Zero Cost Transformation for Airport Operations

Guest Author by Guest Author | Mar 19, 2019

A blueprint for innovation, efficiency and growth without capital-intensive investment

Written by Carlos Hernandez, Partner and Global Lead, Travel and Transportation, Avasant LLC

Innovations in technology have the potential to reinvent airports across critical dimensions of passenger experience, operations efficiency, and revenue growth.  However, between 75% to 90% of current technology spend is on sustaining existing technologies and operating models , with limited focus on transformation and innovation. 

This lack of innovation in driven by challenges of current technology and service delivery models, with 60% to 70% of programs failing to meet their scope, cost or schedule objectives, over 30% of programs being cancelled before they are completed , less than 20% measuring whether any business benefits had been realized, and long implementation cycles of 24-36 months leading to initiatives which are obsolete when implemented.

Airports need to develop technology and service delivery models based on the principles of agility, low investment and rapid benefits, or face the prospect of a vicious cycle of an increasingly obsolete technology foundation which forms an increasingly greater barrier to innovation, where large capital deficits make even rudimentary improvements difficult.

Reconciling Innovation with Investment

This apparent contradiction between innovation and investment can be reconciled by way of three converging forces:

  • New technology for business advantage – The impact of technology on optimizing core operations is exponentially greater than what was possible a decade ago.
  • Standardized technology platforms – The cost of open-standard and cloud solutions is significantly lower than traditional application and infrastructure models.
  • Reducing or eliminating one-time investments – Strategic partnerships with leading technology companies based on the gain-share of tangible business benefits is increasingly the norm.
Figure 1: Market Trends Driving New Partnerships

Zero Cost Transformation

These three elements define Zero Cost Transformation, a business model which reduces or eliminates initial investments and links risk and benefit-sharing directly to business outcomes delivered by innovations, and provides:

  • Technology and business initiatives with a direct linkage to business outcomes.
  • Minimizing or eliminating initial capital costs to implement technology and business initiatives
  • Migrating business and technology costs to predictable operating expenses linked to business metrics
Figure 2: Zero Cost Transformation contrasted to Traditional Transformation Programs

These trends are already prevalent. 80%+ of transformation programs are based on hybrid cloud models, 50% of programs deliver tangible solutions in less than 6 months, and a quarter of all transformation relationships are based on Zero Cost Transformation.  Critically, 60% of senior executives are exploring alternatives to traditional technology and service delivery models.

Airport Digital Transformation Best Practice
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Airport Operations Reinvention

There are proven use cases for technology-driven transformation across airports and related industries across key parts of an airport value chain.  These address critical improvements in the cost, reliability, effectiveness and sustainability of core airport operations, while impacting the entire ecosystem of airports, airlines and support services.

Call to Action

With Zero Cost Transformation, airports have a once in a generation opportunity to drive innovation into the core of operations, while addressing the barriers of high cost and inflexibility.  Decisions made in the next one to three years will be critical to the future of airports as hubs of economic activity and engines of growth.

The article was provided by a third party and, as such, the views expressed therein and/or presented are their own and may not represent or reflect the views of ACI, its management, Board, or members. Readers should not act on the basis of any information contained in the blog without referring to applicable laws and regulations and/or without appropriate professional advice.

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