Roundtable: Buyers Finesse Corp. Card Utility

Corporate payment system negotiation, implementation and maintenance were the subject of a recent discussion between Business Travel News editors and three business travel buyers: Tom Barrett, global strategic sourcing director for American Standard Cos.; Ron Sharer, director of corporate support services and facility operations for Ciba Vision Corp.; and Mark Strominger, director of maintenance, repair and operations purchasing for ZF Group's North American operations. All three currently use American Express for their payment tool, but Strominger is in discussions with air card provider AirPlus International, and Barrett had a long relationship with Diners Club while at another company.

BTN: Do you find that payment system providers are more open to negotiating now than they were previously?

Ron Sharer: It depends on the economy and the health of the industry. They seem to negotiate a lot better when things are tight, and they don't negotiate very well when things are going extremely well in the industry. Right now, it's really a questionable area. Things look better economically, but individual companies are not seeing the benefit.

Tom Barrett: I consider that they've always been aggressive, and they've always been ready to negotiate.

BTN: Will any of you soon rebid your contract for payment systems?

Mark Strominger: We're looking at other options. I can't say that the contract is up for negotiation, but we're evaluating different ways of handling it.

Barrett: We're into probably the fifth year of an agreement with American Express, and we continue to evaluate the opportunities within the marketplace. With a program that's as large and in as many countries as ours, we'd end up having to have a strategy developed with the implementation of any card program with a contract termination.

Sharer: Ciba Vision is a subsidiary of Novartis, and in Novartis North America, I'm one of about eight or nine travel managers who work together as a team on the card program. We are always evaluating the latest and greatest in what might help us reduce our cost. We're not actively looking at moving the card right now, but we're always looking at what's out there.

BTN: Tom, you mentioned the length of your contract is five years. That seems to be an industry standard. Why five years? Is that a good deal for you?

Barrett: In my situation, it would be more than 9,500 cards for all these countries. It could take you upwards of six months to negotiate an agreement, probably a good three months to negotiate terms and conditions and then you're into a complete deployment process. Now, all of a sudden, your interface and your connectivity with your PeopleSoft system for data feeds or your expense-processing tool need to be disconnected and reconnected. In the old world, I could delegate that off to some manager. These people aren't here anymore. Some organizations that are resource-rich have possibilities to go out every two or three years, but people get tired of that.

Sharer: We seem to be migrating from a three-year to a five-year situation also. Not only is it a cost and resource issue, it's an issue to your customer. In our company, we have quite a large field salesforce. If every three years you're changing the card, it has a huge effect on their ability to do their job properly. They've got to concentrate more on the cards changing rather than going out and selling their product.

Barrett: I considered what I thought to be an attractive deal for three years as well, but again, you're going to take a year to stabilize the program, a year to manage it and a year to renegotiate it. You're going to be back in the marketplace by the time you turn around. You have to determine how many years is the right amount for your organization.

BTN: Are there ways to keep long-term contracts fresh?

Sharer: Absolutely.

Barrett: The companies that you would be affiliated with are evolving new strategies. You can't be too far out of pace. In our side of the world, we're only as good as today's news. Tomorrow, our chairman and CEO is going to see whatever appeared in USA Today or The Wall Street Journal and say, "Why don't you have it?" Whether it's better terms or better insurance coverage, all these things are very important to the organization on a large financial basis.

Strominger: The key is to really find out the changes. Even though you might have a five-year contract, you can always go in and say, "The market's changed, so we need to change the contract."

BTN: Beyond better terms, is there anything in particular you're seeking in your next negotiation?

Strominger: Exchange rate charges. As we see now from American Express, when you're traveling overseas, the exchange rate charge is 2 percent. There are competitors out there that will give you 1 percent exchange. You look at that, and if you're a big international company, that's a big dollar amount.

Barrett: I would say paramount to most companies is employee productivity. Whether on T&E or a procurement card basis, you want to know where you can gain those productivities and synergies to take excess cost out of the system. Now, the problem we face is quantifying those numbers, but whether that's a $12 million, a $6 million or a $1 million productivity savings, those productivity savings directly impact your cost-per-share earnings. As in travel management and self-booking tools, the market may not be ready for it. Our business may not be ready for it. In those markets where it is, our job is to provide the resources and the vendor to take advantage of that opportunity.

Strominger: ZF is an international company, and I'm responsible only for the NAFTA region. In Europe, which is 70 percent of our volume, they use a different card. They use AirPlus. It's not as popular here in the States right now, but it's coming in that direction.

