Landmark Venture To Launch Next-Generation Computerized Reservation System
In a five-year project, traditional competitors share knowledge and costs developing the CONFIRM Reservation System, designed to revolutionize the travel industry.
About two years ago, a $50 million project called the CONFIRM Reservation System was launched. Billed as "the next generation of computerized reservation systems," the system will enable travel agents to access hotel room or rental car availabilities and book their selections with instant confirmation. Offering features available today only from sophisticated airline reservation systems, it is expected to revolutionize the travel business when it's complete in 1991.
Four Companies, One Goal
Less heralded is the fact that the development of the CONFIRM system may well revolutionize the way companies--and even competitors--view one another and work together. Because the more than 200 people working full-tilt at two facilities in Dallas don't work for just one company. They work for four: AMR Travel Services, a division of AMR Information Services Inc., an affiliate of American Airlines; Hilton Hotels Corporation; Marriott Corporation; and Budget Rent-A-Car Corporation. Which leads one to ask, What are two hotels, a rental car company and an airline subsidiary doing together?" The answer: "They're focusing on areas of mutual concern, and they're overcoming obstacles-both technological and bureaucratic. In other words, they're making steady progress.
"It's amazing that four companies can work together so well on something so complex ," says Carole Agli director of the project for Hilton Hotels Corporation. "I think we might set a trend for what can be done when companies work together."
"There's no moss on this thing," says Russell Harrison, president of AMR Information Services. "We have to move fast. Because having started this idea, we've created the impetus for a rapid pace. I'm very respectful of the potential for competition. In the late spring of 1986, we discovered the potential opportunity for a more comprehensive reservation system for hotels and rental cars. We realized that no one could bring all the knowledge needed, so we wanted extremely well-thought-of and capable partners with whom we could form a relationship.
AMR brought to the joint venture technical expertise and "the ability to build such a large system and run it," Harrison says. The three other companies brought an in-depth understanding of their industries and strong positions of leadership within them. In many ways, the partners started off with a great deal in common. "Each of the partners ( except AMR ) would be developing its own system," says John Mott, president of AMR Travel Services. "It's more cost effective to share development costs, since everyone has many of the same needs with some minor variations, depending on the product line." Bert Bartz, director of reservations systems for Marriott, agrees: "What attracted us to this venture was that it gave us an opportunity to share the high cost associated with developing and maintaining the next-generation hotel reservation system."
Other hotel and rental car companies will be able to buy services from the partnership, thereby allowing the partners to offset their development costs. Of course, two hotel corporations like Marriott and Hilton are also natural competitors. And one could easily argue that Budget is in a different industry entirely. But the partners have found a way to resolve these and other issues.
"Yes, we view Hilton as a competitor," Bartz says. "But we found that we tend to compete on our service--on the quality and consistency of that service--and on what we do at our respective hotels. The technology that supports that service can be a competitive advantage, A larger part is dependent on our view of the customer. Then, there's also a cost to technology. If we developed the system ourselves, we'd carry all the cost, and we'd lose our competitive advantage." Or as Hilton's Agli puts it: "Although some functions may be kept proprietary, competition has been set aside in the project."
From Budget's point of view, there are many similarities between the hotel and rental car businesses, In fact, Budget's Bob Lewis, system project manager, says one of the advantages of the partnership is that "we get to look at our problems from a different perspective." AMR's Mott says, "The same concepts apply to the business of reserving hotel rooms and renting cars. The biggest differences are the size of the space and the fact that one moves and the other doesn't."
Project On Target
Certainly, what all the partners seem to agree on most is that the partnership is working, and working well. By the end of 1988, the project team had finished the design phase and started on development. By the end of 1989, the development of the critical transaction management facility is expected to be complete. That component will serve as the switch that will route transactions from one environment to the next and provide the interface between the network and end users.
"We purchased, a licensed copy of the switch, known as the Delivery Processor, from IBM, and we're building our own from that instead of building one from scratch," explains David Harms, vice president of development for AMR Travel Services. "By the end of 1991, we should be fully operational." In the meantime, work is proceeding on schedule--a fact that no one attributes to luck or accident. "Traditionally, a development team would be made up of technicians, and periodically they'd meet with end users," Mott says. "But there have always been problems with that approach. And if you multiply those problems by four - the number of companies involved - it would be a nightmare."
The partnership is taking a different approach to development. First of all, there's an eight-member board with two people from each company which meets once a month. AMR Travel Services has people working on the technology and the other partners have people working full time to help define requirements. The three so-called "user partners" also have point people in Dallas who manage their teams and communicate back to headquarters.
Running A Tight Ship
"We spent a couple of days in team-building sessions at the beginning, getting to know each other and work out ways to resolve conflicts," Bartz says. "We put in place some good project management tools to track change and allow people to surface and resolve differences." What also helps, she adds, is that each company has someone on site who's authorized to make decisions so that the project isn't slowed down by an endless series of reviews at each company. And because the three companies have their headquarters in other cities, the project team is insulated from day-to-day business problems.
"No one comes by and asks for help on another project or wants to borrow so-and-so for a day," Bartz says. "There's not that stealing away of resources you would normally have." Agli points to the joint application design process led by five IBMers. "They're specially trained to manage meetings and see that the conversation stays on track and we accomplish our goals. They make sure that everyone's in agreement before we move on. Of course, no venture is risk-free. But today, such risks seem remote.
"What makes the partnership work is that we're all committed to the effort," adds Lewis. "The cooperation between the three user-partners has been exceptional."
And for tomorrow, the CONFIRM system promises to revolutionize the industry by providing a fully centralized and powerful reservation system and a new profit center that all the partners can enjoy.