Carole Walls
Carole:
1. How Important Was AXI
Travel To American Express?
AXI
addresses a critical need among corporations to maintain control of their
travel expenses. Unlike consumer travel
websites, the American Express system incorporates company-negotiated rates,
preferred supplier prompts and the ability to track business travel information
-- all key ingredients to effective corporaate travel management.
AXI
has been designed as an "industrial strength" system with the travel
policy controls built in, allowing companies to maximize their savings while
enabling business travelers to make reservations from their laptops or desktop
PCs. AXI offers the traveler direct
access to fares and availability and provides a wealth of hotel and destination
content. It features a unique low-fare
search tool, based on American Express’ proprietary software, which
automatically compares published fares to negotiated fares in real time to
ensure that the traveler is offered the best deal.
Marcus:
Further,
since AXI is a component within American Express’ travel management platform,
called RoundTripsm Services; it integrates with other proprietary technology
products offered by the company. These
include online solutions for electronic ticketing, information management and
automated expense reporting (Expense Manager). And, because AXI has been developed with
Microsoft server and desktop software, it integrates easily with a company’s
technology infrastructure.
"This product
initiates a new era in business travel management," said Ed Gilligan,
president, American Express Corporate Services. "The online revolution has arrived, and
we want to help corporations capitalize on technology that will deliver cost
savings and traveler convenience. We are
extremely proud of this joint development effort, which will pay off for our
clients."
American
Express Travel alone sells as many as 12 million airline tickets a year. It is estimated that the company booked $60
billion worth of corporate travel in 1996. The company expects 30 percent of these
bookings to be made over the Internet by the year 2000.[1]
For
the world's largest pharmaceutical company, AXI could translate into millions
of dollars in savings over time. Novartis spends $65 million annually just in
Besides
savings in processing costs of as much as $50 a ticket, Novartis' 4,000
frequent flyers will have real-time access to the latest discounted and
negotiated airfares and hotels. A highly
customized AXI system outfitted with the company's travel policies and
negotiated fares provides access to all the major airlines' computer
reservation systems and car rentals.
"Savings
is not the only benefit. People adhere
to the company policies better and there is huge savings in time because
[forthcoming] travel templates will bring up for users their frequent flyer
choices in airlines, hotels and car rentals at the best prices," said Paul
Tomaszeski, executive director of administration at Novartis.[2]
Carole:
How has the business model for AXI Travel and the
follow-on AXI Interactive online service offering evolved over time?
The
AXI system, which was developed by American Express and Microsoft, uses a
Windows NT server and SQL server with proprietary software. The system is customized for each company to
reflect its policies and procedures.
To
make AXI more attractive, American Express has linked it with its Expense
Manager software so that a travel itinerary will automatically start the
expense reporting system. All corporate
charges, including approval, auditing and reporting, are automated. An Internet version of the Expense Manager
will be available next year. A Java
version of AXI will be rolled out early next year.
There
is more in store for AXI users beyond electronic booking. According to Andrew Bartels, vice president of
encrypted payments at American Express, AXI users will, at an unspecified
future time, be able to simply use smart cards that contain ticketing
information instead of tickets at airline check-in. "All this allows us to follow our
customers as they move from phone or paper-based customer support or
transactions to the use of the Internet to handle their travel activities, all
the way to the use of smart cards," Bartels said.
David
Mason, principal at Northeast consulting Research, said that agencies like
American Express must go online to compete with airlines and computer
reservation systems that increasingly want to deal directly with customers.
Marcus:
Chrysler,
Novartis and many others are taking part in one of the fastest growing segments
for online commerce. With managed online
travel expected to grow as high as $10 billion by the year 2002, according to
industry estimates, the sky is the limit considering that U.S. businesses
currently spend about $156 billion on travel, lodging and entertainment.
American
Express Travel alone sells as many as 12 million airline tickets a year. It is estimated that the company booked $60
billion worth of corporate travel in 1996. The company expects 30 percent of these
bookings to be made over the Internet by the year 2000.
