Optimization Potential for Business Travel Agencies

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1 2001 B U S I N E S S T R A V E L U P D A T E e F U L F I L L M E N T Optimization Potential for Business Travel Agencies

2 efulfillment TABLE OF CONTENTS Introduction 03 Management Summary05 Situation Analysis and Goals 06 Procedural Model of the Study07 Comparison of Conventional and cytric-based Booking Procedures 09 Comparison of Conventional and cytric-based Booking Procedures for Domestic Airline Bookings (Germany) 09 Comparison of cytric-based Airline Booking Procedures for (German) Domestic and European Bookings 10 Approaches to Optimizing efulfillment Procedures in Travel Agencies 11 Benefits for the Travel Agency when using efulfillment 13 Advantages of cytric 14 Results 15

3 I BUSINESS TRAVEL UPDATE 2001 efulfillment TABLE OF CONTENTS INTRODUCTION HELLO! We are i:fao, the market leader for business travel efulfillment solutions. With our software, we are the market leader in business travel eprocurement and efulfillment. cytric and quixdata are our best-of-class products, which provide our customers all around the world with significant cost savings when purchasing and booking business trips. Our software is well-established in the market among leading travel agencies specializing in business trips. With the series Business Travel Update, i:fao is selecting current topics, presenting you with extensively-researched reports, and thus providing you with guidelines and making an active contribution to innovative market development. The results are clear: Business travel efulfillment leads to considerable savings that no travel agency specializing in business travel can afford to overlook. In this brochure we have summarized for you the most important statements drawn from this extensive investigation. You can obtain further information about business travel efulfillment or the study by Dr. Fried & Partner directly from i:fao Aktiengesellschaft. Sincerely yours, Ludger Bals Director Business Solutions While the emphasis of the first edition was on company processes and potential savings, this second edition will focus on optimization potential that can be exploited through deployment of cytric in travel agencies. i:fao commissioned a representative study by the management-consulting firm Dr. Fried & Partner to analyze the potential for efulfillment in travel agencies. In the study, Dr. Fried & Partner compared conventional booking methods with modern, cytric-based efulfillment procedures in a practical context. I INTERNET TRAVEL SOLUTIONS 2 3

5 I BUSINESS TRAVEL UPDATE 2001 efulfillment MANAGEMENT SUMMARY MANAGEMENT SUMMARY What advantages and effects does the deployment of Internet-based booking systems have on costs and procedures in a travel agency specializing in business travel? Since the deployment of business travel eprocurement software (cytric) in a company has already produced significant strategic competitive advantages, then that company s vendors and partners can achieve even more significant savings in their downstream processes. efulfillment refers to the processing steps that a travel agency must take when a customer makes a booking using an Internet booking engine. i:fao Aktiengesellschaft commissioned Dr. Fried & Partner to carry out a practically-oriented study on this topic. Here are the most important findings based on observation and analysis of 460 processes in more than 30 customer firms: _ With the deployment of efulfillment software, processing costs can be reduced by 60%. _ The travel agency is relieved of the significant burden of performing unprofitable tasks, such as providing schedule information and booking standard trips. _ Travel agency employees have more time for complex tasks and intensive customer service activities that reflect their training and knowhow. _ In travel agencies, freeing time restraints of the booking process means employees can be deployed a lot more flexibly. _ efulfillment increases the amount of information that the customer has available at the point of decision. This significantly reduces the number of simple inquiries at the travel agency and sharply reduces telecommunication costs (telephone and fax) in the total process. _ Customer policies are taken into account automatically with efulfillment, thus avoiding time-consuming communication regarding travel policy (eprocurement). _ The travel agency gains a powerful instrument for customer consolidation and service. _ There is a high cross selling potential for previously unprofitable products such as hotel and rental car bookings. _ With efulfillment, travel agencies can make their services available 24 hours a day. These results directly reflect the reality in travel agencies today. These are, after all, not theoretical or contrived examples, but procedures that occur every day. Travel agency employees can better focus their attention on products, helping the customer and improve travel agency profitability. Project management and detailed planning can provide positive support for implementation and secure the rapid exploitation of existing potential. This study is a qualified and well-founded contribution to efficient sales of standard travel services. No travel agencies that specialize in business travel can afford to overlook these advantages. I INTERNET TRAVEL SOLUTIONS 4 5

