Part of the reason people get dissatisfied with terms like Web 2.0 and Web 3.0 is that we all know the Web is an unfinished project and we're somewhat impatient to see some more progress made on getting it built. So it's good when an announcement comes along that suggests things are actually moving in the right direction.
One such announcement is the news that American Express has launched an 'intelligent online marketplace' based on hosted technology from Rearden Commerce. Fellow ZDNet bloggers Dan Farber and Joe McKendrick each covered the story yesterday. I was stuck in an airport with a recalcitrant laptop and couldn't post at the time, but I have quite a bit to add, in part because I know Rearden well since the company is a client [see disclosure page], and in part because this announcement reinforces so many of the themes I've been writing about recently.
Convergence of business service providers with SaaS. We're seeing more and more examples of traditional business services giants teaming up with (or acquiring) SaaS vendors to enhance their service offerings to customers. American Express is the grand-daddy of business service providers and so the alliance with Rearden both reinforces and further validates the trend. Why are providers doing this? Because the latest generation of SaaS vendors are raising the bar in delivering effective end-to-end automation of business services.
"... the Holy Grail for developers of the semantic Web is to build a system that can give a reasonable and complete response to a simple question like: 'I'm looking for a warm place to vacation and I have a budget of $3,000. Oh, and I have an 11-year-old child.'
"Under today's system, such a query can lead to hours of sifting — through lists of flights, hotel, car rentals — and the options are often at odds with one another. Under Web 3.0, the same search would ideally call up a complete vacation package that was planned as meticulously as if it had been assembled by a human travel agent."
The Rearden Commerce platform is that Holy Grail. It adds the semantics to be able to correlate an individual's preferences, entitlements and circumstances with all the options available from suppliers, and present just the ones the buyer is interested in. For American Express, which has something called 'first-pass yield' as a key metric, that's a phenomenal advantage, because it promises to keep the numbers of transactions that get completed on the first pass at a high level. In a pre-briefing late last week, Andy McGraw, senior vice president of American Express Business Travel, told me that Rearden's 'personal assistant' interface, which presents personalized service choices to the user, "is an important differentiator. We're able to consolidate within a point-and-click environment so [users] can find, purchase and manage all their business services requirements."
Focus on business results. The Rearden platform helps AmEx bring a whole new swathe of business services spending under management, because of its support for services outside of the traditional core travel spending focus areas of flight, hotel and car bookings (Dan Farber's posting has a neat graph to illustrate the near-50% share of spending that falls outside of these three categories). Bringing them into the automated booking system allows enterprises to steer users towards recommended suppliers of services such as airport parking, dining, event tickets, package shippint and web conferencing. These smaller-ticket items still add up to a large volume of spend and, because employees usually end up sourcing them on their own initiative rather than through negotiated contracts, businesses pay anything from 15% to 27% higher prices, according to research that AmEx's McGraw cited. As he succinctly summed up, "Poor policy compliance leads to high prices." Rearden's system focuses on reducing those costs by making compliance the path of least resistance for users.
Consumerization of enterprise applications. Online purchasing is one of those areas where consumer Web sites set the bar and any enterprise application has got to provide at least the same level of ease of use and functionality to have a chance of getting used. Providing a Web-style, consumeresque interface is a cornerstone of making sure users aren't tempted to bypass the corporate system and start making unapproved purchases. It's also a prerequisite for doing well in that 'first-pass yield' metric that AmEx values so highly. Rearden's personal assistant interface is designed to look and feel just like a consumer Web application. Its management console and supplier onboarding tools also have a strong point-and-click ethos.
Putting the user at the center of the process. One of the biggest problems with present-day enterprise applications — and with a lot of what's out there on the Web, too — is that it makes users bend their workflow to the demands of the application. To me, the most impressive aspect of the Rearden system is the way that it has been designed to accommodate the user's own workflow and put the Web to work for the individual. This shows through, for example, in the way that interlinked bookings can be completed as a joined-up process — such as booking a flight, airport parking, hotel and dining — in which each separate booking follows on sequentially from the last, and there's no need to re-enter duplicate information for each separate step. Then the information pertaining to the booking gets automatically updated to the user's calendar and any subsequent changes will generate automated alerts, rather than putting the onus on the user to go back and cut-and-paste information across or manually updated and reconfirm details in the event of a schedule change.
Promotion not advertising. From American Express' point of view, there's "a tremendous opportunity to go after that long tail of services related to business travel," McGraw told me. "In a sense, it's game-changing for us because we're offering a marketplace of services." Now look at this from the point of view of a small service provider — perhaps an airport parking operator or a local limousine service. Instead of advertising on Google or in Yellow Pages, now those suppliers have a new option. All they have to do to access the potential business from AmEx's 14,000 Business Travel clients worldwide is get themselves included in the Rearden-powered network (branded AXIOM, for American Express Intelligent Online Marketplace). Then the Rearden software will make sure that their service gets presented to any user who has a qualified need for it. That's the essence of promotion instead of advertising, as enabled by the next generation of the Web, and it could dramatically change the economics of new business acquisition for this type of company.
Scale economies of shared services. This is the killer justification for the on-demand model. The vast advantage that comes from Rearden hosting this system for all its customers — an advantage that's now hugely boosted by the deal with American Express Business Services — is that just one integration is required to access the entire network. Customers integrate once and they gain access to every supplier in the network. Suppliers integrate once and they become accessible (subject to corporate approval) by every customer and user within the network. On-premises applications have to make those integrations over and over again, which puts them at a massive and growing competitive disadvantage.
Extensibility of the services architecture. All of the above points add up to the Web being put to work to deliver real-world business results in a way that we often dream of but have rarely seen realized to date. It's appropriate to see American Express, who pioneered online travel booking services a decade ago, mvoing ahead with this new platform for intelligent services procurement. It's made its choice not only because of what the Rearden software enables today but also for its future potential, McGraw told me: "Over time, we have a platform where we can add more service capabilities and we have a technology foundation for future growth. That's very important for American Express."