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Cost control and beyond: The CFO’s agenda for corporate travel

Cost control and beyond: The CFO’s agenda for corporate travel. Presentation to ITM and Amadeus, 23 October 2008 Jason Sumner, Research Editor, CFO Europe Research Services. Agenda. 1. Key findings 2. Demographics 3. Cost versus quality 4. One view of travel across the business

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Cost control and beyond: The CFO’s agenda for corporate travel

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  1. Cost control and beyond:The CFO’s agenda for corporate travel Presentation to ITM and Amadeus, 23 October 2008Jason Sumner, Research Editor, CFO Europe Research Services

  2. Agenda 1. Key findings 2. Demographics 3. Cost versus quality 4. One view of travel across the business 5. How to impress the CFO

  3. Key findings 2. CFOs say travel managers should prioritise employee productivity 1. Travel costs can be managed better 3. On the whole, CFOs aren’t yet convinced of the benefits of green travel • 4. CFOs want to see travel IT linked with ERP, HR and expense management systems 5. Travel managers should focus on improving supplier relationships

  4. Demographics • 127 senior finance executives • 50% Europe, 25% US and 25% Asia • Most major industries represented • Small to large companies

  5. Cost control – room for improvement • 80% want travel managers to focus their programmes on immediate cost savings in the next two years • 62% want to see long-term savings • There is a large discrepancy between the numbers managing travel costs very well and the numbers that deem this to be very important 60% 50% 40% Managing 30% travel costs 20% 10% 0% Very well Very important

  6. Which travel tools would help? • Almost two-thirds rate online booking tools and automated expense reporting systems to have medium-high cost-saving potential. Automated travel expense reporting systems Corporate credit cards for travel Cost-saving potential Airline/hotel websites High Internet travel agencies (consumer sites) Medium Low Call centre – live travel agent Don’t know Online corporate self-booking tool In-house travel agency 0% 10% 20% 30% 40% 50% 60%

  7. The value add • “The services we would like to see performed by the travel agency have changed dramatically. We need more value-added services – knowing what vaccinations we should have, rather than just booking standard tickets, because we can do that ourselves.”

  8. Looking beyond cost • When it comes to traveller care, mobile travel services and feedback tools, more CFOs see service quality and operational efficiency benefits than cost savings. 25% Feedback tools 41% 17% 2% 15% Cost savings 4% Service quality Travel services via 33% mobile devices 42% Operational efficiency 1% Regulatory compliance 20% Don't know 5% Traveller care 49% (ie security 27% alerts, 8% delay/incident 11% alerts) 0% 10% 20% 30% 40% 50% 60%

  9. Two views of feedback tools • “I think a feedback tool would allow you to respond to things and fix them a little more proactively.” • “Feedback is informal. If somebody has a terrible experience, they’ll tell our travel bookers. … If somebody’s had a bad experience on a flight I’m not particularly interested.”

  10. Is productivity a priority? • Almost two-thirds of CFOs want their travel managers’ programmes to save employees time • For another two-thirds, employee productivity should be a moderate or major goal when procuring travel • 45% of CFOs want travel services to focus on employee productivity in booking travel

  11. Filling time • “There is probably a little more tolerance towards downtime because the tools that are at your disposal allow you to still be productive.”

  12. The green light – travel and the environment • Over half of CFOs said they did not know what the benefits of environmentally friendly travel could be • Only 19% of CFOs said they wanted travel services to focus on driving more environmentally friendly policies in the next two years • One quarter of CFOs said environmentally friendly travel would benefit regulatory compliance How might environmentally friendly travel benefit your company? Cost savings 4% Service quality 14% Operational efficiency 7% Don't know 51% Regulatory compliance 24%

  13. Green drivers • “More and more of our customers, who are partly in the public sector, will need to do business with environmentally friendly companies.”

  14. One view of travel expenses • What are the three most important benefits of having one accurate view of travel across the whole business? To create better budgets and 19% 19% forecasts 13% 1 11% To track spending by project or 32% 7% employee 19% To negotiate supplier discounts 30% 22% 2 To identify unauthorised 12% 10% spending 9% As the basis for advising 25% businesses on improving 16% 15% 3 profitability 23% 12% To identify/select suppliers 9%

  15. Integration – importance versus performance • Almost three-quarters of CFOs recognise that integrating travel management systems with the expense management system is very important, but only 18% say that this has been achieved at the highest level. • Nearly half (48%) of CFOs said they would like to see travel services improve the accuracy of travel data. 80% 70% 60% 50% ERP 40% HR database 30% 20% Expense management 10% system 0% Highly integrated Very important

  16. The benefits of the single view • “[One view of travel] gives you the ability to drill down further and get a sense for where the spend is highest, and then utilise preferred vendors.”

