ACTE Asia Pacific

Interview with Eric Conrad

Eric Conrad is Travel & Transportation Industry Leader, at IBM Global Business Services, based in Singapore. Eric will be addressing a keynote topic at the ACTE 2008 Asia-Pacific Education Conference on Thursday, 21 August in Singapore “The Profitability Constellation--Finding Competitive Advantages through Your Supply Chain”. Recently, Kenneth Phua, ACTE Regional Director Asia-Pacific, spoke with Eric on issues surrounding the supply environment.

KP: What major transformations do you anticipate in the next few years for the supply environment for travel and transportation?

EC: I anticipate three important changes which we, as a corporate travel industry, will need to grapple with. First, emerging strains in basic resources (energy, food, water) will drive changes in corporate travel demand and will place significant cost and allocation pressures on corporate travel suppliers. From a demand perspective, social and economic reactions may drive alternative strategies to doing business (e.g., increased use of in-situ global staff, leverage of technology for virtual meetings). Second, service expectations will grow to include non-direct and/or social characteristics, including environmental, human, and infrastructural characteristics. These sustainability considerations will comprise both regulatory and voluntary actions for all segments of the business travel supply (e.g., transport, accommodation, services). Third, continued fragmentation of information and growth in customer empowerment will further disrupt marketing and distribution channels of all business travel suppliers. This includes the growth of social networks, the abundance of unstructured communication modes (e.g., blogs) and the evolution of third party rating services. Needless to say, the massive expansion of high-end corporate travel facilities in Asia, India, the Middle East, Africa and elsewhere, will continue to set new standards of service that others will ultimately emulate.

KP: How will these alter the procurement strategy for business travel?

EC: Increasingly, these transformational forces will drive corporate buyers of business travel to push accountability and service delivery to corporate travel agents and their suppliers. This includes the requirement of suppliers to reflect the buyers' brand values (e.g., alignment of social, ethical, and commercial values) and, importantly, the reflection of corporate responsibility directions in the supply of services and supplies. Corporate buyers will also push for simpler, more comprehensive, and globally consistent set of tools and operating procedures as they demand the Corporate Travel Agents and suppliers to reflect and integrate their operating models for greater efficiency and effectiveness. These, naturally, include automation of processes to take out transactions and eliminate cost in booking channels, while at the same time improving the experience. Finally, I think that we will see an increase in demands for business services, both in terms of basic product offerings (e.g., email onboard travel, mobile working environment in accommodation) and ancillary services (e.g., more granular reporting, spend analysis, score card measurement, and traveller management). This last point is critical: the ability of suppliers to mine data and provide information to partners and customers will be key, be it for compliance or well-being services for disasters.

KP::How do you see the Asia-Pacific region responding to these changes?

EC: Asia, in my experience, has consistently been a leader in terms of business travel service delivery. To be fair, much of this has to do with the age of the infrastructure. New properties, aircraft, airports, railroads, etc. are much more likely to meet the needs of business travellers at a lower cost and in a more environmentally friendly fashion. Retrofitting is so expensive. But the success goes beyond having bought the right assets...the service culture that exists in Asia, and the attractiveness of the travel industry, means that management and front-line staff actively care for, and often anticipate, the needs of the business traveller. Where Asia still struggles, however, is in the application of technology in both the core operations and in the service delivery. Further work is required in terms of distribution (exposing real time inventory) and self-service, as two obvious examples. Additionally, suppliers and service providers will face, in some locations, increased pressure on the human resource side of the equation, as a combination of demand and greater buoyancy in the economy reduces the availability of front line, the back office, and managerial resources. The back office is an interesting issue in that, increasingly, much of global corporate travel back-end services are, and will continue to be, driven from Asia. Hence, the demand for these professionals is quite high.

KP: If there were three things you would have the industry examine now, what would they be?

EC: The business travel industry is highly fragmented today and the challenges we have discussed suggest that, at the industry level, there is a greater need to examine how we can: 1) Drive towards an integrated travel offering in-country, while at the same time delivering on the supplier brand promise of service consistency globally...we must look at ways and means (process and technology) of packaging and delivering a complete and consistent set of services for business travel and, at a minimum, greater uniformity in operations globally by suppliers; 2) Proactively adopt a strategy of responsible operations that "fits" with corporate expectations. Increasingly, environmentally and socially responsible operations will become a hygiene factor. The faster we, as an industry, can adopt a basic framework upon which we commit to operating, the faster we can avoid corporate defection or, worse, regulation; and finally, 3) Exploit technology at an industry level to make the industry more effective and responsive. Every supplier will have its own approach to leveraging technology...and I am not suggesting that this is wrong...we all need to compete. What I am suggesting, however, is that technologies and standards to help drive greater transparency and flexibility in bundling travel components in the sales and distribution will have a significant benefit to all industry participants. Turning inventory queries, pricing, and rules into services that can be easily and consistently called will enable the industry to gain better control, increase the potential for bundling of services, and meet the higher demand for quality real-time data.

KP: How important is it that an association like ACTE takes the lead in raising an awareness of these changes to the community of procurement practitioners?

EC: I think it is absolutely essential, more so than possibly at any other time in history, that ACTE proactively lead in these industry trends and, in so doing, communicate directly to the procurement community, the supplier community, service providers, and governments/regulators what needs to be done today and tomorrow. The need for leadership and interaction with these parties will help drive convergence towards sensible uniformity...find those areas that are industry specific but do not differentiate the supplier...and drive towards greater aggregation and consistency in the delivery of those functions...leverage technology...and significant shareholder value can be created within the industry and within those industries ACTE members serves...the corporate buyers.

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