Reporter's Notebook: Tech World Draws Buying Crowd

<B>Reporter's Notebook: Tech World Draws Buying Crowd</B>

Chicago - Representatives from each of the three largest global distribution system companies in the United States--Galileo, Sabre and Worldspan--made bold predictions about online usage as they spoke at BTN's fourth annual Travel Technology World conference here earlier this month.

Giving the crowd of more than 300 corporate travel, IT and purchasing managers an overview of travel technology, the execs said as much as 90 percent of travel will be purchased online by individual travelers within five years.

Wireless, too, was top of mind, particularly for Galileo vice president of corporate and consumer sales John Hach: "Somewhere between 2003 and 2004, more people will access the Internet from handheld devices than from PCs." According to Worldspan CEO Paul Blackney, already more computer chips are sold for devices other than PC workstations.

The speakers minimized the extent to which corporations are signing their own GDS contracts, with the exception of Airlines Reporting Corp.-accredited Corporate Travel Departments. Said Sabre BTS senior vice president and general manager Scott Smith, "It's gaining or not gaining momentum at about the same pace. Nine out of 10 times the choice is to continue doing business through the travel agency." Sabre has "some" such relationships, while Hach said Galileo has "very few."

Asked about the promise of enterprise resource planning, all three execs said they are working to connect with the Oracles, PeopleSofts and SAPs of the world. Hach emphasized that the way to integrate travel products with ERP is to use the XML language now being standardized by the Open Travel Alliance but also is available through such programs as Galileo's XML Select.

"Years ago, we were very proprietary and protective--the programming language is arcane," said Blackney. "But the future says that we have to take the wraps off. Having a close-minded attitude would have made us dinosaurs."

"All the GDSs have opened their once-proprietary systems," added Hach.

Having bought GetThere in part for its development of non-GDS links with suppliers, Sabre now is embracing such transactions. "We think 15 percent to 20 percent of all transactions will go supplier direct over the next three years," said Smith.

The GDS execs also gave estimates on revenue growth. Blackney was "not uncomfortable" seeing about 7 percent growth "sustaining itself for the future." Smith said Sabre in 2001 is targeting double-digit revenue and profit growth, which will continue "for the foreseeable future." While Hach said Galileo's best growth potential comes from outside the United States, where it derives more than half of its revenues.

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Two basic questions came up repeatedly in different guises during the Direct Connections session. Both concerned costs. "If the GDSs lowered their fees, would it reshape travel buyers' current interest in direct connections?" Similarly, "are direct connections really the start of the growth of two-tier pricing at the GDSs?" Answers to both questions appeared elusive.

"What we were looking for was a touchless air ticket reservation and ticket fulfillment system, where there'd be no human intervention and where we could see significant savings," said panelist Mary Bastrentaz, director of the U.S. travel program at Anderson Consulting. The Via World Network system that Anderson adopted eliminates agency commissions and GDS fees. "It has allowed us to negotiate deeper discounts as a result," she said.

Stephan Meyer-Ewald, just promoted to CIO after serving as director of Siemens travel IT, described his company's experiences with direct connections from the traveler's point of view. "Customer service issues often are overlooked. Companies need to survey travelers regularly to make sure customer service isn't being sacrificed in the name of savings," he said. Siemens has negotiated initiatives with Lufthansa Airlines and National Car Rental.

Meanwhile, Andrew Menkes, vice president of global travel management for HSBC, described in detail his bank's direct connection with British Airways on the busy New York-to-London route. "There were no start-up costs involved and no lead time was necessary," he said. "It's a paperless process, which means it can be executed efficiently. In this kind of situation, physical location no longer matters. You can book and ticket from anywhere."

By the end of the session, one thing was clear: The rationale for implementing direct connections shouldn't simply be to save GDS fees. Rather, it is another opportunity for travel managers to work closely with their preferred suppliers, building a stronger relationship in the process.

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During a panel discussion on data standards, Nick Lanyon, president of Dallas-based Lanyon Inc. and a board member of the Open Travel Alliance, said he is "not entirely confident" that OTA's development of specifications for common availability and reservations messages for travel suppliers would be available by year-end, as previously hoped. "But we're still shooting for that," he said.

Lanyon and Stephan Meyer-Ewald of Siemens also issued a call for corporate travel participation in the OTA, which is setting up standards for XML-based data exchanges.

"I feel we don't have enough corporate representation," said Lanyon, who told BTN there are fewer than 10 corporate travel representatives in the organization of more than 150. "These standards are to allow suppliers to talk to corporate customers the way they want to be talked to, and the suppliers missed that early on in the OTA."

Lanyon said annual fees range from $1,500 to $7,500 a year, depending on the size of the travel spend. "We'd ideally like to see someone with a technology background or a travel manager with their IT person."

Michael Whitesage, president of Albuquerque, N.M.-based Prism Group, also issued a call to action, noting that "data sources are closing down and becoming more restrictive. Some are planning to bill you for your own data, and there's only one group that can turn that around--the buyers."

Whitesage also noted that Galileo has promised to begin providing amount data on air segments by the first quarter of 2001 but, after millions in investment, Amadeus has yet to offer a workable solution. Amount data is helpful--if not essential--for airline negotiations.

"Today, North America has the segment amount in all back-office systems, which gives me the ability to price segments and origin and destination in a complex itinerary," said Whitesage. "Amadeus does not have segment data. What they propose to do is prorate, but prorating methodology is not accurate."

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A session on mobile technology focused on both emerging and converging technology being developed for corporate travelers and how travel managers should try to implement new devices. Bob Lichtman, a consultant with The Corporate Solutions Group and the session moderator, said, "PDAs and Web-enabled cell phones are being used by your travelers, so you may want to proactively follow their lead and build your programs to incorporate these."

