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Cisco Systems since November has virtually eliminated travel for internal meetings and shifted such demand to its own collaborative technologies as part of a corporate strategy to cut $1.5 billion in discretionary operating expenses to deal with the global economic slowdown.
The efforts have slashed Cisco's travel expenses from a "run rate of $750 million to the current run rate of approximately $350 million," CEO John Chambers said last week during a conference call with analysts.
Travel and meetings for sales, new business and customer opportunities continue unaffected, but internal travel and meetings are redirected to Cisco's various virtual meeting technologies, global travel manager Jane Gardner explained here during the Institute of Supply Management-National Business Travel Association travel summit last month.
Cisco's seven-person global travel team for the past 10 months has worked on consumption management plans to "balance rising costs and validate the necessity for travel" with employee satisfaction. The team needed to shift more of the internal travel to the company's multiple technology products: TelePresence, WebEx and standard audio-video conferencing, Gardner said.
The initiative began last spring after Chambers asked for a "20 percent reduction in travel to address a 25 percent reduction on carbon emissions over the next four years," Gardner said. But the team wanted to ensure that the reduction wouldn't come at the "sacrifice of our employees' experience. We wanted to transform the experience while we told them they couldn't travel when they wanted to," she said.
To capture the "voice of the customer," the team deployed numerous collaboration tools and portals for travel, including wikis and a travel forum, which is the "most viewed forum at Cisco Systems," Gardner said. But this means that the travel team "small though we be, addresses comments on forums three times a day."
Last April, Cisco revised its travel policy to eliminate a pretrip approval process, which Gardner categorized as a "miserable failure." Instead, only policy exceptions would be forwarded for manager approval. The self-booking tool was reconfigured to ask employees to identify a reason for travel: customer travel, external travel, internal travel, emergency travel or training. Depending on the response, employees were directed to the appropriate tool. For example, those who identified the travel as customer or external travel landed on the self-book tool site. Provided travel was booked within Cisco's "lowest available preferred" policy, the reservation was booked. Employees who selected internal travel were redirected to a booking site for WebEx, TelePresence, audio- or videoconferencing.
Redirection to a conferencing booking site "was a benefit and really started affecting our people looking at how they were spending the company's money for internal travel," Gardner said. "We had found that 49 percent of travel at Cisco Systems was for internal reasons. That was a little scary. We want to put our people in front of customers--that's where it really matters."
Also to "enhance the customer experience," Cisco travel added new functionality to the booking toolsuch as a concierge service to book restaurants and seat mapping. An online video detailed policy and technology changes, while a new travel dashboard was introduced to help managers better manage expenses.
In four months prior to the end of its fiscal year, the travel program initiatives "saved $59.7 million. Our internal meetings reduced by 15 percent by using our virtual collaboration technologies," Gardner said. The company held about 13,000 meetings via TelePresence to avoid travel.
Although pleased by the results, senior management "basically said, 'We want more,' " as global economic slowdown concerns intensified, Gardner said. Faced with a mandate to slash spending to avert job cuts this fall, Cisco in November told employees "there isn't going to be internal travel, there aren't going to be internal meetings, unless it is incredibly important. Every manager thinks it's incredibly important that they meet with their teams," Gardner said. So, Cisco bumped the exception approval to the executive level.
"Now when you click on internal meetings" as a reason for a trip in the self-booking tool, "you stop. It won't let you go further. Only a senior vice president can approve internal travel. This isn't any criticism of managers, but managers--and I'm one of them--have tunnel vision," Gardner said, intimating, " 'It's my budget, my T&E. This is what I need to accomplish.' ".Instead, Cisco escalated approval authority for internal travel and meetings to the executive level, as "they're looking at this from a companywide perspective."
Cisco also moved more of its training to Web-based classes, identified only a few classes for which travel is allowed and mandated that other travel for training purposes must be "approved by the senior vice president of human resources in conjunction with the CFO," Gardner said.
"Since Nov. 1, we have accomplished a 99 percent reduction in internal travel and a 98 percent reduction in training travel. To accomplish this, they gave us all the funding that we needed to make sure our customer travel was not affected and could grow," Gardner said.
Cisco CEO Chambers also detailed the switch from travel to technology during a quarterly call with analysts last week. "Utilization of the collaboration enabled by WebEx is up by 3,100 percent. TelePresence meetings are averaging 4,700 a week, which enables not only new business models, but also new reductions in our travel expenses. Discussion forums are up approximately 1,600 percent" and use of Cisco's internal version of YouTube is up 2,300 percent, Chambers said, according to the transcript posted by Seeking Alpha.
"A lot of the expenses will never come back. So our expense per employee on travel has gone from I think about $7,900 per employee down to almost a run rate of $3,400," Chambers said.
"Is it always going to be this way?" Gardner asked rhetorically. "Of course not, but every company is looking at how it is going to address the downturn in the economy, how are we going to make sure what needs to be accomplished can be accomplished and still have our company remain strong and profitable. We needed a quick win. This was a quick win."
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