Only nine months after the word "intranet" first appeared on the travel horizon, there already is a new variation on the online theme. Increasingly, customers are asking not only for intranet-based booking systems, but also for third parties to handle everything for them on an outsourced basis.
It seems clear that the trend will continue as new corporate booking systems roll out in 1997-and agencies and technology companies will be stepping up to the plate to deliver.
Some see a service bureau as a temporary fix and predict that corporations eventually will opt to pull the technology in-house to maintain intranet-based booking systems themselves. Others see service bureaus as the perfect technology solution for corporate cultures where outsourcing is standard operating procedure.
To many business travel buyers, the travel technology arena seems a fickle place, moving in the past twelve months from automated booking systems that sat on PCs to solutions on the Internet. Early this year, private corporate intranets-which combine the easy access of the public Internet with the reliability of dedicated access lines and protective firewalls-quickly caught the attention of the industry as a cost-effective answer for corporate travel booking systems (<I>BTN</I>, Feb. 12).
With the rollout of the majority of corporate systems approaching in the first quarter of next year, insiders say the question being asked by travel buyers is shifting from, "do we want an intranet application?" to "do we want to maintain our own intranet, or do we want to use a service bureau?"
"That's precisely what our customers are asking," said Chris Noe, technology solutions business director at Rosenbluth International in Philadelphia. "Using an intranet allows people to roll out applications to the individual desktop without much effort from the MIS organization, and that's what's been getting all the fanfare."
But, he said, "there is still some effort needed. For corporate travel managers, there is a challenge in getting the limited resources of their internal MIS staff involved in travel applications. As we rolled out our intranet solution, customers started saying, 'we don't even want to do that much-can't you just do it for us?' "
More and more companies are making this option available. In October, TravelNet joined its Voyager distribution partner Carlson Wagonlit, as well as competitors like Internet Travel Network, in offering a service bureau for the Voyager booking system (<I>BTN</I>, Oct. 14). This month, Needham, Mass.-based CompuTravel debuted a similar model for the E-Travel system, aimed at companies with air volumes of less than $2 million. In the first quarter of 1997, service bureaus to handle online booking needs will be launched by American Express, Rosenbluth International and BTI Americas. And Sabre has said from the beginning that it would offer its Business Travel Solutions system in a service-bureau model, either directly through Sabre or through a travel agency partner.
"Almost 100 percent of the companies we are working with want an intranet solution, but in the last two months we've been hearing customers ask for an intranet that includes a service-bureau model," said American Express vice president of interactive travel Rich Siemborski. "They say they are concerned about security, but they still want us to run the system for them."
At TravelNet in Santa Ana, Calif., chairman John Shoolery has been hearing the same thing. Shoolery said that "at least half of our new customers are interested in an intranet solution, and I'd bet the number is significantly more than that-maybe 60 or 70 percent. And three or four out of every 10 customers will want to begin with a service-bureau model to get the ball rolling cost-effectively and with the least amount of trouble."
Marty Runyan, director of technology research and development at Rosenbluth, said the 60-to-70-percent figure applied to his customers as well. And Bruce Black, president of Chicago-based McCord Travel Management, said that "at least 70 percent" of his customers are looking for an intranet system, "but they don't want it at their site. They don't want to take a proposal for $200,000 to a committee and wait 18 months for an answer. And they don't want to spend a lot of money on the first iteration of a new technology. So they are telling us, 'you do it, and you manage it.' "
For customers unsure about investing heavily in a technology that barely existed a year ago, an outsourced service bureau can be a good way to meet travelers' demands for online systems and at the same time assess the usage, benefits and pitfalls that automating travel over the Internet will bring.
"If I were a travel manager today, I'd probably be trying as many alternatives as possible with as minimal an investment as possible," said Carol Salcito, a former United Technologies travel manager who now is president of Management Alternatives in Stamford, Conn. "There are so many products coming out and so much change. And often travel managers find that to install a booking system on their corporate intranets, they need to put their names on a waiting list of applications that the MIS staff is prioritizing. For a company that's betwixt and between, a service bureau is definitely a good way to start."
