Case study: Siemens streamlines

It's not enough to have a well-designed corporate travel policy, even a policy with management support and considerable staff buy-in. It is also important to collect and manipulate relevant and valid data to measure the policy's effectiveness.

Steven Schoen, director of travel management for Siemens Shared Services in Orlando, took on that challenge a couple of years ago for Siemens in the U.S. He said his group rebuilt the Siemens travel data warehouse to integrate information from the travel agency (BCD Travel, No. 5 on Travel Weekly's 2008 Power List), the corporate card (American Express) and Siemens human resources departments.

The idea was to match travel booked with the agency with real spending reflected in the Amex data and to measure results against five key indicators: booking with the travel agency, adopting the online booking tool, booking in advance, low-fare acceptance and using preferred hotels.

Other companies merge agency and credit card data for insight into traveler behavior, and the five performance indicators almost precisely mirror the five areas with the most potential for cost savings identified in research released by Carlson Wagonlit Travel in May.

It's the Siemens human-resources information that makes things really interesting. Schoen said the H.R. data incorporated six layers of hierarchy, which means that when someone is noncompliant, that information goes to the traveler's boss and to the boss's boss.

In other words, he said, these are the "actionable data" that Siemens managers had said they wanted before the Shared Services unit got to work on the project.

Schoen said the point was not to go after the poor soul who makes a mistake but to identify frequent offenders and hold direct managers accountable, as well.
Another spin-off benefit, he said, is good information that is a "strong tool" for negotiations with suppliers.

He said he assumed other companies achieve the same ends, though perhaps not in the same way. Shared Services is a vendor to Siemens' other operating units in the U.S., and it competes for those units' business in the marketplace.

Travel policies are almost identical across business units, but managers at each unit set their own performance goals in the five key areas, Schoen said. Shared Services measures each unit against its unique goals. The units also benchmark their results against each other, he said.

Shared Services was able to issue the first of its monthly reports, initially on a test basis, during the fiscal year beginning October 2006.

Currently, Siemens is in the first full fiscal year for the reports, and "we've had a lot of success," Schoen said, so much so that in the next fiscal year he foresees raising the bar in some areas.

For example, he said, "We thought 92% or 93% channel compliance was as good as it gets," realizing that travelers do what they must to get rebooked and on their way if a trip is interrupted by delays or canceled flights. However, he said, a couple of units are at 97% to 98%, so that bar will rise.

There are several other next steps, he said. For one thing, Siemens has started using Amex's e-folio program, meaning statements that break down the components of hotel invoices charged to the travelers' corporate cards.

"We're looking to see if [we can] improve our reports with e-folio data," he said.

In addition, he said Shared Services was looking at ways to help managers determine which portion of all trips are taken for any of three main purposes: face-to-face meetings with customers, training and internal meetings. The thinking is that managers might conclude that they save resources by reducing the number of internal meetings.

With a newly upgraded expense report system to be implemented soon, Schoen said, travelers will have to specify the purpose of trips taken, "so we may pull that expense report data into the warehouse" to capture the information on trip purpose.

Taking that a step further, he said, Shared Services is planning to roll out a meetings and events program to allow separate and better analysis and management of company meetings that involve roughly 25 or more participants in cases where management concludes that face-to-face confabs are really necessary. -- N.G.

The cost of fuel is driving higher prices for just about everything, most spectacularly for air travel. And, call it a recession or not, the economy is trending downward.

In this kind of environment, you might assume that corporate travel buyers naturally attend to their travel policies, amending them to fit changing circumstances and taking steps to ensure better compliance with company mandates.

Think again.

To the regret -- and even astonishment, in some cases -- of National Business Travel Association leaders and corporate travel agents, these policies are not getting the attention one might expect.

Indeed, many companies still have no formal written travel policy, and some offer no more than guidelines tucked into a company handbook. Such firms generally fit into one of several categories: They might be small businesses or not-so-small businesses that don't buy much travel. They might be upstart companies intently focused on selling their products. Or they might be consultants or professionals such as lawyers, who can pass their expenses on to others.

