Employees of oil field services firm Weatherford International had been traveling around the globe for 20 years without a travel department, policy or procurement strategy. That changed--and quickly--in 2005, after the $2.28 billion acquisition of Precision Drilling Corp.'s energy services and international contract drilling divisions. Within six months of the executive director tapping procurement to develop and implement a travel program for the firm's 20,000 employees in North America, a new policy and online booking system, and preferred agency, air, hotel and car programs debuted.
A year later, management has begun to enjoy the fruits of the data, reporting and leveraged buying power, and is turning the focus toward global expansion.
"We have come so far in a short period of time," Cindy McSwain, Weatherford senior procurement manager and newly appointed travel manager, told Association of Corporate Travel Executives members at a meeting in Chicago this summer.
The journey toward a consolidated North American travel program began in late 2006 when Weatherford's executive director recognized the need for a strategic approach to travel management. "He came to the four of us in procurement and asked, 'What do you know about travel?' We said we know how to buy commodities, but travel? None of us had looked at travel," McSwain said. The same executive also asked, " 'What don't we know? Do we need to look at having a consultant?' "
McSwain welcomed the idea. "I buy natural gas and used to think it was hard to figure out kilowatts," she explained. "Then I started to look at airline pricing. Natural gas is a breeze now." McSwain searched online and found consultant Grant Caplan of Consulting Strategies in the company headquarters neighborhood of Houston. "Frankly, I don't think we would have gotten as far as we did, as quickly as we did without that" expertise, she said. [PROFILE_1]
The "marching orders were six months" for discovery, selection of a travel management company and implementation, McSwain said. The senior sponsor also tasked the team to "create a North American program under a common umbrella with a view toward globalization." However, the team knew "to make it effective, there was no way we could take on global right away," McSwain said.
Supply chain and procurement executives in Canada and Houston were selected for the travel team. The personalities "meshed well" and "all truly believed it was the right thing to do for the company, and that's what made it successful," McSwain said.
During the discovery phase, the team identified five different travel management companies and multiple pricing models used by various offices in North America. They also uncovered two travel policies: one allowed business travel on flights of eight hours or more; the other 10 hours or more. Multiple car rental rates and programs were unearthed, and numerous hotel contracts were identified as each of 420 U.S. administrative offices negotiated their own deals. "Trying to figure out what was going on with our data was crazy," McSwain said. "There was no management reporting anywhere, so that was quite a challenge."
As the team began the process, the executive sponsor decided that the new model would not include "onsites anywhere in the company. We had three in Houston and two in Canada. Knowing that from the get-go really helped" to narrow the field of potential TMCs and service configurations, McSwain said. But she acknowledged that the decision was painful because some onsites had been in place for 15 years. However, the sponsor decided "onsites just didn't fit" for the much larger company and online booking would be a "big focus."
Weatherford relied on an "online bid process" to compare bids from targeted TMCs. HRG was awarded the business.
HRG North America executive vice president of global and strategic markets Tom Lacny told McSwain and ACTE attendees that he "was impressed by the amount of discovery the [Weatherford] team invested in. There were site visits at your sites and our sites, technology demonstrations" in which Weatherford asked agencies to suggest different service delivery models for various scenarios. "But the one thing that led to a sound foundation was how detail-minded and methodical your team was about defining your expectations and investing the time beyond just the bid call and 'Here's the document, respond to it.'[PULL_1]"There's often a mentality within procurement circles to have a very formal process, keep it level and balanced with quiet periods," Lacny continued. But to know how to service a client and respond to the RFP typically "requires you to know more than sometimes what is on paper." Weatherford engaged in such discussions, benefiting the end result, he added.
Deploying And Complying
Across North America, Weatherford "went live" with a single travel policy and HRG as its sole TMC on June 25, 2007. HRG provided dedicated offsite support from six agents and an online support team in Halifax. Weatherford also selected and implemented GetThere as its online booking tool. For the first time, the company implemented a security process, with pre-trip advice and reports to track travelers "in unsafe countries." Travelers and managers applaud the enhanced security services, McSwain added.
Prior to implementation, she said, the travel procurement team scheduled "roadshows at each of the main locations" to establish a trust level between the company and new agency. Three months later, they scheduled Webconferences to solicit insight on what travelers wanted next. They also focused on fast customer response to complaints or suggestions.
"We had some people say this is one of few programs that you actually communicated before flipping the switch," McSwain said. A year later, employees often stop her to tell her how much they "love the agents. I tease them, 'Then why did you beat me up so much about this last year?' "
Part of that success, McSwain and Lacny agreed, was due to the procurement team's level of detail on the contract, competitive financials and service level agreements. "Most of us brought a procurement mentality into the contract management process" to incorporate "very good service level agreements, savings guarantee agreements and staffing agreements," McSwain said. The consultant provided guidance on industry standards, she added. "I see a lot of contracts signed and put in a drawer and not actively worked. We work our contract every month."
Internally, McSwain said, she works the business plan to drive online adoption and policy compliance. Online adoption after the first month was 20 percent. By year-end, McSwain "wants over 50 percent" adoption. Policy compliance is "probably 85 percent." Customer service satisfaction is about 98 percent, McSwain said, and 85 percent of travelers rate service as "good or excellent" on welcome-back surveys.
"Management reporting is really exciting," McSwain said. "I can go to the manager of any department and say, 'These are your top travelers and hotels,' " and advise how new contracts could help. "With the airline capacity cuts, this is really going to be important for me to go to their managers" with guidance on how the cuts may impact their travel patterns.
As part of recently concluded airline negotiations, McSwain said, the procurement team presented management with two approaches: guaranteed savings and a much higher level of savings--almost $1 million--if they could support a share shift. Instead of skepticism expressed by some company executives a year ago as they heard of the travel program goals, McSwain said, "Last month, some of those same people just said 'Wow!' The data we were now able to bring to them, compared to a year ago," made some "realize the efforts that both Weatherford travel and HRG brought to the table."
Now, "we are being approached by other regions, and this has become more of a model," McSwain said. "In hindsight, this is exactly what our sponsor looked at. He said 'Put together the business models, best practices and then let's look at the rest of the globe.' He really did a good job of laying out that foundation."
When McSwain began the role in travel procurement two years ago, she had a fulltime job managing global buyouts for international sales orders, as well as buying natural gas. Earlier this summer, the global director told her that travel had "become a full-time job" and offered her the role, supported by an associate who McSwain refers to as her "secret weapon." McSwain still buys natural gas, too. "Two cubicles and it's become the travel department," she said. "But it's been really good."