21 Jan IBM’s Dee Waddell on finding the value proposition in emerging technologies
Written by Marisa Garcia – Flightchic.com
Dee Waddell, General Manager, Global Travel & Transportation Industry at IBM, helped us cut through the hype to identify the value proposition in emerging technologies that are the focus of discussion for the travel and airline industry.
Waddell has a strong background transportation background, having held positions as CIO of Amtrak, CIO and Universal Weather and Aviation and Director of eCommerce at United. His current activities at IBM are grounded on the premise that technology should be a lever for organizational change, based on the needs of industry, with optimized processes to ensure a positive impact on companies and on society.
“It’s not about the technology it is really about how we apply technologies in the industries. That’s a strategic pivot for IBM,” Waddell says. “It’s about deploying out real-world technologies that have real impact. We are helping companies transform in this digital age, from industry lense and industry perspective..making our operations more efficient, with better revenue at lower cost, by leveraging technology.”
Waddell believes that technology applications in the airline space, travel space and transportation can help improve society because of the impact of these sectors on global economies.
“We know the travel and tourism sector—and also in transportation, which is about the same share—about 10% of GDP is in this sector and it has one of the highest growth rates, in comparison to other sectors. About 10% of jobs in the world are in the travel and tourism sector. Which is huge.”
“In our industry, or goal and our strategy is to empower employees to maximize their abilities, to create wonderful experiences for travelers, solve issues when they come up—whether disruptions or whatever—we believe there are technologies that can transform the lives of people for the better.”
Swimming with Data
The IBM travel platform, which is primarily focused on airlines, but also extends to hospitality and other sectors, has focused its ecosystem on travel retail, customer experience, maximizing revenue, travel operations, and maintenance. All of those have one resource in common: abundant data.
“There are large pots of data, particularly on the maintenance side,” Waddell says. “AI loves data. Where there is lots of data, there are many use cases that you can leverage through AI—and not just AI but other analytical methods as well.”
Waddell sees many opportunities open to airlines to differentiate themselves by using AI to enhance the passenger journey. We’ve seen some value-added solutions already become popular in the airline space, but there are still many opportunities to expand beyond current applications.
“We see AI being able to differentiate at each of the touch points—booking, preflight, inflight, post-flight—we believe that personalization is a key principle,” Waddell says. “We’ve talked about it for about a decade, or more. But how do I scale that?”
A key point is to ensure that the vast volumes of data are gathered where they can best be leveraged, ingested through AI algorithms, with the results applied to solve problems which, by their volume, might overwhelm organizations.
“We’ve done this with Japan Airlines, and a number of other airlines, where, based on FAQs, they can automate chatbots. We’ve had great success with engagement and resolution. With Japan Airlines we’ve had 78% of issues resolved through the online chatbot, which is fantastic.”
“In customer service, there are lots of in-bound questions, particularly in Europe, about renumeration because of delays an other disruptions. Airlines are inundated by these requests for renumeration. We are bringing AI, bringing through that data, sifting through it, and applying some algorithms on how to best respond.”
IBM brings to bear machine learning and deep learning concepts to expedite the processing of these types of high volume, high customer impact issues. Waddell says the company spends almost $6 billion a year in R&D of practical tools for AI applications around efficient and personalized resolution of disruption claims.
“We’re making some real inroads in the AI area around offers. Companies, of course, are trying to target individual customers, whether it be to remunerate them, or provide them with an upgrade opportunity, or additional miles because of disservice. We’ve got an engine that we have over 24 patents on, and we just signed up our first real production—we have had several proof of concepts and proof of value with several companies for it—but this is something we are very excited to push in the industry.”
Hype and Hope
While the volume of dialogue around emerging technologies itself is high, can overwhelm some and make others skeptical, Waddell believes it is important for organizations to continue to educate themselves on these trends, identify long-term goals and find how specific technology applications can help them advance their organizational objectives.
“With any new innovative technology, there’s a level of education and learning about the technology. There is the dichotomy of hype or hope, as I put it. Whether it be blockchain or AI, we look at hype cycles,” Waddell says.
But hype may only be the initial perception of value in a technology that is, perhaps, ahead of its time but which, when refined, will significantly change society.
“If you look at mobile devices—there was Apple Newton and Palm—and that died down,” Waddell says. “Then the iPhone came out, and it’s become a key part of our lives. Imagine what our lives would be like without our phones now. It’s a similar trend, if you look now in the context of blockchain and others.”
“Any innovative company will have some ability to look at the future, the hype and the hope, and be able to educate themselves in terms of proof of value.”
Blockchain promises to open up new possibilities for data security and data exchange, but Waddell believes its real positive impact on the airline and travel industries will be in making existing partnerships stronger and helping forge new partnerships.
“We do believe at the fundamental basis that blockchain provides a significantly enhanced level of security, and also transparency of data. It fits really well when you are talking about organizations working together,” he says.
One practical example is using blockchain to manage loyalty and mileage programs. The trust protocols of blockchain will allow rapid and reliable exchange of miles between partners within the travel space—airlines and hotels, for example—with reliable accounting for transactions.
