<B> Buyers Take To Tech</B>
<I>Chicago</I> - Coming amid the majors' embrace of United's latest commission cut, BTN's third annual Travel Technology World conference couldn't have been any timelier.
In the air in the Windy City was the understanding that this cut only will add more urgency to buyers' efforts to take costs out of travel processes, the very reason that so many were on the floor looking for solutions.
Gathering for the second time here earlier this month, more than 250 corporate travel managers, information technology managers, financial executives and other travel buyers came to see the latest products for automating the business travel process from more than 40 vendors.
For buyers, the breeze was blowing heavily toward net fares and the promise of direct connections with suppliers.
<B>Direct Connections</B>
While only a handful of direct connections now exist, they increasingly are being facilitated by third-party vendors as well as the suppliers themselves, noted a panel of travel and technology vendors focusing on the subject.
"A large portion of the corporate marketplace wants the ability to apply corporate policies in a booking engine and we are pushing hard on direct connects with corporate clients," said Steve Scheper, Delta's general manager of agency and corporate program. "But it's not for everybody. You don't get shopping comparisons and it might be beneficial only for certain origins and destinations. Adoption will be slow at first, with many more questions than answers" (See story, page 1).
Scheper said that as direct connections become more prevalent, buyers should look for ways to provide a mutual benefit, and that, "before you commit, you must have the ability to move share via a strong travel policy."
Suppliers on the panel also noted that there are many definitions of "direct" feeds--including those between suppliers and corporations, suppliers and third-party middlemen, and between the GDSs and the corporate desktop, without a travel agency.
Wizcom International president Flo Lugli noted that in connecting with hotel suppliers, "don't even think about going direct to individual properties," but rather to the chains, even though "there are issues with mandating from the corporate office" with hotel franchisees. For hotels, she noted, "I'm not sure whether we've seen costs actually be reduced" with closer links to corporate customers yet.
The catalysts for interest in direct links is "to drive loyalty and compliance, capture some additional leisure bookings and facilitate one-to-one customer relationships," but Lugli said there are other ways to do that. Wizcom's hotel customers "are very interested in the corporate market, but focusing more on "having somebody aggregate multiple suppliers to multiple buyers. Certainly, the larger chains are anxious to get into this." On the property level, even with the booking of meetings, which Wizcom is automating in a partnership with Jade Technologies, "you still have the emotional issue of letting somebody go into their inventory and book 50 rooms without talking to anybody."
The biggest cost factor on the hotel side is whether the agency still is involved in a hotel reservation, especially when a traveler changes or cancels a booking, and in tracking the reservation in the PNR. But American Express Travel vice president Steve Cossette noted that Amex is considering charging different fees for simple direct hotel bookings and "full service" ones.
<B>Online Booking Pioneers</B>
Pioneers in online booking systems panelists highlighted the rationale behind implementation, methods for success and, most importantly, subsequent costs savings. Cindy Heston, travel manager at Thomson Consumer Electronics in Indianapolis, said a gradual two-year implementation of Worldspan's TripManager resulted in a third-quarter cost reduction of 25 percent and online bookings accounting for 48 percent of all reservations.
Heston suggested that corporations "negotiate a sliding scale fee based on the percentage of reservations done electronically." In Thomson's case, there is a $28 average differential in telephonic and electronic transaction fees.
Mary Kay Bellersen, vice president of global travel management at Citibank, reported a similar differential of $31. Her implementation on Sabre BTS was part of a five-year strategy to slash agency transaction costs by 40 percent and also resulted in lowering fares by 20 to 25 percent. Bellersen said, "We charge back fees to the travelers so they understand the costs savings." Citibank also emphasizes metrics, including market share shift from telephonic to electronic, unit costs and quality of customer satisfaction measurements.
Meanwhile, Patrick O'Halleran, manager of travel reporting and communications at AlliedSignal, said his rollout of Sabre BTS about a month ago already has garnered a 5 percent penetration. Targets are for 10 percent by November and more than 70 percent by the end of 2000. O'Halleran said that a single agency and corporate card was helpful in implementing the online booking system and AlliedSignal used an "aggressive marketing campaign leveraging e-business focus," which included incentives to early adopting travel arrangers.
