From 2006 through 2007, Yahoo Inc. laid the groundwork for a global travel program that positioned the company last year to begin generating cost savings through policy adjustments. According to Yahoo director of global travel Donna LaBarge, providing a detailed analysis of cost-savings opportunities and the impact on travelers enabled the travel department to enlist Yahoo's CFO "to be the face of our initiative." The results included more than $20 million in savings from the company's $120 million annual T&E spend.
"The reason it was successful was having a foundation for our travel program," LaBarge said, noting that Yahoo traditionally had a "nonmandated" culture. "It took quite a while to get there."
In 2006, Yahoo established a global travel policy and increased travel spend visibility, according to LaBarge's January presentation at the Institute of Supply Management-National Business Travel Association Summit on Travel & Meetings in Charlotte. By 2007, Yahoo embarked on its second phase, encompassing a global agency consolidation (from 45 agencies to one, BCD Travel) and "true" global data collection. According to Yahoo's Web site, the $7.2 billion company operates in "more than 20 markets and regions around the globe."
That second phase also covered "consistent policy application," messaging within the online booking tool, "service enhancements," a meetings and events desk, and other items. With a better view of its global travel data, Yahoo later in 2007 leveraged strategic sourcing in a third phase to handle global requests for proposals for preferred airlines, hotels, car rental and meetings and events vendors.
The fourth phase, LaBarge said, continued into 2008 and focused on demand management. It began with a discovery period during which Yahoo collected data from the general ledger, its travel agency and frontline agents, expense reports, exception reports, traveler surveys and industry benchmarks. The travel department then charted out how much savings particular actions and policy changes could generate, overlaid with how easy they would be to implement and the degree of impact on employees (numbering 13,600 at the end of 2008, according to recent Yahoo financial reports).
The company determined that strategic sourcing would generate 20 percent of its travel and meetings savings opportunities, while demand management, travel policy and policy compliance efforts would encompass 80 percent.
Low-impact adjustments, LaBarge explained, included requirements for travelers to book hotel stays in advance to "secure the best rate" and to make those bookings via the travel agency/online booking tool. "We had a very poor percentage of people actually booking hotels through the agencies," LaBarge said. The "no hotel, no ticket" approach, she added, is difficult to "operationalize."
According to her presentation, changes required the company to "set up a manager notification process, communicate the new process and work with payroll to require fields in Concur."
Another low-impact step was reducing same-day and one-day trips, achieved by sending messaging from senior management and increasing use of collaboration tools.
Medium-impact adjustments included a mandate to use the online booking tool for "all domestic simple roundtrip bookings," and a requirement to book 14 days in advance.
The three high-impact policy revisions that the travel department proposed to the CFO included eliminating business class bookings and reducing business class exceptions--instead, encouraging travelers "to use their own miles"--and requiring travelers to "always accept lowest fare." For the last item, Yahoo implemented an "active approval for declined savings thresholds."
When reviewing all potential adjustments, according to LaBarge, "our CFO said, 'I think we can reduce business-class exceptions, and I'll be the point person.' Let me tell you, there's not many going up there. That's a very strong deterrent."
Ultimately, Yahoo enacted all three high-impact items and "it's been extremely successful," LaBarge concluded. "The most difficult part of all this was getting the data, and making sure we had the right data to where my CPO, to whom I report, felt comfortable enough that if we stood in front of the CFO we could say, 'If we do this, we'll save $15 million to $22 million.' "
LaBarge's presentation also noted that the travel department, working with the finance department and others, established "push reporting to C-level directs." After implementing the policy changes, for example, "we also created 'Blackberry bullets' for managers," she said. "Instead of just sending the report, we can say, 'By the way, you did great here, but here is an opportunity that if you did this you'd save $3 million extra annually.' "