The
managed travel industry, however, represents only a subset of the unmanaged
travel market, which includes leisure travelers and business travelers who do
their own bookings. Jupiter
Communications Ltd. estimates that by 2002, the unmanaged segment will match
the corporate users with $8.7 billion in revenue.
Marcus:
2. Evaluate the actions taken
to implement AXI Travel. How successful
was the company in building, launching, and then integrating AXI Travel within
the company’s traditional business?
The
time taken to develop and tailor AXI Travel tied in well with the time needed
by the corporate to form their strategy towards implementing AXI. Amex’s initiative started to pay dividends at
this point with the signing up of new corporate customers. In January 1998 Amex had also taken steps to
integrate XMS/AX, a Concur Technologies product with Amex travel itinerary and
corporate card data enhancements, with AXI Travel. Beta testing of the fully integrated XMS/AX
& AXI Travel combination started in July 1998.
Carole:
By
mid 1999 Amex continued to maintain business relationships with 70% of the
Fortune 500 companies and thousands of small to medium sized companies. CSI had installed 240 customized variations of
AXI Travel servicing over 358,000 users. This included some mid-sized companies turning
over less than $10 million in air volume per year. A separate division, American Express One,
offers a full travel service to small businesses and mid-sized corporates to
whom it also markets AXI Travel. AXI Travel
achieved this uptake by meeting the needs of several customer groups including
corporate business executives, corporate travel managers, corporate travelers,
and information officers and travel suppliers. Winning the support of corporate travel
managers and corporate travelers were critical success factors. Corporate travel managers held sway over
whether to take on the system while corporate travelers would ultimately
determine whether AXI Travel saved companies money.
Carole:
What
challenges did the AXI Travel team face?
Building
a new e-business structures outside company boundaries and integrates within
the established business. What business
design needed and the how the technology would work. The AXI Travel teams were
made up of senior managers in marketing, business development, and product
management. Office logistics and
spinning off from corporate, Defining
goals, implementation of new online services and keeping the old system while
building a new system.
Marcus:
What
challenges did the CSI team face?
( Corporate Services Interactive
(CSI), a division of Corporate Services, focused on developing new ventures
that leveraged the internet and related technologies and had five main service
offerings in late 1999: )
Many
of the travel offices were owned by AXI, others were operated by independent
affiliates. It was a difficult task to
emerge both parties into using e-commerce, especially suing the same system. The CSI department tried to sell the product
to the IT department rather than to the endures. By giving the policies to corporate traveler
managers, the CSI team was able to redesign internal processes and stimulate
the adoption.
Amex
went out from the very beginning to build in the necessary flexibility for each
of those customer groups. This included
satisfying corporate travel managers, who initially saw AXI Travel as a threat,
by designing AXI to integrate seamlessly with their operations. For example travel managers could implement
travel policy by directly entering negotiated fares, preferred suppliers and
selected information links. At the same
time AXI Travel helped corporate travelers, who had always opted for the most
convenient flight times over the phone, to adjust their time of travel
according to significant savings clearly seen on-screen. This has enabled travelers to reduce their
travel expenditure by an average of 20%. On top of those savings companies were also
finding they could reduce their administrative costs because Amex could lower
the transaction fees well below those incurred through telephone bookings.
However getting corporate
travelers to use AXI Travel turned out to be the most significant challenge. Amex found business travel agencies gave their
clients high levels of service. Consequently the motivations for travelers to
use interactive technologies were relatively low. There were two reasons for this. Firstly
corporate travelers tended to ask their assistant to call up the travel office,
which normally responded within 20 seconds, and secondly corporate travelers usually
had a strong relationship with an individual agent.
