Carlson Reengineers Itself

<B> Carlson Reengineers Itself</B>

By Cheryl Rosen

<I>Las Vegas</I> - At Carlson's glitzy 60th Anniversary bash last month, Curt retired, Marilyn took the helm and Carlson Cos. outlined a broad internal technology project that will link its global travel management, hospitality and motivation businesses.

Clearly there is something big going on in the back offices of Carlson and its partner Accor, the Paris-based global travel conglomerate that shares ownership of Carlson Wagonlit Travel. While executives declined to identify precisely what the reengineering project involves, the fete was filled with references to what obviously is a vision of interlinked data warehouses--and possibly direct links between Carlson Wagonlit Travel and other Carlson and Accor businesses in the hotel, rail and car rental industries.

Said Carlson Cos. CFO Martin Redgrave, "We are retooling our systems and processes between groups, standardizing financial reporting and building data warehouses to capture and share customer, supplier and financial information. This will allow all the groups to view all the information in a common and shared manner and serve as the cornerstone of building one-to-one relationships across the businesses. Without a networked organization, our strategic imperatives will be impossible to achieve."

Marilyn Nelson noted that Carlson "will have seamless links to suppliers." And her son Curtis Nelson, Carlson Hospitality president and CEO, said the goal is "to build a customer knowledge base unlike anything we've done before. Our new strategic imperative is to take technology from one industry and apply it to another to create a competitive advantage."

Taking the same theme global, Carlson Wagonlit Travel will focus on developing closer ties between its two owners, Carlson in the United States and Accor in France. Noting the "strong converging interests between the travel, hotel and car rental industries," Accor's Jean-Marc Simon, who along with Marilyn Nelson serves as co-chair of Carlson Wagonlit Travel, said a joint team of hotel and agency executives has reported "that with new technologies, this market could yield high return. Carlson Wagonlit will become increasingly linked to the programs of Accor."

Mylle Mangum, senior vice president of expense management and strategic planning, told BTN that the focus of the CWT project is to "reengineer our core business with technology enablers, bringing together locations and consolidating into res centers in the United States and Europe. We will create an artificially intelligent front end that standardizes 80 percent of the process and allows us to better customize the other 20 percent to meet the customer's needs." This agent-friendly front end will be in testing by the end of the year, she said.

Richard Smith, senior vice president and chief technology officer for CWT, said the reengineering effort, which has the working title of Project Mercury, combines earlier U.S. and European driven reengineering initiatives. Smith said the first beta test will begin in September in Minneapolis with between 50 and 75 agents. "The system's look and feel has been designed by agents," said Smith, who noted that 18 agents were part of the development team. He said the beta test will last approximately 60 days and the company expects to do another test by the end of the year. It plans to implement the system throughout North America and Canada in the next 12 to 15 months and hopes to have the system in Europe by the end of next year.

Asked if the details of the plan include direct links between Carlson Wagonlit and the reservation systems of Carlson and Accor hotels (which include Radisson, Novotel, Sofitel and Motel 6), CWT president Travis Tanner said that "the vision isn't the link between Carlson and Accor hotels, but whatever our customers want, and the good news is that they can participate first." In about six months, he said, Carlson will be ready to "talk about what we have done rather than what we are going to do."

But pressed for details, Tanner added that CWT is "building a new front end to the CRS that will offer more direct ways to book. And I'll say at the same time that if anyone can bring a solution to the hotel business to help them get closer to their customers, they should do it."

One of CWT's newest global customers, Joseph Seagram and Sons global travel manager Earl Foster, said that "as a customer, I get zero value from driving hotel and car bookings through the CRS. Since travelers normally make about four changes to their hotel reservations, and each change costs $3, the hotel general manager often eats 12 bucks in CRS fees on a reservation, even if in the end the traveler cancels altogether. That's a cost to me, and I expect to share savings with Carlson by booking in their inventory without the CRS. Seagram expects to develop gateways to do that, either through the agency or through a third party, next year."

