Technology Competition and Small Companies

By: David J. Wardell

Over the last 10 years IBM spent more on research and development than any other company in history. During the past several months it also posted the largest operating losses of any company in history, faced increasingly successful competition from much smaller companies with much smaller R&D budgets, and found transferring technology investments into sustainable competitive advantage to be challenging.

In our industry, SABRE Travel Information Network is reported by Travel Weekly to have spent up to $ 10 million and several years developing TravelBase — its accounting and MIS system for the 1990s. This is a commitment only a few suppliers could match.

Without degrading the obvious success major travel industry vendors have had, it is a mistake to assume successful products must follow bug budgets. The computer industry as a whole teaches us that this is not always so.

The key to successful development is methodical, systematic planning, not size. Money spent is not necessarily money well-spent. The travel industry is rich with failed big-budget projects that lacked management ability, foresight, or a basic good idea that is commercially practical.

Small companies can compete and produce superior technology products if they can use their entrepreneurial freedom to make decisions quickly to focus on logical, well-defined goals that the market really wants to buy. Where they usually fail is in the ability to achieve long-term success, which means providing required support and evolving a good idea into the next phases customers must have if their needs and expectations are to be met — an area where large, well-financed companies usually have the advantage.

The travel industry in particular must never lose sight of commercial (business) practicality. We differ from the computer industry in that the newest technology (where the big investments are found) is not required (sometimes not desired) in order to produce the best business result. As long as travel systems can evolve to meet the changing needs of the user, the precise technology used to produce the product or the result is far less important.

Developers with a proven history of (or ability to) produce cost-effective business answers to business problems are those worthy of our support. This is vital role in our industry that can be played by developers irrespective of size, technology platform, or resources as long as they are able to make best use of available tools and meet real needs.