Philips Pilots Galileo System

By Cheryl Rosen

Eindhoven, The Netherlands - As the result of a cooperative beta test with Royal Dutch Shell Oil Co., Philips Reisbureau B.V. is rolling out a PC-based, dial-up booking system developed for KLM Airlines by Galileo International.

Philips-believed to be KLM's largest global corporate account-and Royal Dutch Shell were approached separately by the airline and asked to beta test the new system about a year ago. While each began working on its individual vision of an automated solution, all the parties soon agreed that a joint effort would be the logical way to develop the best product.

"We each drew up our functional design requirements separately, but when we laid them next to each other, there was a lot of synergy," said Herman Mensink, the Philips general manager in charge of travel operations. "So we sat down with Galileo and KLM and said we might as well do it together, as one focus group and one project team. That way, we get cross-fertilization of ideas between the two companies, and also a more generic solution for Galileo."

Although the system is "still under development and being modified," Mensink said he considers it to be "past the beta stage. At a certain moment you have to define that this isn't a test any more, but a volume test that simulates a real-life situation."

This month it is being introduced to Philips' 60 on-site agents, all of whom are Philips employees and report to Mensink. In addition to the agents, the Philips travel operation is supported by another 50 staffers in finance, accounting, global travel management and information technology.

Starting Simple

The intial focus will be to use the system for "the simple back-and-forth trips," both domestic and international, that make up about 63 percent of Philips' travel, Mensink said. The company is projecting a total air spend of about $80 million in 1996.

"We have the dual responsibility of being the travel manager and the travel agent at Philips, and the on-site agents will be the ones who have to provide support to our travelers and secretaries as they use the system," Mensink said. "So it made sense to give it to them first."

Overall, the beta test has lived up to Philips' expectations of cutting costs and moving market share, Mensink said. As the complete system becomes available to the general Dutch market in the first or second quarter of next year-and barring a possible logjam resulting from a single but important disagreement over seat inventory-Philips plans to roll it out first to a target group of departmental and Board of Management secretaries, and then companywide. As part of the deal, Philips also will focus on "maximizing the number of Galileo and Apollo sets we use in all Philips locations worldwide," Mensink said.

Although Mensink agreed to the test to allow the company to keep better control of its T&E costs, he declined comment on whether part of the expected savings will come from staff reductions. "The system provides us with a perfect steering mechanism, and as far as I'm concerned, that is the most essential thing in a corporate intuitive system," he said.

But while the ability to move market share was the expected benefit, the beta test also brought some surprises. "The first surprise was when we gave the system to a group of secretaries who didn't have a clue about how to arrange travel other than to call the travel office, and they were able, with a half-hour of training, to do complete bookings on their own," Mensink said. "I thought it would take three or four days of training to get them to that point."

Also surprising was the secretaries' easy acceptance of a technology tool the travel office had expected to be met with some resistance. "We thought we'd have to push it down the line into the company, but now I'm expecting a pull philosophy," Mensink said.

But Mensink does have one serious concern that has yet to be worked out-and that is the question of where the inventory of the last few seats on any flight will be held.

"I am concerned that the large suppliers will offer their last available seats on the Internet rather than the GDSs, because from a distribution point of view, the Internet is the cheapest solution and offers the highest margins," Mensink said. "But no matter what channel is used, I want access to those last seats, so I am currently in discussions with KLM. They were the ones who wanted my support, and I cannot allow them to use another system for their last available seats. They haven't said yes, but they haven't said no. I am hoping they will be able to do something for me."

Allowing For Differences

While Mensink said he was impressed by a presentation he recently saw in London by Galileo partner United Airlines, in which the company described its technology, he remained more comfortable with the KLM product.

The European and U.S. versions will have a few differences, he added. "The U.S. version will be a bit different, and there are specific issues-currency issues, especially-that aren't needed in the United States but are vital here in Europe," he noted.

Mensink agrees with the ultimate technology vision of many American travel managers: a single integrated system that pulls together both the booking and the expense reporting processes. "I think there is more expertise in the U.S. with automated T&E systems, but we are looking at that piece as well," he said.