Is it envy, the drive for continuous improvement, or simply the need to frame data in context that has prompted the surge in corporate benchmarking? Perhaps it's a bit of all three, as benchmarking emerges as part of a new core competence for travel procurement managers.
Demand for travel pricing and performance metrics has generated at least a dozen announcements this year of next-generation benchmarking options from travel management companies and their consulting arms, independent consulting firms, industry associations, payment providers and others. These are all in addition to the benchmarks that such companies as Topaz International and Runzheimer International have published for decades.
[PULL_1] Doing the Benchmarking
Among those benchmarking travel today are such groups as the National Business Travel Association Foundation, the Association of Corporate Travel Executives, the Institute of Supply Management's Caps Research unit, the Society for Collegiate Travel Management and the Institute of Travel Management. APQC also has developed a benchmarking framework and code of conduct as part of its services to more than 500 member firms. Travel management companies, with and without their consulting arms, also promote benchmarking--from specific projects to ongoing efforts that help advise clients on how they compare with other customers at any time. Independent consultants and even benchmarking networks also provide some data to specific groups. Such management consulting and outsourcing firms as Aberdeen Group, Deloitte Consulting, IBM, ICG Commerce, Paystream Advisors, The Hackett Group and TRX Travel Analytics are reporting benchmarks in procurement, expense reporting, accounts payable, sourcing or other travel-related areas.
[PULL_2]In conjunction with the release of its new management information reporting system, Axis@Work, American Express Business Travel launched "core benchmarking tools that allow general managers as part of annual or quarterly business reviews with clients to provide them with air, car and hotel benchmarks," said Richard Chinitz, marketing director for North America. In this review, account managers can provide "air by average segment cost and cost per mile," plus detail based on class of service, online versus offline purchases and advance purchase. The managers also can benchmark car and hotel average daily rates or room nights against those of all Amex clients or clients of similar air volume or industry, he added.
Former American Express airfare guru Robert Harrell continues to provide a series of standard airfare benchmarking tools to the travel management company, as well as other clients. One weekly report tracks current and historical airfare data on the top 40 routes for most major airlines, representing nearly 300 origination and destination combinations. Harrell Associates tracks domestic and international fares and, like everyone else interviewed for this story, noted greater demand than ever before for benchmarking.
Atlas Travel International announced a new benchmarking service called Travel GPA. Atlas chief technology officer Rock Blanco is heading the new business unit to help companies measure how their travel programs rank against others. To build a benchmarking database, seven travel management companies agreed to pool data representing nearly $1 billion in annual travel transaction volume, including clients with volumes ranging from $100,000 to more than $30 million. Customers must subscribe to Cornerstone's iBank Travel Management to use Travel GPA, which is offered to both corporations and other agencies.
The NBTA Foundation in July released the third version of its Managed Travel Index, including a new travel risk management component. The Foundation in 2004 hired two consulting firms to build the tools as a means to allow members to "measure the effectiveness and return on investment of their companies' travel programs," the Foundation stated in its annual report.
Going beyond costs, NBTA's Managed Travel Index helps users benchmark travel operations in six areas: finance, administration, sourcing, technology, quality and compliance. Users rank their policies and practices to generate an MTI score, which they can then benchmark against other companies by industry, region or total spend.
After reviewing the enhanced benchmarking tool, Janan Johnson, director of procurement, corporate services for GlaxoSmithKline, said, "I was really wowed. What a cool thing. It's a great starting point if you have never benchmarked your program. Maybe you don't want to buy it from your consultant or from your agency. This is really a value-for-money idea. We can all benefit if we get that database filled up."
The NBTA Foundation recently introduced a multi-use licensing plan for travel management companies to boost data beyond the 160 to 180 companies that have entered data during the past two years. Ideally, NBTA would like the data from "a couple hundred companies," said NBTA Foundation director Daphne Bryant. Travelocity Business purchased one such license to allow its clients to use of the tools, while Radius negotiated special pricing for its agency consortium members to extend to their corporate clients, Bryant added.
The Association of Corporate Travel Executives offers special pricing and access to such third-party benchmarking providers as Aberdeen, Smith Travel Research and Topaz.
Best Time to Benchmark
A good time to benchmark, several suggested, is just before or after a major change to a program. "Our approach to benchmarking is that we don't consider benchmarking a solution in and of itself, but a very important data point within a larger solution," said Vournakis.
The emergence of an "issue" in a travel program also could prompt a benchmarking exercise, noted Lee. The goal, he said, is to identify a company that has mastered a problem process and ask enough questions to replicate their success.
Consultants and others said some companies benchmark to gain support for major policy changes, especially those that may reduce the level of service to lower travel costs. But others noted that benchmarking has become a standard component to their continuous improvement processes.
Most vendor negotiations occur just once every year or two, Vournakis said. "What a company can do in between is monitor use of their preferred program and adherence to it to drive costs out of the program."