As for companies that do have formal policies, the short explanation for a sluggish response to pricier travel is corporate culture (maybe fearful of upsetting valuable personnel) or the size of the travel budget (relatively low).

To be sure, many companies, especially those with large and hence very visible travel budgets, are revising and updating policies and working on compliance rates.  And among those without policies, some are newly interested in implementing a formal program.

"More and more small and midsize businesses are coming to us and asking for information and even joining," said Bill Connors, the NBTA's executive director and COO.

Michael Dixon, president of Travelink, said most of his agency's new customers these days were firms that have been unmanaged or lightly managed via the Web. "With the rising costs of travel, a lot of companies realize the Web is not necessarily cheaper than other choices and are seeing the need to have a policy," he said. And clients at his Nashville agency were seeking more guidance than in the past when reviewing existing policies, as well, he said.

Casto Travel in Santa Clara, Calif., like many corporate agencies, keeps a sample policy on its website. Marc Casto, president and COO of the agency, which ranked No. 47 on the 2008 Travel Weekly Power List, said downloads of the template have been increasing "significantly."

Kevin Maguire, who is NBTA president and CEO as well as travel manager for intercollegiate athletics at the University of Texas in Austin, said he sees this slice of the market because he does consulting. "I've found companies with accounts of $100,000 to $9 million to $20 million without policies," he said. "Those who oversee the travel spend are now being held accountable ... so policies jumped to the front burner."

Nevertheless, he said he was surprised at how many people, who have no policies but are nevertheless responsible for travel budgets, cannot explain to their boards how they control travel expenses.

Companies can generally get starter templates from their travel agents or from more than one agency website. In addition, one or more templates will be offered to delegates who attend the Becoming a Strategic Player seminar July 29 at the NBTA conference in Los Angeles.

Beyond the dollars

Reasons for writing a policy or regularly updating it have evolved well beyond mere cost savings in recent years. Productivity is also key.

Connors said he expected to see more emphasis on productivity savings, those steps that get business travelers out of lines and on their way. He cited Registered Traveler as a program that represents productivity savings.

Security is also a growing priority. Connors said more companies were now concerned about the ability to locate employees while they are on the road and to protect them by selecting safe suppliers, particularly hotels.

Besides, Connors said, there are "growing concerns over liability issues" if a company does not have a policy that emphasizes security. He pointed to recent conferences in Europe focusing on "corporate manslaughter," a company's culpability in a staffer's death if it has not taken reasonable steps to protect the employee. Implementing a travel policy would be one such step.

Suzanne Fletcher, NBTA chairwoman, past president and the director of travel and industry relations at Concur Technologies, a travel technology company based in Prague, Czech Republic, defined her job as "getting staff to destinations and home safely and [helping them] be productive while traveling."

"It is important to make deals with safe vendors," Fletcher said. "Then be sure other things happen" to save time, such as having the traveler's Hertz Gold Card number in the file or ensuring that the hotel promising free Internet access delivers it.

Frank Schnur, vice president of advisory services for American Express Business Travel (No. 1 on the 2008 Power List), said the trends were "around adding content to deal with security and safety, as well as social responsibility." When American Express consults with clients on social responsibility, it looks at two categories: the environment and traveler health.

In the first category, the corporate customer may want to assess the environmental practices of its suppliers as well as implement its own e-practices -- elimination of paper wherever possible -- within its travel purchasing and reporting operations.

As for traveler health, a typical consideration would be whether the company allows a business-class upgrade when an employee must go directly to work after taking a red-eye.

There is still another consideration for America's publicly traded companies: complying with the Sarbanes-Oxley Act, the post-Enron, accounting-reform law.

That legislation, which requires clarity about transactions and records, pushes companies to have appropriate policies and technology that facilitates the record-keeping, said Jay Ellenby, president of Safe Harbors Travel Group of Baltimore.

