<B>Stairway To Opportunity</B>
<I>Travel Managers Shift To Strategic Sourcing</I>
By Cheryl Rosen
The forces of change are converging in the travel office, and many travel managers are applying their skills in consolidating purchasing and implementing technology to broader e-commerce initiatives.
"It's a time of opportunity for travel managers," said Cheryl Geib, travel manager at Duff & Phelps Credit Rating Co. in Chicago, who volunteered to apply her experience in managing the firm's corporate card program to the search for an online expense reporting system.
As airlines cut commissions and agencies turn to fees, Geib said, "I see a general trend across the board with most major companies whose T&E has surpassed building overhead to become the second largest corporate expense, behind salaries. When that happens, people sit up and take notice."
At Hewlett-Packard in Palo Alto, Calif., former travel supplier manager Jeff Kurn in January became global project manager for travel strategic sourcing. "H-P has publicly announced a goal of reducing infrastructure cost by $1 billion--and travel is an infrastructure expense," said Kurn. "Like many companies, we're working on a global strategic sourcing project to save on travel expenses."
On Kurn's plate now is an analysis of H-P's total worldwide expenditure and potential cost-saving opportunities, a review of all travel policies and "the creation of requests for proposals across multiple suppliers, including technology suppliers."
In the group he heads are 15 people from around the world, some from travel, some from other disciplines. Kurn's first project was a request for information from travel agencies--perhaps indicative of a switch from H-P's traditionally decentralized approach to travel purchasing, though Kurn would say only that it "may lead into an RFP process in an effort to consolidate our worldwide travel." H-P also is "investigating expense reporting" and looking to "increase our use of online booking" through GetThere.com.
Meanwhile, Mike Kabo--who first turned his experience as travel manager at Conrail and Avon into a consulting practice--now is heading a wider e-commerce initiative as the new director of global travel at Computer Sciences Corp. in El Segundo, Calif. In addition to taking on responsibility for the travel program, Kabo is looking into the feasibility of CSC offering a business-to-business e-commerce site with a travel purchasing option to its customers.
"CSC makes an awful lot of money through IT outsourcing, and recently we've been helping clients develop e-commerce sites and portals," Kabo said. "Now our customers are asking if they can outsource other administrative areas to us, and travel is one of them. So we're looking at whether that is a viable line of business for us. Strategically, we need to figure out what we can offer, what it would look like and what value we could bring. As I look at a booking system for CSC, it would be foolish not to be looking at that concurrently." The decision, of course, will not be made by Kabo alone, but his voice will carry weight in decisions on the larger initiative.
And choosing an online booking vendor is not all Kabo will be doing. A month into this job, he now is heading a review of all of CSC's internal processes and key supplier relationships "to make sure they are bringing value to both sides," he said. "We're not looking to rebid anything, but rather to expand and improve our existing relationships and ensure that we're being a good partner by driving our business where we need to, putting in process improvements to reduce cost and improve service to our travelers."
Also in the works is a globalization effort that will bring not just online booking but also automated expense reporting--now rolling out in the United States--to CSC employees around the world. The company has consolidated purchasing through Carlson Wagonlit in Europe and American Express everywhere else, "but we still have lots of pockets that we're slowly converting to one or the other," Kabo said.
With CSC's revenue growing at "about a billion dollars a year for the past four or five years," adding technology will not mean laying off travel staff, but just keeping up. "Our $100 million air program could easily be $200 million next year--and my role is to strategically figure out how to position and implement these diverse programs as we grow," said Kabo.
Geib, meanwhile, has been "asked to investigate the possibility of streamlining the expense reporting process by looking at automated systems." She began with a cost analysis, working with the account payables supervisor to determine how many steps Duff & Phelps' travelers go through and how much that costs the firm.
Geib divided the employees' salaries by the minutes it took them to complete the 10-step process, "and just the employee time involved was frightening. I cost it out to an average of $54 per statement, which put us at $250,000 in employee time companywide." That compares favorably with the $20-$25 per-statement cost that automated expense reporting vendors have quoted her.
The company asked Geib to spend the month of June evaluating expense reporting systems in a joint effort with the accounting manager. "I'll handle the benchmarking and bidding and evaluation," she said, "while the accounting manager will be giving feedback on how the system melded with our accounting systems and on the electronic funds transfer piece." The plan is to roll out a pilot program by September and launch the system companywide in 2001.
Online booking also is in the works, but "our people are service people, and expense reporting is an easy sell, where moving them away from our agency would be harder. And you can mandate the process," she said. "Booking is much more personal. We are not a company that sells widgets--we are bankers, and our travelers like the warm fuzzies."
At Travel Management Alternatives, a consulting firm in Stamford, Conn., president Carol Salcito agreed that times are good for professional travel managers to move up. "It's all about being adaptable to change and looking at new and creative ways of broadening your job. Anything you do to promote cost avoidance in your company gets you noticed.