BTN: How does AirPlus change the equation? They're trying very hard to build on their beachhead in the United States.

Strominger: It is very aggressive. There are a couple of problems that AirPlus has with their cards. One is that they don't have reward programs, and that's a problem if you're passing your program rewards onto your employees. They won't have it until fourth quarter of this year.

Barrett: After you've negotiated an agreement without a reward program, you will never go back. After you've taken all the slings and the arrows and you're able to standardize that process, you're going to find out that there's dollars associated with that.

Strominger: Are you without a reward program?

Barrett: Yes, we are. Not only that, when considering a program going forward, even though I considered a proposal with rewards going back in, senior management said, "no reason to recapture that beachhead." When you end up looking at programs, evaluating these programs and the support structure, then you understand the dynamics of what really happens with these miles. Get into the discussion of what David Spade is all about with his Capital One program and how much that card costs. You're going to find out that the difference and the dynamics are the economics of soliciting a card. Getting a card and the dynamics of what drives these reward programs is substantially different in a corporate card basis. You would want to evaluate the proposal in those directions.

Strominger: The analysis I saw within our organization is that the payback wasn't that great to the company. We weren't really giving up that many dollars.

BTN: Has anyone else looked at air card programs?

Sharer: It's not been on our radar.

Barrett: We looked at the Universal Air Travel Plan cards. UATP cards probably offer a solution for the airlines and give you an incentive in order to do so. In so doing, it strips out the air, but it gets back to into the reconciliation issue. There hasn't been enough momentum either presented to me for a proposition or as part of an industry panel.

Sharer: Plus, it's one more point to consolidate. What's the advantage? Somebody's really going to have to convince me of some huge advantages in order to go to multiple cards.

Strominger: They have some benefits to offer. AirPlus has, in my opinion, a much better reporting system that can be modified for your business, and it can be done in a half-hour's timeframe. American Express is a little more cumbersome to get a report that's designed for what you want.

BTN: Are you satisfied with your payment system providers' reports?

Sharer: Never have been, never will be. They all seem to lack in user-friendliness. It's the format: the ability to catch all the expenses of a particular traveler, because sometimes they do violate that policy and don't use a mandated card. Then, the card no longer becomes effective for getting all of your data, so you've got to go somewhere else. If we ever get to the point where we can merge all of them together, you've got the panacea, but I can't see that happening anytime soon.

BTN: Amex said they've figured out how to leverage agency with card data

Strominger: They did that with their own agency, but to bring in another agency, they may be a little reluctant to consolidate that data. They're protecting their own turf.

Barrett: I've used American Express now on the global side at a high level, validating carrier reports and some of the high-level reporting. It's very adequate for what you need and what you want. They can be responsive to their clients based on their size. All large clients, depending on what your needs are and if you're succinct in your request, will fall into a queue about what things they need to drive their entire business model. The problem is: If you want to invest the time, you can make the reports work, but I don't have that time. American Express is developing strategies to address those requirements, but like anything else, it's going to take time. A good client services representative can run the reports that you need and shoot them over to you, and I do get a lot of my procurement card and T&E data from that process.

Sharer: Here's a totally different reason why you'd want the reporting system to be as simple as possible: Even though you normally rely on your TMC reporting data to give you a "where is my traveler" report, what if that traveler goes out and uses that American Express card through that card program and buys a ticket but not through the TMC? You could just run a "where am I" report through the card system, but I challenge you to try to do that easily.

BTN: Why? Have you seen anything at all to improve that?

Barrett: There's a real need for multinational companies like ours to have that data, but you want to be able to make sure that you don't evoke issues for data privacy. If all of a sudden there was a tsunami warning, you'd begin to say to yourself, "Is someone getting out of this area? Are they just going to go to the airport and buy something?" There is preponderance of opinion in the management team that we do have control over this. We do to the level of accuracy to which it's approved, but not with every last traveler.

BTN: How would you improve your payment system?

Barrett: They have to be giving us actionable information. We get a ton of reporting right now, and we have somebody sorting through that. The other day, I had the agency call me to say that we had 18 executives going to a meeting in Dubai, and there were too many on the plane. Could we have had an earlier warning? If somebody's going to start purchasing a ticket on a blacklisted airline, I want a warning flag to be sent to my security director. I don't want to see it. I want them to get the information.

BTN: Have you integrated your payment system with other travel systems?

