In a blockbuster move, Pegasus Solutions, the hotel technology and distribution services company, signed a 7-year deal to outsource the day-to-day management of Pegasus's applications, data center services and network management to HP Enterprise Services, the company formerly known as EDS.
The two sides declined to tell me the dollar value of the deal leading up to today's announcement, but I expect those figures to emerge later today.
One of the most important aspects of the agreement is that Pegasus's RezView NG, which enables the melding of CRS, property management and Web functionality for hotels, would be integrated into HP's Travel Service-Oriented Architecture (SOA) platform.
In the outsourcing agreement, the companies say that no facilities are closing, but about one-third of Pegasus’s affected employees are being offered jobs with HP.
EDS, of course, has long worked in providing host systems to airlines, and has penned several technology outsourcing agreements with Sabre. HP also provides call center, application and on-property solutions to several large chains.
And, of course, HP has signed on to create a new internal res system for American Airlines.
In all of these outsourcing agreements, the parties speak of seamless transitions for customers and Pegasus and HP talk of minimal impact in this deal, as well.
"A very detailed transition plan has been put in place that we will take over the coming months, with a goal to minimize impact to our customers and ensure seamless business operations," says Steve Lapekas, the CTO of Pegasus Solutions. "The transition will take place in phases to ensure continuity and knowledge transfer."
The companies portray the agreement as one that will enable Pegasus to boost customer service, pare costs and enable it to continue to fine-tune products.
But, undoubtedly, there will be some transition pain and some distraction.
"Outsourcing major functions can be a smart thing for a company, but the biggest risk when outsourcing customer-facing apps is always the transition," say Valyn Perini, executive director of the OpenTravel Alliance, of which both companies are members. "While companies work to do everything right and assure their customers they won't notice a thing, no one can predict the future."
"HP has a lot of experience outsourcing applications, even in the travel industry, so Pegasus and its customers can take some comfort from that," Perini says. "In addition, shifting RezView into an SOA environment is a best practice in application development and management, and could allow Pegasus to extend the life of the applicatino and facilitate integration and online distribution with trading partners."
Perini adds: "Shifting to an SOA environment is a huge undertaking, expensive, time-consuming and often painful. Pegasus may feel it's best for them and their customers to outsource to HP."
Eric Harte, HP's vice president, transportation industry, notes that HP will assume day to day management of Pegasus applications, and points out that the RezView management team "will remain intact."
But, doesn't HP already have its hands full in building JetStream, an airline passenger services system, from scratch?
HP and Pegasus point out the differences, noting that they are not creating RezView, but will be tasked to integrate it with the HP platform.
Pegasus is a private company, but one has to believe that it has taken a substantial hit from the lodging industry's struggles during the recession.
So, this agreement may make a lot of economic sense to Pegasus as it seeks to offset declining revenue.
Lapekas says: "This is a strategic opportunity to collaborate with a proven technology services provider. With that comes multiple benefits, including an economic one."
Pegasus, of course, puts the best face on it, pointing to the benefits to its hotel and distribution partners.
"The goal is to provide a market-differentiating solution to the hospitality industry that will help our clients better understand and track their customers' preferences, identify new sources of revenue and increase operational efficiences," Lapekas says.
The lodging industry utlimately will provide the verdict on how well Pegasus and new-buddy HP accomplish these lofty goals.