<B> Schwab Goes End To End</B>
By Mary Ann McNulty
<I>San Francisco</I> - When Charles Schwab & Co. Inc. next month drops an electronic expense reporting system into place, it will join an elite and intimate circle of corporations that have solved the ultimate travel management puzzle: the rollout of an automated end-to-end travel solution. But even without the final piece of its paperless vision, Schwab is proving that employees can be trained to use technology to help drive down their company's travel costs.
Less than a year after installing Sabre's Business Travel Solutions Travel Planner on its intranet, Schwab has moved about 22 percent of all travel transactions onto the automated booking system, reduced its travel staff by 40 percent and slashed its FedEx bills dramatically, as 82 percent of all tickets are now electronic, said director of corporate travel Bob Grant.
"In 1997, I added $1.9 million to the bottom line of the Charles Schwab Corp.," Grant said. The savings came from the "accidental commissions" sent to Schwab, which holds its own appointment from the Airlines Reporting Corp. The commissions are accidental as Grant negotiates all travel contracts on a net basis, and has succeeded in moving about 70 percent of Schwab's domestic, and nearly 100 percent of its international, air travel to net fares. The resulting discounts range from 22 percent to 52 percent off applicable fares when any ticket is booked.
Before implementing its electronic travel strategy, Schwab hired an auditor to benchmark its costs against those of other companies in the San Francisco area. While others averaged between 32 and 34 cents a mile, Schwab's costs were 40 cents. Today, thanks to technology, Schwab pays just 20-21 cents per mile.
Buoyed by the initial success of the program, Grant now is striving to drive up usage of the electronic system to 60 percent of all transactions.
"We've started to put messages out on our phone line saying the standard for booking travel is Travel Planner," he said. Those who insist on calling the travel department to book reservations immediately hear a recording explaining that there is no waiting on Travel Planner. Call volume has dropped from a high of 350 calls a day to no more than 260, while the average duration of calls has shortened from over five minutes to about three.
When a Sabre gateway used by reservationists crashed earlier this month, the travel staff immediately recorded messages apologizing for the technical glitch and directed employees to the online system as it was operational. "We saw a 300 percent increase in hits and doubled the number of tickets issued through it," Grant said. That day, 36 percent of all transactions were made using BTS.
As bookings through BTS rise, Grant plans to further reduce his reservation staff, redeploying the employees within the fast-growing company. A year ago, Grant had 15 reservationists booking business travel, as well as some groups and meetings. Today, he has nine reservationists, one full-time information technology expert and a customer service manager. The last two reservationists were promoted within Schwab, with one moving into purchasing to spearhead the move to electronic processing.
Efforts to reengineer Schwab's travel, with its net air spend of about $12 million, began in 1995, when the brokerage firm issued a travel policy, garnered senior management support and negotiated preferred vendor contracts. It was then that Grant began looking for an automated end-to-end solution for booking, reporting and reimbursing travel. Initially, Schwab offered a booking module from Internet Travel Network. But last year, as complete systems came to market, it switched to Sabre travel planning and data management modules, and to IBM for an expense option that will pre-populate expense reports daily with data from Schwab's Citicorp Diners Club program.
The expense reporting component from IBM has proven to be the most difficult piece of the reengineering puzzle to implement, Grant said. "This is the toughest piece of technology I've ever had my hands on. Our senior person in MIS looked at the diagram and said it's the largest endeavor he has seen since electronic brokerage."
The expense reporting software is connected to Sabre's computers in Tulsa, which collect the daily charge downloads from Diners Club and disperse them to employees via e-mail. In addition, the system is connected to Schwab's computers, including the PeopleSoft enterprise business system it uses for accounting.
About 200 Schwab travelers have been using the software since January and three have been working eight hours a day entering data to assimilate peak volume.
To prepare expense reports, employees open e-mail messages that contain charge data to prepopulate the reports. They then verify the charges, add out-of-pocket expenses and forward the expense report to a supervisor for approval. In the background, the software checks for policy compliance, verifying that tickets were purchased through Schwab Travel and were not exchanged, and that hotels billed were preferred properties. Policy violations pop up immediately, forcing employees to type in an explanation of why they went out of policy.
Employees then print the report and an accompanying bar-coded transmittal sheet, attach receipts and send it all to accounts payable in a special window envelope. If the receipts don't arrive within 24 hours, accounting calls the traveler. No future reimbursements are issued until the receipts show up.
Supervisors can ask to see receipts, review details from charge forms, question expenses or approve them. The system sends e-mail messages when reports are approved and again when they are processed, with the latter detailing how much will be paid to Diners and how much will be transferred to the employee's primary bank account that day. Schwab pays Diners when it's convenient.
Grant doesn't expect to eliminate the jobs of the two T&E processors--but neither does he expect to have to add staff as the company grows about 25 percent a year for the next few years. "The real gain is from service to employees," he noted. Reimbursement funds will arrive within four days, instead of the average three weeks the process now takes.
As a paperless pioneer, what would Grant change if he had to do all this again? "There are days when I quite frankly wished that someone else did the pioneering. I might have waited for the technology. My perception was that this was all turnkey, but I was just fooling myself."
Still, in the end, he said, "the result is I have the best travel processing in the country and we'll continue to save money with it."
Pete Stevens, director of marketing and business development for Sabre BTS, credits Schwab's aggressive embrace of technology with producing the dramatic returns. "If you're just in there dabbling with only 5 percent going through electronic bookings, you're not seeing the savings. But if you're in there with 20 to 30 percent electronic, the numbers are really obvious."
For its part, BTS has learned from Schwab and other implementations that it must really make two sales, one to the corporate decision maker and the second to individual travelers, Stevens said. BTS has tried contests, mini-trade shows and other promotions to convert employees. And it has learned to issue new releases on a much more frequent basis than ever envisioned. New features are being added every eight weeks, Stevens said.
Now that he has proof that the vision is working, Grant said, a number of large corporations--including one from New Zealand--have visited. He tells them that the technology "works very well for us, because we've developed the combination of pieces that have made the process a success," he said. "It starts with extraordinary approval from senior management, and the belief that travel management is a yes or no question: Do you want to manage it or do you want the travelers to manage it? We made the decision that buying travel isn't any different than buying pencils, paper clips or a desk for my office, and then sought and used all the technology possible to make it work. The change that I envisioned is beginning to come to the fore--and I can stand back and say, 'I think I was right.