Travelers Kills Travtech; Buy-Side Units Timco, RCM Don't Seem To Notice

TRAVTECH, a corporate entity created last spring by Travelers Inc. to handle voice and data communications services for its entire family of financial companies, has been dissolved. The unit had been designed to rationalize costs and procurement procedures among all of Travelers' financial units, including its three buy-side subsidiaries: Travelers Insurance Companies, Travelers Investment Management Co. (Timco) and the San Francisco-based RCM Capital Management--as well as retail brokerage Smith Barney Inc.

The degree to which Travelers' buy-side units will be affected by the abandonment of Travtech remains a matter of some debate. At the time that Travtech was created, it was thought that the group could provide a boost in the quality of information technology available to Travelers' buy-side units (IMT, June 10, 1994). These companies currently rely on a combination of standalone terminals and a patchwork of digital data distribution systems to deliver real-time market data to their traders and portfolio managers.

But one Timco official says that the death of Travtech has had no impact on his firm, which represents the insurance company's investment management arm. "I was aware of the name.... [but] I wasn't aware that they were even working with us on anything," the official says. "[Travtech] didn't have any effect on us whatsoever." Officials at Travelers Insurance either decline to comment or did not return calls seeking comment. RCM officials did not return calls seeking comment.

Travtech, short for Travelers Technology Services, was supposed to provide services to a community of users that included investment managers handling more than $138 billion in third-party assets. (That figure includes some $16.5 billion in assets contributed by the former American Capital Research & Management, a one-time Travelers Inc. subsidiary that was sold off to mutual fund manager Van Kampen Merritt last month; American Capital Research is now part of Van Kampen/American Capital.)

All tolled, Travtech would have positioned some 20,000 data consumers to shop en masse for software, systems and services, affording them considerable clout with vendors.

Details about the reasoning behind the decision to ditch Travtech are somewhat sketchy. The group was supposed to be headed up by Rich Witenberg, executive vice president and head of communication services at Travelers' Smith Barney Inc. subsidiary.

Witenberg, who had been tasked with supervising Travtech's mission to consolidate all of the separate telecommunications departments of Travelers' various financial organizations, refers calls to a Smith Barney spokesperson. The spokesperson concedes that Travtech no longer exists, but asserts that it is improper to say the group was disbanded because it was never officially formed.

"Travtech was an idea we had over a year ago--to consolidate communications functions and some people--but it never really got off the ground," the spokesperson says. "When [Travelers] began to pursue it, I think they found that there weren't the efficiencies they had hoped to achieve. Therefore, it kind of withered on the vine, so to speak."

A source close to Smith Barney agrees that Travtech never really developed beyond the "concept" level. Says this source: "The original business designs were laid out to make Travtech an actual business subsidiary of Smith Barney, [but] that never occurred.

Travelers' chief information officer Rick Morrison, who was supposed to serve as Witenberg's boss under the Travtech set-up, did not return calls seeking comment.

The death of Travtech comes on the heels of an abortive restructuring that recently took place within Smith Barney's capital markets market-data group. For a short period of time until it was rescinded, that reorg effectively rendered the Smith Barney group powerless. At press time, it remains unclear the degree to which the failed restructuring of the Smith Barney group is related to the larger failure of Travtech.