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C-Commerce Applications in SFCVB-Travel Trade 1

Collaborative Commerce Applications in Travel Trade of San Francisco Convention


and Visitors Bureau (SFCVB)
Wei-Chen Wu (Rachel Wu)
BUS 4200: Enterprise Information Management Systems
Dr. Rodney Heisterberg
January 27, 2010
C-Commerce Applications in SFCVB-Travel Trade 2

Problem Statement
By the definition of “Travel Trade,” is “[a] term describing the full range of
organizations that operate as intermediaries in the travel and tourism industry. These
typically include tour operators, wholesalers, receptive operators, group leaders and
travel agents.” (TradeSmart, n.d.) Therefore, San Francisco Convention and Visitors
Bureau (SFCVB) plays an important role as an intermediary to collaborate and
integrate all the stakeholders, which include “SFCVB members, the City and County
of San Francisco, the Tourism Improvement District Management Corporation, local
industry associations and business groups, the community at large, and local media .”
(SFCVB, 2009, p.67) Despite the blooming direct-booked travelers in the recent
years, “the professional travel trade remains an important distribution channel to
bring visitors to San Francisco, particularly from international markets and domestic
niche segments.” (SFCVB, 2009, p.42) Moreover, we as SFCVB Travel Trade group
are going to cooperate with other groups that represent other organizations and
integrate their events in our event. These groups/organizations are: SFCVB Leisure
Travel, Sonoma Mission Inn & Spa, Halleck Vineyard, and French laundry
Restaurant. SFCVB is also one of the Destination Marketing Organizations (DMOs);
according to Destination Marketing Association International (2010), DMOs’ goal is
to “promote the long-term development and marketing of a destination, focusing on
convention sales, tourism marketing and service.” Also, “DMO leaders are the
masterminds behind campaigns marketing an “entire” destination to meeting
professionals, business travelers, tour operators and individual visitors. DMOs
represent the hotels, facilities, attractions, restaurants and other providers serving
travelers.” (Destination Marketing Association International, 2010)
With the applications of Collaborative Commerce, which is defined as an “[o]nline
collaboration and interactions among the employees, business partners, and
customers of diverse firms belonging to a trading community or industry segment”
(BusinessDictionary.com, n.d.) plus the applications of Destination Marketing, which
by definition, is “a proactive, visitor-centered approach to the economic and cultural
development of a destination, which balances and integrates the interests of visitors,
service providers, and the community.” (DMAI, 2008, p.77) as the foundation of our
business strategy, we will be able to launch our event successfully. The two
problems that SFCVB encounters can be generalized as following:
1. How to apply Collaborative Commerce to our event planning in order to
benefit all of SFCVB’s stakeholders and the organizations that being
mentioned above.
2. How to utilize Destination Marketing to market our event and bring
more visitors to San Francisco.

Challenge/Opportunity

There are many challenges that SFCVB as a Destination Marketing Organization


encounters. First, the competitors of SFCVB are increasing gradually. For example,
from an online survey, which was conducted by DMAI (2008), that asked DMO
C-Commerce Applications in SFCVB-Travel Trade 3

CEOs to list the major competitors that those CEOs perceived; the result indicated
that the top five competitors are (p.50):
• Chambers of commerce
• Other DMOs
• Local economic development organizations
• Local arts organizations
• Funding of non-visitor-related capital projects

Especially San Francisco faces the competition from other convention cities; “[t]hese
cities often use aggressive convention center pricing, financial incentives and other
tactics to get the attention of meeting planners” (SFCVB, 2009, p.13). As a result,
SFCVB has to be more innovative and creative to catch our customers’ attention and
become a unique organization that differentiates other competitors. On the bright
side, the opportunity for us to solve the situation is to cooperate with these
organizations or cities.

The second challenge that SFCVB faces is that because of the clutter of online
information sources, prospective visitors would find all the information they need and
never have the chance to discover SFCVB’s sources. SFCVB has to increase its
visibility and make more appearance through the media, such as the online ads, print
advertising, and social media. Maintaining to be the leader of the San Francisco
travel information provider is and will always be the challenge and the goal we have
to achieve.

