Nortel Networks global travel manager Robert Ridpath shuns the hype of data integration from "end-to-end" travel management systems and tries to be realistic about just how global consolidation efforts can get. But Ridpath continues to find savings in an otherwise mature program. Basically, he goes basic by focusing on internal procedures he can control.
Nortel is one of many corporationsrecognizing that while supplier pricing is largely out of a buyer's control, revisiting internal procedures can pay off nicely. This is particularly true as mature programs run into the complexities of multinational consolidation. However, while making change through policies and compliance can be more controllablethan other program aspects, it is not easy.
Nortel does not have an "end-to-end" solution in place, but Ridpath last month said the $11.4 billion communications giant with more than $60 million in global air spend across 58 countries is "starting to pursue that."
"We recently executed a major cost reduction [effort] and were going after about $50 million on a spend of $200 million," said Ridpath, referring to total travel and entertainment figures. "We achieved $32 million of that. The initial approach was [to] go after suppliers, pull procurement in and try to make contracts better, [but the] answer was to simplify the policy, link it to the audit processes on the employee receivables side and let employees know you're really watching them to change the behavior. That's how we achieved 95 percent of that cost reduction."
The simplified policy and tighter audits on employee vouchering (with penalties) meant that Nortel "started pushing out rejected expenses" when, for example, travelers do not book air travel through the designated travel management company. "We were measuring and reporting exceptions, and it changed that behavior [and] drove higher cost reduction for us," Ridpath said.
"We feel comfortable with the travel management part and the tools and processes we have in place there," said Ridpath, speaking here at last month's Association of Corporate Travel Executives conference. "We have our enterprise systems in place now, with global deployments like SAP for human resources, finance and linkage into payroll. So we have the basic enablers in place to go after a solution." On the other hand, he said, "We process in excess of 200,000 employee vouchers annually through a mix of homegrown, third-party and outsource [solutions]. As we look to move out into the various regions on expense management, the processes we have in place work well, but the back end is horrendous. You have all the tax reporting you need to do, you have the linkage into payroll when someone submits an expense that is a taxable benefit, and you have the compliance management--which is very tough when you're so distributed."
"Simply stated, global equals complex," Ridpath concluded.
Expense management is not the only challenging area when it comes to transnational management, but Nortel has consolidated where possible. Last year, the company issued a request for proposals for travel management services, and ultimately chose American Express Business Travel after many years with Carlson Wagonlit Travel. American Express also provides the multinational card program. Having weighed a regional approach, Nortel instead went as global as it could--accepting that while geographical coverage on card or TMC programs is not going to reach 100 percent, more than 90 percent is "probably the best we're going to get," said Ridpath.
Online booking presents greater hurdles, but Ridpath again took a "best we can do" approach. Globally, Nortel registers 49 percent online booking adoption despite an "achievable" goal of 70 percent. "You have to have different solutions in different markets," said Ridpath. "If you put processes that work in some markets into other markets, they simply don't work and employees go around [them]."
Ridpath's advice to other multinational travel managers was essentially that they do their internal homework.
"You really need a handle on your policy, processes, the culture, the legislation and everything you can do in various markets--making sure it [all] fits with your core strategy," he said. "When you pursue an end-to-end solution, you truly need to have clear objectives. Every comptroller, HR leader or finance leader in your corporation around the world will have a different view of what's important and needs to be accomplished, so you need to have your arms around what's going on out there."
Buyers should ask whether it's best to handle a process internally or to outsource it, he suggested, and should also leverage relationships with peers inside their companies. Meanwhile, he said, travel managers should absorb with skepticism everything vendors have to say.
"Just jumping on the bandwagon of putting an end-to-end solutionin place because everyone else is doing it and that's what the industry is talking about is absolutely the wrong way to go," said Ridpath. "The technology works well, but you're looking at the glossy side of it. Does it really work for you?
"My data coming from card and from booked [transactions] is always different," said Ridpath. "I do try to look at the difference, but I don't see an incremental value in trying to integrate. It will tell me I have more card spend than booked spend, or in China my booked spend is high and I have no card spend. Well, they don't use the cards there. I already know that!"