Indeed, betwixt and between is just where many travel managers find themselves, scurrying to match travel systems to the ever-changing overall direction of their internal systems. Until a year ago, automating the travel booking process usually entailed a client-server computer architecture, under which the corporate MIS department had to install software on every employee's computer. The Internet offered a low-maintenance and low-cost alternative, but involved questions of security, speed and dependability that made it an imperfect choice as a platform for travel systems that demand "24x7x365" reliability.
Runyan said he is "amazed at how fast corporations are embracing this solution. The Internet standard is gaining critical mass. The push from IS departments and from users is to let travelers bring the skill set they are using at home, where they are surfing the Net, into the office."
He noted that the Web environment is so new that standards have not yet been set. While exchanging documents and information is what the Web does best, standards for interactive data-which travelers will need to pull expense reports together and add up the columns of data-still lag behind.
"The standards are coming, but it's early," Runyan said. "You're going to want to know what tool set your systems are being built on, and use your judgment as to which will hold up over time."
But, he added, "Even though we may say some things that are cautionary about using intranets, the point is that we believe intranets are the right answer for booking travel, as well as for other processes, like expense reporting, down the line."
Using a service bureau for the booking piece of a corporate travel system is a solution that will still allow a travel manager to provide a variety of services on a single travel department home page, Noe said. "Travel managers could offer a traveler's tool kit of services-reservations, expense management, corporate policy and destination information, as well as e-mail-at a single address," he said. "Each piece could go to a different destination without travelers being aware of where the actual information resides. The destination information could go out over the Internet, for example, while the booking piece goes over a dedicated line directly to Rosenbluth."
Shoolery suggested that travel managers "think of an intranet like the old medieval city behind a protective wall. Because intranets are a controlled environment, where you can set policy regarding security and increase the capacity of the wires to speed up the transmission, they are an ideal way to accomplish purchasing activities and still keep information private. But with a service bureau, the server is outside the wall, which means information has to go across the public Internet, where information is more subject to getting lost or being accessed by others if the security is not set up properly. And since the server is outside, it cannot talk to other internal corporate systems. Interfacing travel purchasing with other systems is much less difficult to do if they are all on the same physical network."
As a result, Shoolery said, his customers are insisting on keeping open the option of moving the system inside their corporate firewalls.
Microsoft travel products development manager Byron Bishop agreed that most customers that start with service bureaus will eventually pull the technology in-house. "A company installing an intranet owns the system and controls it, and can add other corporate-specific information in a very seamless way," he said. "I expect the majority of customers to move to an intranet, especially at large companies, where the cost can be distributed across many employees. Most Fortune 1000 companies already have an intranet, and a travel system is just another functionality they can make available at very little extra cost."
But Sabre's Sam Gilliland, vice president and general manager for the BTS products, disagreed. With 90 percent of his customers, particularly in the Fortune 1000 group, looking for intranet systems, he expects that "very few will be interested in a permanent on-site." Indeed, he noted, all but one of about 15 companies currently beta testing BTS-including one Fortune 50 company with extensive in-house IS support-have chosen a service-bureau model.
And he does not believe the trend is just a temporary fix until the market matures. "There are two audiences for service bureaus: those that want to connect directly to us and those that want to use a service bureau at their agency," he said. "Either approach is right for a company that wants to minimize its capital and operational costs, and Fortune 50 companies are as interested in doing that as small ones are."
For now, at least, BTS is offering the same pricing structure for its service bureau model as for an on-site system: $4 to $7.50 per PNR, based on volume. TravelNet's pricing is similar: $3.90 to $7.50, plus a surcharge on the first 15,000 transactions. CompuTravel is charging $5 to $7, plus a monthly support fee. Many travel managers expect to offset that cost by negotiating discounts on their agency fees.
Siemborski said that in an unscientific walk-by survey at the annual National Business Travel Association conference this year, 82 percent of travel managers said intranet projects were already under way at their companies. A <I>BTN </I>poll of 200 travel managers released earlier this month came up with almost exactly the same figure: 83 percent said they either have an intranet now or will have one by the end of 1997 (<I>BTN</I>, Nov. 11).
Despite all the excitement surrounding the use of Internet and intranet technologies, Runyan offered a final word of caution. "In all this hype and excitement, it's important not to forget that the important component in a travel booking system is not the interface, but what's behind it.