Worldspan Shifts IT Strategy

As part of a broad company strategy to focus more resources on developing technologies for its airline and hotel clients, Worldspan L.P. is moving to a software-as-a-service model for three of its internal systems.

The company is replacing its Siebel Systems Inc. customer-relationship-management application with Siebel's CRM On Demand service. Soon after, it will move its human-resources and payroll and travel-and-entertainment expense-management systems to undetermined service providers. Worldspan plans to complete the entire migration within six months.

Worldspan serves up a global distribution system for the travel industry, but that's not its only business. The industry faces sweeping changes in how hotel rooms and airplane seats are distributed, and Worldspan says its clients will require the technologies to support those changes. At the same time, the company realizes some of its internal systems need updating.

And while on-demand software isn't a novel approach, Worldspan's decision to migrate three back-office systems almost simultaneously is ambitious. "Doing several apps is not the norm of [software-as-a-service] adoption," says Amy Konary, an analyst at IDC.

Worldspan CIO Sue Powers says the dramatic shift in strategy stems from a goal to squeeze more efficiency out of IT so that she can shift resources to developing new products for clients. "We've made a decision to focus on travel technology," Powers says.

The company anticipates that on-demand software will give it access to improved functionality and new features that otherwise would have required expensive and time-consuming upgrades. Worldspan has been running an older version of Siebel CRM and outdated versions of Geac Computer Corp.'s Millennium HR and payroll system and the Extensity travel-and-entertainment expense-management application. (Geac acquired Extensity Inc. last year.) "We really didn't invest a lot in internal systems," Powers says. "Service offerings provide an opportunity to significantly upgrade that technology."

Worldspan's technologies for clients include server-based airline-fare shopping tools, an electronic- ticketing interchange, a ticket-repricing application, and interactive hotel-mapping software, all delivered as XML Web services.

Worldspan plans to wrap up its CRM migration in March, after which it expects to recoup the costs of the move within a year, and then see a 50% reduction in CRM-related costs, Powers says.

Perhaps more important, the move is expected to give Worldspan more flexibility in how it serves customers. The company has been making changes in its sales force that will alter the way it uses Siebel. For instance, Worldspan divided its sales and service staff into more-specific roles, meaning fewer people will be day-to-day power users of the Siebel system. But when it's gearing up for a sales blitz, Worldspan may want to ratchet up the use rights of some of its service staffers so they can assist in the sales effort. The on-demand approach will let the company make such changes on the fly.

The HR and payroll and the travel and entertainment systems, both of which are less critical from a competitive standpoint than the CRM app, are expected to move to on-demand by the end of June. Worldspan expects to select on-demand replacements for its Geac apps soon.

The idea that internal management of IT resources doesn't necessarily provide a competitive edge is a concept that's gaining steam, analyst Konary says. "There are some companies that very early on have gone gung-ho into software as a service because they really can see a lot of value," she says. "They look across their portfolio and decide there really is no advantage to running these applications in-house."

In Powers' mind, a simple equation drives the decision: "We're going to subscribe to any technology service that will help us improve our business."