Profiles In Travel Management: Leveraging Videoconferencing, Consolidation - 2007-06-11

Mobile telecommunications provider Vodafone has slashed a $155 million travel bill by 20 percent by multinationally consolidating its travel policy and supplier base for the first time, pushing the widespread adoption of videoconferencing.

The company has installed 200 videoconferencing units across its business, including six "videoconferencing lounges" in the public areas of its largest sites, which any employee can book. Utilization of the lounges during business hours is 85 percent, and travel between sites with lounges fell by 100 trips per month per site over a 12-month period. Vodafone recouped its investment in the lounges, introduced in December 2005, in only two months.

In addition to the videoconferencing push, global commercial manager Tracey Williamson, recruited in September 2005, has overseen the introduction of the first unified travel policy for the 17 countries with operations in which Vodafone has a majority shareholding. She also selected Carlson Wagonlit Travel as the company's first consolidated travel management company and concluded the company's first multinational deals with airlines and hotels.

The push to adopt videoconferencing predates Williamson's arrival, but senior manager for global videoconferencing Nik Frengle said, "It didn't work until a travel person came along," because the lack of a groupwide travel policy prevented an integrated strategy. The new policy requires employees to state why they cannot accomplish their mission through conferencing when making a travel booking, whether by telephone or in an online Excel template. The reason is sent in a confirmation e-mail to the employee's line manager for approval.

Vodafone has introduced videoconferencing not only to reduce travel costs, but also to limit employee wear and tear and the impact of its travel on the environment. About half of its 200 units are located in directors' offices. The manufacturer Tandberg supplied most of the units.

Initially, Vodafone used ISDN lines, but the transmission quality and reliability were poor, so where possible it has moved to Internet Protocol architecture. This has yielded a reliability rate of 99 percent. Where it cannot move away from ISDN, improvements in the technology have led to a climb in reliability from 70 percent to 93 percent.

According to Frengle, the technology must offer two features if it is to gain widespread acceptance. The first is presentation capability, which enables participants to look at the same document on their screens, usually by taking a feed from a laptop computer. Frengle said Vodafone employees use the presentation capability on almost every call.

The second feature is multipoint service, which allows more than two units to participate on the same call with minimal effort. Vodafone's setup allows up to four units to join in, the average being 2.5. "These are the two things that have made videoconferencing an everyday tool for us rather than something we use only occasionally," Frengle said.

Frengle and Williamson also ascribe the success of videoconferencing to assiduous communication, especially for the highly visible lounges. The opening of the lounges was accompanied by a poster campaign and promotional events with actors dressed as cabin crew explaining how the units worked and handing out food and other items with the slogan "Travel VC Class." "The lounges and the marketing campaign were a big step forward," said Frengle. "Some people had bad experiences with videoconferencing in the past. This showed the technology had changed."

Williamson received a board-level endorsement for the initiative, but found TMCs that bid for Vodafone's consolidated business last year far less helpful. "They were not very creative or holistic," said Williamson. "Unless they could see a revenue stream in it, they were not interested. We asked questions in the tender about how they would respond to travel reduction but nothing much came of it. I don't understand why more global TMCs are not offering video- and audioconferencing in their standard suite of products."

Before Vodafone selected Carlson Wagonlit Travel at the end of last year, the company had been using 17 different TMCs. Carlson Wagonlit already was handling its travel in two European countries. Williamson said all bidders offered fairly similar products and services but Carlson Wagonlit won after a close run-off against another competitor. Carlson Wagonlit also has been given the job of handling Vodafone's meetings and conferences.

"Carlson Wagonlit is clearly doing a good job already," said Williamson. "Our venue day rate has gone down because they are implementing the guidelines we gave them and taking care of details, like not hiring overhead projectors if they are not required."

However, finding a TMC was by no means Williamson's first task when she joined Vodafone. Instead, her top priority was securing senior buy-in for the program she intended to create. She found a sponsor in CFO Andy Halford, to whom her plans appealed both because they would reduce the travel bill and impose standardization throughout the business. "I knew from previous experience that I must get senior buy-in," said Williamson.

Her next step was to form a global travel team by asking each of the 17 countries to send a representative. Armed with useful feedback and a sense of enfranchisement among the representatives, she then created a consolidated travel policy that sets the minimum—but not maximum—restrictions to which all countries must adhere. This includes allowing business class for flights of more than four hours' duration. Previously, some countries had permitted business class for all air travel.

Williamson established a good relationship with Vodafone's human resources department, under whose name the policy was issued. "It proved a wise decision," she said. "If it had been seen to originate from the supply chain group, it would have been seen as a cost-cutting exercise. Instead, it helped travelers realize the policy was as much about issues such as safety and security."

Williamson formed air and hotel agreements based on data provided by the suppliers. The improvised nature of those deals gives Williamson confidence that she can improve on them next time, despite the impressive savings in year one, because she will have the benefit of consolidated data from Carlson Wagonlit. However, she faces another challenge: Vodafone increasingly is globalizing its business and therefore likely will travel more. Cutting trip volumes likely will prove harder, so the onus to reduce average prices will be even greater.

The major uptake of videoconferencing offers hope that Vodafone can succeed. "The travel category strategy approved by the board," Williamson said, "is as much about challenging and changing existing processes to become more efficient and remove costs as it is the consolidation of the supply base and leveraging spend."