SFCVB relies on third-party travel producers, such as retail travel agents and tour
operators, largely to market our travel products. Particularly to international travelers
“due to many factors including unfamiliarity with the U.S., exit requirements (such as
visas), and the protection that consumers have in many countries through the use of
trade versus direct bookings” (SFCVB, 2009, p.42). The next challenge for us is
finding ways to enhance the relationship between these domestic and international
travel producers and us.
Improving the relationship between local communities, SFCVB, and the visitors has
become a big challenge to our organization as well. This would be our fourth
challenge. Tourism is a great tax revenue source, especially to San Francisco. As
Figure 1 shown, in 2008, visitors brought $16.4 million revenue to San Francisco. As
a result, educating San Francisco residents and communities the importance of
international tourism to local economy is also a challenge to us.
C-Commerce Applications in SFCVB-Travel Trade 4

Figure 1. Annual Total Visitor Volume (In Millions). Source: SFCVB Research 2008.
Furthermore, for SFCVB, the difficulty of execution these four major bring could be
eliminated when we applies Collaborative Commerce (C-Commerce) systems. For
instance, SFCVB Travel Trade team has to look for the solutions to utilize these
advantages to collaborate with our competitors to the extent of turning our
competitors into our partners. Also, using the power of C-Commerce to integrate our
third-party travel producers and the transportation, lodging and convention venue
providers enables our group to improve the connection between these organizations
and us. In addition, using C-Commerce with local communities would be very helpful
to our event implementation.

In the meanwhile, the new challenge we need to deal with is figure out how to get the
opportunity from our business partners, customers, and suppliers to launch the first
step of our C-Commerce system. To gain their trust of sharing the internal
information with SFCVB is not easy. However, we will create an implementation plan
and present to them the importance of using C-Commerce system.

Management Solution
A survey report entitled "Collaborative Commerce: Compelling Benefits, Significant
Obstacles," by NerveWire, Inc. in 2002, states that the “[c]ompanies operating at the
highest levels of Collaborative Commerce have increased revenue on average 40%,
reduced costs 30%, slashed cycle-times by 37% and boosted customer retention
35% (NerveWire, Inc., 2002, p.3). As in a business entity, SFCVB wants to benefit
from the merits that C-Commerce brings. In addition, the survey report also shows
that “integrating a company’s internal business processes and systems is critical to
external integration. Companies with the highest levels of Collaborative Commerce
(and greatest business benefits) are much more integrated internally than companies
with low degrees of collaboration” (NerveWire, Inc., 2002, p.4). For SFCVB,
implementing C-Commerce in a travel and tourism industry will be a breakthrough.
However, we are also the best organization to initiate this model and system. It is
C-Commerce Applications in SFCVB-Travel Trade 5

crucial for us to integrate our suppliers, customers, and business partners through
the use of Internet technologies in order to increase our market share and maximize
our profits.
Based on J. Fou (2001), who is the co-funder of E-Dynamic Inc, C-Commerce Model
has three stages:

• First stage of C-Commerce — web enabled C-Commerce, a one


dimensional, single e-enabled business process that allows certain
internal data to be visible to external trading partners, and vice versa.
Typically, this meant implementing a web presentation of the data, and
allowing partners access to it. This is a limited form of c-commerce,
with very limited value, saving only labor cost. Typical applications
would be displaying demand for production materials, showing sales
forecasts to suppliers, or presenting bills electronically.

• Second stage of C-Commerce — B2B exchanges in markets such as


steel, auto parts, chemicals or airline equipment. Buyers, sellers and
suppliers are integrated through a web portal. In this stage, each
enterprise can reconfigure its supply chain through the marketplace to
leverage aggregated buying power and eliminate brokerage fees and
middlemen.