Curtis Nelson said that "when it comes to the CRS, we are clearly building lots of network capabilities within our own company and clearly will have the ability to build direct connections. We look to coordinate wherever we can add value. If we have hotel rooms that fill the bill, it's clearly an opportunity."

Meanwhile, Carlson Wagonlit Travel executives reported an official relaunch of the ActOne suite of travel booking and reporting products, the launch of a new Business Advisory Services consulting business, the continued rollout of its corporate card and its business plan for Europe, and the inking of a deal with reservations connector Novis that will allow for a front-end link to their booking product. ActOne is expected to bring in $2.8 million in sales in 1998. Customers "aren't yet ready for end-to-end solutions, but are buying discrete entities, and the market is beginning to move," said Mangum. Carlson Wagonlit is about to add the E-Travel booking system to replace TravelNet, which shut down in March, and will begin beta testing the KDS system in Europe this month.

Mangum also introduced attendees to Carlson's consulting arm--called Business Advisory Services--which already has signed one customer and expects eight more in the United States and a soft launch in Europe this year. Currently the company is looking for someone to head up Business Advisory Services in Europe.

Addressing a new market Mangum valued at "$2 billion in the U.S. alone," Business Advisory Services is set up to work initially with customers with volumes of $10 million and more.

The company also is working on an intranet travel module that as of yet has no name and will be offered through Business Advisory Services. Carlson wanted at first to create an out of the box solution to meet different clients' needs but realized this was not possible since "90 percent of customers need some form of customization and Business Advisory Services provides that," said Peri Koch Phillips, intranet project manager. The intranet product is "easy to put information in without HTML knowledge," Phillips said. The goal is to run a pilot test of the product by the end of April.

On the agency side, Carlson Wagonlit Travel Europe now ranks among the top three agencies in every market but Germany, said Herve Gourio, president of Europe, Middle East and Africa, with sales up 19 percent and income up 33 percent in 1997 over 1996. This year, CWT in both the United States and Europe is consolidating branches into larger, more centralized business travel centers. Virtually all U.S. customers are on fee-based contracts, as are about half of Canadian customers and 35 to 40 percent of those in Europe.

On the hotel side, Radisson Hotels Worldwide announced plans to relaunch its frequent guest program after a seven-year hiatus. With more than 150 worldwide corporate accounts, Radisson will begin holding focus groups drawn from its 50,000 frequent guests and corporate travel and meeting buyers. The invitation-only program will offer more than just airline miles, with possible rewards including travel and merchandise incentives from other Carlson companies.

At the heart of the program, said Radisson's executive vice president of marketing and sales Maureen O'Hanlon, will be the Harmony database system, to which all Radisson properties will be connected by year-end.

At the official passing of the baton from Curt to Marilyn, the star-studded stage included such Carlson "suppliers, customers and friends" as former president George Bush and executives from British Airways, Coca Cola, Walt Disney and Oracle Corp.

In a comment that can well be applied to the current state of travel technology, Oracle founder, chairman and CEO Larry Ellison said that "because of the youth of the computer industry, we have sold things people don't want to buy and charged top dollar for them. More often than not we sold technology components while people wanted to buy complete systems."

But he added that "once the infrastructure is in place, you can automate all kinds of things, including accounting systems and second-generation systems that make it easier to sell and market to customers, and to track their purchases to see when spending drops and you are about to lose a customer. If we can get it right, it's going to make life a lot easier."

Futurist John Naisbitt, who noted that the travel and tourism industries are now a $4 trillion business that provides 10 percent of the world's economy, said that "networks are replacing nation states" and that "women are creating companies at twice the rate of men, and by the turn of the century will own more than half the companies in the United States."

And in the best line of the conference, Colin Marshall of British Airways noted that, "A recession is when you have to tighten your belt. A depression is when you lose your belt. When you lose your pants, you're in the airline business."

--<I>Maria Vallejo and Sarah Welt contributed to this story.