6 SITUATION ANALYSIS AND GOALS The industry is booming! Thanks to market globalization, travel volume is constantly increasing. Each month, trade journals publish up to thirty pages of advertisements seeking qualified employees for business travel agencies. However, the market is subject to agressive changes. New reward models and new market participants demand innovation in travel agencies specializing in business travel. Increasing cost pressure on customer companies demands that they question processes and organize themselves as effectively and efficiently as possible. The premise of the study is: The majority of business trips can be classified as simple and recurring and they are therefore well-suited for technological support. Substantial optimization potential lies in booking standard trips through Internet technology. Using a practically-oriented approach, the study investigates the work of travel agencies using Internet-based booking systems and identifies the following optimization potential: Travel agencies throughout Germany were involved in this study FIRST Travel Management, Munich Hapag-Lloyd Communication Center, Hamburg DER Geschäftsreiseservice, Bergen- Enkheim DER Geschäftsreiseservice, Osnabrück Lufthansa City Center, Munich Lufthansa City Center, Sindelfingen Siemens Travel Center, Munich The selection was undertaken by Dr. Fried & Partner in collaboration with i:fao. Agencies with open booking access (private customers) and agencies with closed user circles (corporate customers) were analyzed. cytric has been deployed in these agencies for between 6 months and 3 years. In all, 460 processes and sub-processes were observed and analyzed _ How different is the classic process from the modern process supported by efulfillment software? Execution of the process analysis: Observed (sub-) processes and additional activities: _ How far can the booking of standard trips be optimized through technology? _ How high are the savings that can be achieved with efulfillment systems? 56 hours observation time 460 (sub-)processes 24 employees observed 173 additional activities More than 30 corporate customers and numerous private customers _ What effects on travel agencies does this have and of what benefit is it to them? Dr. Fried & Partner bases its statements on a large number of measurements in a wide variety of companies that have already been using these tools for a long time.

7 I BUSINESS TRAVEL UPDATE 2001 efulfillment SITUATION ANALYSIS AND GOALS PROCEDURAL MODEL OF THE STUDY Concept Phase Selection of Participating Travel Agencies Observation/Recording of Processes Process Analysis: classic vs. efulfillment Elaboration of Optimization Potential in Travel Agencies Step 5 Step 4 Step 3 Step 2 Step 1 The results presented here reflect the reality in travel agencies. There will be no presentation of theoretical or laboratory-based processes. The goals of cytric-based efulfillment are: _ Increased productivity in travel agencies _ Efficient performance of recurring and simple tasks _ Concentration on more profitable tasks _ Improved customer consolidation Results Step 6 _ Reduction of inquiries regarding travel plans, schedules, and hotels _ Optimization of processes through earliest possible digitalization I INTERNET TRAVEL SOLUTIONS 6 7

