Gilligan Goes Global With Amex

By BTN / December 03, 2000

Gilligan Goes Global With Amex

Ed Gilligan recently spoke with BTN travel management editor Megan Hjermstad about his new responsibilities, Amex's recent accomplishments and its plans for the near future. Gilligan this summer assumed the title of American Express group president of global corporate services. Charles Petruccelli, president of American Express travel services group international, now reports to Gilligan.

BTN: What have you accomplished over the past year?

Ed Gilligan: The complete turnaround of our global travel business. The single biggest thing that has happened in the year 2000 is that we truly have a global travel business that is growing and is profitable. If I stand back and look at 2000, I can say for the first time in a couple of years, we have a healthy, growing travel business that's focused and where we are getting compensated fairly by our customers.

That's no small feat, it's the result of five years of reengineering, getting the value proposition right to reflect the realities of the new economic model and creating value for customers. And I'd say all those pieces came together this year.

BTN: Do you see yourself more as global, as opposed to multinational?

Gilligan: Well, I think global is a journey and I think we're far along that journey and we're making lots of progress. And I don't think you ever arrive there, because when you finally meet the needs of what your customers have asked you to do on a global basis, they then set the bar higher for you. Anyone who says they're global probably hasn't listened to their customers lately.

My mission for 2001 is to continue to globalize, to take any good idea from anywhere we can find it, to standardize it and to roll it out in the 20 key business markets around the world. In those markets, we probably are the number-one travel agency or corporate card provider in 18 of them.

BTN: Not easy for a company with American in its name?

Gilligan: Ten years ago, we thought it would be more of a challenge. But the American Express brand is incredibly strong in every major business market in the world. This year is our 150th anniversary. American Express literally has been operating in multiple countries around the world since the 1890s. We opened up our first office outside the United States, which was Mexico, well over 100 years ago. Our first European office was in Paris and that was in the 1890s. So, it is incredibly strong. Maybe on the surface, it would seem difficult, but every company in the world, for the most part, knows and trusts American Express and expects that American Express will deliver value. And it's up to us to live up to that.

BTN: What are the responsibilities of your new job?

Gilligan: My job is to run global corporate services, which is made up of our corporate travel business, corporate card, purchase card, consulting services and information management businesses. There are a few other stand-alone businesses that I oversee for the company, but the focus of my job is on corporate services--the business to business part of American Express.

Our mission is straightforward. It's to help companies save money and to provide high levels of service to their employees across all the products that we serve them on. I think our mission has stayed the same, even though we've changed the organizational structure. We were operating more in a matrix environment before June of this year, meaning we all didn't report to one person. But we already were closely aligned with the international pieces of our business, and we were well on our way to globalizing our business.

In June, my boss asked me to run the whole thing directly around the world, which I was feeling privileged to do. The goal is now to take it to the next level and to leverage our investments and overhead and make sure we are adding value to our customers everywhere.

It's a logical next step for American Express to officially globalize our business. We signed our first multinational account in 1990. I believe that was Texas Instruments, and we've been globabilizing our business since then.

BTN: What changes have been made in the organizational structure?

Gilligan: I've made some changes first to kind of streamline the people running the United States, so that I could free my time up to do other things than run the U.S., which I've been doing for the past five years. So, for example, I've consolidated all our card businesses, corporate and purchasing card and consulting and information services under Jud Linville. I've consolidated all our business travel activity under Pam Arway.

So that really narrowed things. I had 10 direct reports before in the U.S., I now have two. And now I've taken on international and I'm spending a lot of my time learning about the international markets, figuring out how to globalize and what to globalize next, and also spending the bulk of my time on B to B e-commerce activity.

This is the first year that any of us can remember, and this is my 20th year at American Express, that there hasn't been a crisis somewhere in the world in the economy, whether it was problems in Mexico years ago, or Asia or Eastern Europe. We live in a very cyclical world. But this year, everything has been strong. Not that there aren't some issues, but the economies around the world are strong.

The thing I worry about is that the economy is starting to slow down, certainly in the United States and in other parts of the world. Other parts of the world will follow the U.S. lead. The stock market is the leading indicator to me. There are literally tens of companies, 40 companies or more whose stock is down between 30 percent to 40 percent from the highs this year alone. And this is not just for Internet companies. These companies, for the most part, are our customers.

