Sabre Updates IT Systems

Rare is the company whose business-technology strategy has the potential to determine the path of an entire industry. Rarer still is the company that can determine whether you stay miserably stuck in the middle seat on that next last-minute cross-country flight. Sabre Holdings Corp. is both of those.

If you're trying to get out of that middle seat today, your travel agent--most likely through Sabre's online reservation system or one of its competitors--needs to ping the system repeatedly looking for an open seat. But dramatic changes Sabre is making to its IT system will allow much more flexible services, so an agent might be able to automate that process and get an alert if a precious aisle seat becomes available. It's the kind of system travel agencies would not only like but would likely pay extra to get, says Loren Brown, CIO of Carlson Wagonlit Travel. "That would be a much more elegant solution than we have in place now," says Brown, whose company, with some 8,000 agents in 140 countries, is one of the biggest providers of business-travel management.

Since Sabre's birth in the 1960s as American Airlines' electronic flight-reservation system, it has set the standard for how travel reservations are processed. (Its roots go back to the 1930s reservation-tracking system of color-coded cards in revolving trays.) Spun off from American in 2000, its Sabre Travel Network, a system for electronically distributing air- line tickets, hotel rooms, and rental cars, provides pricing and availability information from 400 airlines, 60,000 hotel properties, and 41 car-rental companies. It processes 40% of travel reservations worldwide, the largest share for any electronic distribution channel.

But Sabre's business model is being threatened by the Internet. Airlines and hotels are pushing customers to buy direct online, avoiding Sabre's fees--$3 to $4 per flight segment and about $4 on hotel rooms--to process transactions. Travel agencies, facing their own pressures in competing with Internet booking, also are trying to help suppliers avoid Sabre's transaction fees. That's eroding Sabre's traditional role as a transaction platform that gives airlines and hotels a conduit directly to travel-agency desktops. So Sabre is relying on a technology-enabled transition to make its core business less an aggregator of travel-reservations information and more of an IT factory developing tools that travel agencies will use to design their own content applications.

Doing this requires nothing less than reinventing the travel industry's decades-old distribution ecosystem. In a transition years in the making, Sabre is moving from proven, reliable, yet inflexible IBM mainframes running the Transaction Processing Facility operating system to a service-oriented architecture. It expects to provide dramatically lower IT operating costs from Linux-on-Intel servers and more-productive developers, and more flexibility using Web services and the Internet to deliver new kinds of content to travel agents. Sabre is the market leader, but its competitors--including Amadeus Global Travel Distribution, Cendant's Galileo International, and Worldspan--are attempting similar changes. "These guys don't have an option," Forrester Research analyst Henry Harteveldt says. "If they don't reinvent themselves, they don't survive."

The technology change chief technology officer Craig Murphy is leading will cost Sabre more than $100 million. He calls it a new way of doing business.

Sabre also expects the new open IT architecture to improve how the company runs. In many ways, the legacy infrastructure encouraged silos within the company's operations, CIO Carol Kelly says. Billing processes have been specific to each business unit: Sabre Travel Network, Travelocity, and Sabre Airline Solutions. The open architecture will make it easier to combine those processes into a single billing system, Kelly says. She sees this as an opportunity to reengineer the company's billing systems to run on the service-oriented architecture.Sabre already has standardized on certain systems--such as Siebel Systems for customer-relationship management, SAP for enterprise resource planning, and Business Objects for reporting--and is using the new architecture to address common business problems. For instance, employees were bothered by multiple sign-ons to the applications they use, there weren't logical connections between related information residing in different systems, and valuable ERP data was tough to access. The move to a service-oriented architecture has let Sabre use XML to break down such barriers. "We call it one version of the truth," Kelly says.