R&D is the bad conscience of the travel industry. Everyone knows they should be future-proofing by investing in new technologies and processes. But for many companies, it's too tempting to just stick with what they've always done.
Breaking from the pack is Amadeus, the technology giant. It claims to strongly emphasize research and development. One sign that it's on to something is that the European Commission recently ranked it number one in R&D investment among travel and tourism companies in Europe.
Over in the US, last November, Rashesh Jethibecame the regional head of R&D in the Americas.
Tnooz chatted with him by phone from his office at Amadeus's North American headquarters in Waltham, Mass., about the very European company's growth in the Americas.
Some people might find it odd why anyone would move from sunny California to Massachusetts during wintertime. For his new gig, Jethi left behind a decade long stint on the West Coast at a few startups, including Virgin Mobile, and a few large companies, such as Wells Fargo Bank and Cisco Systems. At various points, he interviewed at Google and Facebook, too.
So, given that background, does he consider Amadeus to be more like Google or Facebook, in terms of R&D culture?
"We are probably more like Google in our commitment to excellence in recruiting and to efficiency in our technical processes. Frankly, the thing that has pleasantly surprised me the most since I arrived here has been the way we constantly push the envelope with new approaches....
"In a way, it's not a surprise that we have a very strong partnership with Google for one of our customers, Lufthansa."
What is this about Google and Lufthansa? He explained:
"We're putting software capability that Lufthansa relies on us for in the Google cloud environment, in data centers distributed across the globe. In terms of execution, it takes a lot to keep things running dynamically at different places with a hyper response time."
Amadeus has about 400 R&D employees in the Americas, with two-thirds in Waltham and the rest scattered in Texas, Arizona, Florida, Brazil, and Colombia.
We asked Jethi about the extent to which the Waltham team is looking at R&D projects specific to the needs of the North America market. Or is it instead re-engineering existing global projects from its R&D hubs in Nice or Bengaluru for North America?
He said it's a blend of both. His teams work on product engineering and they work on local product implementations for customers.
Jethi reports to the global head of R&D for Amadeus, Hervé Couturier, based in Nice. While there are development teams worldwide, the largest R&D cluster is in Bangalore, where the company has has well north of 1,000 R&D staff.
So is Waltham something like "West Bengalaru", at least from the perspective of headquarters?
"I wouldn't say that. Bengalaru does core engineering and supporting customer implementations in the Asia Pacific region....
"We obviously don't have a similar cost base, here.... We reject the model where you can just do a lot of stuff offshore, and try to get the cost arbitraged....
"Amadeus deliberately chose to put an R&D hub very close to a strong technical community in the Boston and Cambridge area...
"That said, we're a global operation.... The development work to testing the production readiness is done by teams who have specific expertise, wherever they are.
"A good example is our InterContinental Hotels project, which is essentially being driven out of the office here in Waltham, and starting now with a just-opened office in Atlanta. Most of the work, the architecture, the project management, the development, a lot of that is being done here with support, with equal contribution from teams in France and in Bangalore."
In terms of R&D priorities in the Americas right now, Jethi said there are more than one, including development work for key customers Intercontinental Hotels, Southwest Airlines, and the major online travel agencies and metasearch brands Orbitz, Expedia, Kayak, and Fareportal, among others.
Jethi's organizational approach is to think in terms of horizontal and vertical team structures.
"We have a team that works on our distribution set of products. We have a team that works on our passenger support system family for airlines, such as departure control, flight management, load balancing, etc. We have our shopping and search and pricing platform, with a team that focuses on that.
"I also have horizontal teams that do more overall architecture and quality, and software frameworks, and run the test environments, etc., as well as a services team, meaning, for customers that want our help in implementing or modifying different products.
"Part of the work that the team does is in core product engineering, so building out and enhancing products, or working on new products.
"The second part of the business is what you would also expect a regional team to do, which is namely, work on projects that are for our customers. We base small teams nearby.
