Virtual Meetings Demand Management

Industry analysts, suppliers and other observers for many years promised that while remote conferencing technology was improving, it would not replace business travel. "There's nothing quite like a face-to-face meeting," they argued. While there's no disputing that, such spin is falling behind the realization that there are legitimate alternatives to being there. Organizations are actively exploring reduced trips and remote conferencing as part of the increasingly popular "demand management" approach.

A lot of business travel is going virtual; however, business travel buyers seem to have merely a supporting role. Just 8 percent of travel buyers in the United States last year said they were responsible for videoconferencing--unchanged from 2006 and 2007--according to the National Business Travel Association Foundation's annual salary and benefits survey. ( 1)

Yet, Procurement.travel's "State Of The Practice" research found 62 percent of organizations have travel policies recommending that travelers consider remote conferencing options before booking travel, and two-thirds of those had created such policies within the past three years. Policies at 71 percent of "State Of The Practice" respondents whose firms spend $5 million or more annually on travel and entertainment expenses recommend consideration of alternatives, versus 53 percent of those below that threshold.

According to one NBTA survey of U.S. travel buyers during the third quarter of 2008, 75 percent were increasing the use of teleconferencing and Web meetings, while 57 percent were growing the use of videoconferencing. Four out of five said the growth came at the expense of business travel. ( 2) An American Express European poll found 62 percent of companies had increased use of videoconferencing. ( 3)

Fourteen percent of NBTA's respondents said they were increasing the use of more sophisticated and expensive telepresence solutions--as nearly 64 percent reported they didn't use telepresence--but according to vendor Cisco, TelePresence has become its "fastest-growing emerging technology, with more than 100 customers globally" and more than 750 deployments since it was introduced in October 2006. ( 4)

"We are looking at the confluence of economic pressure, customer need and technological availability, which generally heralds significant change for an industry," according to Susan Gurley, executive director of the Association of Corporate Travel Executives. Gurley labeled the change "electronic travel, a hybrid philosophy of physical travel and computerized communications designed to serve the travel function," according to a summer 2008 statement.

The terminology continues to be coined as the practice remains a relatively new one. Unlike, say, promoting preferred suppliers or disallowing first class, buyers generally are not pushing remote conferencing options at the point of sale. Just 14 percent of all 473 "State Of The Practice" respondents said their travel agents ask travelers whether they have considered teleconferences, webinars, videoconferences or telepresence. Even among the 292 respondents whose companies have policies suggesting that travelers consider alternatives, just 24 percent prompt travelers in self-booking tools about whether they did so.

Source: Procurement.travelAugust-September 2008 online survey of 473 qualified travel decision-makers

Distributors including American Express, Concur and Sabre's GetThere have introduced point-of-sale options for promoting alternatives. Concur said it invested $4 million to enable bookings of trip alternatives; executive vice president and general manager Tom DePasquale said clients could eliminate about 10 percent of trips. ( 5)

Bristol-Myers Squibb is one firm that has integrated its videoconferencing option into its online booking tool. Doing so was part of a demand management approach, initiated a few years ago, that also included the installation of videoconferencing facilities in 23 countries, said director of corporate travel services for the Europe, Middle East and Africa and Asia-Pacific regions Philippe Darson. ( 6)

More broadly, demand management can deliver savings of 15 percent or more in travel, temporary labor and office supplies, according to an A.T. Kearney study. ( 7)

"Many companies today view demand management as one of the biggest opportunities they have to control or reduce costs without compromising their overall business goals and requirements," according to Carlson Wagonlit Travel. "As costs for business travel continue to increase, companies realize that strategic sourcing and procurement may have limits ... simply fine-tuning what has been done in the past will not have great impact." ( 8)