Deutsche Bank Lands Global Air Deals
Deutsche Bank for the first time has secured global airline agreements structured to yield substantial savings from its $200 million worldwide air volume.
"Our most significant savings are likely to come from getting our arms around our global spend and proving we can manage our program on a global scale," said Debbie Dayton, the U.S.-based global head of travel-related services for Deutsche Bank. Dayton drew on senior management support, including having regional COOs join her in a round of meetings with competing airlines in all major markets. She currently is finalizing the bank's global preferred airline program.
Even without those deals, the company's global air spending has fallen 8 percent this year, of which 3 percent is attributable to deflation in fares and the rest to tightening and managing policy. Among the strategies which have led to the improvement is the introduction of automated workflow per-trip approval, which has reduced not only the bookings outside policy, but also prompted a fall in the number of trips taken by employees. Further average ticket price reductions are expected following the introduction in August of a policy change on short-haul flights from coach to lowest fare on the flight requested, regardless of restrictions.
All these achievements have been earned in a company with a culture that does not allow rigid mandates. Dayton's team has a stack of additional innovations to its credit, including pioneering full automation of the bank's ground transportation program and cutting corporate card delinquency by 80 percent in the United States. The travel team also has become a major component of Frankfurt-based Deutsche Bank's emergency command center since Sept. 11, 2001, and played a role in preparing its response to disasters such as this summer's hurricanes.
Dayton joined the U.S. brokerage firm Alex. Brown & Sons as a travel manager in 1986. Alex. Brown was later bought by Bankers Trust and, in 1999, Deutsche Bank acquired the combined company. At Deutsche Bank, she became U.S. travel manager, rising to the global position in 2002. The bank already was managing travel successfully at a regional level. Of total travel spend, 15 percent is in Germany, 31 percent each in the United States and the United Kingdom, and 19 percent in Asia/Pacific, with most of the remainder in the rest of Europe.
This was a time when Deutsche Bank was consolidating a series of acquisitions and wanted to start leveraging its enlarged global capabilities. With a clear strategic target from senior management to merge the travel program worldwide, Dayton found her commitment was reciprocated, earning an endorsement from the global head of procurement and receiving COO support for her initiatives as long as she could demonstrate the business case. Her first task was to define best practices and then assess how close each country had come to achieving each of them. For the card program, for instance, Dayton determined that best practice included eliminating cash advances and using cards with individual liability. Her research showed the United States was close to achieving this, while Germany still relied on centralized billing. The United Kingdom had some individual billing, but relied heavily on cash advances.
After explaining the business case for her best practices to COOs, she received authorization to make changes. Senior- level support helped her overcome any traveler intransigence. "When we shut down the cash advances delivered to travelers' desks in London, we had complaints for the first 30 days, but now it is business as usual and the change has been accepted," Dayton said.
Dayton did not introduce such changes without first consulting with each local team. "We respect the fact that each market is different," she said. "I didn't say, 'This is what you will do,' I said, 'This is what I've seen work in other parts of the world—will it work here?' I was mentoring my direct report staff and they were mentoring me. Some ideas would never work in certain countries."
One aspect that Dayton does not see the need to globalize is the bank's choice of travel management company. Today, Deutsche Bank uses TQ3 Travel Solutions in 90 percent of Europe and in 70 percent of its Asia/Pacific operations, but places its business with the Hogg Robinson-owned Sea Gate Travel Group in the Americas. "No TMC is the market leader in every region and often its presence is built on a network of partners, so it is almost impossible to guarantee consistent, high-quality service levels worldwide," said Dayton.
However, Dayton does believe it is vitally important to consolidate TMCs at the regional level. "If you had 16 or 17 points of contact to make a policy change, it would be very fragmented and time-consuming and it would make disaster recovery difficult," she said.
Despite not having a global TMC, the bank does have worldwide consolidated management information. It uses the Hi-Mark data platform, which is managed on its behalf by TQ3. There is also a good level of cooperation between TQ3 and Sea Gate. "They are very good at sharing information and best practices and providing seamless cross-border service to our travelers based on a unique relationship we established," Dayton said. "The account managers talk a couple of times a week and openly share information."
Having successfully fused her regional programs, Dayton and her team in February went to work on building global supplier deals. Negotiations concluded in the past few weeks. In the past, different regions of the bank would negotiate with airlines, not knowing what their colleagues had achieved elsewhere with the same carrier. Now, the bank has been able to present a united front across all regions of the world for the first time. "We were able to leverage our data," she said. "Suppliers could no longer take advantage of us in individual markets." Leveraging has even extended to winning improved deals from airlines in their home markets, based on what Deutsche Bank can deliver to them overseas from other desirable locations.
Ironically, the deals have wrapped up just after the company shifted policy for air journeys under five hours from full-fare coach class to a stated requirement of "lowest fare available on the flight requested, regardless of restrictions" on preferred suppliers. The policy change resulted from a one-year audit of the bank's fares, the results of which Dayton described as very significant. Preliminary findings showed Deutsche Bank could save between 25 percent to 80 percent on eligible markets by traveling on the lowest fare with preferred suppliers instead of a corporate or fully flexible fare.
The policy change is aimed principally at travelers whose itineraries are less liable to alteration, and Dayton said that its first month of operation in August netted big savings in the U.S. market, with the cheap fares offering a viable alternative for 15 percent to 20 percent of trips and proving up to 80 percent cheaper in some cases. Other employees also have been offered the restricted fares, despite not having their policy changed, but have nevertheless accepted 25 percent of those offered to them on a voluntary basis. Deutsche Bank's European operation is set to implement this policy before year-end.
Another strategy that has brought direct cost savings—and helped convince suppliers of the integrity of the Deutsche Bank travel program—is the introduction of pre-trip approval with an automated workflow system attached. If a traveler requests a trip that falls within policy, it is routed to the traveler's line manager to approve or decline. The manager must state a reason to decline the trip. If the request falls outside policy, the same procedure is followed, but if the line manager consents, the request also is routed to an approved global signatory—usually at COO level—for secondary approval.
Awareness of this level of scrutiny and that their name will appear on an exception list significantly has curtailed exceptions, according to Dayton. Initially introduced among support staff, it also has led to what she called a "dramatic fall" in the number of trips they booked. "The system has paid for itself 100 times over," Dayton said.
The system sends reminders to approvers every three hours until they make their decision.
Dayton also has used automation to tackle cardholders who do not settle their bills before the need to pay interest kicks in. "It can add up to a very big number and impact incentives from card suppliers," she said. As a result, e-mails automatically are sent to delinquent debtors to let them know the bank is aware of the situation. Failure to respond leads to an automated escalation of the matter to a COO. In the system's first year, incidences of delinquency dropped 80 percent in the United States.
Owing to the frequent client visits and long working hours common to the investment banking industry, ground transportation is a major expense for Deutsche Bank, with black cars and taxis costing it in excess of $25 million per year in New York and London combined. New York alone generates 150,000 rides per year from a multitude of providers. Once again, Deutsche Bank turned to automation, working with a company called Aleph Inc. to create an end-to-end ride-order and rate-scrubbing system. Employees can verify supplier rates and book a vehicle online. After the journey, the invoice from the supplier is systematically scrubbed against the bank's rate book to confirm the bank was charged accurately. The transaction is then uploaded into its SAP system for payment and into its management information database for the line manager to review and manage use.
Since Deutsche Bank pioneered the system four years ago, Aleph has rolled it out to most other banks in New York. Deutsche Bank is introducing a similar program in London.