Finance executives prioritize cost control when viewing travel management, though "some CFOs do indeed look beyond cost when making travel decisions relating to the adoption of new tools, productivity considerations and the green agenda," according to a new report released this month. Prepared by CFO Europe Research Services in collaboration with Amadeus, the report also found that finance professionals believe their companies need to do a better job managing travel costs, increasing leverage with suppliers, connecting travel systems with other systems and building relationships between finance and travel management departments.
Results included in the report are based on a July survey of 127 senior executives from Europe (50 percent), Asia (25 percent) and the United States (25 percent). About half of all respondents were CFOs or financial directors, with shared services leaders, controllers, finance vice presidents, treasurers and chief accountants among other respondents.
Overall, 59 percent said effectively managing travel costs is "very important," but only 40 percent said their organizations do that task "well." A mere 10 percent said travel costs are managed "very well."
"And in spite of its perceived importance, finance executives say that travel cost management has, as yet, made a minimal contribution to overall cost management at their companies," the report stated.
Partly explaining that perspective, respondents generally saw travel as more disconnected from the finance department than human resources, corporate security, IT or procurement. While 50 percent said finance's relationship with travel services is "very important," only 27 percent deemed it to be "very effective"--the largest disparity observed in the survey results.
In addition to building better interdepartmental connections, respondents wanted their organizations to improve supplier negotiations. Thirty-six percent said increasing leverage with travel suppliers is "very important," while 6 percent said their companies are "very effective" at doing it.
As far as specific areas on which finance executives want travel management to focus during the next two years, the largest number of respondents (58 percent) listed "improving T&E expenses and reimbursement." That finding was more pronounced in North America than elsewhere--72 percent of regional respondents, compared with 59 percent in Europe and 50 percent in Asia-Pacific. Globally, it was followed by "creating benchmarks for negotiating deals" (54 percent); "better accuracy of travel data" (48 percent); and "employee productivity when booking travel" (45 percent). The fewest number of respondents (19 percent) listed "driving more environmentally friendly travel policies."
Overall, more than three-quarters also said they wanted travel managers to "demonstrate immediate cost savings" and two-thirds said travel managers should "help save employees' time on their journey."
When looking at specific travel management program components, more finance professionals (66 percent) viewed automated travel expense reporting systems as having high or medium cost-savings potential, compared with other components. Corporate booking tools (63 percent) and Internet travel agencies/consumer sites (56 percent) drew larger responses for having high or medium cost-savings potential than live travel agent call centers (37 percent).
"The services we would like to see performed by the travel agency have changed dramatically," according to quotes attributed to Bengt Wallentin, CEO of Swedish software manufacturer eBuilder. "We need more value-added services; for example, knowing what vaccinations we should have, rather than just booking standard tickets because we can do that ourselves."
Meanwhile, corporate finance departments crave "one view of travel across the business." According to the report, that one view is crucial as a means to "advise businesses on improving profitability." Tracking spending and creating better budgets and forecasts also were deemed as important benefits. At larger companies (those with annual revenues of at least $500 million), respondents emphasized a single, accurate view of travel spending as the key for generating the aggregated data necessary for effective supplier negotiations. "A smoother, fully integrated system will also save employees time in booking, authorizing and reimbursing travel, and help them to get the most out of each trip," according to the report.
Achieving the one view, however, is made difficult by disparate IT systems. For example, 71 percent said it is "very important" to integrate travel systems with expense management systems, but only 18 percent said their organizations have highly integrated the two. For integration with human resources databases, the response levels were 37 percent (very important) versus 9 percent (highly integrated). For ERP, the responses were 36 percent and 10 percent, respectively.
In terms of "new" travel tools, those which allow employees to share feedback were seen by many respondents (especially those based in the United States) as potential cost savers that also help improve service quality.
But not all respondents agreed. "You can ask two people what they think about a hotel, and it could be exactly the same situation, but they will judge it differently," according to eBuilder's Wallentin. "We need to have an impartial measurement network, as well. What we're trying to go on is more about cost efficiency and performance fulfillment. Those are things that are indisputable and factual, and which we can use when we negotiate agreements with our suppliers."
"Feedback is informal," according to quotes attributed to James Scott, finance director for outsourcing country operations at U.K.-based IT business services firm Logica. "If somebody has a terrible experience, they'll tell our travel bookers. I'm not sure how a feedback tool would really help from a financial point of view. Obviously, we could remove hotels that are flea-infested and make sure that we don't take customers there. But if somebody's had a bad experience on a flight, or had a bad meal, or had a broken seat, or the flight was three hours late, I'm actually not particularly interested. That's something for the individual or our travel bookers to take up with the airline."
Survey results also showed no definitive perspective on environmental considerations in travel management. When asked how such considerations could benefit their companies, more than half said they did not know. About one-quarter said they could improve their organizations' regulatory compliance and 4 percent said green policies could lead to cost savings.
Regionally, 30 percent of respondents from Asia-Pacific said they want to see travel managers focus on environmental travel policies, compared with 25 percent in Europe and 8 percent in the United States.