Suppliers Team Up To Serve Small Companies In Italy

<I>Treviso, Italy</I> - Several business travel suppliers in Italy have joined forces to meet the technological and negotiating needs of small and midsize businesses, which make up the backbone of the Italian economy.

A software provider, Europa 2000, is developing an automated end-to-end travel management system specifically for small firms. And its sister company, an agency called Montello Tour, has formed a consortium with two others to pool the spending power of their clients for single negotiations with suppliers.

These moves are particularly surprising in a country that has been relatively primitive in the travel management area. That's largely due to the fact that Italy has few large companies with multimillion-dollar travel budgets. Instead, businesses, often family-run, have only one or two employees who might travel, making it difficult to manage a negotiated spend.

Europa 2000's automated system is thus a high-solution for what is generally a low-tech country. It will encompass back-office accounting, management information and expense reporting. Several companies, including sports shoe manufacturer Lotto and motorcycle maker Aprilia--both clients of Montello Tour--and department store chain Coin already are using the system's online PC booking facility, which gives direct access to Sabre.

The consortium, called The Millenium Team--with a combined client spend of close to $100 million--is a joint venture of Montello Tour and two other agencies: BOPA of Milan and Da Verrazzano of Florence. The team is about to launch an intranet that will allow communication of data among the three agencies and between each agency and its clients for the purpose of group negotiating. The intranet will initially be connected to nine of the team's clients.

Montello Tour president Vittorio Guillon Mangilli has led development of both Europa 2000 and The Millenium Team. He is pulling together Europa's end-to-end system by securing exclusive national licenses from foreign software manufacturers, principally in the United States, and customizing them for the Italian market.

The online booking system is a version of Travelogix Online, based in Austin, Texas. Mangilli has translated it into Italian and modified it to the needs of his clients. "Our priority is to adapt large products for large companies in the U.S. to make them useful for smaller companies in Italy,'' he said.

The software is working well. "Before we had this, our secretaries were spending two to three hours per day phoning the travel agent and changing and rechanging flights,'' said Christina Rugolo, secretary to the strategic alliances and merchandising director of Coin. "Now it is much easier to see which flights are available, and instead of having three or four secretaries working on travel arrangements, we can release one or two of them for other duties.''

Coin, which has a satellite ticket printer on the premises, has been using the system for about a year and had no problem training staff to use it. "If you already know how to use Windows, it is easy,'' Rugolo said.

A back-office accounting system, built by Europa 2000 and called Advance Travel System, is already in place. It helps process payments in a way that meets all of Italy's idiosyncratic accounting regulations.

Also in the back office is Corporate Travel Manager, a management information system produced in a joint venture with Danish software company Business Travel Consult. That company also has produced an automated travel solution for the Lego Group (See related story).

Europa 2000 has yet to add an expense management system. It is looking to buy an existing package and produce a lighter version for the Italian market. Mangilli also expects to sign a license this month with Travel Technologies Group for its quality and productivity software.

Once the entire system is installed, the flow of information will be seamless, Mangilli claimed. For instance, flights reserved on Travelogix will automatically pre-populate the traveler's expense report.

Mangilli also is aiming to establish a seamless flow of information on the Millenium Team's intranet, with data kept confidential by a series of firewalls. The largest firewall will protect the entire intranet from the outside world; the agencies will be able to hide booking information from each other, and no client will be able to access any other client's files.

There also will be flexibility as to how the information will be presented. Each client will have the same browser, but it will be compatible with Lotus Notes, Microsoft Office or any other desktop manager.

Mangilli said that buying into the Millenium Team and the Europa 2000 system will bring huge savings for clients. "We are telling corporate clients that by adopting this solution, they will save 10 to 30 percent on their travel expenses,'' he said.

All of the three agencies' clients will receive the same discount, regardless of their travel budget. Is this unfair to some of the larger clients, such as Gucci, former prime minister Silvio Berlusconi's Finninvest and Andersen Consulting, which could argue that because they provide much of the spending leverage, they should receive a greater share of the rewards? Not so, said Mangilli, who claimed that even Benetton, one of his largest clients, accounts for only 3 percent of the group spend and that therefore everyone should benefit equally.

For the moment, remuneration to the agency is based on old-fashioned commissions. However, Mangilli does expect a gradual evolution toward consultancy fees, perhaps on an hourly basis, as travel management matures in Italy.

"Italians are only now beginning to understand that they can control travel costs,'' Mangilli said. "Italy is two to three years behind the more advanced parts of Europe.''

As The Millenium Team looks to add agency partners in Milan and Turin, there are other signs of evolution in the Italian travel market. Several low-cost airlines have commenced operations in the past year, principally on domestic routes; national flag carrier Alitalia responded by dropping its fares drastically. Furthermore, IRI, Alitalia's parent group, is scheduled to be privatized in the third quarter of this year. Many observers believe that the entire Italian travel industry has been fossilized by Alitalia's inertia. Perhaps these changes will be the catalyst for the Italian travel management revolution.