Other strategies recommended by the panel included an initial focus on top travelers, extensive training, continued itinerary monitoring by managers and use of the telephone for more complicated trips. Of course, buy-in from senior management is key.
Bellersen also noted a few barriers to online booking implementation, such as a lack of Internet access for all travelers, inconsistent network standards (particularly in merger scenarios), insufficient bandwidth and, perhaps the biggest barrier of all, behavior.
<B>Face-Off: Online Booking</B>
A big development this year in online booking systems from the vendor side is the integration with palm-sized computing devices and wireless phones. During the face-off
on the trade show floor, representatives from AXI, GetThere.com, Sabre BTS and TTG's ResAssist all noted that the systems can or soon will enable travelers to book and change reservations on the fly.
Dan Whaley, co-founder and product development vice president for GetThere.com, for example, said the system this fall will introduce pager- and SMS-enabled cell phone messaging to inform travelers of delays, cancellations and gate information, complementing existing schedule and flight availability features.
Whaley also said GetThere.com "has allowed the ability to pull data in from multiple GDSs and helps to construct a global implementation."
Aside from working with IBM, Nokia and 3Com on wireless connectivity, Andy Ross, program manager for Sabre BTS said that system is being integrated with other software products, including offerings from Ariba, CommerceOne, Concur, PeopleSoft and SAP, to fully mesh the travel process. Ross also said the speed of the system has increased 40 to 60 percent in the past six months, and now a complete travel booking--including air, hotel and car--can be accomplished in under five minutes.
Meanwhile, TTG's ResAssist now can be implemented at a corporation in less than three weeks, according to sales manager Jeff Fix. Links with Amadeus and Galileo will be established by year-end. The 6.0 version will be out next spring and will add Amtrak and Eurorail bookings, multilingual functionality, trip templates and the ability to export itineraries into Outlook and other calendar programs. Currently, 1,500 corporate clients account for ResAssist's 50,000 users, but that number will rise sharply when Sprint and its 30,000 travelers sign on by year-end.
AXI's Joe Monaghan, Interactive Travel Group vice president at American Express, said, "We have software that tells us about your network infrastructure" that can help determine the ease of access for users and, in turn, the level of penetration that is possible.
<B>Computing The Future</B>
Palm devices also were in the spotlight in a session on the future of corporate computing. The session focused on portals, devices and other enabling technology that promises to soon provide seamless Web-access to travelers, whether they are on the ground, in the air and in the hotel room. Viador's James O'Malley and BroadVision's Rick West talked about their companies' portal platforms used by 150 and 300 corporate clients, respectively. Palm Computing's Rick Pumo said $7.2 billion will be spent on handheld devices by 2003. Presenting enabling software for a multidevice world were Sun Microsystems' Daniel Green, who said his company's Jini is focused on providing service rather than software; Microsoft's Kent Compton, who talked about how Windows CE is designed to provide a link across a range of devices; and AvantGo's Chris Moore, who talked about how his company's server software extends content from the Web to hand-held devices.
<B>Expense System Pioneers</B>
Two sessions on online expense reporting systems brought news from users as well as more than 10 suppliers.
New to the group is Boomerang, a Lotus Notes-based system from groupware supplier Momentum of Warrenville, Ill., which soon will begin global rollouts to 75,000 users at Proctor & Gamble and 35,000 at Asea Brown Boveri. Employees can use the system either in Notes or through any Internet browser, and work either online or offline. Lotus Notes users will see the system as an icon on their screens, while the data feeds into corporate accounting and general ledger systems.
Boomerang president James David said that since the majority of Fortune 500 companies are using Notes already, adding a Notes-based expense reporting system helps them leverage their investment in the software.
