Profiles In Travel Management - 2006-02-06

Seven-Step Savings Strategy
Company: Verizon Communications Inc.
Headquarters: New York
2005 U.S. Booked Air: More than $50 million

Verizon senior management last year charged its travel program with seven cost-reduction initiatives, including pushing touchless booking and traveler compliance, to help yield $11 million in savings. Meanwhile, the travel department is continuing to use online auctions to select various travel services, an effort it began last year.

Verizon's travel department in 2005 increased online adoption, contacted travelers who are noncompliant with policy, reduced the hotel database, optimized travel spend by managing market share, avoided shuttle transaction fees by purchasing tickets at the airport, mandated specific airline use in particular markets and held reverse electronic auctions for agency services.

The biggest challenge for travel services senior specialist Debra Goldmann to tackle in 2005 was contacting travelers booking out-of-policy flight arrangements. "We added a drop-down menu to GetThere online booking tool where someone would need to identify their line of business head's e-mail address, as well as their own e-mail address on the travel profile that is stored on GetThere," she said. "If you are trying to make a reservation and you're out of policy, a reason-code drop-down menu pops up. We get a report of those exceptions and we see if we have any repeat offenders and then we can e-mail the traveler." Adding or subtracting reasons can be done on demand. The key behind the drop-down menus, Goldmann said, is that it keeps human intervention out and drives up the company's touchless rate.

When the program launched in March 2005, Verizon's online adoption rate for airline reservations was at 73 percent. By December, adoption rose to 83 percent. "Our adoption rate without the non-eligible, including VIP travel, group travel and international travel, is at 92 percent, so 83 is a real number," Goldmann said.

Online hotel booking in 2005, however, lagged behind air at 45 percent. Goldman said the booking tool only shows preferred properties and lists by price. She minimized spend by reducing the company's hotel database from 1,100 in 2004 to 700 one year later. Limiting suppliers also enabled Goldmann to negotiate a global hotel program for the first time, even though 94 percent of Verizon's travel is domestic. Goldmann may cut that number again in 2006. "I'm not sure we have that much wiggle room, but it's a possibility," she said. "We'll certainly look at where people are staying and take a look at rates and see if anyone's willing to play or be aggressive."

Verizon's travel department is part of the company's strategic sourcing department and used a reverse online auction to select American Express as its travel management company. "That's a procurement trend that's been taking off," Goldmann noted of the auction. She said her department is encouraged to hold auctions. "It really helps you level the playing field and makes things a bit easier to compare," she said. "Because this is an unconventional thing to auction, we did a lot of groundwork beforehand." Goldmann met with Verizon's suppliers prior to designing the request for proposals. An IT group within sourcing then designed the auction specifically for the travel department.

"It was a two-part RFP," she said. "We designed the auction portion to be the financial portion—the real quantitative part of the RFP. The second part was the qualitative portion which really hit on services, reports and anything else that was going to support the program." Goldmann gave suppliers a specific area in which to respond so she could compare responses. "I have to say it worked really well," she said.

Goldmann also held an auction for meetings. The process was more challenging because it involved more suppliers. "It wasn't initially streamlined, but we managed to do it," she said. "We handled it the same way that we did with the auctions, and now we have preferred suppliers that are going to be communicated to the entire corporation."

Verizon last month closed its purchase of former competitor MCI Inc. "We're at the point where we're comparing contracts with MCI," Goldmann said. "We're actually a part of the merger team and assessing best practices."