IBM Spreads Hotel Folio Solution

<B>IBM Spreads Hotel Folio Solution</B>

By Cheryl Rosen

Two new developments--one from Starwood Hotels & Resorts Worldwide and one from IBM--herald the solution to one of the prime puzzles of travel management technology: a completely paperless expense reporting system.

Having reached a critical mass of hotels willing to provide complete line-item spending data, IBM plans to share the folio data wealth with customers of its automated Expense Reporting Solutions. This quarter, 15 corporations will receive full hotel folio data from 38 properties in the IBM program. By year-end, IBM is expecting to have hundreds of properties participating.

IBM also will get folio data from Starwood, which passed on buying the DB Technology software the others are using and instead built a folio reporting capability internally, at the corporate level.

In either case, hotel charges incurred by IBM travelers will download into IBM's ERS--not as a single hotel charge, the way credit card companies pass it along, but instead broken down into room rate, meal charges, business center fees and incidentals.

Starwood senior vice president of staff operations Glenn Tuckman said the chain has "asked," though not mandated, that Starwood properties participate in the full folio data program. But he expects full cooperation because virtually all the work is done at the corporate level.

"It's not that they have to stop what they're doing," Tuckman said. "Each night we go into the central property management system and pull out the IBM reservations, then summarize the information and send it to them." While the current program includes "just a sample" of properties, "there is no reason it can't be expanded if it works."

Indeed, Tuckman added, "IBM is our first major account to look at this, but it's only a matter of time until all our customers can get the data. This is new to a lot of people, but I think in a short amount of time it will ramp up industrywide. IBM was involved from the start, saying they were interested, and we try to say yes to our customers, so we got on board and got up to speed as fast as possible."

IBM's internal travel accounting team spent months coming up with a solution to deliver hotel folio data, finding the software to do the job and cajoling its preferred suppliers to install it (<I>BTN</I>, Jan. 10). Its original deal with one Crowne Plaza property near IBM headquarters expanded during the course of the past months to a larger agreement with Crowne Plaza parent Bass, and another, some insiders said, with Marriott.

IBM today gets full folio data electronically every night from 38 hotels, and expects that number to rise to 150, including 60 Bass properties, by June. "This thing is really starting to blossom," said John Rosato, IBM's manager of employee disbursement systems and control.

While he is excited about pioneering what he sees as an important step in the business-to-business e-commerce marketplace, Tuckman predicted that offering folio data will bring Starwood a competitive advantage for only a short time before other chains follow his lead.

"Filling out expense reports is the kind of thing that frustrates business travelers. It's not a fun use of time," he said. "And the technology is not difficult; it's available by simply modifying existing programs. This is going to permeate the hotel industry and other segments of the travel industry, like car rental, as well. The whole business-to-business purchasing side has tremendous potential, and we're changing the way we do things to make it as easy as possible for our customers to purchase that way."

Indeed, Starwood is looking at automating not only the back end of the hotel stay, but the front end as well. "We are very close to being able to let travelers book reservations direct, and a huge initiative is under way to redevelop the whole checkin procedure," Tuckman noted. "There's no reason that frequent customers whose profiles we have, need to continually go to the desk to check in. At some point, in a fairly short amount of time, you'll be able to go on the Internet and check yourself in. Eventually, though it will take some time to retrofit the doors, you won't need to stop by the desk at all. You'll literally check in on the Internet on the way over, the desk will code the door to your credit card, and you'll go right to the room and slide your card to open the door. There is no reason we can't emulate the car rental industry in speeding up the checkin process."

On the supplier side of the IBM house, Ray Curatola, practice leader for the ERS expense reporting solution, expects "a few hundred hotels and some major chains" to sign on by the third quarter, while pilot testing continues with 15 ERS customers, including Bristol Myers Squibb and Eli Lilly.

At Bristol Myers Squibb, as at IBM itself, the elusive goal of a totally paperless expense reporting system was made possible by a 1997 IRS ruling that allowed electronic rather than paper receipts.

"We've gotten a commitment from our controller that anything that's charged on the American Express card pre-popped into the expense reporting system doesn't need receipts, no matter the dollar amount," said Bill McDonald, BMS's director of financial services. "What we want to do is eliminate all receipts if possible, but the one thing that always required receipts was the hotel folio."

A paperless process "is everybody's vision and the goal of everybody around here," including McDonald in Treasury and George Matsagas, director of disbursements, on the T&E side, both of whom agreed to sign Bristol Myers up for the ERS folio data pilot.

"We haven't even gotten a price yet, but you can imagine all the cost we have now," McDonald said. "We have a sales force of 6,000 and we do 12,000 expense reports a month--and all those receipts are filed. So hopefully one cost will wipe out the other."

BMS has been using IBM's NEDS client-server expense reporting system since 1996, and switched to the Web-based ERS in August 1999. "The Web version is much, much better than the client-server version, especially with the prepopulation of data," McDonald said. He also likes the ease of use of loading the system at only one central server instead of every site. "That's working super when we make changes." The ERS system is loaded on to each PC at BMS so travelers can do their expenses on the hard drive and, at the end of the month, dial into the Web only once and file remotely. Any changes made to the system on the central server automatically download the next time users log in.

BMS expects the prepopulation feature to help cut down on personal use of corporate cards by travelers, as management now will see all charges directly from American Express, and also to improve the speed with which its employees pay their bills. "If there's a prepopulated American Express charge in your inbox and you haven't done an expense report, we're going to send an e-mail to you and your supervisor, so the card doesn't become past due."

On the folio front, McDonald hopes eventually to get 60 percent of BMS's hotel room nights on the electronic system. "The Hyatts and the Hiltons and the Marriotts no doubt will be signed, though I doubt if they'll get every local hotel in Minnesota," he said. Still, even 60 percent will help. Today, BMS stores all receipts for headquarters' travel onsite for two years, while it sends receipts from the sales force to an outside storage facility. Auditing a salesperson's account therefore means "having all those boxes shipped back."

IBM's Curatola, meanwhile, noted that the next version of ERS, which will begin shipping next quarter, includes an enhanced business rules engine that allows customers to apply different rules at either the employee, approver or accounting levels, and an improved reporting engine that allows trend analysis across the full corporation or by division. "We want them to be able to look at exceptions as a trend, to ask, 'How many times did Ray exceed the policy limit for dinner compared with a peer at the same level in another area of the company?' People focus on creating rules, but the real question is what you do with the information after you know who has broken the rules," he said.

ERS has more than 50 large enterprise customers and will continue to develop "an end-to-end solution focused on integration and seamlessness with the corporation's financial systems infrastructure," Curatola said.

On the international front, ERS will be available by next quarter in Canada, the United Kingdom and Australia, and possibly Europe and Latin America, where local IBM Global Services teams can provide service and delivery. Curatola said he is "talking to a slew of customers."

DB Technology Inc., meanwhile, has its own plans for hotel folio data. It spun off the software that provides folio data into a wholly owned subsidiary, Foleon Corp., "to promote this whole product offering and propel it a little bit faster than it's been going," said president David Wechsler.