TQ3 Tackles Globalization, Tech

<B>TQ3 Tackles Globalization, Tech</B>

By Amon Cohen

<I>Hanover, Germany - </I>The management of TQ3 Travel Management's sister travel technology company, InfoTec, occupies the same floor of the same building as the chairman of parent group Preussag. It is no coincidence that they command such prestigious proximity to their boss. As a group that once majored in heavy industries, but now has switched to travel and tourism, Preussag believes it is, to some extent, "industrializing" the travel business, and the perceived route to this ambition lies through the application of technology and process management.

InfoTec serves the technology needs of all Preussag companies. With 330 staff--of whom 50 are dedicated to TQ3, although others can be used when their specialist skills are required--InfoTec claims to take a wider view on technology than other travel IT companies. For instance, InfoTec is a fully certified SAP enterprise system implementation partner, and has implemented SAP's human resources module, as well as its travel module, for DaimlerChrysler.

InfoTec also is partnering with a second German online travel vendor, Siemens' in-house booking system TravelNet, which the technology giant now is marketing to third parties. Other projects InfoTec is working on include building an alternative distribution channel to the global distribution systems, developing common back-office systems for TQ3 members and establishing data warehouses to provide management information for corporate clients.

At present, there are four TQ3 clients in Europe using SAP implemented by InfoTec. SAP has been favored above U.S. rivals for two main reasons. The first is that U.S. systems are perceived to be too parochial, especially in non-Anglophone countries. In particular, German clients want a system better equipped to handle rail. The second reason is that SAP provides a better fit with InfoTec's vision of holistic integration between a client's travel systems and its other business processes.

So believes Ingo Brandes, director of InfoTec's IT competence center travel agency division and also chief information officer for TQ3 Europe, Middle East and Africa. "If you simply introduce a URL for online booking, you will fail," said Brandes. "You have to implement policy. You have to implement customer organization." He makes no bones about it being a lengthy, and therefore costly, process. InfoTec had an employee onsite with DaimlerChrysler for half a year while implementing SAP and he estimated the average implementation duration to be six to 12 months.

Nevertheless, Brandes said the investment is worthwhile for the extra benefits SAP can produce. "SAP gives a chance to integrate data," he said. "For instance, project managers can relate travel costs into their profit and loss accounting at the end of their projects and evaluate whether the travel helped the customer or not. I see SAP as a very special product. Other booking systems are starting alone in the process. They are not connected to the internal systems of the company. The companies developing booking engines are only looking at the engines, not the processes of the client."

Brandes believes this line of thinking can be taken still further. "There is a new generation to come," he said. "SAP comes close but, even there, the travel agent is not integrated into the system. TQ3 is working on a totally integrated process with customers. We see it differently because we work in an industrial environment here."

Where exactly this thinking will lead, if at all, is not yet clear and, to some extent, Brandes and his team acknowledged they are ahead of their market, given that online booking systems of even the most rudimentary kind remain a rarity in Europe. However, it is clear that one plank of strategy will be to establish direct booking connections for clients as TQ3 seeks to disintermediate GDSs.

"Our long-term strategy is to be GDS-independent," said Brandes. "On the leisure side, we have our own hotels and airlines, so we already are used to distributing inventory. We have been thinking about how we can bring this technology to business travel. You won't get rid of all GDS functionality, partly because, at the moment, we are selling the inventory of third parties. If that changes and we start selling our own product--TQ3 is considering launching its own airline (see story, page 1)--we are technically prepared for it."

Brandes pointed out that the hegemony of GDSs is on the wane in any case. Scheduled carriers have an increasing number of special fares that they distribute through other means, such as their own Web sites; low-cost carriers do not distribute through GDSs at all. InfoTec and TQ3 Germany a year ago took their first steps into GDS bypass, with an online distribution channel for car rental. A similar system is being prepared to distribute 50,000 hotels using such aggregators as Pegasus Systems. Airlines, given the vast complexity of fares and schedules, will be a tougher nut to crack, but, apart from starting an in-house carrier, Brandes thinks another solution will lie in the strengthening of airline alliances.

"If they made up their minds to go to one shared global distribution system, it could be the chance for us to aggregate and do the same," he said. Brandes wants to bypass GDSs partly because he hopes it will drive down costs but also because he believes it will allow greater flexibility to deal with clients' individual needs. "GDSs are there to normalize content, but this would allow suppliers to offer prices they might not wish to distribute through an open channel," he said.

While trying to makes sense of the future, InfoTec also is grappling with the more pressing logistics of integrating the technology of TQ3 partners. Brandes said that will be made easier next year, when 11 European countries give up their national currencies and trade solely in euros. As well as coordinating back-office systems, InfoTec is setting up one data warehouse in each of its three global regions--the Americas, Europe and Asia/Pacific.

"In the United States, it is done," Brandes said. "In Europe, some partners are transferring data each day, some each month. Some multinational TQ3 clients already are receiving integrated data online and can build cubes or drill down to individual invoices.