Boston-based Thomson Corp. encourages travelers to use PalmPilots, but has not yet connected online booking or e-mail to the wireless network. "The frustration with our IT folks is that the Palm.Net server does not allow e-mail from our internal system because of firewall issues," said director of corporate travel Chris Staal. "As a result, we have turned to the Blackberry device for e-mail accessibility." Staal said travelers are asking for a totally wireless, fully integrated solution to limit the number of devices they need to carry. "A drawback is our decentralized environment where one great solution may not be applicable to everyone because of differing systems. We don't even all use the same expense reporting product."

Meanwhile, Palm-based expense reporting system ExpensePlus from WalletWare, plans to work with all the major enterprise systems and already is formulating a partnership with Gelco (see story, page 28). "Corporations don't often think about employee efficiency, instead they focus on their accounting departments," said Gary Amstutz, WalletWare president and CEO. "But eventually travelers will be able to submit expense reports directly from their Palms." WalletWare also is working on virtual receipts either beamed to PDAs via infrared or newly emerging Blue Tooth technology.

Amstutz said cell phones and Palms eventually will mesh, raising the question of which operating system will be used. "Qualcomm, Motorola and Nokia are licensing Palm for future use in smart phones, while the Symbiant consortium is looking for a standardized OS to run smart phones," he noted. "Palm and Symbiant are odds on favorites."

Meanwhile, David Armon, western regional sales manager for CAIS Internet, a high-speed Internet access provider for the lodging industry, said wireless solutions still cannot download larger files. "We have created a plug-and-play environment for laptops, but also are looking at kiosks in hotels, airports, train stations, etc.," Armon said. "I envision a PalmPilot at an Internet kiosk that can both download and upload e-mail wirelessly via a high-speed network."

Said Lichtman, "Convergent technology in these areas should happen in late '00 or early '01."

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In a session on how to buy technology, Bob Lichtman, a partner in The Corporate Solutions Group, said while companies may be forced to migrate to a product they didn't choose, his only concern for corporate buyers about the acquisition of GetThere by Sabre is reduced competition going forward.

John Hintz, corporate travel manager for TIAA-CREF who has budgeted for an online booking system in 2001, is looking for a product that is going to be available for at least three years because that is a change cycle people can accept.

Steve Reynolds, executive vice president and chief technology officer of TRX, said companies should put more emphasis on testing the product with real-life scenarios.

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Participants in panels on expense reporting were divided over the extent to which they could integrate booking with T&E. Vince Wissink, director of financial systems with United Health Group in Minneapolis, is "now looking at how to integrate booking, which we are piloting, with T&E." The U.S. Department of the Interior's chief of financial management, Ed Ottenheimer, said booking is "our next venture."

But Ford's Larry Brophy, in global business expense project accounting, said, "The industry needs to mature a little bit to where there are systems that can handle all travel. There are a lot of issues now with booking." Ford recently bought a piece of expense provider Captura, but Brophy had no comment.

"My jury's still out," said Bill Amaral, corporate travel manager for the Sacramento, Calif., campus of Intel Corp. "We're trying to figure out if a dual data feed is appropriate and what we might need it for. I'm interested in billed data; booked data is less interesting to me."

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Intel's Bill Amaral and Dorian Stonie, Internet travel technology manager for Hewlett-Packard told attendees that attracting employees to the travel pages of corporate intranets, which can improve policy compliance, is often a matter of offering them easy access to information that will improve the quality of their travel and travel arrangements.

Amaral has posted information on travel safety and security and links to procedures airlines follow for recovering lost luggage, for example, in addition to travel policy information.

"Make sure you have allocated some of the budget to internal marketing, because you want people to go to the site," said Amaral, whose travel page serves employees of the former Level One Communications, purchased by Intel in 1999. "The information needs to be creative, fresh and easy to access."

Stonie said his company ingratiates new employees with the travel page immediately upon hiring, to familiarize them with content and procedures.

"We have data links with other departments, like human resources, that allow us to integrate profiles," said Stonie, whose page received about 200,000 hits in the past six months. "We want all our travelers to log in to one place and access all travel information and news globally. But the information is only as useful as the degree of accessibility."

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Howard Brooks, senior director of expense management and travel administration for Sony Music Entertainment Inc.; Elise Kramer, travel analyst with Rockwell International; and Sheri DeVries, data manager for procurement reporting at Microsoft, shared their experiences and preferences in selecting and using decision support information tools.

Sony Music has been using TRX for more than a year to gather and consolidate data on its global program with U.S. booked air volume of more than $20 million. Sony Music, which operates in 53 countries, has nine domestic agencies and one agency per country outside of the United States.

"If data warehousing didn't exist, we would not be able to have multiple agencies," Brooks said. Brooks uses the data for airline negotiations, airline-to-airline comparisons, as well as agency-to-agency comparisons of returned commissions, rebates and transaction fees. "Data must be turned into information to maximize its potential," he said. "It is useless unless it is computed and compared properly."

Rockwell--which has a $57 million U.S. booked air volume--implemented Sabre's Vantage Point as a result of a company-wide strategic sourcing initiative. The Web-based product integrates seven different information feeds and produces reports downloadable in PDF files.

DeVries since January has been working with Hi-Mark, scrubbing and defining three years of back data from Microsoft's $90 million U.S. booked air volume. DeVries needed a product that could run on the Microsoft operating platform, including new versions that had not yet been released. "Hi-Mark was flexible, accommodating to our needs and provided quite a lot of customization," said DeVries.