To build or to buy? That is the question

To build or to buy? That is the question

I have worked with many travel companies across the years, helping them to buy new systems. It is very important to buy the system that will best suit your business. Select the wrong system and it is a certainty that you will suffer some serious business disruption.  Get the decision right and you will still need to live with business disruption, but just while implementing the new system.  After that you could have for many happy years of system use ahead. I usually suggest to my clients that they should be prepared to change systems every five years but that it will be likely that their newly purchased systems will last for eight years or even longer. One travel company I am working with at the moment was one of my very first clients several decades ago. The system we chose all that time ago is still being used today, so we got that purchasing decision right!

A question I am often asked is whether to build or buy. Should you get a developer or two to build your new system or should you buy a system from a respected travel technology provider. The former approach, building your new system, sounds very attractive. You will be getting technology that does exactly what your business needs it to do.  It will suit you perfectly.  Moreover, as the system will be the nervous system and brains of your company, from a business perspective, building your own has to be good. You will own the intellectual property rights and no competing company will be able to use it.

This seems great but reminds me of a travel company I worked for some years ago. It needed a new system and the Managing Director had to decide whether to buy or build.  He hired a new IT Director to work full time on the project.  The IT Director was very enthusiastic about the idea of developing the new system in-house. He did some financial planning. His plan was to build the new system and then recoup the cost by taking the system to market. He drew a sales chart on the blackboard. By year 4, he was projecting system sales outstripping travel sales. I did point out to the Managing Director that, as a business plan, this was rather in the area of ‘pie in the sky.’ The IT Director was not long in his job.

On the other hand, I am writing this blog sitting on a train on the way to visit a tour operator that has actually built its own system. I have been asked to give my opinion on whether it has been developed to a sufficiently high level that it could be put on sale to other travel companies.

In summary my starting point to answering the ‘buy or build’ question is always to buy. Developing a travel system is a major undertaking. I would estimate that a good system needs at least twenty man years of development.

If you are buying rather than building, you will be getting a system with good all round functionality. This is due to the fact that the system will have been developed across the years to reflect the functionality requests of all the companies that are using the system, rather than one travel business building a system in isolation.

There can be valid reasons for travel companies to develop their own systems and I do sometimes recommend this, but if it is something you are considering, think long and hard before starting on such a project. You may end up just re-inventing the wheel but with some spokes missing.

Tagged .

Paul Richer is Senior Partner of Genesys, a management consultancy specialising in providing advice on technology for the travel, tourism and hospitality industries. Genesys has built a worldwide reputation for its knowledge and experience of new system procurement, online technology and strategies including website audits and online booking systems, reviewing and formulating companies’ IT strategies and more. Clients include many of the best known names in travel. Paul has co-authored several reports examining the impact of technology on the distribution of travel, including “Distribution Technology in the Travel Industry” originally published by Financial Times Retail and “Marketing Destinations Online – Strategies for the Information Age” published by the World Tourism Organisation. He has presented at and chaired many online travel conferences, is regularly quoted in the press and has also been invited to make several appearances on television to debate the subject. Prior to founding Genesys in 1994, Paul was Business Development Director of Finite Group plc and Head of the Group’s IT strategy consultancy. He holds an MBA from Cranfield School of Management, is a Fellow of the Institute of Travel & Tourism and Member of the Chartered Institute of Marketing. More information at http://www.genesys.net/

One comment

  1. Avatar Vasiliki says:

    criteria for choice: Is it a system for sales or a system for recording arrivals and departures. Specifying the scope of its use helps maintaining a good aspect of clarification on the needs.
    What is your staff like , since they will be using the system. Mostly, millennials and young generation prefer new technology and they rather think quiet techy. It might be better to consider building and using your in house team. Costs can be less and it also counts in favour of their development. The system is your trademark and if that good can be sold to other companies, via your consulting – sales team. This is best for smaller size companies that cannot afford to buy a highly expensive one.
    On the other side, WTM is a good place to visit and speak to potential system sellers. By setting up a meeting prior to the commencement you save time and point out the ones that are of interest. The most recent was a call centre system, that logs calls 24/7 and works with agents, mainly bilingual. It was all about advising tourists on touring and accommodation via packaging and securing payments.

Leave a Reply to Vasiliki Cancel reply

Your e-mail address will not be published. Required fields are marked *