Digital Transformation in the Tourism Sector - Challenges and Opportunities

Abstract

1. Digitalization – definition and meaning
2. Key drivers of digital transformation
3. Transformation and customer journey
4. Challenges and opportunities

Full text

05.03.2018
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DigitalTransformationinthe
TourismSector‐ Challenges
andOpportunities
Prof. Armin A. Brysch
June,28th,2017
UniversityofSeville,Spain
Somedigitalassociations‐ industryrelated…
DigitalTransformation2017,©Prof.A.Brysch 2
Digitization
of
products/
services
Val ue
Creation
Digitization
ofbusiness
models
Digitization
ofwork
Consumerization
(IT)
Source:Zimmermann,A.,Jugel,D.,Sandkuhl,K.,Schmidt,R.,Schweda,CM.etal.(2016)ArchitecturalDecisionManagementfor
DigitalTransformationofProductsandServices.ComplexSystemsInformaticsandModelingQuarterly,6:31‐5,p.31

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Demographics
Infrastructure
…andsomeexternalinfluencesaccelerating
digitaltransformation
DigitalTransformation2017,©Prof.A.Brysch 3
Digital
Transformation
Regulation Legacy
System
Jobs&
Skills
Source:World EconomicForum(2017).DigitalTransformationInitiativeAviation,Tra ve landTo ur i sm Industry,p.9
Agenda
DigitalTransformation2017,©Prof.A.Brysch 4
1.Digitalization – definitionandmeaning
2.Keydriversofdigitaltransformation
3.Transformation and customer journey
4.Challengesandopportunities

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Definitionof „Digitalization“
“Digitalization istheuseofdigitaltechnologiestochangea
businessmodelandprovidenewrevenueandvalue‐producing
opportunities;itistheprocessofmovingtoadigitalbusiness.”
vs.“Digitization istheprocessofchangingfromanalog to
digitalform.” (Gartner2015)
Theconcept of digitalization is both aspecial manifestation of
(digital)economy and its economic subjects and the
technological,organizational and/or marketing specific
consequences of adigitalalignment (see Brysch2017).
Thereby the term digitaleconomy,alsoknown as internet
economy or net economy,has no consistent meaning in
literature (see Wirtz2016).
DigitalTransformation2017,©Prof.A.Brysch 5
Digitalization of products and services in
two directions
DigitalTransformation2017,©Prof.A.Brysch 6
Physical products
•SoftwareDVD
•Book
•Ticket
•Map
Digitalproducts
•software download
•E‐Book
•E‐Ticket
•Digitalmap
Physical services
•Moneyorder form
•Trave lconsulting
•Tour guide with map
•Seminar
Digitalservices
•software as aservice
•Trave lchatbots
•Trave lApps
•Webinar

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Meaning of „Digitalization“
Discussion should notfocus ontechnical or technological
aspects,butalign digitalization to aholistic approach and
source for new business opportunities.
Changesofstatusquoof abusiness because of digitalprojects –
with ubiquitously and indefinitely collecting and analyzing data
–affectinternaland external transformation processes
Thesetransformation processes could improve effectiveness
and efficiency (e.g.customer solutions willbe personalized or
production processes willbe connected)(see Brysch2017)
DigitalTransformation2017,©Prof.A.Brysch 7
Agenda
DigitalTransformation2017,©Prof.A.Brysch 8
1.Digitalization – definitionandmeaning
2.Keydriversofdigitaltransformation
3.Transformation and customer journey
4.Challengesandopportunities

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Driversof digitaltransformation – overall
perpective
9DigitalTransformation2017,©Prof.A.Brysch
Economy
Customer
Technology
Driver:Technology
Digitaltechnologies (offering a
globalinfrastructure,hence
people &organizations share
informations,collaborate,interact
and communicate).
Internetof Things/IoT (connects
through implementing intelligent
components;B2Cand B2B)
Human‐Robot‐Collaboration
(interfaces between employees,
robots and customers)
(see Schmitt2015)
10DigitalTransformation2017,©Prof.A.Brysch
Economy
Customer
Technology

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Driver:Economy
Digitalization of services
accelerates the shifting within
ServiceEconomytoExperience
Economy(seePine&Gilmore1998)
Newcompetitors and typeof
competition (based onGAFA
unicorns)increase tensions and
put pressure ontraditionalplayers
Innovationcompetence of
businesses becomes crucial to stay
competitive;shorter innovation
cycles accelerates speed
11DigitalTransformation2017,©Prof.A.Brysch
Economy
Customer
Technology
Driver:Customer
Demographic changes (BestAger,
Silver Surferetc.)and related life
styles (Millenials,GenY, GenZ
etc.)willchallenge companies to
customize servicesevenmore
BYOD (bringyour own device)will
change workplace and blur the
line between privacy and business
Overstimulation orsensory
overloadrequiresexcellent
understandingofcustomers(i.e.
AttentionEconomywithBigData)
12DigitalTransformation2017,©Prof.A.Brysch
Economy
Customer
Technology

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Driversof digitaltransformation – sector
specific perspective (tourism industry)
13DigitalTransformation2017,©Prof.A.Brysch
Industry
Traveller
Technology
Driver:Technologyinthe tourism sector
14DigitalTransformation2017,©Prof.A.Brysch
Industry
Traveller
Technology
Travelplatforms aggregate and
provide big data – mobile(like
dominantbooking.com,offerings
in96.000destinations,1.32mn
hotels 120mn reviews)
Disruptive changes insales and
distribution (number of travel
agencies willdecline sharply)
AI,MLand ITinvestments from
non‐touristic players likeGoogle
(GoogleDestinations,GoogleTrips
etc.)threaten traditionalplayers

