, event based and personalised re-accommodation of travellers in case of disruption.

• Airline CRM’s, aiming at enriching their traveller’s knowledge and profiles, facilitating personalization of offers or post departure up- sells

• Multi-channel pricing, then dynamic pricing, combined with data- enriched revenue management

• Partner seamless offering and selling inside an airline alliance,

It is acknowledged in the market that OOSD projects now have started, in a quite slow mode, as they face a lot of risks and difficulties inherent to a disruptive way of distributing the main retailing IT blocks to new IT suppliers, and to lack of integration and implementation specialists in the IT service market.

In the airlines, The OOSD transition projects are addressing either in sequence or in parallel the offer management and order management, with the use of RFI’s or RFPs basically focused on:

• The PSS current functional scope, progressively abandoned as the Newgen blocks are installed

• A transition platform aimed at supporting a progressive internal transition and coexistence with partners still in PSS mode

• An IT integration project

• A migration project, organised in a similar mode as PSS migrations, but with a smoother and more complex set of one shot and parallel milestones

In the IT offering space, some actors position more on offer or order side, or both

They all aim at covering all future retailing practises all along the travel, but their roadmaps are now focused on the progressive replacement of the PSS, not embarking all the existing PSS peripheral applications, and the ones under development in all airlines.

The specialised research or IT purchasing consultants are doing their best to modelize the as-is and to-be situations, the market offerings swots, and the typical transition paths, but do not include the PSS complements mentioned above.

The strategic consultants, supporting the Airlines full business case of the transition, have tackled a significant ROI of IT simplification with the new OOSD concepts.

Such simplification is likely to happen only if OOSD suites include what airlines have built on top of their PSS.

In Kiveca we believe that the main risk for all actors for the transition is an unclear or incomplete functional scope :

For airlines, whatever block addressed (offer, order, internal and partner e-retailing), an incomplete project scope to be completed during the transition project, driving to significant, unexpected additional costs and delays.

For suppliers, mis-adapted priorities in their roadmaps

For consultants and the entire market, lack of reference for a full airline retailing library of use cases, with target assignment of the functionality to the OOSD building blocks. In the PSS area, RFP’s and migrations are industrialized, it is not the case for transition from PSS to OOSD

In the below sections, we propose, based on our experience of a lot of PSS migration projects, and our current involvement in airline new retailing projects,

A high level model of the OOSD moving target and a from-to vision

A high level methodology for the different actors to mitigate the above- mentioned risks

2 - OOSD scope, larger than PSS scope, is a moving target. Illustrations and from-to vision

The below section intends to illustrate, thanks to a hi level from-to model and some illustration use cases, that due to the development of digital, personalised interactive practises, with inclusion of data intelligence in all airlines, a significant part of automated retailing practises is now supported by applications linked but out of the PSS scope. This statement is valid for all kinds of airlines, with very diverse types of applications.

Therefore, contrary to the current common sense stating that the industry moves from an old IT standard to a new one,

The transition for each airline will embark a starting point which will be unique, linked to its own digital retailing maturity, and set of applications complementing their PSS

The target OOSD scope, supposed to simplify the current airline system landscapes, will have to incorporate the as-is situation

All airlines will not have their transition at same speed but will continue to innovate,

the target OOSD scope is a moving target, for airlines, for OOSD suppliers, for consultants and IT integrators.

2.1 Illustrations

Below find typical existing retailing processes that today are covered by PSS + complements, but should ideally be incorporated either in offer management, order lifecycle management, or delivery management target scope

Search and initial booking on an alliance partner

The main airline alliance has defined and proposed alliance offer packages, which are proposed and saleable seamlessly through the alliance members websites. To do so, the alliance IT has settled an alliance offer catalogue, accessible via standard Api’s (typically NDC ones) , and has established links with the alliance members’ PSS.

If some of the airlines using this functionality decide to transition to a new offer management with no functional regression, the offer system has to embark the alliance offers in its product catalog, and permit the seamless link to the alliance platform.

If the alliance member starts a transition towards a new order management system, this system, associated with a translation platform able to connect to another member not yet transitioned, should also adapt to the member’s booking engine capabilities.

Upsell at check in, connection or arrival

Currently the travellers using digital touchpoints at airports can be proposed upsell functionalities for upgrades, seats, or ancillary services from those touchpoints. The new DCS systems covering the Depart of OOSD systems.

In addition, the order management system should include an event management engine capable of activating, previous to check in, the commercial communication platform with its travellers, using business rules, as another digital means to propose upsells.

In case of quite long connections, expected or not, there is also room for upselling, either airline ground services such as lounge coupons, or partner offers like airport stuff or hotel bookings.

