The original interview is by David Peller, AWS Travel and Hospitality leader.
Ted Zhang, Co-Founder and CEO of DerbySoft, joins David Peller, Global Head of AWS Travel and Hospitality, for a broad-ranging discussion about the recent disruption faced by travel and hospitality companies – and his company’s response to that disruption. DerbySoft enables travel companies to work together through technology and innovation by providing high-performance distribution services to suppliers, distributors, metasearch engines and more to conduct digital commerce efficiently and effectively. DerbySoft is a proud partner with all of the top 10 global hotel groups, all of the leading third-party central reservation systems, and hundreds of regional hotel chains of all sizes throughout Europe, China, and North America. On the demand side, DerbySoft is connected to all of the major online travel agencies, metasearch engines, wholesalers, and tour operators around the world.
This Executive Conversation is one of a series of discussions held with industry leaders, where we seek to learn more about their resiliency, tenacity, and capacity for innovation. The series follows the publication of the AWS Travel and Hospitality E-book: “Building Resilience For The Long Run.” Filled with strategic observations, hints, and tips, the E-book provides guidance for building a more resilient organization, potentially serving as a useful resource as travel and hospitality companies address both current challenges and those yet to come.
David Peller: While your business is recognized publicly by many, what’s one unique characteristic or feature that is either lesser known or understood about your company?
Ted Zhang: Value. DerbySoft provides visible and invisible value to clients. We significantly reduce a client’s transaction, or social cost as Ronald Coase defined, during their entire life of the partnership. DerbySoft’s unique character and belief are that we go above and beyond our responsibilities to solve a client’s business problems. Even surrounding problems that don’t belong to our solutions, we still own them and solve them.
DP: Many companies across travel and hospitality have been managing through a period of unprecedented disruption. What have been the biggest challenges you’ve faced during this recent period and how have you managed through them?
TZ: First of all, the company will communicate and define our principles to handle any extraordinary situation. The foundations of our principles are:
- The Company Values and Worldview
- Technology and Product Capabilities
- Organization and Leadership
From day one, we never stopped building on those foundations. We believe that the world will be very dynamic since we started this company. Distributed technology architecture is applied. Those foundations empowered us to be able to handle disruptions effectively. For example, I did not feel significant challenges to handle the COVID-19 pandemic. Actions have been taken one by one based on the principles we agreed on in March. The biggest industry challenge could be uncertainty.
If I have to talk about one challenge for the company during the pandemic, I will pick the time difference. Face-to-face group discussions are extremely important to generate business strategies after the corporate strategy has been finalized. We have people around the world. It is very difficult to coordinate such discussions during COVID-19. We are planning to apply objective key results (OKR) in the company, establishing transparent objectives and key results for each person to meet the challenges we face.
DP: As we all prepare for the next phase of traveler or guest demand, what are some of the changes your company has taken (or plans on taking) to adjust to the current operating environment?
TZ: There are many important changes for DerbySoft, the first being increase efficiency. We will have detailed cost analysis for any project, product and client. We want to define the way to drive cost lower and lower. The industry has been damaged badly. We must increase cost-effectiveness to reduce the price and support the industry. When I talked to Andy Jassy one year ago, he also told me that price was strong competitive advantage of AWS. I kept that in mind for our own company. Other changes include:
- • More Dynamic Systems and Organization: We need to have even more dynamic systems and organization to proactive handle disruptions. Several actions are being taken.
- • Collect and Analyze Requirements in the New World: The world will be changed significantly. Business will not be as usual anymore. Designing the new products and services for the new world is important. An integrated client feedback management system is under development.
- • Have Service-Level Agreements (SLA) in Place: Have an SLA with all clients and improve service quality to reduce data error rates. This will involve a lot of offline work.
DP: In the face of the current disruption to the travel and hospitality industry, we’ve observed incredible innovations coming from across the industry. How has your company innovated through these challenging times and what are you most proud of?
TZ: DerbySoft is not connecting systems together, not even data. We connect businesses together by means of sharing data and functionalities. When a customer has a new requirement, we will map such a requirement with the customer’s partners. If we have identified a new opportunity, we can also introduce our customers to a solution that needs very limited additional effort from them.
In the future, DerbySoft will keep focusing on developing more automated and intelligent products with assistance of AI technology, which will dramatically reduce the labor cost and improve the industry’s operational efficiency. The travel business has recovered regionally. A lot of global companies have to have local strategies. Those strategies including special promotions and business models that need effective technical support. For example, we launched Marriott-WeChat partnership for the China domestic market, and IHG official store on Ctrip. DerbySoft’s distributed architecture empowered us to do so quickly.
DP: The travel and hospitality industry is incredibly resilient. As you look toward recovery, what role does technology play for your company moving forward? How do you see technology enhancing the customer experience and improving operational efficiency?
TZ: At DerbySoft, technology plays the most important role. It is the foundation of our products and services. We will focus on the following to improve our technology capabilities:
- • Stability: Stability is the other side of flexibility. When we emphasize the flexibility, we should focus on stability first.
- • Flexibility and Adaptability: The world will be more dynamic.
- • Scalability: A lot of travel companies will look forward to automation and more cost-effective technical solutions.
- • Security: There can never be too much focus on security in today’s unpredictable world.
- • Cost-Effectiveness: Reduce marginal cost.
- • Transparency: Both clients and internal teams need to be transparent to handle disruption.
As a technology company, DerbySoft has one mission and one mission only: Make the travel business easier. We are targeting to empower hotels having zero incremental operational cost when a new partner has been enabled.
DP: There’s much talk at the moment about how the travel and hospitality experience has changed and there will be a “new normal” going forward. What does this “new normal” look like to you?
TZ: There are a few “new normal” elements in my mind:
- • Local Markets: The international travel will take a while to recover. However, a lot of local or regional markets are coming back.
- • Leisure Travel: Leisure travel will play a major role of the travel business. Innovative promotions and packages are important for this market segment.
- • Cost Reduction: The travel industry will be very cost conscientious. Two things important to any industry player and DerbySoft are automation and lower marginal cost.
DP: What makes you excited for the future of travel and hospitality? As a traveler or guest, where are you looking forward to visiting next?
TZ: In the future, the industry will embrace technology more. Automation, outsourcing computing power to professional companies, and reducing marginal cost will be key competitive advantages for any travel company. In terms of travel, personally, the San Francisco Bay Area is always the best place to visit and stay.