Kevin Maguire
Applied Materials is working to globalize its travel management program as growth pushes travel expenditures higher and it focuses on cost-saving initiatives. The Santa Clara, Calif.-based nanomanufacturing technology provider--with 14,000 employees spread across locations in China, Europe, India, Israel, Japan, Korea, Malaysia, Singapore, Taiwan and the United States--began the process in earnest earlier this year under the leadership of global travel services director Kevin Maguire. A candidate for president and CEO of the National Business Travel Association, Maguire last week spoke with The Transnationalabout the Applied Materials travel program and industry topics. An excerpt follows.
What have you already learned from this initiative?
The biggest thing we have found in going into each region is that they have to understand what we are doing and why we are doing it. Just to walk in and say, "This is going to happen," would not have made sense. The other thing is that there is natural pushback to change. They have been comfortable with suppliers, and the relationships they have had, and we have to work with them to explain and to justify, to make them comfortable with our new structure. We will try to implement all the regions we have but we know some may not be involved. We have one in particular, Israel, that will probably remain out of the program for a while, just because they already have some relationships in place. There may be others, as we move into the Pacific rim area, but at this point we have not penciled anybody else out of the program. Globalization is so new to everybody. It is a learning process for us and for suppliers. There are territorial issues and a lot of things that you have to work through. The concept sounds great, but the concept also, in many ways, is probably pie in the sky. When you get down to the nuts and bolts, it's a much tougher system to implement than anyone expects. The biggest misnomer is that when you say "global," people think "one." But there is no one process that can apply to every area. It is a culture issue. Travel management is one of those things that people understand and want, but when there are changes in place and changes to suppliers, there are things that knock the fulcrum out of the center. It does become an issue for travelers, compared with the norm they had been used to. It has been an interesting challenge. It has not been totally blip-free but it is going more smoothly than we first anticipated.
Will you look to implement a global travel policy?
I do not think there is such thing as one, truly uniform global policy that companies can implement. Everybody has a bit of a different take on it when you look at the regions. Asia may have some things they have to address, EMEA may have things to address ... so you use your base policy as a foundation and then, in our case, we'll have addenda that address the specifics of each region. You have people following the structure of the main policy but you also allow flexibility. It also gives them more of an ownership role with the policy. It is not being forced on them to accept the one way we want it done. We need their input.
In the United States, Applied Materials works with American Express. Will you use that travel management company in all other regions?
At this point, [American Express] will handle most of the operations. It will not handle 100 percent. They will have regional call centers and from a data standpoint, things will be handled on a regional basis. We started working with other suppliers concurrently, but it has been more of a discussion. It really rolls to the data collection. We have to have some firm numbers to show airlines or hotels for them to be really able to come to the table with any kind of proposal for us. The data collection is done from different aspects; it is done from the TMC and also is done from the card. We also ask for back-up information from individual hotel properties. Sometimes their information does not match the national information for some hotel companies. It is the same thing with the airlines. It is a collective draw of information that we try to sort out so it makes sense.
Does the globalization include deployment of online booking tools and expense management systems?
We made the decision to do that as a phase two process, and first get everyone comfortable with the travel management company and the new, basic procedures we have. The plan is that once a region comes on, we will roll out the booking tool 60 to 90 days after they are up and running. We did some pretty extensive research on the tools that are out there, and there a couple that can service all the regions. We did select one tool that can be used globally, [Concur's] Cliqbook. From an expense management standpoint, that really falls under our accounting division but it does follow a similar timeline.
As you piece together your global program, what can you do to keep a lid on rising hotel costs, especially in emerging markets where supply is tight?
In the emerging markets, you really do not have a lot of options. You can't really move market share because there is no place to put it. You can negotiate in terms of a long-term relationship, and what you can bring to their table when demand is not as strong, and when capacity has increased and there are other properties to chose from. Sometimes that works. But right now in the emerging markets, you are pretty much at the mercy of the supplier. Hotels in the United States need to be careful when they have their discussions on rates, because it is all very cyclical, when it comes to business travel and the economy. There will be a downturn at some point. Hotels, from a pricing standpoint, are trying to recoup what they felt were not normal profit levels over the past three or four years and they are trying to do it in one fell swoop with huge [rate] increases. We all have to remember that we are partners. When times are good, we are partners, and when times are bad, we are partners. Or, we will have a situation we don't want. It is sad to see that it is starting to crumble. The partnership structure in the industry is coming apart.