Procurement Takes Over But Still Needs Travel Management: Large Companies, Particularly, Effect Convergence

During the past few years, there has been a seismic shift in the departments to which travel management reports. Industry data show, particularly at large companies, that procurement has basically taken over.

Procurement.travel's "State Of The Practice" research demonstrates that for organizations of all sizes, the procurement department rivals finance and executive offices for travel management responsibility. But broken out by size of company--recognizing that larger organizations are more likely than smaller ones to even have dedicated procurement or purchasing departments--procurement is the clear leader.

At firms with more than 1,000 travelers, 54 percent placed travel management within procurement (including shared services), versus 19 percent with finance and 8 percent in executive offices. The procurement figure is 48 percent at organizations spending more than $15 million annually on travel, versus 22 percent for finance and 12 percent in executive offices.

Looking specifically at the responsibility for supplier contract negotiations, the numbers naturally rise. That duty falls under procurement in 38 percent of all companies, 67 percent of those with more than 1,000 travelers and 62 percent of those spending more than $15 million.

Source: Procurement.travelAugust-September 2008 online survey of 473 qualified travel decision-makers

Other research shows procurement's influence on travel management has grown dramatically just in the past few years. An annual BCD Travel client poll ( 1) found that in 2008 travel reported to procurement at 74 percent of more than 300 firms surveyed. That grew from 44 percent in 2007 and 34 percent, 30 percent and 27 percent in the previous three years, respectively. "Business travel is securely in the procurement realm," BCD Travel wrote.

"The early stages of this transformation have rocked both procurement and travel management over the past five years," according to a 2006 Procurement.travelresearch paper. "But by all accounts, this is just the start of dramatic change expected in procurement over the next decade. As procurement executives continue to transform the practices, policies and tactics of all purchasing within their organizations, they remain stymied by travel and meetings. Though it may represent a company's second- or third highest expense, travel and meeting purchasing is often an anomaly." ( 2)

For all its strength in contracting and negotiations--or process improvement and continuous assessment--procurement does not necessarily bring competency in operations. The temptation to outsource travel management, meanwhile, has remained largely that. "State Of The Practice" found the vast majority of firms do not outsource such operational areas as data reporting, technology, security, meetings management and policy. A convergence between travel management and procurement is underway.