H-P Singles Out WorldTravel BTI - 2001-01-15

<B>H-P Singles Out WorldTravel BTI</B>

By Megan Hjermstad


<I>Palo Alto, Calif. - </I>In a drastic departure from its historically decentralized approach to travel agency suppliers, Hewlett-Packard has consolidated its $850 million worldwide travel spend with a single global travel agency partner: WorldTravel BTI. Prior to the consolidation, H-P in North America alone used five different agencies: American Express, Carlson Wagonlit Travel and WorldTravel BTI in the United States, and Carlson Wagonlit affiliates in Canada and Puerto Rico.

"When we went out and talked to other corporations, we saw that the trend was toward consolidation, minimally at the geographic level where you have one agency for the United States," said Jeff Kurn, global travel strategic sourcing manager. "We demonstrated to management that it was a best practice. There was a comfort level when we told them IBM and GE were doing this also."

Consolidation of travel operations globally was part of a larger global strategic sourcing initiative begun a year ago to leverage H-P's worldwide travel spend, significantly reduce T&E costs and create a more effective distribution method. The move by the company may further the industry trend toward supplier consolidation, as more travel managers are driven to similar cost-saving measures as a result of companywide strategic sourcing initiatives.

Scott Gillespie, founder of Cleveland-based Travel Analytics, who as a consultant at A.T. Kearney in 1995 engineered the first comprehensive strategic sourcing initiative at Bank of America, said, "Companies of all sizes are embracing strategic sourcing as a proven long-standing method for achieving cost savings and improving quality." Gillespie said companies are challenged in sourcing initiatives to find a balance between reducing costs and maintaining quality. And when it comes to sourcing the travel agency portion, companies are better served by striving to significantly improve quality and then improve costs.

A company can expect $10 in savings for $1 in agency fees, said Gillespie, who compared the travel agency with a quarterback. "The travel manager is the coach, and the agency is out there taking the hits and driving the team toward the goal line," he said. "You want the best available quarterback and you should be willing to pay for the best."

H-P put together a strategic sourcing team with a dozen members from travel and procurement representing H-P and its sister company Agilent Technologies in seven countries. Travel was divided into 12 different work streams, of which the agency portion was very high on the list.

H-P began by sending out a request for information. The team looked at a total of five different agencies for Europe, Singapore and the United States, evaluating each agency in five areas: strategic partnership, service delivery, human resources, cost effectiveness and consolidation expertise.

A global partner also was a goal, though not a requirement. "We realized very quickly that in order to consolidate globally, we had to have a partner that could excel in different programs in different regions of the world," said Kurn.

Ultimately, H-P selected WorldTravel BTI. "Past performance was a key indicator of the future," said Kurn. "We had a very lengthy relationship in the United States and we believed they would be able to execute most effectively and bring to life our strategy under one umbrella." WorldTravel BTI also offered H-P global scope, a responsive account team and top-notch technology.

H-P is using TRX mid-office and back-office quality control products and EnCorre mail for e-mail itineraries, and Jan. 1 implemented the same tools in Europe. Kurn said this technology was not available through other agencies in Europe and is a big plus, as it will provide more consistent data.

H-P late last year began a phased implementation of WorldTravel BTI by converting the CWT business Oct. 30, the American Express business Dec. 4 and the Canadian business Dec. 15.

"The transition was very smooth, there were no unexpected glitches and the agency was very prepared," said Lea McLeod, North America agency partner manager, who added that WorldTravel BTI project director Phil Gaskin provided exceptional leadership.

Having that single point of contact is key when it comes to making and implementing decisions, according to Gillespie.

Now, H-P only has to measure the deliverables of one agency in North America and can more consistently manage the program in a more streamlined fashion. "Say, tomorrow we want to implement a trip purpose code--there used to be five people to go to and follow up with, and you start thinking, 'what is the value of having five different agencies?' " said McLeod. "In managing the process, it became very evident that we could move more quickly, effectively and aggressively with one agency."

H-P now is in the process of bringing on Europe and Latin America, where a handful of agencies will be replaced by the end of March. By then, 89 percent of air should be consolidated with WorldTravel BTI. The company at that time still will have half a dozen agencies in Asia/Pacific--accounting for less than 10 percent of T&E--which Kurn said will be consolidated with WorldTravel BTI when it expands its network and once GDS tools in that region mature.

With 95 percent of reservations coming through dedicated call centers, the company's goal is to do away with its three or four onsites in the United States and Canada, and up call center activity to 100 percent.

The call center environment is key to an "always on" infrastructure, which ensures dedicated round-the-clock travel services and self booking of reservations anytime, anywhere from the desktop. "We didn't see it as emergency travel," said McLeod. "Internet time is requiring people to work in ways they haven't before. Our people are working 24/7."

H-P anticipates that having a single agency will help boost the adoption rate of self-service reservations, which currently averages in the mid-to-high 20 percentile. H-P, which in the United States has implemented the GetThere product private labeled as Smart Travel and is planning to roll out a self-booking tool of some kind in Canada, anticipates reaching 50 percent adoption. "When we were using multiple agencies, it was promoted to various degrees depending on the agency," said McLeod. "In the first couple of days after the agency switch in Colorado, the ratio was in the low 40s, so we know it's possible. But we can't do it without the complete support and advocacy of the agency.