E-Fulfillment Capabilities Maturing

The latest wave of automated fulfillment technology features are enabling corporate customers using online booking tools to achieve touchless rates averaging around 90 percent. Business travel buyers increasingly are attaining online booking adoption levels high enough for automated fulfillment to yield significant savings.

The proprietary mid-office software that Sabre's Travelocity Business rolled out late last week, which adopts Sabre GetThere's new online ticket exchange, void, and refund technologies, reflects features being embraced by most travel management technology providers, including American Express, Cendant, Expedia and WorldTravel BTI.

While GetThere's void, refund and exchange technology, deployed in late 2004 through January 2005, takes the online transaction only as far as the user's agency can handle it, mega travel management companies have been working toward touchless fulfillment of such requests for the past several years.

Angie Weber, product manager at Expedia Corporate Travel, whose fulfillment operation is supported by third-party provider TRX, said that ECT has touchless transaction rates in "the high 90s" and has offered exchange capabilities, continuously under development, since the company's launch in 2002.

"It's something we've been expanding and building pretty progressively," said Weber. "In many cases, it's just a matter of focusing on a particular airline or a particular aspect. For instance, when we launched, we didn't have the ability to exchange company negotiated fares, but we received a lot of feedback from our clients that they wanted to exchange these fares as well because they represented anywhere from 10 percent to 50 percent of their flights." With exchange capabilities implemented, said Weber, online voids and refunds are high on the list of ECT's priorities. "We're looking at building that right now. Clearly that would be the next horizon."

Charlotte Blackwell, vice president of product and marketing for Orbitz for Business and Travelport, said that both Cendant-owned platforms currently offer online void, refund and exchange capabilities, with varying degrees of self-imposed limitations.

"On the Travelport side, what we allow for in online exchanges is driven more by what the larger corporate customers tend to want, which is not allowing the travelers too much control over the change in the online environment because of the kind of trouble they can get into, ratcheting up cost by making a change simply because they can. That's something we look to control with policy," said Blackwell. She said the typical Orbitz for Business customer is less focused on policy compliance and allows for more automation in the change/exchange category. "It's a different set of services. That's not to say that as we start to integrate more of the technologies between the two companies, which is something we're actively engaged in right now, that we won't draw down some of that into the Travelport offering. I absolutely believe that we will."

While Internet travel management companies like Travelocity, Expedia and Orbitz are, by nature, focused on the leading edge of online adoption and fulfillment, the largest traditional travel management companies also are closing in on optimizing automation.

"The biggest piece of functionality that we're in the process of rolling out this year is the cancel/change technology with our biggest partner, and that functionality is being tested right now," said Steve Power, senior vice president of American Express' Service Delivery Network, noting that about one-third of Amex transactions originate online and, of that third, 88 percent is considered touchless. "Cancel/exchange will, we think, give us somewhere between 3 to 5 percent lift in our first pass yield. It'll be dependent on customers utilizing that technology when it's there and a lot of times, just because the functionality's there doesn't mean it's being used."

Many travel buyers indicate that this technology is much needed and, where in place, highly utilized. "Our travelers are making changes all the time," said Nancy Garner, global travel procurement manager for California-based Extreme Networks, who works with Travelocity to service Extreme's 1,000 travelers and manage its $5 million annual travel spend. "About 20 percent of transactions result in some kind of change, and voids and refunds are probably 10 percent. It's the exchanges that put it up there."

Though satisfied with Travelocity's online void and refund fulfillment technology, Garner is approaching exchanges a bit more tentatively. With some carriers limiting providers' automated fulfillment capabilities in the current GDS environment, Garner said she is content with the extent of touchless capabilities.

"It's the only way to go. We're closing more loopholes with this and it really brings to light to upper management controls they need to have in place," said Garner, highlighting one of the primary benefits of online booking and fulfillment to buyers—policy enforcement. "I don't think companies actually know what their travelers are doing with travel. They upgrade or they make an extra stop that they shouldn't have. Anytime you have to do this online, the VP or the managers will see it. The visibility guilt will be there."

Use of e-fulfillment in the corporate travel market has grown almost exponentially, said Mark Johnson, vice president of business development for WorldTravel BTI's corporate fulfillment services division. After implementing its e-fulfillment program in 2001, the mega agency celebrated its one-millionth online transaction in the spring of 2004 and, by November of the same year, already had churned out another one million transactions. Like its industry counterparts, WorldTravel BTI's touchless transactions comprise roughly 90 percent of all online originating trips.

"We've grown very quickly over the last four years and continue to have another large growth year," said Johnson. "We're looking at more demanding, more complex clients, and because of that, we have new versions of the technology that we have developed that controls that fulfillment, quality control, file-finishing function, coming out over the year that are going to add some control, some extra flexibility to that process."

Johnson said that WorldTravel BTI, which provides fulfillment support for all the independent booking tools, is in talks with those providers to determine how the agency will touchlessly complete this new wave of online transactions—voids, refunds and complex exchanges.

"Everybody has been able to do this for certain segments, some are easy to do and we've been fulfilling them for however the booking tools have set them up," he said. The next generation of incremental change, he said, "is still in development or hot off the presses. Really, they're mainly better pricing tools. They allow the traveler to better understand the pricing of these complicated changes before completing the transaction. We're assuming that once they get their technology in order, we'll be able to fulfill it as we have with every other development that's hit the market."

The primary limiting factor, said Johnson, confirming the concerns of buyers like Extreme's Garner, is today's distribution environment. "The current platforms support automation in so far as they are limited to GDS functionality. Today, all inventory resides in the GDSs. When that starts to change over the next year or so, it'll be a really exciting time to talk about fulfillment. Until then, we probably are reaching a plateau of maximization for automation."

Steve Reynolds, regional vice president of Dallas-based business processing outsource provider ACS and formerly executive vice president of sales and client services for TRX, said that fulfillment providers are confronting the law of diminishing returns when it comes to further automating the end-to-end process. "You could spend six months automating that last 1 percent, it could cost you $5 million and it would only save you 100 grand. So you just continue to do that manually," he said. "What's happening is the fulfillment stuff is really heading towards just exception processing, handling that stuff that the products can't."

The major hurdle in touchlessly processing that last 10 percent of transactions, said Reynolds, is the current climate for inventory distribution. "When the GDSs added the automated refund and exchange process, that took another chunk out of the exceptions, but what's kind of kicking it back in the other direction is all these direct connects," he said. "Now you've booked a flight, and the air is over at American Airlines, and the car and hotel is over at Worldspan or whatever it might be, it gets more complex in a hurry, especially when you get to an exception. If somebody wants to cancel or change a flight, you have to go find it now. Your robotics just have to be more intelligent."

With automation limited by factors beyond the control of fulfillment technology developers, the real market differentiator, said Will Tate, vice president of Connecticut-based consultancy Management Alternatives, will be in the quality of the data presented during and derived from the online transaction. "Automated fulfillment needs to enhance the transaction rather than just complete the transaction, really enrich the data," he said.

Still, as adoption of online booking tools starts to reach its saturation point in the United States, automation nears optimization and e-fulfillment becomes standard practice rather than cutting edge, "People have accepted the reality of the way things stand today," said Tate. "They're saying, 'Hey, we achieved the cost savings and here we go.' "