IBM Drives Site Innovations
<B> IBM Drives Site Innovations</B>
By Mary Ann McNulty
<I>Southbury, Conn.</I> - A pioneering example of IBM's massive transformation to e-business is its new travel Web site, which for the first time consolidates all travel-related data and allows employees to link with preferred car and hotel vendors, and access and book distressed airline inventory.
When the company decides on an online booking system, that too will be accessed from this comprehensive travel site, said Lee Farnum, program manager of travel agency operations and travel technology for IBM global procurement, and the strategist for the travel site.
Like IBM's many other e-business strategies, the site is expected to save millions of dollars off the company's $1.2 billion annual travel and entertainment tab. Exactly how many millions might be difficult to prove, though Ray Blair, director of e-procurement for IBM Enterprise Web Management, said the company is "getting an extremely high return on investment" on all the applications. In total, the applications have necessitated an investment of less than $1 million.
Applications "take about three months to build, which compared to legacy systems is incredibly fast, and the savings are 20 percent to 40 percent," Blair said.
A newcomer to IBM and its travel department, Farnum soon realized that although the company made a lot of travel-related data available on the Web, it was all on different sites. To learn the status of an expense report, IBMers had to visit a disbursements site; for preferred hotels, they had to jump to procurement. Nowhere could she find the definitive list of IBM's global preferred hotels.
This thinking from the traveler's perspective happened to coincide with the IBM e-business transformation that began in earnest in 1998, when the company saved more than $67 million on electronic procurement alone. This year, it expects to save more than $240 million as it virtually eliminates paper invoices. The early returns so impressed CEO Lou Gerstner that he gave the e-procurement efforts one of two chairman's awards last year, unusual in that recipients are usually revenue generating.
Working with Blair and about 30 other stakeholders in the various travel-related sites in early 1998, Farnum outlined what travelers really needed on a comprehensive travel site, and how to leverage the technology to allow various process owners to retain control of their areas.
"We tried to have a one-stop shopping area for travel," she said, with travel policy, vendor communication forms, expense reimbursement status, weather, tips and a meetings section listing preferred chains and virtual site inspections. And it just so happens that IBM's Domino platform is perfectly suited for such distributed control, Blair said. For the travel site, the software allows 30 different editors to quickly go to their area, edit the pages or content and immediately make the changes available to everyone.
Again trying to improve an existing process, Farnum also worked with vendors to learn exactly what data they needed to be able to access in order to research and resolve complaints. IBM then designed comment templates for agency, car, card and hotel suppliers that travelers can either route to the vendors or the travel department. Vendors report all such communiqués as part of their regular customer service reports. Previously, IBMers e-mailed vendors, but didn't always provide all relevant data necessary for research.
Beyond the ease of access issue, Farnum said, the travel department also wanted to help educate employees about travel offers, especially last-minute e-mail specials on airline seats, most of which require a Saturday night stay. At the same time, it needed to inform travelers of the limited scope of such discounts, so they could better appreciate the regular business fares they are offered.
To give employees access to these fares, IBM negotiated with five airlines--and is in talks with others--to link directly into the distressed inventory listings on their Web sites from the travel home page.
IBM likewise connected the travel site to customized sections of its preferred hotel and car vendors' sites to allow employees to book IBM rates. This option is proving especially useful for those who don't need an air reservation with their hotel or car booking.
The travel site was unveiled in December to all employees worldwide, though initially the content is only for those based in the United States. Gradually, the site will add policies, vendors and nuances for IBM operations around the globe, Farnum said. In February alone, the site had 4.5 million hits.
Additional savings also are expected once IBM begins to populate its expense reports with corporate card data. Internally, the company still is using the mainframe expense software that it has sold to others on both mainframe and Web platforms.
Now that the application is built, IBM also might be able to use it to help suppliers remove costs from the current booking process. Said Farnum, "We're definitely looking at that as an opportunity, both short term and long."
IBM's e-strategy began last year as an outgrowth of a massive reengineering, Blair said. To turn the company into an e-procurement powerhouse, IBM had seven goals. The first was to break down the doors or silos within the organization and share data, facilitated by the deployment of SAP software; next was "to break down the doors between us and our suppliers." To that end, the company is striving to purchase all goods and services electronically.
It now is focusing on seven areas: e-commerce sales through extranets; e-procurement; "e-care," or self-service for customers; e-care for employees, including distance learning; e-care for business partners; e-care for influencers, including technology consultants, financial analysts, shareholder, the press and prospective employees; and e-marketing.
For now, the e-strategy applications and savings are all for IBM's internal benefit, Blair acknowledged. However, executives are analyzing whether, and what precisely, it might sell to others.