Like many suppliers, buyer Eli Lilly switched from a client-server to a Java- based system in early 1998, and at the same time switched to a modified approval process under which it audits only about 25 percent of expense reports. Instead, the company sends daily travel spending reports to line managers, who were afraid of losing control if no one audited their travelers. Eli Lilly also has instituted a no-receipt policy for all charges on the corporate card, relying on an IRS ruling that credit card receipts are sufficient documentation for T&E expenses.
Owens Corning had been using a homegrown expense-reporting system through which travelers send in receipts and the company does virtually all the rest of the work. The company feeds in the data, pays American Express and informs travelers via e-mail that their bills have been paid, said Tim Kearny, leader of shared services operations in North America. But "the system was becoming way too hard to operate and support, and our internal customers were not happy" with the inaccuracy of the system and the long cycle time until their bills were paid. "I saw the need to shift ownership back to the travelers," he said. The company signed with Vin.Net last March, and rolled the system out to all travelers in August. While all data input is still being done by shared services, Kearny now is going to "market the system internally to give travelers the option of putting in the data themselves, and I expect 75 percent to start doing that," since they will get reimbursed faster. Next, he will begin to require direct deposit of reimbursement in travelers' accounts. The Vin.Net system will be deployed in Canada in the next few weeks, and "there's interest in Europe as well."
The Miller Brewing Co.'s Don Draves offered up benchmarks from its usage of its own homegrown system the company rolled out in 1995. Miller is processing 40,000 expense reports a year, averaging 3.3 days from filing to reimbursement, and paying card vendors an average of 13.5 days after receipt of the bill.
Cisco Systems has cut its cost per expense report by $8 million since automating the process with Extensity, reducing the staff involved from 4 to 2.5 people, even as the number of reports tripled from 54,000 to 192,000. Processing time is now just 3.5 minutes, and cost per expense report is $3.81. Between 1996 and 1998, the company estimates that it saved $6.1 million and cut the number of travel policy violations in half. Cisco randomly audits 20 percent of reports, finding errors in 3.6 percent.
Cisco uses a negative approval process, where expense reports go automatically unless a manager stops them, rather than the more usual flow of waiting for a manager's approval before processing. Despite "a lot of debate" over the idea, the company found that managers disapproved only 22 expense reports out of 23,000--or about 0.1 percent--for a total of $66,000.
Cisco now plans to roll out a corporate card program and the Extensity reporting system globally and to integrate it with GetThere.com's online booking system and event management software it will either build or buy.
<B>GDS Execs Face The Future</B>
GDS executives focused on the pros, cons and details of going public. Galileo, for example, is in a quiet period as it prepares an upcoming IPO, however, director of corporate sales John Hach said it will give the GDS more capital for developing adaptable technologies for use overseas. Hach noted that 55 percent of Galileo's revenues come from abroad. Scott Smith, vice president of emerging businesses for Sabre--which is 20 percent publicly held--said the company is considering going 100 percent public to allow for "greater flexibility and to attract alliance partners for outsourcing IT." He added that many new relationships would not have developed if Sabre was still fully owned by AMR Corp.
Amadeus also is planning a public offering later this month. According to vice president of sales and marketing Doug Fogwell, the funds from the sell-off of 25 percent of the company will be used to invest in e-commerce initiatives, forge new relationships and build a stronger U.S. presence. On the flip side, Sue Powers, vice president of sales and marketing at Worldspan, said an advantage of being privately held is the ability "to be more strategic when looking at business opportunities without obligations to shareholders."
Meanwhile, all of the GDSs have new products in some stage of development. According to Smith, by next summer every Internet fare will be found on Sabre, and even more intriguing, Sabre by next spring "will have a product that is more competitive but more responsive than Priceline.com for corporate travel." On the Amadeus front, its Corporate Traveller product for booking travel with only a few clicks will be ready next month. Amadeus is developing Value Pricer, a product Fogwell said will provide a "price to beat option" that will give users shopping capability on the host system. By June of next year, Worldspan's TripManager will show low price alternatives without building an itinerary, and for its part, Galileo is working on a product that will give information on a supplier's inventory to see if that seat at that fare actually is available.
