Corporate Finance

Mad About Cyberfares

Business travelers are finding bargains on the Web - to the dismay of corporate travel managers.
John P. Mello Jr. and John XenakisSeptember 1, 1999
Mad About Cyberfares

In what may be a tempest in a computer, travel managers have boosted the noise level over discount fares sold by air carriers via the Internet. What’s bugging the managers is that the fares aren’t funneled through a central reservation system (CRS) for airline bookings.

“At the current time, this is a pressing and irritating concern among our travel manager members,” wrote the National Business Travel Association (NBTA), based in Alexandria, Va., in a June letter sent to airline executives. “When deeply discounted inventory is sold, which is often not available on a CRS, the corporate travel managers are placed in a bad position where they are circumvented, or viewed as being circumvented.”

The “circumvention” occurs when a company traveler finds what appears to be a better deal than his company is getting through its volume discounts with an airline and springs the rate on his travel manager. “We have people out there surfing the Net, looking for these fares, thinking they’re going to undercut what we’ve got–and often at first glance they do. But when they dig down to the restrictions, they see themselves that they can’t use the fare,” says Colleen Anderson, vice president for corporate travel services for PacifiCorp, in Portland, Ore. Even when fares can be obtained, buying tickets over the Web may undercut a company’s volume discounts.

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Anderson sees the fares as more of an annoyance than a threat. “Where travel managers have issues is that the airlines have these fares out there that, for the most part, business travelers can’t use. But they create work for us educating travelers.”

The travel managers’ concerns received a sympathetic ear at Delta Air Lines Inc., which in July announced a three-point plan to smooth ruffled feathers. Companies that permit their travelers to book flights at Delta’s SkyLinks Web site will receive their negotiated discounts; corporate travelers who book at the site will have access to all Delta Web fares; and travel managers will receive information about what was booked through SkyLinks. The NBTA’s executive director, Norman Sherlock, praised Delta’s action and predicted that other airlines would follow suit.

Meanwhile, in August, another Alexandria-based group, the American Society of Travel Agents, called for a federal investigation of Internet fares, which it views as discriminatory.

———————————————– ——————————— Internet Recruiting: Geek Seeking
“We’re a technology company, and that’s why we need to be a leader in using the Internet for recruiting employees.” So says Kevin Marvel, director of employment at Horsham, Pa.-based General Instrument Corp., a maker of telecommunications and cable TV equipment. That’s why the company has hired, an outsourcer that adds a recruiting section to the company’s Web site and manages the receipt of résumés. charges $4,000 per month and up, depending on the number of résumés received, with $6,000 per month being the average fee. Its customers include giants like MCI WorldCom and EDS, but using the Internet for recruiting is becoming important for everyone, according to Gartner Group Inc. analyst Jenni Lehman. “There’s a skills shortage, and people are desperate for resources,” she says. “But the biggest issue with Internet recruiting is that it generates huge numbers of résumés, and then what do you do with all of them?”’s service, as well as new Internet products provided by such vendors of résumé- tracking software as Resumix Inc. and Webhire Inc., allows applicants to answer questions online. If the applicant gives the “right” answers, the résumé is routed immediately to the hiring managers.

Lehman adds that one of the most valuable uses of these systems is as a “passive recruiting” tool, enabling Web surfers to check out a company and, in some cases, apply for a job anonymously through E-mail. – John J. Xenakis

———————————————– ——————————— Variable Compensation

Counting Carrots

The management of sales commissions and other variable compensation is becoming an increasingly important software niche.

How complex can variable compensation be? Look at what Jamba Juice Co., in San Francisco, is doing with its 150 company-owned stores. “We make incentive payments bimonthly,” says CIO Manoj Tripathi. “We give payments based on top- line sales and bottom-line profits, and whether these parameters are going up or down, and by how much, and by combinations of these parameters. We calculate by manager and by store. There are also refinements–store size and when the store opened–that we use as parameters.”

Because of the complexity of computing these payments, Jamba Juice uses variable compensation software from Incentive Systems Inc. “We used to use spreadsheets when our incentives were simpler,” says Tripathi. “But if your incentives are longer term–some of ours go out for three years –then you need a history and a comfort level that you don’t get with spreadsheets.”

Variable compensation software is pricey. Incentive Systems has an entry-level price of $150,000, for processing 200 payees. Another recent entry, TrueComp, from Callidus Software, starts at $350,000 for 400 payees. Both systems support industry-standard databases and operating systems; both work with various ERP and sales force automation products; and both can be deployed over intranets.

“All the vendors have pretty much the same functionality, with some small variations,” notes Gartner Group Inc. analyst Rob DeSisto. “Incentive Systems weighs more toward the sales department, while Callidus is more focused on the finance organization,” but both systems are used in both places, he adds.

DeSisto says the total implemented cost of these systems typically runs anywhere from $500,000 to $1 million. — John J. Xenakis

———————————————– ——————————— Office Productivity Software

Three Sweet Suites

The new release of Microsoft Corp.’s office productivity software, Microsoft Office 2000, makes it easy to incorporate the Web in your work, if that’s where you want to go today ( But it isn’t the only suite in the sea.

All of Office 2000’s modules produce documents in a form suitable for Web publishing and Web collaboration, and the new Microsoft FrontPage module makes it easy to create and manage a corporate Web site. Furthermore, Microsoft avoided the mistake it made with Office 97, whose file formats were incompatible with older versions of Microsoft’s software, causing users enormous headaches. Office 2000 Word, Excel, and PowerPoint read and write file formats compatible with Office 97.

The overwhelming market leader, Office 2000 is the product to buy for many businesses– especially for companies that want to leverage its Web functionality for intranet use. The price is $799 for the full suite, or $399 to upgrade from a previous version.

But there are solid alternatives to Microsoft Office 2000, including some bargains. Corel Corp.’s WordPerfect Office 2000 costs $399 ($159 to upgrade) and comes in a version for Linux. Meanwhile, IBM Corp.’s Lotus SmartSuite also sells for $399 ($149 to upgrade). Unlike Microsoft, both IBM and Corel offer their upgrade price to customers who own competitors’ products, which means companies may be able to save quite a bit of money.

The three products are roughly equivalent in terms of functionality, according to Amy Wohl, president of computer consultancy Wohl Associates, in Narberth, Pa. “If you make a grid [of products versus features], then all three get as many checkmarks, though not in all the same places,” she says. And when any one of them adds a worthwhile feature, the other two quickly follow suit, adds Wohl.

Corel’s product is strongest in law firms and government agencies, thanks to the enormous popularity of WordPerfect in those sectors during the 1980s. And Lotus SmartSuite is strongest among Lotus Notes users. The main problem with the Corel and IBM products is that there are compatibility issues when users have to exchange documents with Microsoft users.

The PGA Tour, a Lotus Notes user, has standardized on Lotus SmartSuite. Director of IT Steve Evans says exchanging documents with Microsoft Office users has caused some annoyances, but has not been a major problem.