Marketing, momentum and timing helped Marsh and McLennan Companies Inc. speed through a travel management consolidation of approximately 80 percent of its travel and entertainment spend by convincing employees, from the top down and bottom up, of the need for the convergence.
Each of MMC's risk and specialty consulting operating companies has long managed travel autonomously. As recently as 2007, when combined volume was about $379 million, the five operating companies and the corporate staff used more than 40 agencies globally. MMC's relatively new procurement organization hired Judy Bauer as global travel director to leverage this spend category in July 2007, just prior to the economic downturn.
A 20-year veteran of consolidation efforts, first with American Express and then as travel manager at Lucent Technologies and JPMorgan, Bauer said the chief procurement officer who hired her to consolidate the travel program told her, " 'I know little about travel. You take the lead and come to me when you need some help.' "
The message she heard, Bauer said during a National Business Travel Association conference session about leading change, was to "apply all the experiences that I've acquired over all these years at other companies and move forward." [PROFILE_1]
Bauer established the "value proposition for the program" and marketed it to the chief officers--operating, administration, financial and executive--at each of the operating companies. In late 2007, Bauer and the CPO attended a meeting of operating company senior managers. Trying to capture their attention, Bauer told them, " 'I'm surprised that a prestigious Fortune500 company is so far behind the times in travel management. Did you know that T&E is the third-largest manageable expense in a corporation?' This caught their attention, and they started to engage. That was the turning point." Beyond the ability to leverage spend, Bauer told executives that consolidation would offer safety and security benefits as a result of better traveler tracking and reporting. Given the nod from the then governance council to move forward with a request for proposals, Bauer in August 2007 invited travel management companies to bid for the global account.
In the following months, stakeholders from each company formed a travel liaison committee that continues to operate today. "I invited them to the initial stages of the RFP to see each travel management company's technology, reporting capabilities and operational configurations so they gained a better understanding of the contenders." She then asked each member to assess the TMCs.
As the financial phase is a "procurement function," Bauer said, she conducted this portion with her travel team. She promised to "negotiate the best deal we can," assured them pricing would not increase and told them that "we will definitely benefit from the consolidation in leveraging our spend."
With travel management company pricing and service proposals in hand, the travel team called on the travel liaisons and "gave them the final results." Pricing didn't vary that much between the four TMCs, but it wasn't the single driving force of the consolidation either, Bauer said. "It was all the capabilities that the TMC could provide"--flexibility, safety and security, a travel portal and data reporting to leverage total spend. The team selected BCD Travel.
In a three-page summary for operating company senior management, Bauer documented the process, participation by all companies, evaluation results and the recommendation. "I vetted the recommendation with each of the operating companies," she said. "They agreed to move forward."
The 'Right' Team
Between June and September 2008, Bauer and the travel team worked with BCD, online booking provider GetThere, payment provider American Express and others to deploy the new program in the United States, Canada and United Kingdom, representing roughly 80 percent of MMC's T&E spend. The team updated the travel policies of each company. "We still don't have an enterprisewide policy, but are working to get that approved in the near future," Bauer said.
The travel team currently consists of Greg Wilczek, responsible for implementing and overseeing consolidation in the United States and Canada; Lynne Lawrence in the United Kingdom; sourcing specialist Janet Lasten, charged with air, hotel, car and all other travel categories, as well as development of all savings methodologies; and Edwige Adikpeto, hired in July to manage the European consolidation.
Adopting a consultative approach, Bauer said, her team "used multiple communication vehicles and forums," including email blasts through MMC corporate communications to more than 25,000 employees, change management webinars with more than 1,000 attendees and ongoing quarterly self-booking tool training for more than 500 people per session.
The team also created a travel portal and updated information on an intranet site. While the travel team reviews all travel-related content, some operating companies distribute the content while others rely on the travel team to assist.
"We still don't have anything in writing that officially endorses or mandates this program," Bauer said. But she has "90 percent-plus compliance. Compliance is not an issue here in the United States, Canada or in the United Kingdom. All five operating companies are onboard."
Even though she sits within the procurement organization, Bauer said, her job is very much a marketing function. "If that's what works culturally and that's going to make it happen, I have no problem with that."
Delivering Results
Bauer and her team meet quarterly with key stakeholders and the CFOs or senior managers of each operating company. "We show them the travel trends, such as missed opportunities, as well as the power of the data and other reporting." The team developed an executive dashboard that compares each operating company and parent organization.
Global travel also is identifying new opportunities. The team during the summer of 2009 crafted a special hotel program with 10 hotels in New York City, to take advantage of market conditions, and directed all employees to use only those hotels. "Savings were significant," Bauer said. Consequently, the team has established similar programs for other destinations. "Now [senior executives] are really looking for these innovative ways" to save, "and they depend very much on us to do it for them," Bauer said.
[PULL_1]Recently, Bauer said, her team noticed that "one operating company had a high percentage of missed opportunities" and communicated that to the stakeholders. "They are really appreciative that we're looking out for them."
Overseas, Bauer noted, people are "proactively asking, 'When do you think you can handle Dubai?' or other countries."
Operating company executives are "seeing the benefit of the global data," Bauer added. She said suppliers also appear to be noticing the transformation and pointed to success in negotiations with American Express in expanding the payment program. Airlines also are more receptive, she added. "Airlines didn't think we could drive the program or give them the data."
The global travel organization now is trying to build on the momentum to scope opportunities for meetings consolidation, enhanced analytics, corporate housing, car services and better leveraging of its spend. Consolidation in the Europe/Middle East/Africa region, which began last summer with France and Spain, is expected to continue through early 2011 for all 13 countries involved. Next will be Asian and Latin American countries.
Consolidation has delivered just shy of 10 percent savings "and that's all incremental savings" from the mature preferred agreements that already were in place, Bauer noted. Travel volume and spend have declined, due to the economy, to shrink MMC's total T&E expense to about $240 million. But Bauer said her team is careful to report only savings it has delivered and give the operating companies credit for the results they deliver through better policy enforcement.
"We're in a sourcing organization, but only 20 percent of the activity is sourcing--80 percent is program management," Bauer said. "What I have to continuously make sure is visible is the contribution for the program management side, the consultative side. That is what results in demand management savings."