AXI Travel Services

1
AXI Travel Services

• How AXI Travel Was Implemented

2
History of AXI Travel

• Corporate Services Interactive (CSI) was created
  as a business unit with American Express
  Corporation in 1997.
• AXI Travel was launched as part of its mission to
  develop new e-business ventures.
• Through the late 1990s, CSI served an important
  role of conceiving, incubating and launching new
  e-businesses.

3
Porters Competitive Forces Model
Threat of Substitutes Airline booking agencies,
airline owned computer reservation systems, and
travel agencies. Strong Threat
Power of Suppliers Few large scale software
creators and alliances of e-commerce and
technology companies pose threat. Moderate Power
Power of Buyers Attractive to corporate business
travelers, but not to the individual business or
leisure traveler. Moderate Power
Competitive Rivalry Strong competition from
original suppliers. Moderate Threat
Threat of New Entrants In addition to e-commerce
and technology companies entering the market as
competitors, traditional rivals such as Visa and
MasterCard pose a threat. Strong Threat
4
Competitive Rivalry

• Little direct competition at initial 1997 launch
  of AXI Travel.
• First into the market helped establish an initial
  foothold.
• By 1999, technology and e-commerce companies had
  created competitive rivalries.
• Competitors include Ariba, Oracle, and Master
  Card.
• Competitive rivalry now poises a threat to AXI.

5
Power of Suppliers

• Suppliers consist of firms that can provide
  knowledge and implementation of interactive
  information systems.
• Microsoft was chosen to develop and implement the
  software necessary to carry out interactive
  travel services.
• As a leading developer of software, it would be
  difficult for AXI to find another supplier who is
  capable of establishing an IT structure as
  efficient and as quickly as Microsoft.

6
Cont.

• Tradex Technologies, Content, Inc., and Ventro
  are suppliers that provided AXI with the
  knowledge of interactive marketplaces.
• While there are many companies that develop
  interactive marketplaces, the fact that they are
  working together has created an additional threat
  for AXI.
• The power of suppliers is great as they hold the
  knowledge necessary to create and maintain the
  system as well as, their ability to compete
  directly with AXI.

7
Power of Buyers

• Buyers represent AXIs corporate and individual
  business clients.
• Substitutes give buyers the option of choosing
  another travel service.
• Because of integrated features within AXI, the
  are few comparable alternatives for corporate
  buyers.
• However, individual business travelers have
  multiple options with to choose from.
• Buyers display a moderate level of power within
  the industry.

8
Threat of Substitutes

• Substitutes that threaten AXI Travel include
  traditional airline booking agencies, airline
  owned computer reservation systems, and travel
  agencies.
• These substitutes poise more of a threat to
  obtaining individual business travelers who do
  not need many of AXIs integrated functions.
• There is a moderate threat of substitution within
  the industry.

9
Threat of New Entrants

• The threat of new entrants has increased since
  AXIs inception in 1997.
• The technology and e-commerce firms that once
  helped AXI are now forming alliances to compete
  directly with them.
• These companies can also sell there systems or
  provide there knowledge to other potential
  competitors of AXI such as Visa or MasterCard.
• The threat of new entrants is a serious problem
  for the industry.

10
Industry Structure

• High competitive rivalry.
• Powerful suppliers.
• Moderate level of power among the buyers.
• Moderate level of threat for substitute services.
• High level of threat for new entrants.
• These factors create a poor industry structure
  for AXI Travel to work in.

11
AXI Travel Program Implementation
12
Timeline for Launch

• AXI Travel was launched November 1997
• By late 1999 the online/offline travel service
  had been adopted by 200 corporations
• Had begun researching options in August 1995

• Was launched by Corporate Services Interactive
  dept., which partnered with MSN to fashion it in
  the style of an entrepreneurial start-up company
  with its own marketing, sales, product
  development, and business development resources.

