Customer Talk: How Amadeus solves the application sourcing puzzle
Amadeus is the largest technology vendor in the world of travel. The company offers marketing, distribution and global IT services. During the last 4 years, Amadeus GBS has worked hard to develop and adapt its sourcing strategy. Ignacio Lopez, sourcing manager at Amadeus GBS, talks about how Amadeus deals with complexity.
“Our greatest challenge is to generate more revenue,” Lopez says. “The current circumstances play a crucial part in this. We have two kinds of businesses: one that is more traditional, while the other is rather based on IT solutions, focusing more on specific markets. We would like to grow there. Because of fierce and numerous competitors, this is not easy.” The business partners of Amadeus consist of large travel organisations and airlines. Amadeus does not carry out customer facing business. “The challenges of our partners are our challenges, as are the ways we collaborate with them. They expect us to be able to react very fast to market developments. That means that we have to keep the development and release cycle as short as possible. That is where most of the pressure currently comes from.”
From Resources to Services
Amadeus uses a striking sourcing strategy. One of the aims is to attain a certain level of agility. But that is not the final goal. “We want to realise a time to market that is as short as possible, and we do that by standardising our operations as much as we can, among other things. Our partners expect us to as well,” Lopez says. “To be able to do that, much analysis has to be done from the perspective of our customer, but we also have to determine how far we want to take it. This is not our primary working method, as we only outsource the technical part of our applications. So it does not constitute outsourcing of development and maintenance. Those things we do ourselves and we want to keep doing ourselves; we want to keep to that which is our responsibility. That is a talent in itself.”
Unfortunately, the time and effort put into integrating a vendor or partner is often not taken into account when outsourcing a service. Those extra costs are often forgotten, even when it is so important to ‘embed’ the partner responsible for management and maintenance. Lopez’s staff is working on that. “We are working with a process in which a devoted group of people focuses on the library of the suppliers. But a change in the mind-set of the organisation is also needed. Team members need to learn to think in terms of services, not of resources. They don’t use the resources, but the services that are delivered by those resources.”
Any map drawn from all outsourcing objects of Amadeus will bear a close resemblance to a classic jigsaw puzzle. Many consultants would frown upon seeing the architecture, which is not the prettiest of its kind. However, all 25 pieces are connected in multiple ways. “It is a complex puzzle,” Lopez concurs. “As a diagram it looks very clear and deceptively simple. However, when you are in the middle of the process, the puzzle becomes complicated. It certainly is not a matter of adapting a few pieces: a provider on this side, an organisation on the other and it all spontaneously works together. Digging down to the details reveals will reveal the true challenges. For example: how to measure? The partner could very well use my tools – but he may not know those tools or cannot integrate them with his environment. You have to realise how complex it all is. That demands talent.”
Every time a step is taken towards a deal, an intervention by a supplier, or by an outsourcer the organisation has to accept this and immediately act on it. This demands clear communication. “Change management is a continuous process on which we are currently working very hard. We need to prepare the organisation for the continuous stream of changes, otherwise each change would have paralyzing effects,” Lopez says, adding an example to that: “One day, we were planning to go live in a number of areas. We gave advice, we applied the usual change management and we consulted with the managers and the team. Everyone was informed and we thought nothing could go wrong. Until we actually went live; from that moment, we were confronted with frictions and issues. The resulting situation demanded a response. We then realised it was better to set up continuous change management, so we could say: it does not matter what people think, we are going to run a change in Kiev. Then everybody knows what you mean and you don’t have to rely on internal managers with their own vision of the problems without knowing all the ins and outs. It is better to run a structured change.”
After a number of years, Amadeus consisted of more than 20 operating companies, and the organisation consolidated. After that, the company wanted to do more than resource management, moving closer towards outsourcing. For that, Lopez chose two partners in the area of applications: Accenture, and CDA. “In this case we did the selection ourselves, even though we do and did many things with Quint Wellington Redwood. We were planning to do everything with a single supplier. During the initial process, we decided to separate applications and infrastructure,” Lopez says. “We discussed which parties would qualify for the different parts of the process. Eventually, we chose a number of companies we have already worked with, therefore knew us and for whom transitions to new models would be limited. That resulted in a shortlist and we began an RFP process with 4 companies.” Quint has been advising Amadeus on the area of sourcing services for a quite a while, not so much in the area of applications, but rather in infrastructure. “They have helped us finding the right service model and advised us on preparing the RFP’s. In the past, we mostly worked with them in the field of service management, but now it is more in the areas of Business Process Management, Lean and similar fields.
Amadeus had to develop its own sourcing management skills in order to engage its outsourcing adventure, such as demand management, supply management and service management. Also, the question was raised whether the right people were on the payroll. “After our sourcing initiative attained its form, we looked at our organisation and defined certain key roles, especially in the areas of supply and delivery management and sourcing management. Now that we are in the process of change towards a global business service organisation we have started hiring people involved in service management. But originally we were focused on sourcing and outsourcing of activities. We did not build any special demand or supply organisation, but we did define the roles. Also, vendor management is an important element. Without that, the task would be harder than expected.”
Assisted by Quint, Amadeus has invested much in training people in the area of sourcing. This is not exactly simple. Lopez never heard a company saying that a simple one week course would be more than enough. “I wish it was. It is something you learn by doing it. It is also a painful process, but one day you are sure you have the needed knowledge and can retain it. You do not get there with a course, which after all does not teach you the harshness of reality. The experience is now paying off.”
Amadeus has come a long way, a very long way even, with application outsourcing, but it is not reached its goals yet. “We are not there yet,” Lopez says. “We have decided to recalibrate after we started creating awareness for ‘the global approach’, putting the original plan on hold for the time being. We are currently describing very accurately how we can attain our goals, without adjusting them by the way. We just want to do it in a better way and pull everything together to succeed in our planning.”
What lessons have Amadeus and Lopez learned? “Self awareness of the organisation is the base. When hiring people, it is difficult to teach them how the organisation works and how the organisation provides services. A new employee attains that knowledge in the working place, by doing the things as he wants to do them and by showing us how we can be successful by retaining his services. You need to know yourself. We have 10.000 people working for us in 75 countries, and we are active in 195 countries. 600 people coming from partners work with us as well, consisting more than 40 nationalities. Most people in management positions have been working at Amadeus for more than a decade. They all know how Amadeus operates and why we do things the way we do them.”