Again event-driven offers can be pushed to the traveller, some airlines have developed ad hoc complements to their website, this should move to rule-based, event driven use cases in the future offer or order modules

Omnichannel Voluntary change

It is acknowledged that modern retailing should allow a permanent capability for the traveller to have access to its shopping basket through whatever distribution channel. This is today almost impossible via the current PSS systems, but may be for some airlines a strong reason to transition. In this area again, some airlines have opened the door via dedicated product or distribution partners.

The ones willing to transition to offer or order management should embark their existing practises in their RFP scope

Involuntary disruption change

This functional area is in constant progress, aiming in all significant disruption situations at coming back to planned flight situations but also at reaccommodate the travellers in the best conditions for them and their context.

Here again airlines have developed a large set of event-based logics either to impose or to suggest re-accommodations via communication platforms, allowing in parallel more flexible rules for auto-rebooking, and/or complementing the proposal with meaningful services. (e.g. hotel night stop or day use)

In such situations the future multi service orders will be burst by plenty of flight delay/cancel/reroute situations, automatic notification to ground partners part of the orders and self - rearrangements should be proposed in the order management lifecycle logic of OOSD systems, to maintain what airline have already developed around their PSS while suppressing internal bespoke applications

The hereabove situations highlight the fact that the scope of transition from PSS to OOSD should be larger than the PSS scope only, otherwise the transition, expected to simplify both retailing practises and IT complexity, may conduct to high disillusion and/or transition projects very difficult to manage.

2.2 From-to hi-level model

Below find the main application blocks in place today which support airline retailing practises, all along the travel experience:

As the market tends to new standards and IT simplification, below is our view of what should be the OOSD target structure:

Kiveca believes that, due to hereabove statements there is a huge risk in the market for costly, uncertain, over promised transition projects (to offer or to order). Those risks should be mitigated by the airlines, by the suppliers, and by consulting companies, who should adopt a hi level common understood from- to model like below, and conduct a necessary gap analysis before starting transition projects.

3 Secure transitions: recommendations for airlines, OOSD suppliers, consultants

The move from PSS + unique complements to a moving OOSD standard target is a complex issue, Kiveca believes that all actors in the market should contribute to build a more secured transition:

The airlines to better anticipate and draw the scope of their to-be system,

The OOSD supplier to complete their basic functions with event driven, rule-based offer/order lifecycle management modules,

The consultants (strategic, purchase, IT integrators, business change support) by clarifying the to-be full scope of an OOSD

3.1 Secure OOSD b-cases and transition projects: recommendations for Airlines

Airline having not started their transition:

Document the new use cases that they automate around their PSS

Build/Rebuild/Consolidate their internal data/event/customer profile application architecture use cases mall.

Build/Rebuild a data/event/business services application architecture. A more structured application landscape will considerably simplify transitions to OOSD when these airlines will be ready to move.

Airline starting their transition

Conduct a gap analysis based on the full scope of their future OOSD system, not only on current PSS scope + current OOSD suppliers’ roadmaps, which don’t take the full target scope into account

Focus on the essential current non-PSS applications that they have developed or assigned to digital players

Some airlines have faced such situations in the past when planning to move from a major PSS to a smaller one, gap analysis is a discipline that has not to be re invented

3.2 Secure implementations: recommendations for OOSD suppliers

Complement the core structure of their modules with event-driven, rule-based generic engines to cover offer and order lifecycle management in a generic way, then simplify the current multiple ways having been implemented in the airline IT landscape.

Complement their roadmaps to cover the post booking multiple automated existing or to-be retailing use cases. (incorporate emerging AI pieces, enriched customer profiles, travel experience data)

Put in place or train an internal/partner OOSD implementation practise, capable to replicate in the very diverse starting points in the airlines the PSS to PSS implementation industrialised practises. (questionnaires, solution designs, hi level module migrations ….)

Build a set of IT integration partners

3.3 Support transition strategies, IT partners selection, system migrations: recommendations to consultants

Transition strategic advice: combine strategic commercial progress roadmaps, transition project segmenting, and IT simplification goals in the Airline business case build and transformation planning. Draft the migration scenario, one shot (very complicated to manage, complex fall back), or channel by channel (needs a full synchronisation between shopping basket and old world (PNR/Ticket)).

Transition sub-projects preparation (phased or parallel transitions by module) :Drive a full scope gap analysis before preparing RFP’s

Build a standard transition framework: capitalise on emerging transition projects and contribute by whatever way to rebuild a standard high level use case library on the larger scope possible, tentatively faster than what has been built for PSS’s. Have the full market (airlines and suppliers) benefit from the libraries to build either their RFP’s or their roadmaps

Design an industrialised transition methodology, including migration strategies and transition platforms design

Elaborate typical transition project charters

4 Conclusion

Transition from PSS to OOSD must be better prepared and standardised to secure the airline overall IT simplification and the transitions sub projects.

Kiveca with its long experience in PSS changes and its involvement in current new generation retailing projects can contribute, working with airlines, IT providers, and consulting companies, to a better structured transition framework.

Contact us for further details