13
AXI Senior Executive in speechto speech to
corporate customers

• When change is inevitable, you have a choice
  you can either follow or you can lead. And we all
  know that nine times out of 10, the leader will
  get a disproportionate share of the gains. So we
  intend to lead.

14
Introduction of New Travel Service

• Was announced with much fanfare at the National
  Business Travel Association annual convention in
  July 1996.
• In February 1997, AXI and Microsoft began
  sponsoring workshops with CIOS and travel
  managers.

• By partnering with Microsoft, were actually able
  to capitalize on the excitement accompanying the
  emerging Internet economy.

15
Services Offered by AXI Travel

• Enabled business travelers to make hotel,
  restaurant and car service reservations, as well
  as one-stop shopping for expense management and
  purchasing

• Made it user-friendly and offered driving
  directions and travel information through other
  partnerships
• Ran on most standard hardware and software,
  specifically chose Microsoft for this.

16
Creating Value with AXI Travel

• Began marketing efforts very early in the
  process.
• Goal was to prevent current customers from
  signing with other service.
• Required AXI Travel users to be AXI Business
  Travel Service members.

• As a result, generated an additional 15 in the
  base business which was directly attributable to
  AXI Travel, which more than offset cost of
  building the new service.

17
Challenges for AXI Travel

• The American Express Travel Operations group was
  slow to embrace the service but eventually saw
  the benefits
• Could focus on higher-value, more interesting
  work
• Alleviated ongoing personnel shortages

• Had to convince customers that the e-service was
  easily used with the regular travel specialists
  as additional resource that wouldnt replace
  agents when necessary

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What AXI Travel Did Right

• Anytime, anywhere access was important to
  customers, and AXI provided this. Changes for
  email, telephone, address, etc. were easily made
  via Web.
• Created a central location for corporate
  travelers to make all reservations

• Involved its corporate customers throughout
  process
• Was officially launched less than one year after
  development had begun so customers never lost
  connection with it.

19
Cont.

• Made information easily available for CIOs and
  travel managers, most important for company-wide
  use
• Streamlined process by embedding corporate
  information within the system, i.e. TE policies,
  preferred suppliers, per diem, spending limits.

• Shifted customer usage by making booking cost
  about 50 less than traditional methods
• Created an e-purchasing marketplace for buyers
  and sellers, including B2B supplier catalogs.

20
CSI Implementation Lessons
21
Corporate Services Interactive

• Corporate Services Interactive (CSI) was
  created for the development of new e-business
  ventures such as AXI Travel. The success of AXI
  Travel cannot solely be attributed to any one
  act, but many steps.

• Realized importance of first impression
• Realized importance of speed to marketplace
• Realized importance of quality software
• Realized need for a partnership

22
How CSI Grew AXI Travel

• CSIs alliance with Microsoft supported a quality
  product
• Testing AXI Travel pre-release encouraged
  development
• Integrating other products within the AXI family
  increased switching costs

23
The Future of CSI

• Remain developing e-business for AXI
• Promote integration of products
• Develop core competency in e-business
• Let go of AXI Travel

24
Lessons Learned

• Seed of entry
• Integration is a plus
• Ease of use adds value
• Know your market
• Prepare for change
• Look to improve
• When possible start with an existing customer base

25
Questions?
26
The Evolution of AXI Travel

• In 1995 American Express chose to create an
  online interactive travel service to supplement
  its brick-and-mortar system.
• Development began and in 1997 AXI Travel was
  launched.
• AXI allowed for AMEXs customers to create
  traveling arrangements online instead of through
  the normal telephone call center.

27
The Evolution of AXI Travel

• In May of 1999, AXI introduced Purchasing
  Solutions to integrate various managerial
  functions into the Travel system.
• In January of 2000, AXI would partner with
  GetThere, Inc. to establish an online booking
  system.
• These systems greatly reduced transaction costs
  and made AXI Travel an even more valuable tool.

28
The Evolution of AXI Travel

• AXI introduces loyalty programs to entice
  individual business travelers, as well as, to
  increase loyalty with corporate subscribers.