Sharer: We just implemented Boomerang a couple of years ago, and prior to that, we were using a homegrown Excel spreadsheet-type system. In theory, it works well. In practice, there are a lot of things we would do differently. With our automated expense reporting system, we're on an employee-liability, company-pay system. If employees get behind in doing their expense reports, all of a sudden American Express is sending them reminders that the card hasn't been paid. We didn't look at the scheduling of exactly when the expense reports had to be in for the new reporting system versus the card program, and it created a lot of problems over the past couple of years that we're just now getting ironed out. If the employee pays but hasn't turned an expense report in, good luck trying to get that personal money back.

Strominger: We used Concur for expense reporting, but we don't pay American Express based on it. We're still cutting a completely separate check for Amex.

Barrett: We are with Gelco, and we're fully integrated under the procurement card system. It is really simple. People make it more complicated than it needs to be, and that's unfortunate, because it's communications.

Sharer: When you're evaluating any type of new service, whether it be a payment system or an automatic expense reporting system, we have a tendency to bring in department heads to evaluate. The most important thing you must remember to do is bring in that field salesperson who does the traveling. They're filling out the expense report, so they can really tell you what works and what doesn't work. If you don't do that, it may not be a failure, but it's going to take you a lot more resources to correct the situation than what you had before.

BTN: Have any of you been using hotel folio data to prepopulate your expense reports? If not, have you at least been gathering that sort of data?

Sharer: I haven't been educated on that type of data, but we certainly would love to have that happen with our expense reporting system.

Barrett: Be careful. The challenge you get faced with is you've probably got a devil and an angel on each shoulder. You're going to have 5,000 travelers realize that every time they go to a hotel and see a movie, that information is going to be transmitted to their company. It's going to create a privacy issue with which I don't know that I'd want to deal in the future. The only other problem is that there are only a certain number of hotels that will send hotel folio data. You're going to have that dichotomy.

BTN: Folio data has to be ubiquitous before it's even useful?

Barrett: You've got to get to critical mass. We have to decide whether the juice is worth the squeeze.

Sharer: However, if you can work out those issues, it's certainly going to save resources, after you spend the resources to get where you want to be.

Strominger: Do either of you use central billing airfare, a ghost card where you strip off the airfare charges?

Sharer: We used to, but reconciliation became a nightmare.

BTN: That has been accepted as the best practice, and yet, many best practitioners are moving away from it. What's happened to make it a nightmare?

Barrett: Unless you set up a credit card for every single department number and are able to then have it put back into that charge and update it, it's always going to be out of sync. The other problem is that you're going to have to have the controls to understand if there's a pre-trip approval process in place. We don't think there's a large number of people who are out to screw a company, but there are one or two who will try to get by with something, even inadvertently. They'll call an agency to attend a conference in a nice destination, and a spouse may want to come on this trip. Unless somebody is then able to pull it and find it, it inadvertently could be charged back to the company.

Strominger: It happened to our vice president of human resources. He took his wife on a trip. Six months later, he was looking at his American Express bill, and he realized that her charge wasn't on it.

Sharer: Companies are becoming such mega-companies, your transactions are going sky-high, and the volume of those transactions is just taking somebody forever to do the reconciliation.

Strominger: You ought to see the charge accounts that we've got. It's mind-boggling that, maybe for nine divisions, you've got six or eight different cards at a time going all over the place. It's ridiculous. I come from the Sachs division, which ZF bought about three years ago, and we were much more centralized. We're moving to more centralization. I still get mixed feelings as to whether the central bill makes sense.

BTN: Have you explored a one-card solution that combines a purchasing card with a travel and entertainment card?

Sharer: We use a purchasing card and a travel card. I can't tell you any reason they're not consolidated together other than that it's a sourcing issue.

Barrett: The one-card solutions process, as I understand, comes with significant corporate liabilities, and I'm not prepared to go down that road. I don't think our company would be prepared for the cultural change that would have to be communicated across the card-based solution in order to do that. In programs that are my size, you have to talk some serious dollars in order to do it: programming it, resourcing it, communicating it.

Sharer: We'd have to add more headcount to reconcile that particular card. Today, you reduce headcount.

BTN: Do you have any words of advice for other buyers?

Sharer: Each payment systems vendor is going to try to convince them that their program is the best one that is available, but it's not as simple and as easy as all the vendors are telling you. You're going to have to put a lot more work into what you need, and make sure that you involve everybody in the organization.