Does IT Matter ?

The article Does IT Matter? written by Nicholas Carr originally appeared in the May 2003 edition of The Harvard Business Review. The ideas are developped further in the book Does IT Matter? Information Technology and the Corrosion of Competitive Advantage.

Scarcity of a resource gives a company a competitive advantage, not ubiquity. Nowadays IT cannot be used to gain a competitive edge because it is everywhere and in the hands of everyone.

Nicholas Carr makes a distinction between proprietary technologies and infrastructural technologies. Proprietary technologies are owned by a single company, therefore they can lead to a long-term strategic adavantage. However infrastructural technologies, which will be broadly shared, "offer more value when shared than when used in isolation".

Opportunities in gaining individual advantage of an infrastructural technology has to be taken in the begining of its buildout (examples : railroad tracks, telegraph wires, power lines...) . After it, the only advantage remaining is a cost advantage as the prices dropped

 According to N. Carr, IT gathers all the signs of an infrastructural technology. That means that IT is close to the end of its buildout as it became affordable to nearly everyone and the investment bubble has burst.

As a consequence, IT became a essential resource to completion but pointless for strategy, as every infrastructural technology.

IT is caracterized by commoditization, and it has been accelerated by the arrival of the internet. The challenge for companies nowadays is to manage costs. Indeed, although the costs of IT dropped down, many business functions are linked to IT and absorb a lot of corporate spendings.

Internet and IT are nowadays everywhere. It has been completely commoditizated in daily life.

This article deals with IT only from the side of companies and IT vendors. However consumers are not mentionned at all. It has been proved that consumers use more and more internet especially for buying travel and tourism products. Companies need to pay attention very careful to IT developpment although it is not a strategic tool anymore.

To read more of  Does IT Matter? Information Technology and the Corrosion of Competitive Advantage :

http://books.google.com/books?id=wrROE6SLJFEC&printsec=frontcover&dq=does+IT+matter&hl=fr&ei=A6XCTJeSCY7AswaBrczeCA&sa=X&oi=book_result&ct=result&resnum=1&ved=0CC0Q6AEwAA#v=onepage&q&f=false

Global Distribution System (GDS) : New distribution channels in the tourism industry

The GDS have a role of intermediaries between purchasers (mostly travel agencies) and suppliers (hotels chains, airline companies, car rental companies...) in the market of tourism.

According to Amadeus (one of the most important GDS), the GDS or Global Distribution System "refers to the reservation tool travel agents use when making an air, hotel, car or other travel service booking. And not only do GDSs power the content of ‘traditional’ travel agency platforms, they also provide pricing, availability and reservation functionality to many online travel agencies."

The Airline Reservation System (ARS) was invented in the late 1950's to improve the efficiency of arlines reservations system. American Airlines required a system that allows real-time access to flight details, as well as the integration and automation of the flight's booking process. It has then evolved into the Computer Reservation System in the early 1970's and then into the Global Distribution System.

The GDS were the first e-commerce channels to facilitate B to B eletronic commerce.

 GDS have 3 assets. Firstly, it deals with huge database for airlines companies. Secondly, it gives information in real time about marketing data, such as number of passengers and prices per category, increase of bookings, no shows, etc. Finally it enables a easier communication with the customer.

Currently there are 4 main GDS :

• Amadeus, the largest GDS provider was set up in 1987 by several European airlines companies (Air France, SAS, Iberia and Lufthansa). To give some figures, Amadeus processed 670 million travel transactions in 2009.Its data network and database serve more than 57 000 travel agencies. It also provides access to 58 000 hotels and 50 rental cars companies in 24 000 locations.
• Sabre, founded in the 1960's, first a CRS has evolved into a GDS. Sabre connects more than 60 000 travel agencies, 400 airlines, 55 000 hotels, 229 tour operators.
• Galileo International was founded in 1993 by 11 major North American and European Airlines.It is owned by Travelport. Currenty, the GDS is represented in 116 countries ans serves approximately 45 000 travel agencies.
• Worldspan, owned as well by Travelport, was founded in 1990. It serves 20 021 travel agencies in 90 countries and is connected to 421 airlines, 210 hotel companies, 40 car rental companies.

The development of GDS has led to the increase of competitiveness among airlines companies as they can display all their products in a very large network of travel agencies.

GDS have facilitated the development of yield management which appeared with deregulation of airlines transport.

 

Hotel reservation systems (adapted from Carroll and Siguaw, 2003 and Carroll, 2004)

 For recent news about GDS in the hospitality industry :

http://www.hotelmarketing.com/index.php/content/article/gds_are_the_quiet_giant_of_the_travel_industry/