American Express Interactive

1
American Express Interactive

• Case Analysis
• MIS 6413 October 10th Instructor Dr. Richard
  Segall
• Presenters Pete Jury, Shermika Nelson, Jordan
  Thompson, Kelly Vaught, David Nguyen

2
Presentation Outline

• American Express Profile
• Business, Revenue, Cost Module
• S.W.O.T. Evolution Business Model
• Value Creation and Benefits
• Problem Identification
• Future Initiatives
• Q A

3

• FOUNDED IN 1850 AMERICAN EXPRESS
• 2000 Organized around 3 segments
• Travel Related Services (TRS)
• Financial Advisors
• American Express Bank
• Travel Related Services Wholly owned subsidiary
  of American Express Company. Product areas
  included
• Consumer Cards
• Small Business and Consumer Travel
• Corporate Services
• TRS International
• American Express Consulting Services

4

• Corporate Services Specialized in Offering
• Corporate Charge Cards
• Corporate Purchasing Cards
• Consulting on Expense Management Strategies
• Corporate Travel Services
• In 1997- Ranked among highest business travel
  agencies in the world.
• 17.4 billion in worldwide sales

5
Corporate Services Interactive (CSI)

• Focused on internet and related technologies for
  further expansion.
• Late 1999 CSI had 5 Offerings
• AXI Travel
• AXI Expense
• AXI Purchasing Solutions
• American Express _at_ Work
• B2B Commerce Network e-procurement portal

6
Building AXI Travel

• Internet Research in 1995 Showed
• -had to move fast due to competition
• -AXIs traditional business was going to continue
  to erode
• -commission cutbacks among airlines would result
  in revenue loss
• -to maintain their position as the leader in
  Corporate Travel they would have to set the
  standard for Internet Services

7

• Joining Hands with Microsoft as a Technology
  Partner
• -Critical the enter market quickly
• -Decided on a separate location for the main
  office away from traditional AXI businesses.
• -Some of the AXI Travel Team went to Richmond,
  Washington to work alongside Microsoft
  developers.
• -Other employees remained in New York City.
  Every Monday they had a meeting by Teleconference
  so everyone was on the same page!

8
American Express Interactive Incubation Timeline
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC

• AXI
• Preannouncement

- AXI Microsoft Conference
- Beta Version Demo
-Version 1.0 launch
9
Business Model
To be the leader in todays virtual business
world by providing online services to corporate
customers to complement its face-to-face services
while reaping the benefits of follow-on business
opportunities

• Increased value to
• Investors
• Business travelers
• Travel arrangers
• Corporate customers
• Travel agents

• Strategic alliance
• Strong management team
• Technology partners
• Marketing and sales

• First-mover advantage
• Continuous innovation enhancement
• Joint venture

10
Revenue Model

• Implementation fees
• Consulting fees
• Transaction fees
• Maintenance fees
• Commissions

11
Cost Model

• Recruitment costs
• Training costs
• Infrastructure costs
• Marketing and promotion costs
• Human resources costs

12
SWOT Analysis Strengths

• Hybrid company
• Experienced Leadership
• One-stop shopping
• Exceptional business relationships
• Successful marketing strategies/efforts
• Continuous innovation of products/services
• Loyalty programs

13
SWOT Analysis Weaknesses

• Lack of uniformity within business segments
• Dependent on outsourcing of data system
• Role of CSI was eroding
• CSI business developments needed integration

14
SWOT Analysis Opportunities

• Expected growth of business-to-business trade
• Conform all businesses back into AXI traditional
  businesses
• Launch new products to entice corporate customers
  to utilize AXI

15
SWOT Analysis Threats

• Intense competition among competitors
• Boundaries to industry were no longer fixed and
  stable
• Threat of losing marketplace and business
  developments unless uniformity is established

16
Evolution of Business Model

• Extend
• November 1997, AXI Travel launched
• 1998, AXI Expense
• 1999, AXI Purchasing Solutions and American
  Express _at_ Work

Extend
17
Evolution of Business Model

• Expand
• November 1999, announced alliance to develop its
  business-to-business commerce network
• Specialized in offering corporate charge cards,
  corporate purchasing, expense management, and
  travel services
• Partnered with Microsoft to enhance brand and
  image

Expand
18
Evolution of Business Model

• Enhance
• Partnered with Get-There to provide
  travel-related technology and booking services
• Canceled partnership with Microsoft
• Personalized AXI features

Enhance
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Evolution of Business Model

• Exit
• Partnered with Ventro, a business-to-business
  service provider
• Launched Market Mile
• Summer 2000, re-examining CSI developments for
  integration or discontinuation

Exit
20
Travel Pricing Service

• Implementation Fees
• Transaction Fees
• Maintenance Fees

21
Benefits to AXI Corporation

• Benefits to the Corporate Travel manager
• Benefits to the Business Traveler travel
  arranger
• Benefits to the CIO
• Benefits to the Travel Agents

22
The organization design challenge
Complex
Hierarchy
Organization
Entrepreneurial
Simple
StableCertain
DynamicUncertain
Environment
23
The technology design challenge parallels the
organization design challenge
ComplexGlobal
MainframeHierarchy
InformationRequirements
MicrocomputerEntrepreneurial
SimpleGlobal
StableCertain
DynamicUncertain
Business Decision MakingEnvironment
24
Value of AXI Travel

• Key Technological Alliances
• Cost Saving Data Warehousing
• Corporate Card Portals
• Simplified Ease of Use

25
21st Century

• Redefined Competitors
• Dominate Interrelated Channels
• Increased B2B Trade/Coopetition

26
American Express InteractiveQuestions Answers
27
Question 1

• Describe the impact of AXI Travel to American
  Express.

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Question 2

• Discuss the steps taken to implement AXI Travel.

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Question 3

• Profile AXIs business model

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Question 4

• What implementation advantage did the CSI
  business unit give AXI?