AstraZeneca since 2009 has mapped out a multi-phase improvement and expansion of its travel management program. Global commercial lead for business travel management Caroline Strachan, hired that year to bring more value to the travel program, started by heeding the advice to "never outsource a problem." She helped create a multinational travel program, launched in January 2011, that covers AstraZeneca's three key markets of Sweden, the United Kingdom and the United States, and then proposed a plan to globalize travel management by leveraging best practices learned from that first phase. As part of that effort, AstraZeneca established a five-year business process outsourcing agreement with American Express in which the incumbent travel management company takes on much of the program management and many travel procurement functions.
"For the first 18 months I was here, it was all about getting our house in order and making sure we really knew what was needed and that we had travel in a smart, mature place," Strachan said. "Only then would we really understand what the key components of the program should be and to be specific about what we wanted to achieve in the outsourcing agreement.
"From a service perspective, we needed to improve and simplify," she added. "The program had grown organically and inconsistently. This was a key focus to get our house in order." Another key building block to the program was the "voice of the traveler," she said. "We needed to put the customer front and center of everything we do."
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Strachan did not provide specific savings figures, but noted "the additional market intelligence that Amex brings ensures we access every opportunity, no matter how small."
The globalization objective sprung from what had been the traditional approach of allowing travel programs to be managed locally, in alignment with the overall corporate structure. "AstraZeneca traditionally is a series of marketing companies around the world," Strachan explained. "In the last 18 months, we have been going through change from being 100 local marketing companies into being a regional and global organization. Working in any kind of global way, for a service contract, is very new to the organization." The general sentiment within the company, she added, is that if something works better locally, "just leave it as is," but globalization that benefits both corporate objectives and local stakeholders will be considered.
For travel management and procurement, that meant combining the three teams in Sweden, the United Kingdom and the United States into one multinational program. It also meant deciding on a travel management company.
'Forgetting Everything You Know About Your TMC'
In January 2010, "we sat with American Express and said, 'What does world-class look like? Let's have a joint discussion about how we might get there,' " Strachan said. "We looked at our markets and said, 'There is only one other global provider we could move to, so this isn't big RFP territory.' " She added that having what AstraZeneca perceived as only two viable choices (she did not identify the other) was not concerning. "It came down to history to date plus what future innovations could make the biggest difference to AstraZeneca. Amex had done a good job, so why would we want to move away?' Instead, we asked, 'What could a five-year partnership look like?' "
That partnership is a comprehensive arrangement that includes dedicated account managers, a team of sourcing experts, a growing roster of agents and support staff and innovative performance measurement. The contract also specifically addresses the need for "Chinese walls" between the American Express Travel client management group and the American Express advisory division that includes the business travel outsourcing organization.
"There is information that goes into one side of the organization that cannot go across to the other side," Strachan said. "We need to have very open conversations with the outsource team. In any client/supplier relationship, there's some information that cannot be shared; it's exactly the same for us. We have the [corporate] card, technology and security contract information completely ringfenced inside AstraZeneca.
"In outsourcing to your TMC, it's almost forgetting everything you know about your TMC," she added. "You have to look at a TMC in a different way to be confident in outsourcing your program."
Importantly for AstraZeneca, the arrangement requires continued use of its sourcing and supply management framework, including its Ariba sourcing system, a governance model, "reviews throughout the process to ensure we don't lose sight or control of the future of the travel category," and coordination with the internal BPO Center of Excellence, a central resource for all AstraZeneca outsourcing projects.
"It is the best of both," Strachan said. "We use our process but their people, intelligence and technology."
The New Team
At the onset, the travel team consisted of nine AstraZeneca employees: Strachan, one program manager and one procurement manager in each of the three key markets, and "buyers" in the United Kingdom and Sweden. To widen the scope beyond the three core markets, create global capabilities and accomplish its objectives, AstraZeneca needed a bigger team.
To get there, the hiring process "took us longer than we anticipated," said Strachan. "You want to make sure you are really handpicking the people you want in your organization. Not a lot of people that we interviewed really got what we were trying to do. When they understood it, they were either on board with it or weren't. That was probably the biggest challenge and the biggest barrier to get past.
"Yes, someone might have strong travel management skills or background, but the main skills we have been after are, can they truly engage the customer and can they be visible?" Strachan continued. "From experience, that has been the one thing lacking in a lot of companies."
[PULL_1]The result is an 18-member team comprised of employees from AstraZeneca, American Express and an outside consultancy, though all members basically are considered to be part of AstraZeneca. Still, the "four key roles" were filled by AstraZeneca people, said Strachan, who leads an organization now split into three areas: "demand" (travel management), "supply" (travel purchasing) and "transition."
On the demand side—the customer-facing component—AstraZeneca employee Kerrie Henshaw-Cox serves as global program manager, responsible for travel management strategy, governance and policy. She leads a group of nine American Express employees: a regional business partner for each of the Americas, Europe/Middle East/Africa and Asia/Pacific and two "service excellence managers each" for the Americas, EMEA and Asia/Pacific. Those nine are dedicated to AstraZeneca, are based at AstraZeneca locations and use AstraZeneca laptops and BlackBerrys.
