In 1953 an IBM salesman boarded an American Airlines flight from Los Angeles to New York. In the pre business class days, Blair Smith sat at the back of the plane, where he found himself seated next to a dishevelled unshaven man, who over the next couple of hours would establish himself as both a master conversationalist and the current President of American Airlines, C.R. Smith.
When the two arrived in New York the seeds had been sown for a 6 year R&D project between IBM and American Airlines called SABRE (or its less catchy name: "Semi Automated Business Research Environment") a system which ultimately reinvented the way we travel. As Wired magazine also points out, “it shook up computer science too”. Today in the world of self service, online reservations, SABRE is still used to book flights on hundreds of airlines. 50 years on there are lessons for other industries, not least the the outdoor advertising industry where BitPoster is focused, and where many of the pre SABRE practices continue.
Before SABRE, American Airlines reservationists kept track of travellers in much the same way that restaurant waiters keep track of dinner orders. The used ‘lazy susans’ like the one shown below.
This was a clumsy, ineffective system that was costing American Airlines money. Sales cost per ticket were very high, demand based pricing was impossible and there was significant 'inventory' wastage - airplanes were flying with empty seats and about 80% of them were because of bookkeeping errors from paper-based processing. With unsold outdoor media often running at 50%+, and the lazy susan equivalent of telephone, email and excel spreadsheet the weapons of current choice for the market, the scope to "SABRE-ise" is clear: It's shocking in fact that it is 2015 and it hasn't yet happened in every applicable industry.
SABRE’s first system was made up of two IBM mainframe computers, based in New York. 8 years after the 2 Smiths had shared a flight together the 1st live system connected 1,500 terminals across the US and Canada. The hardware alone cost about $30m, or around $250m in today’s money. The hardware order from American was at the time the biggest ever received by IBM.
Being able to have instant updates to its seat inventory and passenger information gave American a huge competitive advantage - they could price and sell in real time through a distributed network. American’s reservationists connected remotely via custom terminals to the IBM mainframes in New York, with data exchanged via an IBM created "frequency modulation data transmission” that worked over AT&T’s telephone lines. There really was a time ‘pre-internet’.
By 1965 Sabre was handling 7500 reservations per hour; which given that it took American 90 minutes to process each reservation under the lazy susan system, this was an epic efficiency improvement. In our market the current average processing time for transactions is 55 man hours with the bottlenecks around manual checking of availability and matching advertiser briefs to that inventory.
The market consequences are the same - human errors, undersold inventory and limited dynamic pricing. As the network of outdoor screens digitises and the scope develops for literally infinite numbers of bookings the lost opportunity also grows exponentially. BitPoster is taking the lessons from Sabre to solve this problem, and we're helped by where the tech ecosystem is at versus when C.R. and Blair Smith started talking.
The entry ticket price for SABRE was $30m ($250m in todays money) on hardware alone, covering the mainframe computers, the terminals, the AT&T line access and the engineering, all of which was bespoke, closed loop and requiring highly specialised operators.
In 2015, cloud based servers that are distributed, shared and standardised for access from any device, combined with open source software that is flexible, scalable and very cheap mean the creation of a SABRE-like system comes with a tiny entry ticket by comparison, and ongoing operations requirements can be made for customer self-service as the likes of Expedia, Opodo and BA.com all provide.