9 I BUSINESS TRAVEL UPDATE 2001 efulfillment COMPARISON OF BOOKING PROCEDURES COMPARISON OF CONVENTIONAL AND cytric-based BOOKING PROCEDURES Through intensive observation and a survey of individual process parts, Dr. Fried & Partner created reference models for classic and Internet-based booking methods. These models were created, analyzed, and evaluated in close collaboration with travel managers and specialists from travel agencies. Dr. Fried concludes: If cytric is customized to suit a travel agency s needs, a standard booking can be accomplished up to 60% more effectively than with the traditional method. It is possible to demonstrate the differences using the example of domestic flight bookings the travel service most frequently requested in any company. A significant advantage of the cytric-based process is that it eliminates the need for timeconsuming communication procedures whereby the travel agency employee acts as the intermediary between the customer and the reservation system. cytric can deliver the information directly. Specifically in the case of trips that require little explanation, so-called standard trips, only availability and attention to the company s travel policies are of interest. Personal counseling by a third party is not a profitable activity. conventional process cytric-based process 42% 100% The percentage of flights for which electronic tickets are available is increasing steadily, a fact that strengthens the optimization potential and the case for deploying a cytric-based booking system. Overview: comparison of conventional and cytricbased efulfillment processes. COMPARISON OF CONVENTIONAL AND cytric-based efulfillment PROCEDURES CLASSIC BOOKING (AVERAGE VALUE OF ALL NON-ONLINE FLIGHT BOOKINGS) individual cumulative PRE-BOOKING BOOKING POST-BOOKING 0:00:29 0:00:29 0:03:33 0:04:02 0:02:18 0:06:20 0:00:55 0:07:15 0:01:41 0:08:56 0:00:53 0:09:49 Intake procedure Preparation of booking Processing + confirmation of booking Wrapping-up of transaction Ticketing* Shipping + filing 4% 37% 23% 10% 17% 9% 0:09:49 100% OPTIMAL BOOKING cytric-based individual cumulative PRE-BOOKING BOOKING POST-BOOKING 0:00:05 0:00:05 0:00:00 0:00:05 0:01:12 0:01:17 0:00:16 0:01:33 0:01:41 0:03:14 0:00:53 0:04:07 Intake procedure Preparation of booking Processing + confirmation of booking Wrapping-up of transaction Ticketing* Shipping + filing 2% 0% 30% 7% 40% 21% 0:04:07 100% * Percentage of electronic Tickets approx. 50% I INTERNET TRAVEL SOLUTIONS 8 9

10 When comparing these two booking methods, increases in efficiency can be achieved through: _ Earliest possible digitalization of booking inquiries from the point at which knowledge of the trip is most readily available; that is, from the traveler him/herself. _ Immediate display of availability and prices on the screen. _ Avoidance of time-consuming process components such as greetings and unstructured inquiries about customers wishes on the telephone or via fax. _ Direct booking that can be processed in the travel agency s own system. _ Customer-internal procedures such as approval systems, which are already taken into account. _ Customer information (profiles) notifications and updates disappear completely. _ The company s travel policy is taken into account, and there is an active steering toward preferred providers integrated into the cytric eprocurement system. Comparison of cytric-based flight booking procedures for (German) domestic and European flights: As a rule, European trips are more complicated than domestic trips, but even in this sector there is a high percentage of standard trips that can be optimized using efulfillment. In the context of the study, European point-to-point connections were surveyed and investigated. European flight bookings took, on the average, 15% more time than domestic bookings. The time differential is due in large part to the smaller number of flights available for which electronic tickets can be issued. While the percentage of electronic tickets available for domestic flights in Germany is about 50%, the percentage of electronic tickets available for European flights is, at this time, only about 20%. TEMPORAL ADVANTAGES OF (GERMAN) DOMESTIC IBE-BOOKINGS BASED ON A HIGH PERCENTAGE OF ELECTRONIC TICKETS IBE-BOOKING: EUROPEAN individual cumulative PRE-BOOKING BOOKING POST-BOOKING 0:00:13 0:00:13 0:00:00 0:00:13 0:03:55 0:04:08 0:00:40 0:04:48 0:02:38 0:07:26 0:00:54 0:08:20 Intake procedure Preparation of booking Processing + confirmation of booking Wrapping-up of transaction Ticketing* Shipping + filing 3% 0% 47% 8% 32% 10% 0:08:20 100% IBE-BOOKING DOMESTIC (GERMAN) individual cumulative PRE-BOOKING BOOKING POST-BOOKING 0:00:05 0:00:05 0:00:00 0:00:05 0:01:12 0:01:17 0:00:16 0:01:33 0:01:41 0:03:14 0:00:53 0:04:07 Intake procedure Preparation of booking Processing + confirmation of booking Wrapping-up of transaction Ticketing** Shipping + filing 2% 0% 30% 7% 40% 21% 0:04:07 100% * Percentage of electronic tickets for European flights approx. 20% ** Percentage of electronic tickets approx. 50% The principal points are: Even for the sector of European point-to-point connections, the increasing number of destinations for which electronic tickets are becoming available suggests a high optimization potential. European flight booking processes are unnecessarily lengthened by some companies issuing additional itinerary copies - even though the customer can already receive notification on times and connections, etc. from cytric.

