<B>Lucent Models New Vision</B>
By Megan Hjermstad
Judy Bauer, former global travel director at Lucent Technologies, has begun to develop a business model that will drive real change in the way travel is purchased now that she and her 11-member travel department officially have become employees of business service provider Alliente Inc.
"The strategy we're headed toward is to look at the paradigms of the travel industry and see how suppliers and corporations would be better served by changing those paradigms," said Bauer, who became vice president of travel at Alliente on Nov. 1 (BTN, Oct. 30).
The major objective is to increase efficiencies in the travel procurement process. Bauer used the example of the current hotel request for proposal process, which would be less labor-intensive and costly to both hotels and corporations with the help of a third-party, such as Alliente, that would negotiate on behalf of hotels and corporations. "We are looking at some of these processes and how they can be more efficiently conducted, driving savings back to individual hotels and corporations. We are taking a look at current procurement policies in place and modifying or reengineering them or developing technology to facilitate these processes so that the whole travel procurement process can be more efficient and less cumbersome," said Bauer.
Technology is crucial to the new model, which will use the Ariba online procurement platform. "Since the Alliente core business revolves around technology, it makes sense that Alliente would potentially invest in technology to improve those efficiencies," said Bauer.
Bauer said it was too early to say what the requirements of the business model will be and how long until those requirements will need to be filled.
"In outsourcing travel, the value proposition is yet to be defined," said Bauer. "But we foresee our role as a management consulting company to provide travel management services to companies. Rather than have an internal travel management operation, they will outsource the capability out to Alliente."
Alliente will provide information, recommendations and guidance on policy, supplier relations and total program management, but it will be up to the company to decide what they want Alliente to implement for them. Bauer said the corporation that wants to benefit from outsourcing its travel management will allow Alliente to completely own the program, as Lucent has done for purchasing of all indirect materials.
"Lucent made a decision through due diligence and evaluation to outsource indirect materials purchasing, including travel, property service, advertising, energy, office supplies and resources, and identified Alliente as a company that could do that," said Bauer.
Alliente is providing travel services for Lucent and two of its companies that have been spun off: Avaya, which Lucent officially spun off Oct. 1, and MicroElectronics, which is a spinoff scheduled for February 2001.
"Many companies are going through reconfigurations including mergers and acquisitions, divestitures, spinoffs and realignment of corporate structure," according to Bauer. "As companies try to keep up with the changes in their organizations, corporations are divesting non-core functions and looking to outsource them."
Bauer said Lucent's move to outsource travel would work for any company that's serious about controlling the second largest companywide expense.
"The way costs are going, companies need to manage it," said Bauer. "Some companies have not got their arms around it. Why should companies build an internal competency when we will do it for them?" One thing Alliente does not intend to be is a travel management company.
"We don't plan to become or replace a transaction processor," said Bauer. "That's not in the scope of our services, and it's not a functionality going forward."
While Lucent travel reservations in the short term will continue to be serviced by its domestic travel agency partner, Carlson Wagonlit Travel, the Alliente business model will allow for relationships with multiple travel management companies.
"Different companies have different requirements, so we would look into dealing with all travel agencies that could provide service, then narrow it down or identify a core service requirement," said Bauer.
Bauer said Alliente would approach other suppliers in a similar way. Bauer has spoken to airline and hotel suppliers, and has sensed eagerness on their part to partner to develop a strategy with Alliente.
"I hear there are other corporations that are working to do some of the same things, and they think it's a forthcoming trend, so the suppliers see this coming," said Bauer.
While suppliers are not comfortable with aggregate or consortium buying, which hasn't worked in the past, Bauer said that is not necessarily the paradigm to go to. "You could have a company like Alliente representing five or six different corporations, individually approaching, discussing and managing those programs," she said. "But you have the expertise of Alliente to do this on behalf of five or 10 or 100 customers.