Benchmarking Study Identifies Criteria For Success
<B> Benchmarking Study Identifies Criteria For Success</B>
By Mary Ann McNulty
Strategic planning, globalization and effective marketing are among 13 critical success factors for effective travel management identified in a new benchmarking study by the American Productivity & Quality Center, a Houston-based, non-profit business association.
The study will be available for purchase by members of APQC July 31 and by non-members in late January. Business Travel News assisted APQC in preparing survey tools and analyzing data.
The baseline study compared the travel practices of nine travel departments. Five of the nine--Eastman Kodak, Intel, Pfizer, Texas Instruments and Whirlpool--were companies deemed "best practice partners." The other four entities--Citibank, Shell International, Warner-Lambert and the University of California--sponsored the study.
The study focused on techniques to manage the travel function, methods to reduce travel expenditures, matching cost reduction methods to corporate culture, methods and costs of administering travel, methods of controlling consumption of travel and measuring return on investment of a travel program.
In best practice organizations today, travel managers have devised strategic plans that most often include global expansion of their programs. Best practice organizations also develop specific goals to reduce travel expenses, develop metrics to monitor the effectiveness of their programs and use technology to automate the travel function as much as possible.
The study found that these organizations use at least 10 key metrics, topped by financial performance and customer service, to measure the effectiveness of their programs. Beyond the typical cost per ticket, monthly savings and monthly cost avoidance figures, buyers typically know how much it costs to process an expense report and administer travel, as well as how long it takes to plan, book and issue a ticket. However, not even best practice organizations were measuring cost per trip, cost per reason for trip or cost per city--all metrics that could yield long-term benefits.
One of the critical success factors for travel managers, the study concluded, is the ability to demonstrate a value proposition for their department to senior management, business unit managers and travelers. This is one of the reasons travel managers in best practice organizations are developing travel Web sites on their corporate intranets, loaded with travel policy, preferred vendors, travel tips and other useful information.
In best practice organizations today, the travel department considers itself a service provider, charged with securing the most cost effective, efficient means of travel for its customers, the study concluded. Most of the departments rely heavily on surveying travelers to ensure the service levels provided by the agency, other suppliers and their own staff are meeting traveler expectations. In best practice organizations, the travel department educates travelers and business unit managers of the importance of policy compliance to the organization, but in most instances leaves policing to business unit managers.
Instead, travel managers focus on negotiations and other ways to reduce travel expenditures without sacrificing service quality. To compensate for the loss of commissions, travel managers cited the increasing use of net/net deals, automated booking systems and other efficiencies such as not printing hotel directories.
Although travel departments consider themselves service providers, they usually outsource the actual delivery of processes and services. Of the best practice companies studied, all had outsourced travel bookings and at least 80 percent had outsourced the issuing of visas, negotiating CRS contracts and compiling management reports. Half the organizations outsourced the generating of reports for business units.
Continuing to add value to their organizations, travel managers in the next two years anticipate being able to lower costs by leveraging their travel programs on a global basis, taking advantage of smart cards and other new technologies, booking directly with preferred airlines and continually looking for ways to remove wasted expenditures from the travel process.