• Third stage of C-Commerce — will be built on Web Service as a core


integration engine to deliver seamless process integration, seamless
customer satisfaction integration and seamless product design
integration. It is a plug and play sort of C-Commerce rather than a
hard-wired, integration driven effort.
Following these three stages of C-Commerce, SFCVB is able to change the current
business operating system with our suppliers, customers, and business partners.
Meanwhile, we are able to save the costs include labor costs and other overhead
expenses. What’s more, according to NerveWire, Inc. (2002), the company “need(s)
to treat both suppliers and customers like partners and collaborators” (p.6). It is a key
to enhance efficiency and value across the whole business value chain.
In order to differentiate SFCVB from our competitors is to provide the customers
things can only be found in San Francisco. Highlighting “Only in San Francisco”
experience is one of our goals and the solution in the travel industry. In other words,
SFCVB is creating a “Only in San Francisco” campaign by utilizing brand marketing
in order to be recognized by the visitors that San Francisco is special and is the
place where the visitors can choose from lots of tour packages, such as a Art and
Music tour in some museums, a Diversity Tour in China Town or Italy Town, or a
LGBT Tour in Castro Street.
The convenience of the Website that SFCVB created:
http://www.sfcvb.org/travel_trade_tour/ can be used with the website
http://www.onlyinsanfrancisco.com/ where visitors can find all their needs. It is shown
in Figure 2 the function of Tour Development and Figure 3 an online planner that
visitors can utilize to arrange their itineraries.
When applying C-Commerce with SFCVB’s current online system, SFCVB Travel
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Trade has the option to utilize Enterprise Information Portal (EIP) structure to create
a community collaborative platform that integrates our hotels, transportation, and
convention venue suppliers. We can all share and collaborate our workflow,
document, projects, and customer service support. Currently, there is some software
in the market that is based on that, such as Confluence by Atlassian Software
System. Confluence is "to build an application that was built to the requirements of
an enterprise knowledge management system, without losing the essential, powerful
simplicity of the wiki in the process (Wikipedia, n.d.)." Therefore, our suppliers can
provide what customers need. All we need to do is to gather the information about
the hotels, activities, dining, tour packages, and transportation that allows the visitors
to get all the information they need by visiting only our website. Also, we are able to
design new products, such as tour packages, to our customers based on the
information we acquire from the C-Commerce system. That is one of our goals to be
able to save our customers’ searching time and costs and increase our revenues by
getting more advertising income from our suppliers.

Figure 2. The Function of Tour Development. Visitors can choose their own theme
trips.
C-Commerce Applications in SFCVB-Travel Trade 7

Figure 3. The function of Tour Development


According to the research of NerveWire, Inc. (2002), C-Commerce has four levels of
external integrations (p.8-9):

• Level 1: Minimal external integration

• Level 2: Moderate external integration

• Level 3: High external integration

• Level 4: Very high external integration

In Figure 4, definitions for four levels are shown.

Figure 4. Definitions of Four Levels of External Integration


SFCVB wishes to get to the highest level where our partners and we have a very
high external integration and where we share the same database and applications.
The advantage from that is to eliminate the redundant activities that our partners and
we involved. Tour operators and agents who use and order our services online will
save a lot of costs and time from searching for and comparing deals.
Lessons Learned/Business Case
As mentioned above, companies that use C-Commerce model have saved a lot of
costs from lowering labor costs, brokerage fees and inventories. According to a
survey that was conducted by Deloitte Consulting (Goliath, 2002), companies that
C-Commerce Applications in SFCVB-Travel Trade 8

