Best Practice Corps. Automate Trip Process
<B> Best Practice Corps. Automate Trip Process</B>
By Mary Ann McNulty
The three most important practices to effective travel management are an automated expense reporting system, central data repository and senior management support, according to a best practices study of travel management just released by Visa USA, San Francisco.
The study, conducted by Deloitte & Touche Consulting Group, Parsippany, N.J., analyzed the travel management practices and performance of 16 Fortune 500 companies deemed to have best practices in this area. Representatives from D&L and Visa collected data in meetings with managers from travel, accounts payable, purchasing and information technology, as well as with travelers and agency managers and from written surveys. The study reviewed travel practices at 3M, Alcoa, Amoco, Anthem, Arco, Bayer, Colgate Palmolive, Compaq Computer, Federated Department Stores, Hewlett-Packard, The McGraw-Hill Companies, Merrill Lynch, Microsoft, Raytheon, Seagram & Sons Inc. and Whirlpool.
The median T&E budget was $100 million, with the largest spend at nearly $750 million. The companies studied had an average air volume of almost $70 million for 1997, with a range of $16-$175 million.
Although corporate cultures sometimes prevent implementation of best practices, the study outlined a T&E best practice in which a traveler logs into an online booking system to book a policy-compliant itinerary, receives an electronic ticket or paper one generated at the nearest satellite ticket printer, and receives the ticket via interoffice mail and the itinerary via e-mail. Post-trip, the corporate card charges are loaded into an expense report that the traveler verifies and submits electronically, with receipts sent in an envelope. The expense processing department stores the receipt envelopes and audits reports using the automated expense reporting software. Using electronic funds transfer, the company pays the credit card company centrally and reimburses the employee. The company notifies the employee of the reimbursement via e-mail or voice mail.
The study emphasized the importance of implementing an effective travel policy and correlated compliance to vendor negotiated savings. "The company with 94 percent compliance achieved the highest estimated savings from negotiations: 25 percent. The company with the lowest compliance (60 percent) has the lowest estimated savings, at only 10 percent," the study revealed.
Key factors determining the success of a travel department, the study states, are: 1) the acquisition and use of travel data; 2) the globalization of policy and management; and 3) endorsement by senior management.
Even though cultures might not allow for one global policy, the study recommended creating a single policy with global focus that can be tailored for specific geographic regions and cultures within an organization. By combining policy and data with its parent company, one study participant estimated it could double its negotiating power.
Although the study advises against pre-trip authorization, detailing that the process can add six extra minutes of traveler/manager time to the booking process, it recommends use of pre-trip exception reports. "One study participant realized a 50 percent compliance conversion through use of pre-trip exception reporting," the study said.
Some companies have the travel agency send such reports to designated management. One company has the agency e-mail the traveler with details on the ticket booked versus the lowest fare. The study noted that cultures can make it difficult to implement such procedures and again emphasized the need for senior management support.
To drive home the importance of securing lowest fares, the study recommended that travelers and managers receive reports indicating the difference between the fare booked and lowest logical fare. "These reports should be available per ticket, per traveler and per business unit," the study stated.
Some companies have found it beneficial to reward travelers for contributing to improvements in travel cost savings. One best practice company links the corporate profit sharing program to travel cost/savings performance. Bonus calculations can be adjusted to include a lost savings performance variable per employee, per business unit or any specified entity. The performance evaluation process also can include a travel expense efficiency component.
Estimated savings from all vendor negotiations range from 10 percent to 25 percent off the lowest logical fares, the study said. But for companies with central travel data repositories, average savings from negotiations were 20 percent versus just 12 percent for those without such tools.
"This technology is the enabler to many of the best practices identified in the study," Deloitte & Touche consultants said.
Recognizing the importance of data, Visa USA is taking steps to enhance its offering by building a database that will marry charge records with reservation data, according to Bruno Perreault, senior vice president of commercial cards. The card association has forged contracts with major airlines to buy reservation data and marry it to charge data to provide corporations with up to 32 legs of ticket data. Currently, only four legs of data show up on reports. Visa also is working with hotels and car rental companies to investigate data elements it can merge with charge data in those areas.
The study also recommends that companies designate just one person or team to negotiate with all vendors so as not to dilute savings opportunities. It also suggests negotiating net-net airline deals to get deeper discounts, lower taxes and greater compliance and to eliminate the administrative cost of distributing rebates to business units. Net-net-net deals--ticket rates minus the commission, override and CRS cost--are even better, but require a direct link or extranet from the corporation to the carrier's air ticket inventory, the study said.
Booking directly also is a practice travelers should adopt, instead of having assistants book trips: "The use of travel assistants is a costly process which often wastes more traveler time than it saves." Companies spend on average 46 minutes from the initial traveler request to ticket delivery.
Delivering tickets is likewise an expensive process. Study participants used e-tickets for 14 percent of travel. Based on delivery cost alone, if the average study participant could use e-tickets with e-mail delivery of itinerary 50 percent of the time, it would save more than $50,000 per year.