Regarding availability of Southwest and Amtrak in the GDSs, Smith said Sabre BTS includes Southwest, but an Amtrak product "had to be canned." However, new discussions are underway and Sabre hopes Amtrak connectivity will be rolled out by 2Q00. Hach said, "Galileo is aggressively working on those areas and soon will have a partial solution on one." Said Powers, "We are planning to move forward with a super PNR, which would reach out to the Internet and integrate information from all suppliers' information systems."
<B>Pioneers In Decision Support</B>
Flanked by their system suppliers, travel buyer panelists in the face-off on decision support systems heralded the merits of the systems they chose to manage and report travel data. "Decision support really means the right information at the right time for the right person," said Norm Rose, technology consultant and co-moderator of the panel. Four distinct solutions took center stage: an agency-supplied system, represented by American Express; a third-party model provided by International Software Products; a GDS-based product, courtesy of Sabre-BTS; and a do-it-yourself strategy adopted by Siemens. W.R. Grace & Co. went the agency route, Disney Worldwide Services Inc. opted for the third-party product and Phillips Petroleum chose the GDS-based system.
Stephan Meyer-Ewald, manager of IT tools for Siemens' travel and fleet services, said an in-house system has enabled the company to maintain independence from any single travel supplier and integrate diverse data sources. "Siemens is a very heterogeneous and diverse organization in the U.S. and the world as a whole," Meyer-Ewald said. "We have multiple agencies--multiple everything, essentially. So when the company started to look at the travel program, they realized they didn't know what was going on at all travel-wise and had no clue how much they spent."
A key issue among the suppliers and buyers involved how collected travel data are analyzed and distributed across the corporation in terms meaningful to the various departments. International Software Products clients, said vice president of processing and development Gil Siler, determine how they want the output. "Our view has been, 'This is your data, you tell us what to do with it.' "
W.R. Grace's director of Global Travel Services Lorraine Rostanzo conceded: "There's no system out there that's perfect. You're not going to get 100 percent perfect data because you've got manual intervention going into it. The only thing is to partner with someone and advise them and let them know, 'Here are the things I want to see in the data.' Have them come up with a solution."
<B>Content For Corporate Intranet Sites</B>
Andy Menkes, vice president of global travel management of Republic National Bank; Lora Barney, manager of account development at Maritz Travel Co.; and Dan Geller, president of WizBizWeb in San Francisco, spoke about building travel sites on corporate intranets. Menkes, who created his own intranet travel Web site from scratch, said to get set up buyers can look to their IT departments, a third party such as a consultant or a travel management company, or do it themselves with the help of an off-the-shelf product. Menkes said that when he went to his IT department, "they said it would take six man-months and a quarter of a million dollars, so I did it on my own."
As for type of content, Menkes suggested the site "show policy, the trip planning process, the booking process and even the expense reporting process." He added that it is ideal to show "price--hotel rates, car rental rates, new net fares." In addition, his site offers access to flight schedules, travel policy, preferred airlines, carrier discounts, city profiles as well as information from security, state departments and centers for disease control. "A great time to start is now," he said, "and any site is better than no site."
Barney agreed with Menkes that "increasingly corporations are saying it is difficult to get a corporate IT department to assist with the project and going to an external Web developer is sometimes a costly solution, so we came up with a standard product that can be customized."
<B>How To Buy Technology</B>
Maritz Travel's Richard Spradling, Bob Langsfeld of The Corporate Solutions Group, Richard Wooten of Belo and Steve Reynolds of TTG Software prepped attendees on how to buy technology before they hit the exhibition floor.
Wooten said it is important in the initial phase to determine what system you want to automate and what you want it to do. For example, a configurable alternate airport search, synchronization of profiles with an agency and speed are crucial features to look for in an automated booking system. PC or notebook connection is a highly desirable feature of an automated expense reporting system.
