Only a handful have followed the first very large corporate travel buyers in pursuing the follow-the-sun travel management concept, in which a very small number of regional service centers, one GDS and one travel management company handle global operations.
Oracle, the latest to join pioneers Cisco, General Electric and Wal-Mart, has made great strides in implementing a follow-the-sun program.
Meanwhile, many global buyers and travel management companies have been hesitant to follow suit because of local market nuances, particularly in the Asia/Pacific region, including content fragmentation, language and cultural barriers, and the inability of governments, travel management companies and technology suppliers to provide standard infrastructure to service all reservations adequately.
"Companies have been hesitant to stick their head out of the foxhole over that issue because of the difficulty of proving that the different locations are knowledgeable about the local travel conditions," said John Caldwell, president of consulting firm Caldwell Associates. "While it makes sense on paper, the practical question when you move the reservations that occur in France to some other place is the same problem that exists with off-shoring. Will the agents be knowledgeable, as not everything they need to know is necessarily in the computer?"
Now in its second year of the strategy, Oracle has provided standardization and consistency to its program via a global travel policy, global consolidation of travel management company services with Carlson Wagonlit Travel, use of a primary online booking tool, GetThere, which has driven overall online booking adoption above 90 percent, and alignment of the booking tool with the Sabre global distribution system, as well as rationalizing its supplier base for global air and hotel agreements and reducing its business travel centers from 91 to an expected 12 by year-end.
"As we see it, if you have one global agency, one global travel policy, one GDS, one company language and an acting global manager on duty at any time, then you can service your employees no matter where they travel in the world," said Ralph Colunga, Oracle senior director of travel, meetings, sourcing, data and card solutions, who reorganized Oracle's travel program into five silo organizations in December 2005 to set the backbone for consolidating through the follow-the-sun environment.
In 2006, with a $585 million companywide T&E bill including $244 million in companywide air volume for 60,000 cardholders, follow-the-sun initially harvested significant benefits. In the first seven quarters of implementation, Oracle's cost per transaction in the United States decreased 33 percent, despite transaction volume increasing 50 percent during the same period. In the Europe, Middle East and Africa region, where Oracle rolls one country into the Warsaw business travel center every three weeks, the first seven countries to convert in the initial five months of follow-the-sun had a 34 percent decrease in cost per transaction. The Warsaw business travel center will handle 19 countries by the end of 2007, and the company's Cairo business travel center, which handles 14 countries, will service 20 countries by the end of the year, according to Colunga, who adopted his follow-the-sun experience from previous employer Cisco Systems
(BTN, March 7, 2005).As Oracle moves further into follow-the-sun, Colunga plans to continue down the consolidation path in hopes of obtaining the optimal service configuration. "As we continue with our consolidation strategy, and we are in phase two at this point, it gets back to what's phase three and then beyond," Colunga said. "By next year, if we get down to 10 or 12 business travel centers, then how do we get down to two or three? Do we take it down to two or three?"
Colunga's notion that it's possible to reduce the amount of business travel centers to a minimum is an attainable goal, according to one CT100 buyer who has experience with follow-the-sun. "Once the call center was established in Europe and then the U.S., we then said, we can do this right across the world," the buyer said. "If you just take London, East Coast U.S. and Sydney and you just have three travel desks, ultimately you can run the whole thing on follow-the-sun. You can just have three call centers, you renegotiate for three points of sale with your carriers and then you've got follow-the-sun."
However, Loren Brown, Carlson Wagonlit Travel CIO and executive vice president of technology and products, isn't so sure it's a realistic goal because of the effects of worldwide content fragmentation, such as accessing the government-controlled GDS TravelSky in China, the proliferation of low-cost carriers that do not participate in GDSs and the complexities of rail content distribution in Europe.
"Even if you look at the leaders in the space that are pushing this, they look at it 80/20. They don't take a position that they can do follow-the-sun 100 percent across their markets because they know that it's really not feasible," CWT's Brown said. "You have to carve out some exceptions."
While corporations adopting follow-the-sun tend to be some of the largest travel spenders, it is not a concept exclusively limited to size. If corporations can work with their travel management companies and suppliers, while also putting in place the necessary infrastructure and standard processes, it becomes a possibility for smaller global companies to jump on board.
"If you get 80 percent of your transactions online, you don't need extensive local market servicing to support your other 20 percent, which are usually transactions that need some sort of manual intervention," the Corporate Travel 100 buyer said, adding that airline contracts need to align with the follow-the-sun strategy. "The next stage was to go to the airlines and see if they would renegotiate our airline contracts so that instead of only being valid from the point of sale in European markets, we could sell them and ticket them from a central location."
American Express Business Travel COO Priyan Fernando said that companies don't have to be one of the 100 largest travel spenders in the United States to be able to leverage TMC and supplier relationships to work in a follow-the-sun system.
"Consistency takes away the cost and complexity of integration," Fernando said. "Having fewer vendors enables you to get the benefits of scale and intimacy. It is to the advantage of the corporation to work with the TMC to prepare suppliers to make the integration to make the value proposition come alive."
CWT's Brown said while is it unlikely for a non-mega travel spender to successfully make the transition to a follow-the-sun program, "unless they have such a high degree of standardization on their worldwide operation that it makes sense," Brown said. "Typically, in the midmarket clients, you don't see that. They are typically bigger in their home market and then they have their fingers or toes in the others, but not in a big way with a high degree of standardization."
Although American Express and Carlson Wagonlit Travel, who handle the lion's share of follow-the-sun clients, each have put the follow-the-sun building blocks in place by globally standardizing their processes, service configurations and infrastructure, Fernando said buyers need to understand their own capabilities before choosing follow-the-sun over a regional service approach
"Being that there are nuances in the different markets, we need to take all those into consideration," Fernando said. "We have a very process-driven implementation, where we have a statement of work and identify our capabilities in every single country around the world. During a global implementation, we basically can tell the client, this is what we have in this countries, this is what the infrastructure of the industry is. We can be realistic about managing expectations in every single country around the world."
Although there hasn't been much traction from buyers for follow-the-sun, consultant Caldwell said it's incumbent on travel management companies to make it a truly viable global travel management option.
"I have an open mind about it if the TMC can put financial guarantees and service guarantees around it, we'll certainly look at it," Caldwell said. "It's an interesting idea that is going to be cost-efficient, but at the end of the day, TMCs haven't proved that they've been able to centralize reservations cross-border in one place for multiple countries, much less around the world moving from center to center, except on an after-hours basis."