Aiming to help corporations save money by optimizing purchasing policies and practices, MasterCard Worldwide has introduced a series of benchmarking tools. The tools help companies evaluate their travel, purchasing, fleet and one card programs by benchmarking them against those of others in their industry sector, as well as those deemed best in class. The interactive tools also provide managers with advice on how they can optimize their own programs and quantify the savings opportunities by card type.
At the top level, any company can spend roughly 30 minutes answering questions about their travel, fleet, purchasing and one card programs and receive a detailed analysis of their responses as compared with best practices that Boston-based researcher the Aberdeen Group Inc. has identified in surveys of about 500 companies.
Available free through the MasterCard Web site, or from banks that issue commercial cards, the Purchase Optimizer tool allows the user to identify his or her role in the card program (cardholder, senior management, business manager, card program administrator or travel manager) and details challenges that each faces, as well as best practice approaches. For example, program administrators are challenged to reinforce preferred suppliers and maintain focus on the program to achieve maximum benefits and payment efficiency. To achieve those goals, best-practice companies distribute card-focused newsletters, post preferred supplier reminders and dedicate resources to manage their programs.
As part of the profile, users also identify their industry sector and sub-sector, location in the world, currency (from a list of five) and the type and brand of cards they currently use. Based on the card types selected, Purchase Optimizer asks a series of questions about how companies purchase and pay for not only travel and fleet, but also office supplies, computers, software, consulting services, telecommunications and other spend categories.
Users also are asked to select the financial and operational goals of their programs: spend visibility, employee convenience, streamlined procurement, monitor of maverick spending or reductions in the supplier base.
A second level of this application available to MasterCard commercial card programs is designed to help companies more deeply benchmark their T&E, procurement, fleet and one card programs, according to MasterCard Worldwide group head of commercial payments Marcie Verdin. Here, users may be asked about auditing expenses, pre-populating expense reports, leveraging card spend with suppliers and integrating spend into their enterprise resource planning systems. In all, MasterCard asks about 120 questions about purchasing and payment.
To delve deeper into programs, MasterCard hired a travel consultant to craft 30 questions specific to travel management. Combining benchmarks from Aberdeen Group, the travel management consultant, a purchasing researcher and its own data, the tool provides users a report card. As more companies use this tool, more data and benchmarks are collected and will be reflected in the output.
"After completing the diagnostic tool, you get a huge diagnostic report card," Verdin said. "Here's where you are compared to best in class." In some categories, the report might indicate that best in class isn't even being achieved, she added.
Verdin is anxious for more companies to use the tool, so they can start populating the database and provide more detailed benchmarks. She said it would take a while to gather the critical mass of responses to deliver benchmarking by industry, size and card type.
At the annual meeting of the National Association of Purchasing Card Professionals, MasterCard ran a real-time benchmarking session using the tool and automated voting. Verdin said she was surprised to learn that only 43 percent of the respondents had integrated transaction feeds to their general ledger, seen as one of the best practices. But the majority of programs had been in place for at least five years and it is usually newer programs that identify the benefits of this practice, she added. A program administrator who needs to support budget authorization for general ledger integration could use this data to do that. "Our report shows that best in class [companies] have automated that feed," Verdin said. A company executive looking for an improved score and better performance could use this approach to support further automation, she added.
The idea for the multi-level benchmarking tool emerged at a customer forum in May 2005. All the MasterCard issuing banks were interested in benchmarking, but Verdin recognized that the data would be much more valuable if MasterCard pooled it all across all issuers. By November, MasterCard launched a Purchase Optimizer focused only on purchasing cards. Response was so strong that officials immediately set to work expanding the tool to travel, fleet and one-card.
MasterCard released the latest version last month. Each MasterCard issuer has the option of customizing the look of the Purchase Optimizer to match their own Web graphics and logos, but the data is combined. The next phase of the project may allow them to add their own recommendations and benchmarks to their custom versions.
"Of our top 10 issuers in the United States, every single one is taking a consultative approach to penetrating their customer base," Verdin said. Purchase Optimizer allows them to pinpoint exactly what corporations need to do to optimize their programs, or ways they can help with implementation, training, polices or functionality, she added.
Card issuers also have found that the solution can be used to help train new hires about travel management. Eventually, Verdin also wants this to be the source of new quarterly metrics on best practices and industry trends. Ultimately, the goal is also to generate more volume on cards. "Down the road, our programs get more volume if our clients' programs are optimized," Verdin said.
"I want to elevate MasterCard's role as a thought-leader. We want to lead in applied intelligence, by taking all the intelligence you're getting out of the card program and applying it to optimized management," Verdin said.
Related resource: www.mastercardbusiness.com