“When you start getting into the realm of companies working together, particularly as you are trying to integrate processes, then blockchain can inherently provide not just security to the fundamental data—because I can do that in today’s technology as well—but the value is that I can help provide a level of transparency that is a foundation of trust,” Waddell says. “The trust protocol allows exchange of things of value and assets that you cannot copy.”
”When you start getting into assets, like points and miles, music, stock certificates—whatever they may be—assets that are tangible or intangible, when you transfer those, there is a full accounting process behind them. Particularly in our industry, the value of blockchain will be in company to company type transactions that then leverage the tangible or intangible assets to transfer.”
There four core blockchain applications in development that Waddell believes will be particularly relevant to the airline and travel sectors: identity, marketplace, loyalty and operations. All of them have one element in common: the transactions require collaboration between different companies.
“There’s a lot of work being done around identity. This includes biometrics, where the World Travel and Tourism Council is doing a lot. We’re actually a strategic partner and one of the leaders in their efforts, along with other companies, driving what the global standard should be around biometrics and cross-border passenger experiences,” Waddell says. “To make sure that it is a seamless environment, where data can be transferred.”
While there are different protocols to prove identity for transactions, Waddell believes there will be a shift to self-sovereign identity, which gives individuals greater control of what data they are sharing about themselves and when they are sharing it.
“It’s a decentralized identity where I own my identity. I own the information that I give out. Even if I interact with a company, they don’t necessarily see the full profile, but they can gain access. Where they believe they can provide value, I can give access to that. I may be willing to give you more information about me if it would give me a better opportunity for a better seat or a better experience.”
“We hope that the supply and demand economics will work in that environment. We think that identity is a very key piece..there are a few travel companies in the travel space that are trying to solve that.”
Marketplaces are another area where blockchain applications are taking hold in travel, though Waddell believes that some applications still need to validate the value of their business.
“I see an interesting dynamic at this stage—it’s pretty early—some companies are offering the crypto currency or token and then basically offering a free business model. [Some examples are] a booking site an AirBnB competitor with no commissions, no fees, they’re going to give you loyalty points. But there’s no such business model like that. Nobody can afford to give you everything for free.”
“Remember, with the boom of the dot com, everything was funded by advertising. Google put advertising on there, and some travel sites started advertising, so they would pay for a lower cost of doing business. But now what is happening is that people are floating crypto-currencies and hoping that the appreciation of the cryptocurrency is going to pay for some of the core business model pieces or costs incurred.”
Waddell believes that marketplace distribution will eventually find its place.
In loyalty, besides managing transactions in existing loyalty currencies, Waddell believes there may be an opportunity in crypto-payments.
“I do believe that currency points are going to, at some point, optimize the connections currently existing in the loyalty program, rather than one-to-one set-ups,” he says. “But how do you use tokens and crypto as the currency for miles and be able to track them, and optimize that process? There’s a real opportunity there. Two in particular. One is around the currency that we currently use, and the other is around billing and settlement. There’s a huge opportunity for saving costs and driving efficiencies.”
In operations, Waddell believes blockchain can help manage the large volumes of documents and data required to operate and maintain aircraft. As connected aircraft take-off, increasing the volumes of data to manage, AI will also help.
“We see that there is so much information between the aircraft manufacturer, to the maintenance provider, to the airline, leasing, maintenance records, optimizing between some of the new airplanes that have data coming off them. How do I use AI to ingest that information and be able to leverage that for predictive maintenance?”
From Transactions to Interactions
Collaboration between different players in the sector will ultimately help deliver useful applications.
“I’m seeing companies much more willing to create groups—even competitors—who on behalf of the industry, like IATA, WTTC, Open Travel. We are basically working on senior levels to drive an efficient industry.”
“I do believe that companies are using some use-cases today, but what is also happening, from an executive perspective, is people are trying to figure out who their network participants would be.”
“Rather than having the technology lead them, they are saying, ‘If I was to do business in our industry—let’s just take loyalty—they are starting to say what would be the groups that I should be working together with? Should it be alliances? There are a number of people looking at who they should they be partnering with to have these discussions, in addition to what they are doing themselves.”
“I do think that companies are exploring what they can do with blockchain. I think that’s good. I think that’s really helpful. We have over 100 engagements in the travel and transportation spot. We’re doing real stuff. We’re getting in with people and doing proofs of value.”
The best way to look at emerging technologies is to determine whether these tool can offer added-value, not just by managing transactions but by building synergies that can ensure operational efficiency and a significant step-change in service.
“We’re basing all of this in bringing people and processes and technology together to benefit people and organizations,” Waddell says.
“When people and data work together in harmony, we can transform companies. We think this a key secret to effective transformation. A number of digital transformations have failed, but we must make sure that we don’t must deliver technology for technology sake. One of the key things that we’ve learned is truly to focus on the individual and the organizational processes, to be sure that we effectively bring people, data and technology together. That’s the real power of transformation.”
This aim applies to IBM’s entire enterprise platform, and to the way that the technology giant measures its own value proposition, Waddell says.
“We pivoted and transformed to a company that is not just technology, but contributing to the lives of people the efficiency and effectiveness of organizations, and of course to the world.”