TUI Group AG

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With a turnover of 5.2 billion euros and a market share of around 22 percent, TUI Germany is the undisputed market leader in Germany. The tour operator is a subsidiary of TUI Travel PLC. The company brings together tour operators, airlines, travel agents and incoming agencies to serve more than 30 million customers. TUI Germany is responsible for the source market of Central Europe (Germany, Austria, Switzerland and Eastern Europe). It manages a host of well-known brand names, including TUI, airtours, 1-2-Fly, Dr. Tigges, Gebeco, l’tur und Berge & Meer, to name but a few.

Challenges faced
“Improve or perish.” This maxim holds particularly true in the volatile tourism market. TUI, a global organization, quickly realised that the key to agility lies in integrated information management. TUI Germany implemented a Business Intelligence solution (BI) back in 1996. Since then, the company has continued to evolve, taking tourist travel into the future with the introduction of a new and more flexible business model. And this concept calls for efficient and near real-time analysis of business data. TUI Germany called upon IBM® Software Group Services to advise it on the design and installation of its new cross-business system architecture. This would include a next-generation BI that combines data from different sources to create a reliable and consistent information base, which would be available at all times and from all locations to support a wide range of operational, tactical and strategic decisions. Significantly streamlining production and administration, and providing a solid base for short and long-term control.

The sheer scale of operations at TUI Germany and the complexity of its market pose a challenge for any BI strategy. Different types of systems churn out vast volumes of data that need to be integrated – from information about the company’s thousands of employees and partners, to information about their millions of customers, to sales figures.

“If it wasn’t for an enterprise data warehouse, TUI Germany would be feeling its way around in the dark,” says Matthias Wunderlich, Head of Business Intelligence at TUI Germany, explaining the vital importance of comprehensive and integrated information management. In 2002, the company was awarded the IMIS Best Practice Award for the most successful German-language BI solution.

Strategy followed

New business model: far more data within far shorter timescales
The market never stands still. The tourism sector is changing, and flexibility, spontaneity and differentiation are becoming increasingly important factors in purchase decisions for consumers. Holidaymakers frequently prefer to put together their own tailored travel experience. To maintain its leading position, in 2007 TUI Germany launched the implementation of a business model designed to allow booking agents complete freedom of choice, starting with the company’s main Canaries/beach holiday segment.
“All the components can be assembled, priced and booked in real time. However, to support this ‘dynamic packaging’ principle, we needed to review our management structures and processes. The concept relies on far faster access to far greater volumes of information in a consolidated format,” explains Wunderlich.

Every decision maker must be able to access the information he or she needs at all times, in the very highest quality. This is by no means an easy task: “We are talking about processing and integrating hundreds of millions of data records,” explains Wunderlich, describing the daunting scale of the BI challenge.

The existing BI infrastructure was no longer able to cope with the new business model, with IBM Cognos® PowerPlay® cubes pushed to their limits. After years of sustained growth, the company’s BI requirements had reached a level of complexity that was driving up costs, while increasing volumes of data were putting a strain on performance and stability.

“We needed a solid foundation to support the rapid decisions on which the dynamic packaging concept relies. What’s more, our old BI landscape was no longer capable of generating a real-time consolidated company-wide view for central reporting,” continues Wunderlich.

The company needed an end-to-end solution that was capable of being embedded in planning systems and providing near real-time information. All users should be able to access the company’s knowledge base and, subject to the appropriate authorisations, contribute toward its expansion.

New intelligence for better performance
At the start of 2008, TUI Germany called in the BI specialists from the IBM Software Group to analyse its existing architecture and design a future-proof strategic target concept, including a roadmap for progressive medium-term implementation. As well as the company’s positive experience from previous engagements, a key factor in the decision in favour of IBM was the consulting and IT specialist’s approach, based on an integrative information agenda.

Three key pillars were put in place by September 2009 to support the company’s new BI solution. At an infrastructure level, an integrated and scaleable hardware package was installed in the form of IBM Balanced Warehouse®. The existing database was replaced by IBM InfoSphere® Warehouse, a consistent information platform for integrating, managing and analysing different types of data and content. At a preparation and presentation level, the existing IBM Cognos BI solution was upgraded to the more powerful IBM Cognos 8 BI, version 8.5, opening up the option of Web-based access to all data. IBM’s dynamic warehousing concept was adapted and the old warehouse structures were transferred to a layer architecture. This allows high volumes of data to rapidly be made available in consolidated format, thereby significantly reducing the complexity of data preparation and aggregation. The migration also involved a partial switch to a ROLAP architecture (Relational OnLine Analytical Processing).

