Some Smaller TMCs Turn To Internal Tech Development

Providers of automation to travel management companies tend to be among the most respected firms in the industry, but they are not always a TMC's best option for enabling services with the latest technology. Even as such third-party providers as Aqua, Cornerstone, Hi-Mark, Trondent and TRX offer service bureau or application service provider models that limit initial investments in favor of a pay-as-you-go approach, some small and midsize agencies have made substantial investments in their own development of such services as data consolidation and reporting.

Woburn, Mass.-based Travizon, which claimed "a recorded travel volume of $452 million," earlier this year launched its Global Data Converter to consolidate information from any of a client's worldwide agencies or card vendors, with converted currencies, and post it on Travizon's Web site or the client's travel portal.

"We did the programming ourselves," said Travizon vice president of strategic solutions Lehi Mills in a March interview. He said Travizon was generating data from 15 countries. "Our customers' technical needs have skyrocketed, so that they are no longer content with a quarterly or annual report from the agency. The level of complexity has increased for smaller accounts as well."

A former Hi-Mark employee, Mills said Travizon used Microsoft's .Net Web services platform, which he called a "rapid application development system" that allows companies to do the work of high-tech developers without them. Internal development is advantageous because it allows agencies to control the costs of customization, Mills said. "We're driven by customer requests for technology," he said. "If there's something we can't develop ourselves, like an online booking tool or back-office accounting system, we'll go elsewhere."

Other midsize agency leaders echoed the same. "It's something about having control of the data and having the information right there at our fingertips," said Milford, Mass.-based Atlas Travel president Elaine Osgood. "The service bureau model has allowed smaller agencies to be able to take advantage of economies of scale, but we don't take part in too many of those. I'm fortunate to have an incredible IT staff so we can do our own development and host our own site and keep the data in house. We can maintain control and turn on a dime."

According to World Travel president Jim Wells, the service bureau or ASP model, also referred to as "hosted," has its limits. "It may help some organizations, but we find that type of model ends up being more costly. For most of our programs we have acquired the license." World Travel sold nearly $180 million in net air volume through ARC in 2003.

Licensing is on the way out at third-party provider Trondent Development Corp. "During the past five years, we've seen a changing dynamic on service bureau versus license models," Trondent COO Lana Parro said. "If it's a license, you're a slave to whatever type of equipment your account has, so we got into situations where the hardware couldn't handle the latest software. So in trying to support clients, we could work with one where it's a breeze because they have the technical expertise and then another where you have to tell them where the A drive is. So the way we feel is, not only can we give better cutting-edge features with a service bureau, but really it's much easier for the account as well."

Where they have stopped short of hiring their own programmers, some tech-savvy agencies enjoy a fair amount of clout with third-party providers, particularly as they earn the kudos of being a sophisticated user. Yet, that may not outweigh the benefits of having the foresight to properly invest in the right places. "I think it's difficult for any organization that hasn't recognized the need for the investment in technology to catch up in today's marketplace," Wells said. "You probably need to have been on that curve eight years ago."

Others said it's not too late. "Technology in real dollars seems to be cheaper, but there can be barriers to entry," said Allan Huntley, CEO of Peabody, Mass.-based Abacus Travel, which booked nearly $25 million in net 2003 ARC sales. "For $25,000, a small agency can be competitive enough."