It is understandable that an organization embracing travel
management or consolidation for the first time considers issuing a formal
request for proposals. This article is not for those virgin souls.
The amount of travel management company RFPs issued by
companies with excellent, mature travel programs is unbelievable. Why? Are
those companies looking only to test the waters? Are they—whoever “they”
are—unhappy with their current suppliers? Are they looking to embrace the
latest travel technologies? Are they looking only at the bottom line? Do they
know what they are looking for from bidders? Are they prepared to measure the
results 12, 24 and 36 months from now, and even beyond, following the
implementation of a new agreement? Are job incentives based upon the number of
RFPs they issue and bring to term with estimated results—not that anyone can
measure them accurately a year from the contract signing? These are just some
of the questions I ask myself—and, many times, the client—when an organization
contacts us for consulting assistance.
Being an independent consultant for more than 20 years has
given me the privilege of working with many excellent travel managers and some
not so in tune with reality. As a result of this involvement, I can certainly
answer these questions with a considerable degree of confidence. Rather than
answer the questions, which could fill up an entire edition of BTN, I’d like to offer some suggestions
one should consider before going out to bid for a travel management company
when one already has a preferred TMC.
The domestic and international members of my consultancy
have worked with more than 650 private and public sector organizations of all
sizes. We have reported directly to CFOs, CEOs, CIOs, CPOs, travel managers and
procurement specialists. We have seen it all, in the old norm as well as the
new one, and we know that more than 80 percent of all TMC RFPs issued by
companies that already have a preferred TMC in result in no supplier change.
Before embarking on a travel management company RFP process,
consider the following:
- Conduct an independent survey of what your travelers think
of the TMC services. Benchmark these concerns with your peers across multiple
channels, and address these positive and negative concerns with your TMC.
- Enumerate management’s concerns regarding the current TMC
relationship. If their concerns are financial, they can be worked out. If their
concerns are about service, that too can be worked out if one is clear and
realistic in what one wants to achieve and at what cost.
If the first two steps do not satisfy your goals, consider a
request-for-information process before issuing an RFP. In this regard, you can
find out if others can provide what you are looking for in a TMC and what your
incumbent TMC cannot provide. Notice, please, that I am not mentioning costs.
Travel management companies have slim profit margins, so know exactly what you
want before you even consider financial discussions. Keep in mind that you will
get what you pay for.
How quickly can one accomplish a request for information?
From the moment you detail your requirements, contact the TMCs, distribute the
RFI, review and evaluate responses and conduct in-person presentations, it
should take two to three weeks. Remember, money is not a factor in seeing what
is out there. An RFI is a quick way to find out what others have to offer, and
it is relatively inexpensive for the TMC to give a response. Keep in mind that
the result of an RFI is an educated consumer. Knowledge and good old-fashioned discussions
can improve service and save both the buyer and the TMC lots of time and money.
How quickly can one accomplish an RFP? From the moment you
gather your team, detail your requirements, develop and distribute the RFP,
review and evaluate responses, clarify responses, conduct oral presentations,
clarify issues raised during presentations, review and evaluate new responses,
narrow the field, negotiate service requirements, address and negotiate
financial concerns, develop key performance indicators and sign an agreement,
the process should take three to 18 months, especially if it involves locations
in multiple countries. Money is a definite factor and requires close scrutiny
as it relates to all travel management company services.
What are the morals?
- Know if what you are looking for in a TMC is realistic
- Know what you are willing to pay for
- Know that if you embark upon an RFP process, it will take
dedication, patience and teamwork not only for you, the buyer, but also for the
TMCs involved
A few final thoughts you must consider if you are part of
the 20 percent that does switch preferred travel management companies: There is
a cost of change not only in dollars and cents, but also to the traveling
population. The RFP process and the selection of a new TMC is only the
beginning. Implementation is never boring and never quick.
This op-ed appears in
the Dec. 20, 2010, issue of Business Travel News.