1. Short Company Description:

Avis-Budget Group, Inc (Avis-Budget) is one of the world leaders in vehicle rental services, which uses technology to meet customers’ demand. The group manages a fleet of more than 400,000 cars worldwide and operates in 70 countries around the world. The group enters into alliance with other travel-related companies in a platform known as Open Travel Alliance (OTA) with John Turato being the Chairman of the OTA in order to provide all services in travel industry by using information technology.

2. Challenges:

Avis-Budget faces two particular challenges which are mentioned in the interview between John Turato, Vice President of Technology of Avis-Budget Group, Inc. cum Chairman of Open Travel Alliance, and Dan Farber, Editor in Chief of ZDNet.

• The first issue that Mr Turato addresses in the interview relates to the difficulty that the group has to cope with when transiting from a legacy main-frame heritage group into a component-based model. However, this model will consume a huge amount of time, money and know-how to implement. Therefore, such model is not realistic and the group has to seek for an alternative solution.

• Another problem that Avis-Budget has to solve is how to operate efficiently in a wide range in geographic regions. The group presents in 70 countries with different languages around the globe.

3. Strategic Advantages:

The utilization of new technology allows the group to provide services at lower cost and first-grade information management. Therefore, the customers shall enjoy a more competitive price and more comfortable services while the group can manage the internal information system efficiently. Avis-Budget’s success is due to the deployment of Service Oriented Architecture (SOA). SOA of Avis-Budget is a platform appreciating re-use of technology in different service applications and it helps bring in a number of strategic advantages for the group.

• Reduce cost of new technology investment and operation: instead of changing all already existing methods, the management of Avis-Budget employed one, which Mr Turato calls “island approach”. This method allows the group to identify the fields of functionality which need redesigning or improving. The applied information system is based on the re-use of services in new applications, which reduces the cost and creates competitive advantages for the group. To demonstrate this point, Mr Turato gives an example of a project that Avis-Budget is conducting, the “e-receipt” project. The group provides information to customers by using notification service such as delivering e-mails, SMS messages and faxes. The customers shall receive “e-receipts” in their emails upon returning their cars. Initially, the notification service is a simple and inexpensive technology so the investment may not be costly. Moreover, this method helps decrease the price for hiring staff to issue receipts. Also, it is paperless and cheaper because neither paper nor postal fee is required to convey the receipts to customers.

• Sharing information efficiently: the group implements standard and user-friendly system known as wizard system which allows their presences around the world regardless of the different languages to use the same system. The purpose of the wizard system is to share information among Avis-Budget entities worldwide as well as to control such information effectively at the central system.

• Enhancement of Customer service by using Internet: Avis-Budget is a member of Open Travel Alliance. OTA is a group of travel-related companies which work together to improve the performance of the tourism industry. As a member of OTA, Avis-Budget also enjoys and benefits from the advanced information technology that OTA is deploying. OTA is currently adopting use of internet to enhance the industry performance, particularly in travel reservation. This means reservations can be tracked with ease and conduct-efficiency will be improved.

• Green image: According to Mr Torato, Avis-Budget would develop in the direction of environmental friendly. They are planning to reduce the number of servers and to use the most effective data center in order to decrease the emission of heat and the use of power. With this approach, Avis-Budget’s image will be enhanced as an environmental friendly group.

4. Future Development:

In the near future, OTA is setting up a sub-committee on content to allow travel suppliers to have more control over the delivery of services, especially in hospitality field. With more control in terms of service delivery, Avis-Budget can ensure that their customers will be provided with accurate service requirements. As a result, the goal of customers’ satisfaction will be achieved fully.

Question for Professor Sergey Butakov: Dear Profession Sergey,

There are two different streams of ideas in NAAB group in relation to the example of “e-receipt project”.  They are mentioned below:

Aymen and Bowl suggested that according to the video, the reduction technology investment lies only in the “island approach”. It means that Avis-Budget only redesigns or improves the parts which require to. This helps save cost of technology investment. Consequently, the “e-receipt project” merely demonstrates the reduction of cost of operation.

Meanwhile, Ngoc and Abby thought that the notification services as given in the example of “e-receipt project” illustrate both decrease in cost of technology investment and cost of operation because, instead of using a modern technology, the group re-used a cheap technology, here referring to emailing, to issue the receipts to customers. And apparently, this method decreases the operation cost because no paper is required to print the invoice and no postal fee is required.

Please kindly explain whether this example is for reducing both technology investment and operation cost or solely reducing the operation cost to us. Thank you very much.