Reporting savings and benefits from demand management
initiatives, particularly remote conferencing technology, can be easy in the
first years. Year-over-year travel volumes, and therefore costs, often
dramatically decrease. But what happens in subsequent years, once such
initiatives have become ingrained in a managed travel program?
Three travel buyers at organizations with mature demand
management programs in December told attendees at The BTN Group's Travel
Management 2013 conference that while hard-dollar advantages become harder to
find, they still are discovering new ways to benefit from these
initiatives—often from surprising sources.
Siemens Corp. several years ago began introducing
technology—notably desktop meeting tools, complemented with a few remote
conferencing suites—to curtail travel for internal meetings, said director of
mobility services and supply chain management for indirect materials Steven
Schoen. By tracking trip purpose, Siemens had shown that about 40 percent of
its travel was for internal meetings.
Initially, the program proved so successful that Schoen and
his team underreported the savings, he said.
"Adoption came so quickly that we couldn't even claim
all the savings we were measuring, because nobody would believe it," Schoen
said. "In the first year, a very conservative formula showed $46 million
[in savings], for just the United States at the time."
Savings in the next few years became "incremental,"
and Siemens no longer bothers to report travel savings from it. That's partly
because the benefits have spread well outside of the travel department, Schoen
said. "A lot of us have shifted to working remotely, and you really can't
measure the usage and try to come up with an accurate formula as to how that is
offsetting travel," he explained. "It's offsetting commuting, which
is wonderful."
Philips Electronics followed a similar pattern, said M. John
Guarneri, the company's global commodity manager for travel and leased vehicles
in North America. During the course of a few years, it gradually installed
about 60 remote conferencing suites to cut travel. By 2011, Philips calculated
that it reduced employee flights by 21,000, "but we could only claim
savings for one year," Guarneri said. "After that, the project's in
place."
Once a program reaches that maturity level, travel buyers
have to start looking at benefits beyond savings, Schoen said.
"Are we reducing spend or are we enabling the managers?"
he asked. "If we cut down [internal travel for meetings], they can travel
more for their customers. So, it's not a matter of reducing spending but
reallocating spending in a manner that will better impact the company."
Guarneri said he constantly is looking for new ways to add
value to the program. For example, he is working with the meetings management
group to see where it can control demand for training-related travel.
Verizon Communications senior travel services specialist
Debra Goldmann said she continually monitors savings from remote conferencing.
Verizon for nearly a decade has used remote conferencing
rooms but began to seriously encourage use about three years ago, Goldmann
said. Buoyed by a 96 percent online booking adoption rate, the company adapted
the booking tool to include a drop-down menu requesting reasons for travel. Any
time travelers select internal meetings as the reason, they automatically are
diverted to the conference collaboration reservation site, where they can
reserve audio, video or webconferencing options.
Verizon has seen about a 25 percent reduction in travel
costs, and Goldmann feels comfortable in reporting that savings as true cost
avoidance.
"We measured the effects of the program on those
particular reservations," she said. "We felt like this was an honest
way to say this is working, because these reservations are truly coming from
this effort."
Like Guarneri, Goldmann also looks at benefits outside of
travel. For example, remote conferencing has enhanced Verizon's ability to
outsource certain departments.
"Demand management and telepresence really allow us to
meet monthly with peers and team members across the world," she said. "We
have people from accounts payable and information technology, and they all can
meet together without needing to travel across the world, and that enables you
to optimize your spend."
Another advantage for mature programs is that some early
obstacles become non-issues. The question of whether certain age groups will be
more likely to use the technology than others, for example, no longer comes up.
"The technology is so mainstream now, demographics are
not an issue," Schoen said. "Those younger employees coming into the
workforce seem to be more anxious to travel—until they've taken their first
trip."
Occasionally, unforeseen cost-savings benefits still can pop
up in mature programs, even if they bring travel buyers little more than a bit
of personal satisfaction, Schoen added. At Siemens, after the technology became
widely adopted, employees started canceling their conference calling cards.
"We didn't anticipate that one," he said, "or
get credit for it."
Sidebar: Many
Definitions Of Demand Management
Increasingly used in the context of managed travel programs,
demand management is an approach to reducing travel costs by redirecting
internal travel to remote conferencing options and enforcing such travel policy
parameters as use of preferred suppliers—including airlines, travel agencies,
booking tools and payment cards—and flight-time windows, according to M. John
Guarneri, Philips Electronics North America global commodity manager for travel
and leased vehicles.
To Steven Schoen, director of Siemens supply chain
management for indirect materials and mobility services, demand management is
all about studying the whos, hows and whys of travel: "What's being spent?
Who is traveling? How and when are they traveling? Why are they traveling?"
Siemens' demand management efforts have focused on "limiting travel for
internal meetings and/or reducing the number of travelers per meeting."
Verizon Communications travel services senior specialist
Debra Goldmann said "demand management is accomplished through optimizing
resources, reallocating assets and embracing alternatives."
To help travelers select the most appropriate remote
conferencing option, Philips provides employees with a matrix that details the
ideal use for each tool, the audio or video equipment required, whether a
meeting must be scheduled, whether it is for internal or external use, the
maximum number of participants, screen-sharing capabilities, content upload and
sharing capabilities, the costs to use the tools and instructions.
To calculate savings realized from conferencing
alternatives, Philips devised matrices that detail typical airfares between
company destinations, the carbon footprint of such flights, the average daily
hotel rate in each destination and the average daily allowance for food. The
average costs were used in formulas to track savings from use of travel
alternatives.
This report originally
appeared in the February 2013 issue of Travel
Procurement.