11 I BUSINESS TRAVEL UPDATE 2001 efulfillment APPROACHES TO OPTIMIZATION APPROACHES TO OPTIMIZING efulfillment PROCEDURES IN TRAVEL AGENCIES In order to support the practically-oriented approach of the study, Dr. Fried & Partner formulated approaches for initial deployment and divided the results into participating groups: i:fao, travel agency and customer. There are three phases for all parties: _ Travel preparation and information _ Booking phase _ Post booking Potential for further reduction of processing times. In detail: Travel preparation and information i:fao _ The rates offered must be updated constantly to reflect market fares (special fares, Negodatabases). GDS _ Optimization of response times and availability will increase acceptance. Travel agency _ At this point, travel relevant customer profiles are stored in several different places. With profile management, the travel agency can offer a service that improves the quality of the efulfillment process and represents a benefit for the customer. _ With the introduction of a help desk and user training, user errors can be minimized and the number of simple inquires greatly reduced. _ Measures to improve acceptance, such as customer presentations, training, or active account management must be taken. During booking i:fao _ Continual optimization of response and access times. _ Increased offerings of direct interfaces to air, car, rail, and hotel information. GDS _ Further optimization of response times and availability. Travel agency _ Emphasis on online sales of suitable products such as point-to-point connections, electronic tickets, PAF and travel information. _ Reduction of processing fees for online orders. Customer _ Clear information for the traveler and/or booker regarding products that can be obtained online. Post booking i:fao _ Incorporation of data into the appropriate module such as travel expense reporting, mcommerce applications, management information systems. Travel agency _ Use of the system for on-trip customer service. Customer _ Active contract negotiations with vendors. Demand for and negotiations with airlines to increase the number of flight segments for which electronic tickets can be issued. Customer _ Information about the purpose and utility of efulfillment can contribute to actively reducing costs, while maintaining the same quality and improving profitability. _ Introduction of active travel management as a competitive advantage. I INTERNET TRAVEL SOLUTIONS 10 11

13 I BUSINESS TRAVEL UPDATE 2001 efulfillment BENEFITS FOR THE TRAVEL AGENCY Account Management BENEFITS FOR THE TRAVEL AGENCY WHEN USING efulfillment In addition to the purely quantitative investigation of processing times, the study also analyzed the benefits of efulfillment systems. The principal points are: _ efulfillment can increase productivity for the processing of standard bookings by up to 60%. _ cytric frees the travel agency from simple, recurring, and unprofitable tasks. _ If these tasks can be comprehensively supported by Web-based technology, their efficiency and effective nature can then be considerably optimized. The higher the processing costs in the travel agency with respect to the value of the service or product provided, the greater the potential for such optimization. Paper ticket refunds Multi-segment domestic flight Relationship of travel agency processing costs to product value. high Electronic ticket refunds Flight information Cancellation of pay-as-you-fly In detail: Process optimization _ Reduction of tasks in the travel agency, for example inquiries regarding availability, flight information and the PNR system. _ Reduction of the number of implausible booking inquiries by customers. _ Increase in the degree of automation through the networking of various media (PC, CRS, mail systems). _ The optimization potential for cytric bookings as compared to classic bookings is up to 60%. _ With an increased number of optimized cytric bookings, the average processing time can be reduced from 9:49 to 4:07 minutes. Efficient work and procedural organization _ efulfillment supports process-oriented work organization and therefore enables process cost optimization. _ Capacities can be made more flexible through reduced spatial and temporal dependencies in the booking process. _ Relativity of location and size advantages. _ Reduction of costs and involvement of other media (telephone, fax). Creative ticketing Paper tickets Domestic point-to-point Optimization of profits through efficient control over sales high International multi-segment flight International Point-to-Point low Generation of profits by the travel agency _ High cross-selling potential for previously unprofitable products (hotel and rental car bookings that require high processing efforts low Electronic ticket Pay-as-you-fly in relation to their value) _ Opportunity to address new target groups (via the Internet) _ Increased transparency in customer behavior Customer consolidation With the use of efulfillment, there are four areas travel agencies can take advantage of: _ Process optimization _ Efficient work and procedural organization _ Optimization of profits _ Customer consolidation _ Booking channel of increasing importance to customers _ Automated deployment of customer preferences _ Availability 24 hours a day, 365 days a year _ More flexible travel and appointment planning _ Current data _ Improved information situation at the point of decision I INTERNET TRAVEL SOLUTIONS 12 13

