Prism Group founder and president Michael Whitesage, a pioneer of travel management data consolidation, recently spoke with Business Travel News editor-in-chief David Meyer about the company's Avion global travel data consolidation product for corporate travel buyers and its Sales Server airline contract management tool, now used by nearly all major U.S. and several international carriers.BTN: Is the next big innovation opportunity for you with Avion or with Sales Server?
Michael Whitesage: It really is with both. For Avion, we're working on the growth of the product in government and to assist companies to really consolidate their data for global contracting. On the airline side, the origin and destination approach that we've used for corporate contracting, using the vivid data that we do and the models that we do are really applicable to the whole airline. We're working with airlines today to use our reports and our information not just for corporate but for all airline sales. We believe that we'll be moving into an airline sales management system, not just corporate contracting.
BTN: Is there an opportunity for you with travel management companies?
Whitesage: Yes. The travel management companies haven't approached us with that, but there certainly is. The patented approach has enormous benefits in terms of getting the accuracy of the data models. We would offer that to them, but no one's approached us concerning that.
BTN: Data integrity is most of the game, isn't it?
Whitesage: Travel management companies have been attempting data consolidation. Their efforts have not been to our standard of quality, but they're good enough for most of their corporate customers. Yet for contracting, they're not good enough, so they're still learning a lot in that area.
BTN: With all of the bandwidth needed for management, how much do you actually have left to focus on innovation?
Whitesage: Innovation is always a very high priority for us. It's always an important aspect of what we do, so at any given time, we always have between five and 10 R&D projects afoot. In the management of activity of the company, innovation is always between 25 percent and 30 percent of what we do, regardless of how big we get.
We're doing a lot of research in the use of airline information, so they can use our principles for managing the whole airline. We feel that a lot of the yield-management practices developed in the '80s are obsolete, and there are better approaches. Also, on the Avion side, we're working with data sources to integrate actual stay hotel—it's not going to be booked hotel, it will be stay hotel—so we have the equivalent of lifted data for the hotel coming into the system. We'll have an announcement on that soon.
BTN: Certainly hotels have everybody's attention these days, with the seller's market and escalating room rates.
Whitesage: Absolutely, but our innovations have really transformed the industry. People haven't really recognized that in a lot of ways, but the export of data from the sources that we're working with, consolidating data from multiple agencies, was unheard of until we did that. O&D didn't exist until we introduced it in the '80s, and today what we're doing with contracting has literally transformed the industry. If you look at the work now that's being done by consulting firms, there's a very lucrative new niche that has been created from Prism's introduction of standardized contracting to assist companies and TMCs, and the consulting firms are thriving because of that.
BTN: The hotel area seems like it could be fruitful for you.
Whitesage: It is. It's one of the areas that really begs for good information and a transparent approach, so people can really see what's going on. We believe we'll have that announcement out before the end of the year.
BTN: Is the U.S. the biggest growth opportunity for Avion?
Whitesage: Really, most of our Avion clients are offshore. We have a lot of growth potential in the U.S. and offshore. Avion customers have multiple agencies, they're global and they have highly skilled travel managers who know how to use our data and our analytics to do the contract modeling, rather than going through third-party consultants.
BTN: How many corporate clients do you have for Avion?
Whitesage: About 20. Avion is really the sister product to the Sales Server airline product. The unique thing about Avion is that it integrates five important global travel management functions. The first is the consolidation of global data anywhere. The second is customer relationship management, which is important because travel managers look at a whole range of people both inside and outside the company. Next are the sales and travel management functions, supporting such things as waivers and favors logs and the storage of electronic contracts. Then it does the the contract modeling, a model very similar to what the airlines use, which is what we call a profit-and-loss approach for the contract, and then decision support, which is the automated, totally electronic, reporting capability. Those are also the five components of the airline contracting system.
BTN: Does the Avion system then allow someone with multiple agencies to consolidate their data independently?
Whitesage: Yes. We were the first ever to introduce that into the industry years ago.
BTN: What's the difference between Avion and the original Travel Manager's Workstation reporting system
(BTN, Nov. 25, 1996)?Whitesage: The difference really is profound. If you're in a bidding situation, the airline has its offer. It knows its economics, its operating expenses, its revenue and its fair marketshare requirements. A travel manager has offers from competitors. What they're able to do is model the new proposed deal compared to the current deal and the competitors' deals. They both come to the table with similar, but different models.
BTN: Were there lessons from providing the Travel Manager's Workstation that you were able to build on when you went to create the new tool?
Whitesage: Oh, absolutely. One of the things we were able to build on was our deep understanding of the data and the transaction process. We understood how to get data from the ticketing sources worldwide and put it into a common usable format. Based on that early work and research we did, we were awarded the patent in 1988 for the first origin and destination format. That really became the foundation of what we did. Then we drew on our understanding of working with corporations on their contracting issues. We came to the airlines with a lot of practical know-how of the data and how corporate contracting worked—or at that time didn't work, I should say.
BTN: Would a Prism analytical tool come up with a similar result as an analytical tool another company might provide?
Whitesage: That analytical tool we have today is patented. The patent is based on the marking of each O&D to its contract term and discount. Those contracts were analyzed and our economics are very precise. They're almost perfect because in taking a historical period and comparing the old contract to the new contract, we can see exactly how a new proposal would behave. Unless someone's violating that patent, there would not be any similarity at all.
