<B> PWC Merges Travel</B>
By Sarah Welt
Saving the "most disruptive" change--the choice of a travel agency--for last, the recently combined PricewaterhouseCoopers LLP travel department has managed to stick to a remarkably aggressive timetable. In less than 12 months, the group has created a unified travel policy, developed a travel hierarchy around the globe and renegotiated contracts with all major vendors.
The need for speed came from the fact that "we were under pressure. We knew that by not having a program in place we were losing money with every passing day," said former Price Waterhouse travel systems director Mark Williams.
Price Waterhouse last July merged with fellow Big Six accounting firm Coopers & Lybrand to form Pricewaterhouse-Coopers (<I>BTN,</I> March 16, 1998).
Jim Lennon, the former Coopers & Lybrand travel management director, acknowledged that the push helped the firm accomplish amazing things in a short period of time. "Three or four months ago, I probably would have said we should not have been so aggressive in our time frame," he said. "It was a lot of hard work, but we accomplished a hell of a lot."
Now finally tackling the remaining piece of the puzzle, PwC held its final round of agency negotiations with American Express, Carlson Wagonlit and WorldTravel Partners-BTI Americas during the Association of Corporate Travel Executives forum last month. It plans to choose one agency to handle its $340 million air-volume account by the end of this month.
To get things underway, Williams and Lennon formed an interdisciplinary committee of about a dozen members, including all levels of PwC management, as well as subcommittees to deal with specific industry segments. Because they needed to maintain control of day-to-day operations at the same time, they hired Caldwell & Associates to help consolidate data and benchmark against other corporations.
"From a financial perspective it made perfect sense to employ outside resources," Williams said. "While consultants are not inexpensive, it was dwarfed by what we were losing. We simply didn't have the manpower to do that and our traditional jobs."
Added Lennon, "I'm not sure we had a choice. We merged, a job freeze came and we were not going to add people."
The firm also needed to fashion a global travel structure. Prior to the merger, Price Waterhouse's travel department had five people, while Coopers & Lybrand's had three.
Now the combined organization is divided into three regions --the Americas, Europe, and the Middle East, Africa and Asia. Lennon is the global travel leader, reporting to a global infrastructure leader. Williams is travel director for the Americas. There is a regional infrastructure leader that heads Asia and another responsible for EMEA. One travel manager oversees the United Kingdom and Eastern Europe, but the travel manager position for EMEA is vacant.
Lennon said he and Williams also were fortunate that their global infrastructure leader had a "good understanding of what we are all about, and communicated that to our global leadership team." He noted that the global infrastructure leader, who commands respect in both firms, often helped to work out issues before any formal recommendation was made to senior management. By the time the formal channels were undertaken, "it was a no- brainer because we already had buy-in from people around the firm."
Perhaps the biggest challenge was bringing the two firms together under a single corporate travel policy--a task not completed until April 30, 1999.
Despite the need to get buy-in on policy changes from so many different people, the end result is much more restrictive than either firm had before. Under the new policy, travelers that do not use preferred vendors are not reimbursed--and since its launch, "we have been inundated with exception requests," Williams said.
Lennon said the firm chose that tactic because "it is the most serious method of dealing with non-compliance. And it gets peoples' attention." And indeed, the strict policy, combined with airline negotiations, has led to a 30 percent savings on air spend alone.
To formulate the integrated policy, Lennon and Williams took best practices from each firm. One such practice, from Coopers & Lybrand, recognized travelers that are "on the road constantly" and permitted them to fly first and business class. Lennon said that includes about 25 percent of partners and 10 percent of managers and directors.
From Price Waterhouse came the best practice of allowing employees to travel somewhere other than their home when away on a client engagement, as long as the trip cost less than the trip home would have.
Since the firm has linked the Lotus Notes servers of its two halves, travel policy, along with frequently asked questions, now are posted on the corporate intranet.
All the commonality achieved so far is especially remarkable in light of the two firms' disparate choices in the past. Pre-merger, Price Waterhouse, with an air spend of $205 million, used Carlson Wagonlit as its agency, Diners Club for its card, American, United and US Airways, and Budget and Avis for car rental. Coopers, meanwhile, with a $139 million air budget, used American Express for both agency and card, Delta, United, USAirways and Virgin Atlantic for air, and Hertz, Avis and National for car rental.
Besides having different vendors, the two firms also operated under dissimilar business philosophies. Coopers & Lybrand had a regional structure while Price Waterhouse had a more national one, Williams said. So while Coopers believed that relocation was the best solution, Price Waterhouse would send an employee to a client site for "as long as he needs to stay," flying him home on weekends. Now, PwC has adopted the Price Waterhouse philosophy. "We have pretty much taken on their practice on a global basis," Lennon said. "If we have an expert in Switzerland, we will fly them to Dallas. That is why travel is increasing."
When it came to negotiating, the firm started with its corporate card program, "the least disruptive" element, and one that could be handed to travelers the very day the merger was announced. PwC selected American Express.
The choice of a preferred rental car vendor, which was "fairly easy to get our arms around," was addressed next. PwC selected Hertz and Budget--one incumbent from each of the two former organizations.
Next came a unified hotel program, arrived at by combining the two existing programs, using the better negotiated rate where there was overlap. The firm conducted global hotel negotiations in the fall and selected four global hotel chains--Forte Meridian, Hyatt, Starwood and Swissôtels.
But negotiating with the airlines was a "grueling process," Williams said. "It was very long and drawn out because we had to get buy-in from so many people, and senior management wrangled for a long time." To pull together a negotiating stance and the data it needed, PwC turned to "a couple of third parties" and conducted several global committee meetings before making written recommendations to senior management on Sept. 15. The new program--with American, British Airways, Delta and United, and covering 6,000 to 7,000 city pairs--took effect Feb. 1.
To determine its airline partners, Lennon said, "We can't pray in all churches. We identified where our travel patterns were and where we could get the best coverage at the best cost, and that is where we wound up."
On the agency front, PwC sent RFPs to five agencies, one of whom declined to bid. Working in conjunction with Caldwell, it conducted an extensive review, scoring each of the bidders in "great detail." Implementation is set for Oct. 1 in the United States, the United Kingdom and Canada.
But Maritz Travel Co. president and CEO Mike Boland, who did not bid on the business, suggested that choosing an agency last was not the wisest path. "You should do that first, because the right travel management company should be an active contributor to the other pieces," he said. "It should help with GDS, airline, hotel and car deals, payment systems, electronic booking tools."
Next on the agenda are CRS negotiations, "in 30 days or less," and the selection of automated booking and expense reporting systems. The two firms had been independently testing booking solutions pre-merger, Price Waterhouse with Sabre BTS and Coopers with Internet Travel Network (<I>BTN,</I> March 16, 1998). Price Waterhouse also had begun looking into expense systems, but because of the size of the merged company, it now first has to replace internal systems. Williams estimated that it will be 2001 before that process is complete.