Langsfeld stressed that everyone in the company--IT department, security and senior management--be kept in the loop to prevent hang-ups in the late planning stages. "Make them part of the effort," said Langsfeld. "If it comes up to production and they haven't been part of it, the only way they can add value is to stop it."
"The key is to make sure you're not over-optimistic in what your objectives are," said Langsfeld. "If you have a culture very receptive to technology, you're going to have a better success rate."
Reynolds said one of the greatest difficulties is post-purchase and implementation of new technology. "Getting people to use it can be a real challenge," he said, but suggested using both positive and negative reinforcement to encourage use of new technology.
<B>The Outsourcing Option</B>
Andy Menkes of Republic National Bank led a panel on outsourcing that attempted to define it and the best method of outsourcing services.
Lawyer Richard Fahy said outsourcing involves "a choice: you can do the work in-house or you can do it out-house. It is really a question not only of cost but of efficiency."
Consultant Tom Wilkinson of the Travel Management Group discussed the option of outsourcing to more than one entity for maximum efficiency. Wilkinson said the ideal is to "create a framework--a kind of Christmas tree with various components hanging on it." However, he said, "it does not make any sense to have one supplier managing another supplier, in which case outsourcing to a single vendor can make a lot of sense."
If you contract with multiple sources, consultant Carol Ann Salcito, president of Management Alternatives, recommended that you "make sure that agreements can be linked but not intertwined." She also urged people to remember that it is not your outsource provider, but you who is responsible. "Only within your organization can you make the change--they can only bring it to the table," she said.
<B>Implementing Technology In Europe</B>
Stephan Meyer-Ewald, manager of IT tools for Siemens' travel and fleet services, said there isn't one booking product out there yet to be used around the world and travel managers should "look closely at the tradeoff between using one system worldwide and having specific systems for each region." He noted that getting European travelers geared up for online booking is a challenge because "the individual traveler is not as price conscious. There is an entitlement attitude." Additionally, the atmosphere in a lot of companies is "highly control-oriented" with "not much empowerment to users," in part because there is a perceived waste of time with using automated booking tools.
An additional wrinkle is the European Data Protection Directive--national data privacy and protection legislation that makes it impossible to export data if a company can't provide adequate protection of personal information and the Employees Council, according to Meyer-Ewald, has not decided if the United States is considered "secure."
On the expense reporting side, Meyer-Ewald said that T&E reports are not usually completed by individual travelers, but by assistants, so there is a fair amount of resistance to rolling out corporate cards.
Bill Brindle, head of IT for the central office of Business Travel International, noted that Amadeus is the major GDS in Europe and that most U.S. technology solutions are not developed for Amadeus. He said that BTI is adapting multi-GDS platforms from the United States to Europe with the assistance of technology partners in the United States.
Ensuring data quality from one market to another is a challenge, but BTI is "basically working with colleagues in the U.S. to put in consistency of service," Brindle said. "There is no reason a PNR created in Hong Kong should not contain the same information" in the United States or elsewhere.
Brindle pointed out that mobile phone usage has greatly changed the European marketplace, especially with the "advent of wireless applications protocols. With new phone systems, a whole lot of data can be shipped by mobile phone." Additionally, mobile phones are extremely important in keeping costs down. "You can't make a big circuit between London and Edinburgh for less than £85 a year."
He also said that a way to keep costs down is to implement electronic fulfillment centers in Europe where "instead of voice, data will be communicated through e-mail."
Meanwhile, Kevin Maurer, general manager of marketing for Rosenbluth International, said Rosenbluth had opened a call center in Kilarney, Ireland, with multilingual agents, "but when we started looking at combining phone numbers to have a single dial number within a country, just to get a direct dial number from a local phone company tie into a call center was an absolute nightmare."
"A lot of networking capabilities should be available in the European phone system that European phone companies don't allow you to access," he said. "In the U.S., we have the ability through network operations in a center to instantly transfer calls. In Europe, you actually have to place a request with the phone company to re-route calls and they get to it when they want to get to it.