"For instance, Southwest Airlines is a major customer of ours, and our office in Dallas is essentially a five-minute drive away from Southwest's headquarters."
Other than time-to-market for a mission critical strategic investment, how does Amadeus make, or incubate, internal investment, versus buying an existing product or company as part of the strategic vision?
From the outside, the answer isn't always obvious. Sometimes it builds, and sometimes it buys (with its recent acquisitions of Newmarket, a hotel tech specialist, and Navitaire, an airline hosting firm.)
Jethi reminded Tnooz that strategic decisions like that are done at the most senior levels of the company.
That said, his understanding is that case-by-case acquisitions are more about rounding out the company's product portfolio in ways that would otherwise take too long for the company to build on its own.
Acquisitions fill a strategic objective for a geography, or for a customer base, or for a product set. Acquiring Navitaire, for example, enabled it to quickly bring on a customer set of low-cost carriers it didn't have.
"We don't go out and go buy R&D. If it can be built, we have so much domain expertise in the industry, and we have a great technical team around the world, we do it ourselves."
While talking strategy, Jethi said he was impressed by the broader hard decisions that Amadeus has had to make.
"Enterprises in pharmaceutical or in retail, or in banking -- wherever you look, everybody's trying to figure out what is the right balance of leverage in the cloud, versus doing stuff in-house. What's the right balance of off-the-shelf enterprise software versus bespoke software?
"Amadeus has also been asking these tough questions and making some tough calls to position us better for what I'd call truly the longer term.
"I would say, three years out, I see Amadeus as begin a clear leader in this space. It's much easier to just do incremental adjustments, but it's harder to take a step back and truly take, straight off, some short-term pain for what's essentially the right long-term goal."
Jethi has a strong technical background, noting at one point: "I can program in more languages than I speak, and I speak five languages." He said this experience helps him in leading teams and with recruitment.
But why should technical people want to work at Amadeus instead of one of the other flashier companies out there?
"If you are a technologist I think there are three things that are very important for you. 'Am I working on interesting technical stuff? Am I around people who are really good and whom I can learn from and I can be challenged by?' Then, 'Am I in an industry that is actually innovating, and is going somewhere?'
"I think working at Amadeus, you not only check those boxes, but in a big way.
"First of all, I have seen we have very low attrition in the technology team. One reason is that you can rotate to pick up different tools for your personal tool set....
"There is constant evolution in the tools available to a technology person, a programmer, developer, tester, business analyst, whatever. That piece keeps changing, so you want to be in an environment where you're learning, you're being challenged.
"You can do that easily here. If you've been in reservations or distribution for three years, and you just want to work on a different area, a different technology stack, you can go and work on the airline side, you can go and work on hotels, you can go and work on rental cars, you can go and work on the shopping and the search algorithm.
"We're also in sync with the contemporary tech ecosystem. For instance, we leverage open source but also contribute back to open source -- something our traditional travel peers don't do nearly as much.
"In the past year, we built a partnership with Red Hat, where we've taken OpenStack and OpenShift and some of the related tools that are essentially used to automate and orchestrate workloads across different infrastructure stacks, is one example."
Jethi said he doesn't regret leaving the California tech scene for a cold Massachusetts winter:
"When I talk to friends back in the Valley, I joke with them that Amadeus is the original software-as-a-service company. From the early days, our customers didn't have to buy servers or network gear or hire technologists. They basically pay for the functionality on a pay-per-use basis.
"That DNA sets us up well for the way the industry is headed.
"We are not that flashy, as you say. We are not on your home screen or we are not the app you go to every day. But we are truly there at the point of making it all happen in travel. There is always somebody boarding a flight somewhere thanks to Amadeus software, for instance....
"And travel is such a fundamental fabric of who we are as people."
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The story behind Booking.com's rise: A Q&A with CMO Pepijn Rijvers
New DHISCO CEO Toni Portmann, on taking Pegasus beyond the hotel switch
Why TripAdvisor excels at product: A chat with Adam Medros, head of product at TripAdvisor