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Driver:Traveller
15DigitalTransformation2017,©Prof.A.Brysch
Industry
Traveller
Technology
Target groups become more
heterogeneous (digital natives
anddigitalimmigrantsonline
behaviourdiffersintermsof
accesstoinformation,channels,
use,trustetc.);futuretravel
tribesrequirenewprofiling
ChangeinConsumerBehaviour
(SmartShoppersor“Phygitals”
mergeonlineandofflineworld
forbestdealsandconvenience)
Driver:Tourism industry
16DigitalTransformation2017,©Prof.A.Brysch
Industry
Traveller
Technology
Value unlockedbydigital
transformation(valuecreation
fortheindustrythrough
increasedprofitability,migration
ofvaluefromtraditionalplayers
tonewcompetitors)
Newbenefitsprovidevaluefor
customers (timesavings,
convenience,sharing,risk
reductionetc.)
Regulation influence competition
(Google‐Apple‐Duopoly?)

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Agenda
DigitalTransformation2017,©Prof.A.Brysch 17
1.Digitalization – definitionandmeaning
2.Keydriversofdigitaltransformation
3.Transformation and customer journey
4.Challengesandopportunities
Modelof custumer journey
DigitalTransformation2017,©Prof.A.Brysch 18
Source:Armstrong/Kotler2005,Kreutzer2016,Kroeber ‐Riel/Gröppel‐Klein2013
pre‐trip trip post‐trip
Attention Interest ActionDesire
Search Share
Stimulii
(observable)
Intervening variablej
(notdirectly observable))
Reactionk
(observable)
Attention Interest Desire Action
Traditional,neo‐behavioral S‐I‐RModel

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Modelof custumer journey (2)
DigitalTransformation2017,©Prof.A.Brysch 19
Source:Lecinski 2011,Brysch2017
Share
Preference
Inspiration
Search Trip
Interest
Booking
Attention Search Interest Action Share
Desire
activating processes
cognitive processes
more
insights
ZMOT FMOT SMOT
Agenda
DigitalTransformation2017,©Prof.A.Brysch 20
1.Digitalization – definitionandmeaning
2.Keydriversofdigitaltransformation
3.Transformation and customer journey
4.Challengesandopportunities

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Challengesandopportunities
DigitalTransformation2017,©Prof.A.Brysch 21
DT
Technology
OrganizationMarketing
Marketing:Challengesandopportunities
DigitalTransformation2017,©Prof.A.Brysch 22
FourPillarsofDT
UserExperience
Personalization
Automation
Organizational
Readiness
Source:Skift (2017).THE2017DIGITALTRANSFORMATIONREPORT,p.15

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Technology:Challengesandopportunities
Intelligentautomation,e.g.
ArtificialIntelligence(AI)supports
highqualityservices
Data‐gatheringtechnologiesfor
personalization
Insight‐generatingtechnologies
fordataanalysis
Digitallyconnectedtouchpointsof
acustomerjourneyforseamless
travel
DigitalTransformation2017,©Prof.A.Brysch 23
Source:World EconomicForum(2017).DigitalTransformationInitiativeAviation,Tra ve landTo ur i sm Industry,p.8,9,13
Organization:Challengesandopportunities
Digitizationinfluences
digitalenterprise
architecturesandsystems
Alignmentofbusiness
modelanddigital
technologies
Outsourcing
Flexibility,agilityand
integrationofmobile
devices
DigitalTransformation2017,©Prof.A.Brysch 24
Source:Zimmermann,A.,Jugel,D.,Sandkuhl,K.,Schmidt,R.,Schweda,CM.etal.(2016)ArchitecturalDecisionManagementfor
DigitalTransformationofProductsandServices.ComplexSystemsInformaticsandModelingQuarterly,6:31‐5,p.32
Source:Steimel 2015
Challenge:Evaluate DigitalMaturity,
use DigitalMaturity Assessment
Tools(KPMG,2014)

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Finalquestion:Willdigitaltransformation
changethetourismsector?
DigitalTransformation2017,©Prof.A.Brysch 25
Yesofcource,itwillstronglyhitandshakeit…
Consequences willaffect the tourism industry indifferent
intensity and speed butwillplay akey role
Tourism providers of commodities mustinvest inefficent
production processes or die
Tou r is m 4 .0 with SmartServiceswillconnect allplayers and
customers realtime undubiquitous
Thank you for your attention…
26DigitalTransformation2017,©Prof.A.Brysch
Brysch,A.(2017):Tou r i s m u s 4.0– Digitale
HerausforderungenfürdieReisebranche,in:
Landvogt,M.;Brysch,A.;Gardini,M.(Hrsg.):
Tourismus–E‐To u r i s m u s –M‐Tou r i s m u s ; 
HerausforderungenundTrendsderDigitalisierung
imTourismus,Berlin,S.35–42
Brysch,A.(2017):Marketing,Digitalisierungund
Tourismus(2017),in:Gardini,M.(Hrsg.):
MarketingexzellenzimTou r i s m u s , Berlin,S.55–78
Brysch,Armin(2015):Internetökonomieund
eTourismus,in:Schulz,Axel/Weithöner,Uwe/Egger,
Roman/Goecke,Robert(Hrsg.):eTourismus:
ProzesseundSysteme,Berlin,S.34‐51
seealso:www.professor‐brysch.com