have connected their businesses with their partners reported 70% higher profitability
than companies that have not.
Take Cisco System Inc. for example, back in 1997, the company created a Web-
based technology platform, the Cisco Connection Online, for its suppliers, partners,
and customers. By providing suppliers and contract manufacturers instant sales
data, the company lowered inventory levels by 4% in three months. As a result, the
company had grown from $6 billion to $22 billion from 1997 to 2002 (NerveWire,
2002, p.7).The impact for a company to change to C-Commerce model is enormous.
The other example is about Lion Travel Group, the largest traveling agency in
Taiwan, has experienced and benefited from applying C-Commerce in the
company. Before the company used C-Commerce, it was like other traditional
traveling agencies in Taiwan; it spent a lot of money on printing and
distributing its ads and sales information to its suppliers, other traveling
agencies, and customers. After the company created a web-based integration
platform with the uses of C-Commerce, where the suppliers could login and
got the real-time sales information. In addition, the travel agents of Lion Travel
Group improved their productivity up to 60%. It reduced over USD$300,000 on
labor and overhead expenses. The C-Commerce system also enhanced the
company’s financial management. The company used to receive 500~600
checks every day. It needed employees and time to process those checks.
However, with the application of C-Commerce, the company cooperated with a
Taiwanese national bank and saved all the expenses the company used to
spend to manage the checks. An additional value from the cooperation was
that the bank was able to check the credit and financial conditions of Lion
Travel Group’s business partners for the company to enhance the company’s
risk management (Zhan, 2007).
OpenTravel Alliance also has been using C-Commerce platform to collaborate
with its business partners and members that include airlines, car rental firms,
hotels, cruise lines, railways, leisure suppliers, service providers, tour operators,
travel agencies, solutions providers, technology companies and distributors
(OpenTravel Alliance, n.d.). The organization is a non-profit trade association that
was founded by the major airlines, hotels, car rental companies, distributors and
technology companies and created open messaging specifications in XML for every
vertical in the travel industry (Perini, 2007). The company also adopted Open
Standards and encouraged its partners to use the system. After Norwegian Cruise
Line (NCL) used the system, NCL was able to connect with more distribution
partners not just from their own call centers and accredited travel agencies.
According to Perini (2007), benefits for NCL of using Open Standards include: re-
usability of messaging transactions, quick deployment to NCL partners, inter-
operability of existing OpenTravel messages for non-cruise functions, cost of
shopping and booking transaction reduced by 50% over call center, expectation of
doubling GDS bookings by the end of 2008, increasing eDistribution of NCL product
in 2006 (one year after using the service), and working with other companies
enhance the standards.
What we can take away from the cases about the advantages of utilizing C-
Commerce is to develop a system that when individual travelers go to our tour
operators or agents for service, we are able to find the specific transportation,
C-Commerce Applications in SFCVB-Travel Trade 9

lodging, and dining providers at the same time from our database that meet what
tour operators or agents need for their customers without going and comparing deals
through dozens of steps. Another advantage is that once the customers want to
change their itineraries about the tour schedule or hotel reservations, all they need to
do is changing their personal itineraries online. The changing information would
directly transferred to their hotels, transportation, and dining providers.
Why I care
The impact from the evolution from E-Commerce to Collaborative Commerce (C-
Commerce) is tremendous. From the platform of Business-to-Customer (B2C) to
Business-to-Business (B2B), C-Commerce integrates these both with the uses the
Internet technology and brings the breakthrough in the business era. C-Commerce is
a powerful business application and would change the business system and
structure of companies that apply C-Commerce. It benefits the consumers who use
the services or products from the companies that adopt C-Commerce. Take tourism
industry for example; for a traveler to arrange a tour or a trip, it takes a lot of time to
search for the information from the departure of the trip to the destination. If there is
a company, whose website is reliable and easy to understand; and what if the
traveler only needs to go to the website to get everything he/she wants, the company
would gain its trustworthiness from the traveler. Furthermore, through word-of-mouth
and viral marketing effect, the company would gain it revenues and market share
gradually. To the company, the integration with its business partners can save the
both sides an incredible amount of expenses. Therefore, for a company and its
suppliers, business partners, and consumers, it creates a win-win situation for every
single stakeholder.
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References
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Destination Marketing Association International, Washington, DC, USA (2010).
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Goliath (2002). Collaborative commerce moves from conference topic to board room
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Zhan, Z. X. (2007). Collaborative Commerce Platform Changed Traditional Business
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OpenTravel Alliance (n.d.). About the OpenTravel Alliance. Retrieved from
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