Profiles InTravel Management:

Federated Takes The CTD Route
Co.: Federated Department Stores Inc.

Headquarters: Cincinnati



In the past two years, Federated Department Stores travel manager Bobbi Huber established an ARC-accredited Corporate Travel Department and rolled out the IBM expense reporting system and Trip Manager online booking tool, creating a more effective and consistent travel program. With the support of senior management and Six Sigma methodology to assure quality, Huber gradually achieved her current 92 percent online booking adoption rate, a reduction in headcount, the elimination of agency fees, as well as consistencies through the company's 11 disparate divisions—yielding a robust view of travel spend and "substantial" savings.

The initiative began with a seemingly straightforward undertaking in late 2000: select and deploy an expense reporting tool. However, the task snowballed into a reevaluation and overhaul of the company's travel processes. "We felt that we didn't have a consistent way to measure, plan, control or monitor travel expenses," Huber said. "We identified a problem area, which was the rising cost of using travel management companies. We had sporadic and inconsistent auditing, a lack of complete and timely reporting, et cetera. We started off on this Six Sigma initiative and broke that out into several subprojects: online expense reporting, CTD, online booking, consolidation."

To make her CTD case to senior management, Huber put together a "mini RFP" to send the agencies, with her own proposal of a CTD included on the list. "We knew what we could do with a CTD and wanted to see what everyone else was offering. After looking at that, we put together a basic spreadsheet with all the options right across the line." In December of 2001, Huber presented the overall plan to senior management, effectively selling the CTD concept. "The one thing that kept coming to the top was the ownership of our data and the travel management company fees," Huber added. "If you look back five years ago, travel management companies would give you anything you wanted. The reporting was free. Now, there is a cost to everything, and there is something inherently wrong with buying back my own data."

In addition to making financial sense, the establishment of a CTD also made operational sense and helped tie together the company's divisions. "We were able to consolidate the offices. There was a huge cost involved both from a hard- and soft-dollar standpoint when you have six or seven different onsites," she said. Instead of flipping the switch from its TMC—American Express since the 1980s—to a CTD, Huber gradually rolled out the new program one division at a time. "We closed one onsite on a monthly basis beginning in May last year, and in July of 2002 we became a full-fledged CTD," she said. "We went from 36 people—34 employees from the TMC and two from our side—and nailed that down to 18."

Huber said coinciding the CTD rollout with the deployment of the Trip Manager online booking tool was critical to ensure the smoothness of each divisional transition. While she said Federated's culture historically has not been to mandate, the company did so to ensure the penetration of the tool. "We actually had Trip Manager in place in 2000," she said. "For the rollout, we slowly began in waves. If we closed an onsite, we had to have them up and running on the tool before it closed and have their mandate in place."

While rolling out the IBM expense reporting tool was first on the to-do list before the overhaul, it was the final component to be put in place to complement the company's new structure. "It did not actually begin in full force until earlier this year," she said. "Initially, the thought was we would just go with the out-of-the box option, but we decided that wouldn't work. We purchased the IBM system, and I'm not even sure IBM recognizes it any more."

Huber had foregone a single travel policy in favor of divisional guidelines and modified the expense tool to reflect that. Yet, consistency was maintained in the expense process and in the data. "It came out of our inability to understand how much we were really spending on things," she said. "It's frustrating for a division to ask, 'What hotel are we using the most?' We can only tell them what they booked. There's something wrong with a hotel or any vendor coming to you to tell you how much you spent. Now, through all the changes, the wealth of data that we have is amazing."