The supply side is led by AstraZeneca's Mia Andersson, who serves as global category manager, responsible for travel procurement strategy, governance and policy. Her group includes a sourcing manager, also an AstraZeneca employee. "That is a very important role in an outsource because that means you have someone who can buy TMC, who can buy corporate card, who can buy technology and who is completely separated from American Express in case there was a conflict of interest in any of the categories we were buying," Strachan explained. For example, that sourcing manager is responsible for the company's American Express corporate card program in two of the major markets, and for the direct contract with GetThere for an online booking tool; AstraZeneca preferred not to source that through the American Express/GetThere reseller agreement.
The supply side also includes four Amex employees: an air lead, a hotel lead, a car/ground transport lead and an analyst. They serve as "the AstraZeneca face" of the respective programs, Strachan said. Unlike the Amex employees involved in program management, these procurement experts are not dedicated to the AstraZeneca account. Strachan described them as "the flexi-sourcing team" who are augmented with additional Amex resources during such busy times as hotel RFP season, but free to serve other clients during AstraZeneca's slower periods.
AstraZeneca's Amex contract stipulates that "we will pay a fixed price a year and you will source everything we require within that," Strachan explained. "If you have to flex your resources up and down, that is Amex's issue to deal with."
The final element, transition, is overseen by a temporary global project manager from the 3Sixty Global consultancy, a U.K. firm that helped AstraZeneca with the legalese of the American Express contract. "We talked about that being an Amex role," Strachan said, "but thought that was a step too far. We really wanted someone completely removed from both organizations to give us additional objectivity."
The rest of the Amex team includes 35 dedicated agents and support personnel, including 10 each in the United States (who also serve Canada), the United Kingdom and Sweden (for the Nordic region), and a five-person "account management optimization team," noted Strachan. "But we are growing, and that team will grow, if needed, as we bring more countries into the program."
Campaigning For 'Better Business Travel'
Strachan and her team went all-out in ensuring the travel program's message reached all employees, with the goal being not just awareness but also interaction and feedback, because, importantly, travelers decide how American Express is rewarded. To spread the message, AstraZeneca enlisted a design firm to rebrand the travel program, complete with new logos and slogans.
Referring to the "huge organization" that is AstraZeneca, Strachan said, "I never had to deal with such a broad demographic of individuals. We communicate the same message in about 10 different ways."
The "campaign for better business travel" that launched this past spring and was highlighted during a "Business Travel Week" encompassed a social networking site (feedback via Yammer); the company's online portal (featuring banner promotions, blog postings and opportunities to provide input); emailed surveys; invitations to attend in-person events (part of a series of roadshows) and "personalized frequent traveler sessions"; and video screen messaging and physical banners. Travelers also are encouraged to visit travel team members to share "likes and gripes."
"Thank goodness we decided to do it this way," Strachan said, "otherwise we wouldn't have caught them all."
Catching as many as possible was key because the travel team "promised we would focus on what they disliked most," Strachan said. "The biggest change" between the new and old Amex contracts is that the TMC now is measured on performance to traveler priorities as part of a "gain share" set-up. "We say [to travelers], 'Here are the elements we could reward American Express on. What is most important to you?' " she explained. "The customer gets to decide what excellent service looks like."
AstraZeneca still is working through travelers' input, "but initial feedback tells us accessibility, knowledge, price and a consultative approach are the key factors," she said.
In many other respects, travel program changes were meant to be seamless and essentially invisible to travelers. "It was never meant to feel like a change of service provisions," Strachan said. "All we wanted to say was that from here on in, it'll only get better. Tell us what it is that you want and we'll make sure you get it."
On the purchasing side, benchmarking data—from Amex and other sources—is key to assessing the travel management company's performance. "We know we are now in a good place," Strachan said, "and now when negotiating each contract, we can see what additional value Amex brings."
Next Steps
AstraZeneca recently began to add to the program Australia, Canada and other Nordic countries. The transition also is underway in China, Finland, Malaysia, the Netherlands and South Africa, with additional markets in the queue. By year-end, the company intends to run a program covering 24 countries on four continents, representing 80 percent of the company's total T&E spending.
Meanwhile, the company's travel policy during the transition largely has gone unchanged, but following a review last year, "a new globally consistent policy" is in the works, Strachan said. "That was one of the items we took off the outsource [project] because we wanted new team members to be in place to help roll the policy out. It's all about consistency and clarity."
A past chair of the British and Irish Institute of Travel & Meetings who also has held travel management roles at Yahoo and Cisco Systems, and currently the chairperson for the Global Business Travel Association's Europe Advisory Board, Strachan shared an optimistic outlook on travel management outsourcing.
"Some people see this whole area as a threat to a travel manager's job," Strachan said, "but I see it really as a fantastic opportunity. There could be a major amount of outsource travel managers in the future."
This report originally appeared in the August 2011 issue of Travel Procurement.