“Analyses now access the data warehouse directly, while the previous MOLAP process required the creation of separate physical data cubes. Initial experience has shown a 5-20 fold acceleration in query times,” says Wunderlich.

Benefits realised
The new BI system integrates all databases within a complete solution, ensuring optimal networking of all stakeholders and factors. In future, operational applications will be automatically supplied with all relevant information in near real time. A quantum leap that is invisible to users, since the BI software performs its tasks discreetly in the background. Heterogeneous source systems, which previously could only be analysed in isolation, have now been merged to create a comprehensive overview.

To guarantee the quality of the information, a universal logic for capturing and structuring data is applied throughout the company. The logic to be applied is now concentrated at a central location and no longer distributed over the entire BI system.

This has helped to significantly increase the performance of yield management. Yield managers monitor capacity, risk and income. They need to purchase and sell flight and bed quotas on the basis of estimated demand. In the event of any fluctuations in demand, they run the risk of being unable to use paid capacity or being forced to absorb extra costs for late bookings. Real-time information is essential to enable them to take immediate action to secure the company’s profitability. The new BI solution provides yield managers with all the data, analyses and evaluations they need – all embedded in operational applications and available in near real time. As well as booking systems, it integrates other relevant source systems such as CRM. As soon as any fluctuation is identified, the yield managers can use this information base to determine the most appropriate response, from negotiating new terms to implementing actions designed to stimulate demand. They can also access ad-hoc analyses for a range of more detailed evaluations of the latest data. The real-time information generated by the yield managers’ activities is used by other operational areas such as marketing. The networking of all systems and users ensures a transparent situation across the entire company, in the form of an overview or in detail.

Guaranteeing smart decisions
Tactical tasks, including portfolio analyses and planning, are now based on up-to-date and reliable information. Decision makers can study price and demand trends, including competitors’ pricing, to immediately change or expand TUI’s offering, and ensure that their pricing remains profitable and competitive. New product lines can be flexibly integrated in the planned quotation model as required. It also draws on the company’s historical knowledge base. Of course, the main variable in portfolio planning is the customer. By bringing together and consolidating all customer data from transactional and master data systems, the BI solution provides the company with a 360-view of customer preferences. This allows it to adapt its offering, ensuring repeat business above and beyond loyalty programmes. Planners can tailor TUI’s offering closer to actual market demand. The integration of cost factors allows managers to simulate different portfolio scenarios and weigh the associated opportunities against risks.

Strategic positions can be based on far broader foundations. Reliable reporting, that consolidates and evaluates data from all areas of the company, is important, and not just to fulfil statutory reporting obligations. Above all, it provides senior managers with reliable information on which to base their decisions. Whereas in the past, company strategists attempted to create a complete picture from a fragmented mosaic of data, they can now access all business indicators and parameters within an integrated system. They can determine which areas are developing according to plan, and answer the questions: Where can we identify any deviations? What correlations can we detect? What are the potential results? What would happen if we adjusted this screw? Or that one? TUI’s managers now have a comprehensive overview of the group’s situation and context, allowing them to simulate future scenarios or possible strategic directions.

The comprehensive IBM solution provides a clear competitive advantage, thanks to the increased speed, reliability and flexibility of the BI solution. “Our information management has been significantly streamlined and is now more effective, cost-efficient and accessible to users without specialist knowledge,” emphasises Wunderlich.

The IBM solution reflects the smarter planet idea: TUI Germany is now far more digitised, networked and intelligent than before the implementation of the new BI. And these are the ideal foundations from which to maintain and develop its market leadership.

About IBM Cognos BI and Performance Management
IBM Cognos business intelligence (BI) and performance management solutions deliver world-leading enterprise planning, consolidation and BI software, support and services to help companies plan, understand and manage financial and operational performance. IBM Cognos solutions bring together technology, analytical applications, best practices, and a broad network of partners to give customers an open, adaptive and complete performance solution. Over 23,000 customers in more than 135 countries around the world choose IBM Cognos solutions.