  17. The finance-travel services relationship • There is a disparity between the importance and effectiveness of finance’s relationships with other departments • Half of respondents think that finance’s relationship with travel services is very important, but only 27% deem it to be very effective Security HR Very important Travel services Very effective Procurement IT 0% 10% 20% 30% 40% 50% 60%

  18. What should the travel department focus on? Improving traveller security and safety 24% 19% Driving more environmentally friendly travel policies 43% Better forecasting of travel costs Improving T&E expense reporting and reimbursement 58% Employee productivity in booking travel 45% 48% Better accuracy of travel data 54% Creating benchmarks for negotiating deals with suppliers Other 4%

  19. Increasing leverage with suppliers • Nearly three in four CFOs said that increasing leverage with travel suppliers was important or very important, but only 36% said that their companies were doing well or very well at this. • Almost half of CFOs want to see travel managers show that their system/programmes will increase negotiating power with suppliers. Effectiveness v importance of increasingleverage with travel suppliers 36% Very important Very effective 6%

  20. Conclusion – speaking the language of finance 2. Emphasise integration when proposing new IT 1. Demonstrate immediate and long-term cost savings 3. A single set of travel data helps justify the expenditure • 4. Frame quality proposals with customers in mind

  21. Conclusion – speaking the language of finance 5. Focus on improving supplier relationships 6. Find a way to measure productivity 7. Choose carefully when making green arguments

  22. ‘Cost control and beyond’The CFO’s Agenda for Corporate Travel: Amadeus’ PerspectivesJason LongHead of Global PartnersMultinational Customer GroupAmadeus, Madrid

  23. Highlights • Integration: SBTs and expense management • The green issue & feedback • Addressing productivity • Data and usage • Summary

  24. On the bright side: The tools CFOs feel good about

  25. Integration: Increasingly demanded How many of you have implemented SBTs and/orautomated expense management? How can technology vendors help?

  26. Highlights • Integration: SBTs and expense management • The green issue & feedback • Addressing productivity • Data and usage • Summary

  27. CFOs ambivalent about green travel Cost vs conscience: When will the balance shift for CFOs? Tax implications driven by regulation? Who is your trusted emisions source?

  28. CFOs see cost-savings impact of social networking/feedback tools Social Networking: a danger to programme compliance and control or an opportunity to drive cost savings?

  29. Highlights • Integration: SBTs and expense management • The green issue & feedback • Addressing productivity • Data and usage • Summary

  30. Traveller Productivity Are you focusing on this? How are you measuring? How could it be measured? Ongoing Focus of corporate tools

  31. Traveller Productivity • Downtime is not black and white • Blackberries, wifi etc are increasing productivity during the trip • Mobile devices and mobility services are becoming more prevalent • Will corporates expect seats with power connectors, internet connectivity, GSM cells in flight? What does that mean at the booking stage? • A wider question is the debundling of services: one-way fares, meals, aisle seat, lounge access etc.

  32. When is it productive to travel? How would you determine the ‘return on travel’?

  33. Highlights • Integration: SBTs and expense management • The green issue & feedback • Addressing productivity • Data and usage • Summary

  34. One accurate view of travel across the company • Improving profitability • Track employees/projects • Budgets/ forecasts

  35. Providers GDS Inventory Systems TMCs Booking Devices Expense Mgmt. Systems So where does the data come from for the“one accurate view” Visibility of the value chain: How can this benefit the traveller, TMC & the CFO?

  36. Highlights • Integration: SBTs and expense management • The green issue & feedback • Addressing productivity • Data and usage • Summary

  37. Relationship with Finance: how big is the gap? And how can it be closed?

  38. Summary ‘savings from travel had been a minimal contributor to cost control programmes’ • We need to prove our worth. Take booking tools: • Understood to be a cost cutter • Maybe as upfront investment is not high it is not valued by management • Mandating usage is not defacto • Focus on reporting and data analysis

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