Cisco Closer To Following The SunCompany: Cisco Systems
Headquarters: San Jose, Calif.
2004 U.S. booked air volume: $85 million
2004 Worldwide booked air: $147 million
2004 Worldwide T&E: $325 million
Cisco Systems, a San Jose, Calif.-based Internet networking company, is moving quickly to provide its employees with round-the-clock travel services through a consolidated global infrastructure that will pare down its 55 American Express call centers to 20 and move the remaining sites to a single GDS, Sabre, by July.
Having entered into the second phase of consolidation in September 2004, Ralph Colunga, Cisco's senior manager of global procurement for travel and meetings sourcing, said the company is "ahead of the game" with its travel strategy
(BTN, July 5, 2004), already moving from 64 agencies to 55, and reducing headcount from 165 agents to 134 worldwide.
"In this year alone, by consolidating from the 55 centers down to 20, we'll be saving a little more than $1 million in operating expenses right at the very onset," Colunga said.
Debbie Winston, Cisco's global travel operations manager, said by that time, Cisco would be "100 percent with American Express in all regions. Also, we will have the GetThere tool in 30 major markets and approximately 90 percent of travel transactions will be made on Sabre/Abacus. We will continue with the consolidation program and at the end of 2005 we will again review the progress and assess the impact of industry changes on our plans."
Much at this stage of consolidation depends on American Express' global capabilities. "There are benefits to both sides of making this happen," Colunga said, noting that Amex is moving forward, on schedule, with Cisco.
Total collaboration between Cisco, American Express and Sabre has been essential to the Internet-networking giant's success in "following the sun" thus far. "Together, we have forged a dynamic relationship that drives change and enables best practices to be adopted in each region," said Winston.
Sam Gilliland, chairman and CEO of Sabre Holdings, said the partnership strategy makes sense for Cisco and Sabre and sets global industry precedent.
"It is a concept that would be helpful for the very largest corporations. It emphasizes the need for those supplying solutions to the corporate environment to have a global footprint. Ralph is working with companies he feels can support him around the world in the follow-the-sun approach. We feel well-positioned should others want to follow that approach," Gilliland said. "Clearly, Cisco's travel management company, American Express, has a global footprint, as do we."
The only obstacle in Cisco's path toward single GDS and agency consolidation, Colunga said, has been determining the locations of the travel centers—now in 15 countries—as the company pares them down to 10 or fewer over the coming years.
Winston said decisions as to quantity and location of agency sites depend on Cisco's ability to provide improved service and meet local market expectations from regional call centers. "Moving from a local platform should not have a negative impact, and there is the value-add of leveraged procurement and consistent service delivery," she said. "At this stage, we plan three centers in Europe, two in the Americas and five in Asia/Pacific."
Over the past two years, Colunga and Winston have consolidated Cisco's Canada operation into its Raleigh, N.C., call center and completed the transition of 11 markets in Latin America through that same location. Cisco's first call center to serve Europe, the Middle East and Africa, currently supports 13 European markets from its U.K. base. The second is scheduled to open mid-year, serving another 20 markets.
While they have implemented a new team in the Asia/Pacific region to consolidate "easy wins" in such markets as Australia, China, Hong Kong and New Zealand, Winston said that addressing that region has been challenging. "We decided for the time being that Japan and India would stand alone. Both markets have technology challenges and a consolidation program simply would not achieve anything," she said.
The development of a training program to address issues of cultural diversity and instruct counselors in working in multifunctional, multinational operations is central to Cisco's strategy and to the industry as a whole, Colunga said. "As we consolidate and go further down to where we have these six, eight or 10 service centers worldwide, those agents that are going to be left on our count really have to become, in effect, global agents. They've got to become super-agents. That's why American Express has really dedicated a team to help us with this global implementation and to do global training to help us identify the best agents. That to me is the future of travel."
John Caldwell, president of Washington, D.C.-based consultancy Caldwell Associates, said the follow-the-sun approach, which has been discussed in the travel world for years, hasn't been adopted by many companies for such practical reasons as rollover, agent training, the cost of labor and the cultural differences in foreign markets. "It's kind of like the offshore issue in India, which is still unproven as to the degree to which those cultural barriers can be broken down in dealing with other parts of the world. It's an idea worth exploring, but there's a lot of downside to it that needs to be independently assessed," he said.
More pressing, Caldwell said, are changing technologies and industry debate about distribution channels. "You always have a risk of putting your stake too far in the ground when technology's changing," he said. "When the industry's so full of uncertainty, maybe it makes sense to keep your powder dry and not go too far away from the traditional, stress the self-booking and watch what's going on with the distribution channels. If you invest a lot, you could end up betting on the wrong channel. You want to have a lot of flexibility," he said.
With an eye to that big picture, Colunga often tells his team that, as travel professionals, they must be "a little bit like chameleons," evolving their strategies to fit the shifting tides of the industry and the world. "We have to change with the changing environment and the only way to survive is to change as the dynamics change. It's not a question of if something's going to happen, it's a question of where, when and what magnitude," Colunga said. "We're still trying to stay on course, but obviously keeping our eyes open to what's happening."
The Cisco team is working to implement a standardized, global emergency response system. Detailed, real-time reporting on employee whereabouts is essential to Cisco's security program, and single GDS and agency consolidation is vital to streamlining the company's reporting processes, said Colunga. "It's not a question of if something's going to happen, it's now a question of where, when and to what magnitude, and that could be anything from a natural disaster to terrorism to disease," Colunga said. "The key word here is really flexibility."
That philosophy also has been put into practice with a slight reorganization of the leadership of Cisco's travel team. Over the past six months, Colunga moved from his post as Cisco's senior manager for global travel, Metro, meetings and events to become senior manager of global procurement for travel and meetings sourcing, leaving Winston to implement the company's follow-the-sun strategy as manager of global travel operations. Colunga and Winston have worked together over the past seven years to form the "trinity" between Cisco, American Express and Sabre.
"Part of this was fueled by Sarbanes-Oxley and the necessity for controls and transparency," according to Colunga. "It was felt that if you're doing the negotiating you probably shouldn't be doing the operations, and if you're doing the operations you probably shouldn't be doing the negotiating."
By enabling Winston to oversee the operations, fulfillment and training aspects of Cisco's new travel strategy, Colunga can focus on developing a true vendor management program, something he said the company hasn't been able to do.
"A lot of our decisions in the past regarding procurement or services were based upon experienced decision-making, not that that's a bad thing," Colunga said. "It was right for the company at that time, but the era we're living in now is very much being guided by disciplined decision-making, on finding the best return on our investment and doing measurements before selecting as well as after selecting."
Cisco's whole strategy—from internal reorganization to supplier relations—comes down to simplification, Colunga said. "As I see it, travel management is nothing more than customer service, procurement management, process management and reporting. You can take everything we do and pretty much lump it into those buckets," he said. "What Debbie and I do is think, 'How best can we simplify this? How do we get to global pricing?' That's really what we're trying to head towards, demystifying the whole travel arena."