I also am very confident that we'll be able to add more value to these companies now that they're going to be even more focused on expense management. Because when times get tough, companies start shifting their activity from revenue building to expense management. Expense management will rise in importance again as revenue growth slows down, which is bound to happen, but I'm also concerned that many companies will just cut travel.

So we're bracing for not a recession, but for a slowdown. That's a major trend that I see happening around the world.

BTN: Where do you see the trend in demand for multinational corporate accounts? Have you seen more interest?

Gilligan: There are more clients who want standard expense management programs around the world, for whom things have worked well in the U.S. and maybe in one or two other countries, that now want to bring it to the next level. They want consistency and they want to work with one company. We've seen more of that in the past year than previously.

The interesting trend there is that it's not just the large companies. Increasingly, it's high growth middle market companies, below the Fortune 1000. And they're not trying to roll out in 30 countries around the world, they're trying to go to three or four more countries. They're trying to open up their business in Europe or in Asia. And they're looking to us to help get them started and to do it right the first time.

BTN: In the U.S., you've given a lot of the midsize and smaller companies to American Express One. Could that platform also work internationally?

Gilligan: It very well could. American Express One is the brand that we operate under. It is a separate platform in the United States that is focused on small and midsize companies, with a dedicated management team, with a singular focus of being highly responsive to their customers. It is the fastest growing part of our business in the United States, by a wide margin. We are looking to see if that model will work in other countries under the American Express One brand or maybe some other way.

In France, we're operating under the brand of Havas American Express. It's focused on handling all of France for us, but the bulk of their business, and it's well over $1 billion in travel sales in France, is focused on French companies that want local responsive service, just like American Express One. In Sweden, we're operating with Neiman and Schultz American Express. These are all wholly owned by American Express, run by American Express management, but operating under a slightly different brand that's focused on the local markets. And that is serving us well.

We have found having that singular focus on small and midsize companies with a highly responsive management team, you grow fast. And then we have the platform to help sell other services, like corporate card and purchase card, and consulting services.

BTN: How long will it take for e-procurement B to B portals to really catch on?

Gilligan: Very few of these marketplaces are producing any transactions yet. So you could be a cynic and say the time has passed for these marketplaces, but this is the year. Right now, we're at the moment of time where interactive travel is going to break through. But it took two years.

The train has left the station, in that companies will forever change the way they buy and sell to each other. I do believe we will see substantial transaction volume next year, both in travel and in e-procurement.

BTN: How will e-marketplace developments affect travel managers?

Gilligan: Travel managers have been evolving at what they do. Not everyone at every company, but the majority has really seen their jobs change dramatically over the past five years. Where it used to be more about managing the operation, it's now about strategic sourcing and selection of e-commerce. And the future will be a lot more about indirect expense management, not just travel. And it will be about possibly managing through consortiums. And we'll see the whole concept of purchasing evolve.

B to B e-commerce can completely change it by creating spot markets. So, instead of committing a year's worth of volume, you only commit three-quarters of a year. And you take 25 percent of your volume at different points of the year and test the spot market for auctions or reverse auctions.

Or maybe now you get a few of your closest neighbors and other companies together and you start pooling some of your volume to see if you can create a spot market for a particular good. We'll see the beginning of that in 2001 through the use of some of this B to B e-marketplace technology.

The same thing could happen for airline tickets. It's a little harder because there is less competition among airlines than there are in say the PC industry. There are all these rewards programs where airlines try to buy the loyalty of travelers. But the possibility certainly exists for consortium buying in travel and the creation of spot marketplaces. American Express certainly is going to be looking to test the waters with some key partners, hopefully early in 2001.

BTN: What's going on with the online booking system?

Gilligan: CTO is up and running now and we are processing transactions. A bunch of our clients have converted over from AXI. We'll be done converting all of the AXI clients by early next year in first quarter.

We are now focusing on getting all of this new CTO business fulfilled centrally. The conversion is well underway, and as we're converting we're seeing big increases in penetration. As we move the fulfillment to a centralized location, we're making sure that all the back-end quality control and fulfillment work is fully automated as well.

BTN: Are you rolling the CTO product out globally?

Gilligan: It's going to be rolled out certainly all across North America, Europe and some markets in South America by the middle of 2001.

More