The above considerations don't have much to do with the state of the economy. Push the right button and any travel manager, on the corporate or agency side, will say it is best practice to maintain an enforceable, thoughtfully managed policy under all conditions.

In the real world, people are more likely to create or revise polices when the budget is being busted, or at least bent.

What's different?

The push and pull between big-picture planning and the immediate need for adjustments during trying economic times is familiar, but broad concerns about the future of U.S. aviation make this downturn a new beast.

Michael Lyons, NBTA vice president and travel services manager for HSBC Bank in Chicago, said, "We know about cycles. This one, particularly as it affects the airlines, is creating change that is permanent."

Lyons said the carriers could not just dispose of aircraft and then snap back later. "We will come out of this, but things won't be the way they were," he predicted.

More pointedly, Steven Schoen, director of travel management for Siemens Shared Services, Orlando, said he has never been this concerned about the future of the airline industry.

Maguire wasn't too sanguine either. "Nothing has taken us back as far as this has," he said. "We may be taken back to a regulated environment. I am not sure this is a short-term downturn."

One practical effect of this new world, Maguire said, is that suppliers will be more insistent on dealing with companies that have good travel policies and strong compliance levels. They will want partners that take the long view and don't "just provide Band-Aids," he said.

Tim Smith, president of GlobalPoint Travel Solutions in San Diego, predicted that the airlines' combined capacity and cost issues would produce "a much greater negative impact on business travel."

This is also a time in which a lot of nasty issues are associated with travel, said Mike Viars, vice president of business development for Travelink: "the economy, fuel, terrorism, service problems, world economic problems," not to mention all those unpopular extra fees. Such negative publicity further highlights the need to look at travel costs and policies, he said.

The technology difference

Fortuitously, there is another difference between this downturn and earlier ones: the high level of technology available to corporations for monitoring compliance at the point of purchase and for tracking and analyzing real spend after the fact.

Safe Harbors' Ellenby said, "The data are much stronger than they have ever been for seeing how effective a policy is and for [benchmarking]. It is a matter, though, of how you use the data."

Amex's Schnur said the technology and its speed were "really unprecedented," enabling managers "to identify opportunities faster and to action them more effectively."

For example, Fletcher said that with Concur's Cliqbook self-booking tool, travelers can be asked to use reason codes: the reason for going outside policy or the reason for a specific trip. Reason codes are "huge now," she said.

The traveler's reason for violating policy can trigger an immediate warning, though he or she might have no choice. Similarly, coding a trip's purpose could trigger a message to a manager questioning whether it's necessary to send several staffers to the same meeting.

Fletcher said the technology also could intervene to ensure that no more than a set number of staffers were on the same aircraft. And a drop-down box could indicate videoconference capability at both ends, suggesting a viable substitute.

Electronic receipts are another example of more and better data.

"A lot of hotels want to get the e-receipts into [customers'] expense report systems," Fletcher said. With those, the travel manager can see whether a staffer did not get the corporate rate or was inappropriately charged for something that was supposed to be included with the room rate.

Dixon, whose agency is an Amex rep, said American Express was seeing an 80% adoption rate for self-booking tools, so managing travel costs "is easier than in the past. Half the policy is taken care of without anyone saying anything."

The effect Dixon references is dubbed "visual guilt." Brett Zabel, U.S.-based global project manager of air solutions for Carlson Wagonlit Travel (No. 2 on the 2008 Power List), said the moniker refers to the fact that simply seeing the various airfare options drives travelers to choose the cheapest. Getting that warning about being out of policy and the awareness that "Big Brother is watching" is part of the phenomenon, too.

Self-booking tools have been around awhile, but over time they have been "refined to make visual guilt more effective," Zabel said. The result, he added, is that the average ticket price is lower on self-booked itineraries than on those booked by the agent.

No wonder then that in the current economic climate, some companies without self-booking tools want them, something they can accomplish in four to six weeks.


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