ADVANTAGES OF cytric _ cytric unburdens cytric reduces the number of customer inquiries about connections and availability, which, as a rule, are not profitable.

14 ADVANTAGES OF cytric _ cytric unburdens cytric reduces the number of customer inquiries about connections and availability, which, as a rule, are not profitable. _ cytric increases effectiveness a cytric system tailored to the needs of a travel agency can complete a standard trip up to 60% more effectively than traditional booking methods. _ cytric frees up employees Thanks to cytric, travel agency employees are relieved of routine tasks and can concentrate their energies on customer service and complex (that is, profitable) tasks. _ cytric takes travel policies into account The percentage of bookings that conform to travel policies increases with the deployment of cytric since, in general, cytric does not allow exceptions to the rules. _ cytric helps the customer With the deployment of modern software, the travel agency can actively support the customer s efforts to fulfill his/ her company contracts by steering him/ her toward selected vendors. _ cytric opens up new service opportunities The deployment of cytric makes many new opportunities for customer service available. With each booking, the travel agency receives an from the customer and thus is informed on customer location; this allows the travel agency to offer on-trip support. _ cytric makes travel agencies more flexible With cytric, travel agencies become more flexible and attractive. Travel agencies are available around the clock and their location becomes less important. _ cytric is good for a company s image Travel companies that offer state-of-the-art booking systems present themselves as modern and customer-oriented.

15 I BUSINESS TRAVEL UPDATE 2001 efulfillment RESULTS RESULTS After an introductory period of approximately three-years, Internet booking engines are beginning to establish themselves firmly in the field of travel service sales. After the survey, structuring, and analysis of all information, Dr. Fried & Partner comes to the following conclusion: _ The percentage of tasks that are timeintensive but only minimally profitable for the travel agency is disproportionately high: _ Schedule inquiries _ Time-consuming order processes _ Standard bookings _ Refunds _ Electronic tickets consume much of a travel agency s resources. _ With the deployment of efulfillment software, a travel agency can save up to 60% of its processing costs. _ Travel agency employees have more time for complex tasks and intensive customer service, tasks that reflect their training and know-how. _ The customer s travel guidelines are applied automatically with efulfillment. Time-consuming communication on travel policy is eliminated. _ The travel agency receives a powerful instrument for improving customer consolidation and customer service. _ There is a high cross-selling potential for previously unprofitable products such as hotel and rental car products. _ With efulfillment, a travel agency s operating hours can accommodate non-stop traffic. Finally, Dr. Fried & Partner comes to the following conclusion: The optimization potential of efulfillment and electronic booking tools is clear and, given current market developments, these must be regarded as a standard for the efficient processing of business trips. _ A travel agency can deploy its employees much more flexibly due to reduced spatial and temporal dependence on the booking process. _ efulfillment increases the information available to the customer, that is, at the point of decision. This significantly decreases the number of simple inquiries in the travel agency and reduces telecommunication (telephone and fax) costs throughout the process. I INTERNET TRAVEL SOLUTIONS 14 15

16 You can get information about the i:fao products cytric and quixdata by contacting: i:fao of North America, Inc. Sales cytric 550 Town Center Suite 126 Dearborn, Michigan U S A Phone: +1 (313) Fax: +1 (313) info.us@ifao.net

Request for Proposal Executive Summary

Presentation to Request for Proposal Executive Summary Key Travel is delighted to be considered to manage The College of New Jersey travel program. Having exclusively partnered the non-profit community