One-on-One: Carlson Prez Takes Stock Of Americas

<I>Orlando</I> - As the new president of Carlson Wagonlit Travel Americas, Doug Ziemer has his pulse on corporations' travel management needs and how the company's Project Magellan reengineering endeavor will meet them. Ziemer was promoted to the post earlier this year as Travis Tanner became president and CEO of Carlson Wagonlit Travel's worldwide operations. BTN executive editor Mary Ann McNulty recently spoke with Ziemer about industry trends, how Carlson has changed since his last tenure there in the 1980s and his strategy for the future.

BTN: What is the level of demand for end-to-end products?

Doug Ziemer: It's increasing as customers' level of expertise or their exposure to the availability and concept of end-to-end solutions grows. Customers are willing to take different pieces of software and put them together. That's exactly why we're staying the course and doing what we're doing.

For one client, General Electric, we're doing it all, from travel through expense reporting. Our employees recently took over expense report processing previously handled by more than 100 GE employees. Is that something we want to get into with others? We'll know in about a year. We don't necessarily have to build the optic scanners and digital scanners that we're using. We have been convinced by GE that we can handle processing better than they can in that situation. When it's end to end on travel, we can do it better, and GE can do a lot of other things better than we can.

BTN: When will demand increase?

Ziemer: As we become more proficient in coming onto the market, people will become more proficient in using it. There's a big gap now for companies to understand and evaluate products. Companies have to do some work and get ready to plug our system into their systems. Their knowledge and technical trust in security is getting stronger and it's going to ramp up very quickly.

BTN: How has Project Magellan affected your technology development?

Ziemer: In the technology arena, you have the mindware-software-and hardware. What we're becoming very, very good at is the mindware. We have now become a software provider, which is a bit unusual for a travel company. The hardware part you can get anywhere.

Dick Smith has done me a favor by coming to Carlson as chief technology officer. It makes all the difference in the world to have this mindware of Dick and others he's brought in. We have intellectual capacity on the technology side that we've never had at Carlson.

The thing that Magellan has done for us is give us intellectual capital. We have as much knowledge about the travel industry as Booz Allen and Andersen Consulting. In fact, I think in most cases we're head and shoulders above them. Once you get to that point when you're as good as they are in our core competency, why not sell that intellectual capital to our customers? We haven't met much resistance from customers. They're expecting us to come up with this concept on how to manage travel, research it and come up with the best solutions. In the past, we did that for free. No more.

BTN: How much attention are clients paying to corporate intranets?

Ziemer: There's a good amount among companies that have the infrastructure and foundation. I think every company could have it if they had the facilitation to do it. We're intranet now; it's a trend you just can't stop. You really shouldn't have to go to the finance department to ask for this because you have to do it to stay in business today.

BTN: Will net fares be negotiated this year net of CRS and credit card fees?

Ziemer: You have to create value for all three; then the formula really doesn't matter-if it's net, net-net or whatever, as long as it creates value for the customer, airline and for us. The airlines are more open than ever before, and they have been for the past year, to sit down and talk about any types of arrangements that we've heard of as a result of listening to our customers.

BTN: What is Carlson going to be doing in regard to bulk buying of inventory?

Ziemer: We have initiatives to do bulk buying and we're talking to people. When it makes sense for the airline and for the customer, we'll be doing those things in 1997.

BTN: What about bulk buying of hotel rooms?

Ziemer: Hotels are having a good time. They're still talking to us and giving us good rates. Again, I'm thinking of half a dozen clients I deal with on a regular basis and they know they'll do 30,000 room nights in a given location. If they have a shortage of rooms in that location, we're talking.

BTN: Tell us about some of the tests going on in Dallas to improve the travel process.

Ziemer: We're not only talking with current customers but selling it to prospects too. We've gone out and sold the new Magellan way and we're converting some existing clients. The process is from A to Z-from workflow to management of employees to technology changes. The next big change is when we lay in the new front-end system in Dallas and other areas.

BTN: Have you been able to lower the transaction costs?

Ziemer: We'll start enjoying that in 1997 with those clients that are part of Magellan. As we see improvements, our clients will also.

BTN: What else did you tell the 760 employees during your business meeting?

Ziemer: We had a great 1996, and we met our expectations. Eighty-three percent of our clients are on some type of management or transaction fee, and we're moving the others on. The government is included in the 17 percent that's not on a fee basis, and that's a five-year contract.

When I walked up to the podium, I had this message in mind: We have to be the best in our business and build a business confidence that is superior to anybody else in the industry. Business confidence means that customers have confidence in us and we have confidence in how we handle the business. Over the last several years, as people see the commitments we've made in 1995 and 1996, they're building confidence.

BTN: What big changes do you expect in the travel industry this year?

Ziemer: A few companies are going to make significant strides in being able to identify with the customer's definition of service. We'll be one of those companies because of all the work we've done in the last two years. 1998 will be the year of really big change as all this ramps up later this year. I'm not saying there won't be change in 1997. Of course you'll have consolidation, some other competitors coming into the marketplace that you wouldn't have thought of a couple of days ago. They'll want a piece of the volume out there.