CSI
team had to quantify the benefits to the business travelers such as seat
assignments, on time flights, hotels including Expedia. In response to this Amex focussed on creating
traveler benefits unique to AXI Travel. Value adding features added included a seat
planner, travel directions, a regular traveler template, visa and passport
planning tools and customer profiling. Customized
seat maps made the greatest impact recall Siemborski.
For the first time corporate travelers felt they were personally benefiting
from AXI Travel in a way they couldn’t usually do booking over the phone.
Carole:
Further
more travelers found they could create their own profile including frequent
flyer numbers, elite statuses, meal preferences, seat preferences and so on. AXI Travel could not only get them the lowest
rate through their company’s preferred supplier but it could then automatically
go to their personal preferences file and optimize the reservation accordingly.
The regular traveler template also
helped to reduce time taken organizing regular business trips. All the individual had to do was bring up the
appropriate stored trip changes, the dates and book it. Those innovations created a sea change in the
way corporate travelers booked travel. AXI
Travel experienced a month on month doubling of ticket sales during the first
half of 1999.
3. Evaluated CSI’s role and actions to date as new business incubator
with American Express. What role, if
any, should CSI play in the future?
Corporate
Services Interactive (CSI) division devoted to establishing Amex as a leader in
corporate travel e-commerce. Rich Siemborski (Vice President of Product Development) joined
CSI to become the architect behind Amex’s interactive strategy after previously
heading up product development efforts on ‘Expense Manager’ and ‘T & E
Mail’ precursors to the Internet strategy. In that same year Amex went on to take the
first official Internet booking, in the consumer travel arena, through Express
Net.
AXI
Travel achieved this uptake by meeting the needs of several customer groups
including corporate business executives, corporate Travel managers, corporate travelers,
information officers and travel suppliers. Winning the support of corporate travel
managers and corporate travelers were critical success factors. Corporate travel managers held sway over
whether to take on the system while corporate travelers would ultimately determine
whether AXI Travel saved companies money.
Marcus:
With
just a click from the main gateway page, busy travelers can retrieve weather
forecasts and information on airport delays, get help with passport and visa
requirements and processing, and look up maps and driving directions for their
destinations. If they're ready for a
vacation, they can even book tickets and special value packages from American
Express Corporate Vacations.
The
new content is provided in secure, dedicated websites by leading Internet
content providers, linked to the gateway page for AXI Travel.
Carole:
4. What Advice would you have
given American Express Senior management in summer 2000?
The
company also decided to make its online service another channel of the American
Express Travel Related Services, rather than a stand-alone business. "We achieved integration with the
front-end technology, but deposited the finished reservation in the worldwide
computer reservation systems, which is the same mainframe legacy system travel
agents use," Siemborski says. That way, travel agents could find online
reservations in the central system and tie the information into telephone
queries. "For most companies,
adding an interactive service is an evolutionary process. They don't switch to online all at once."
Siemborski didn't just guess at what would constitute an easy-to-use interface. American Express asked 190 of its business
customers, which became its Client Advisory Group, to take part in the
development. It began its alpha test
with four customers in mid-1997, and the beta test with 20 companies followed a
few months later.
To
make AXI more attractive, American Express has linked it with its Expense
Manager software so that a travel itinerary will automatically start the
expense reporting system. All corporate
charges, including approval, auditing and reporting, are automated. An Internet version of the Expense Manager
will be available next year. A Java
version of AXI will be rolled out early next year.
There is more in store for AXI users beyond electronic booking. According to Andrew Bartels, vice president of
encrypted payments at American Express, AXI users will, at an unspecified
future time, be able to simply use smart cards that contain ticketing
information instead of tickets at airline check-in. "All this allows us to follow our
customers as they move from phone or paper-based customer support or
transactions to the use of the Internet to handle their travel activities, all
the way to the use of smart cards," Bartels said.
Question to Class:
5. Has your firm (or one that
you have worked with in the past) attempted the launch of an Internet
business? If so, what business model
did you choose, what approach (or approaches) to implementation did you use,
and how successful have you been?