BTN: As a mathematical formula, there's no subjective element in that, right?
Whitesage: No. It's still artful, though. The issue today is network, network, network. Finding the best network means not only destinations, but also the right carrier mix and schedule mix, so I can have my travelers meet their business mission. A lot of judgment is required in choosing the right partners for that. It's fuzzy and it's artful and it requires a travel manager who knows those processes and the best fit. Once you identify that, then it's a matter of negotiating the optimum contract for that network. While it's not subjective, it requires someone who's very familiar with the subject matter.
BTN: It's finessing which sources to use and how to trust them.
Whitesage: Yes. It's always a tradeoff of different competing sources. There's never a perfect match—it's always the optimum match, which is the best match. That's why the procurement approach, which is basically demanding the lowest price, is clumsy and gives misleading results. You have to really find that best match between business mission and contract. That's more complex today, as contracts are joint or alliance deals. Most contracts today include more than one carrier. To analyze that, you need automation and you need someone with know-how.
BTN: How important is travel buyer knowledge of the company you're working with?
Whitesage: Travel buyers are critical because they understand the product and the network. We've heard of instances where companies attempted to bring airlines into a bidding situation and demand discounts and the airlines just walked away. It requires someone who knows the carriers, the options and the optimum contracting methods to do that. It's something that just can't be done with a straight commodity-bid approach.
BTN: At this point, the Sales Server tool has practically universal domestic adoption, and you've made huge inroads in the international air carrier market.
Whitesage: We've got a good share of the market—I'd say 80 percent of the carriers in North America—and we have the largest carriers using this system abroad. It's quickening as they move into corporate contracting. One inhibitor is the use of net fares. As they adopt percentage-off fares and share market requirements, they'll find the application more useful.
BTN: Is data any cleaner today than it was before you developed this tool?
Whitesage: No, the source data is actually the same. The sources have different qualities of data with error rates that go from 10 percent to 30 percent in segment data. There are two rows of data that we collect, the ticket data and the segment data. The ticket data are used for settlement. The segments are really ancillary to those processes and are very unreliable, so we have to go in and clean those processes up. Today, we're taking data from over 150 data sources worldwide, which is amazing when you think about it. Those are cleaned up, normalized, error-corrected and put into a common format. Based on our algorithms, we can make the data highly reliable.
BTN: Does the degree of reliability improve over time, or have you brought it to a certain point and that's where it is?
Whitesage: We've got it to a certain point. The data now have less than one error in 4,000 records, as opposed to having about 30 errors in 100 records.
BTN: The raw data has 30 errors per 100 records?
Whitesage: That's correct, and that depends what ticketing source it's coming from and how bad it may be. Ticketing sources, for example, coming out of South America or Eastern Europe are missing key elements, like International Air Transport Association number or arrival/departure time. We have processes that enable us to write in the correct IATA number and the right arrival/departure time for those segments. We really are dedicated to cleaning up those data. Our airline customers and corporate customers value the reliability of their data.
BTN: Do data streams in the United States have the same level of integrity as elsewhere?
Whitesage: The U.S. streams actually have the highest level. That work was done in the late '80s and '90s, when Prism was working with those data sources to have high-quality segment data. We've opened up segment data throughout the world, and all the consolidators and agencies today are benefiting from those sources that we've opened up. When you evaluate the sources around the world, there's different quality.
By opening up the sources, I mean going to the ticketing source and working with it to export the tickets in segments to create a data export. Those exports have different data elements that are there, missing or inaccurate. We can look at different regions and see how well they're performing. As recently as three years ago, Europe had better data than Asia, but in working with our Asian sources they've improved their data and it's actually better than our European data today.
BTN: When did that happen?
Whitesage: In the past 18 months, they've bypassed the quality of the European data. They've included missing data, like ARC number, arrival/departure time and segment amount. It's an ongoing mission that Prism has to continue working with the data sources to improve their exports. We literally have a team of five people that ranks and works with the sources to help them improve their data exports.
BTN: Who are sources beyond airlines?
Whitesage: Beyond the airlines, it may be a credit card, a proprietary agency system or an agency system sold by a supplier. Within that mix, we have many sources that we work with. The sources are from Australia and Northern Europe, Asia and South America. It is an ongoing mission, getting those data out.
BTN: Are the airlines better than some of the agency sources when it comes to the integrity of the data?
Whitesage: The airlines have good data, and we're the only source that has the direct airline booking data. We have to work with them to normalize those data as well, but they are better than other data because, of course, those are ticketed data. They are the final authority.
BTN: I imagine that the more errors, the more costly it is to cleanse the data.
Whitesage: That's right. It's costly to us in the time that we have to clean up the data. In any typical night, we're loading thousands of files. On average, 23 percent of those files fail to load because of errors. They may be bad transmissions. They may be due to errors in the data themselves that we have to research, or an agency may be sending January twice. We have to spot that, and we have people who call up, find out what the errors are and correct them.
BTN: You can automate some of that, but a lot are judgment calls, right?
Whitesage: We identify the problems through automation, but the fixes require hands-on work. It's either a call to the agency to say that you've sent your January data twice or to find out if they've changed their data format.
BTN: Are travel buyers involved in some of that quality-control process?
Whitesage: No. We really make that transparent to them. They don't really have to experience that at all anymore. There are so many data sources that are open today that they seldom have to get involved in asking for their data.