As business travel expenses nose upward, companies are realizing that better cost-management techniques can change lives
US. corporate travel expenses rocketed to more than $143 thousand in 1994, according to American Express’ most recent survey on business travel minibus in manchester management. Private-sector employers spend a predicted $2, 484 per employee on travel and entertainment, a 17 percent increase over the past four years.
Corporate T&E costs, now the third-largest manageable expense behind sales and data-processing costs, are under new scrutiny. Businesses are realizing that a good savings of 1 percent or 2 percent can lead to vast amounts added to their bottom line.
Savings of the order are sure to get management’s attention, which is a dependence on this type of project. Involvement begins with understanding and evaluating the components of T&E management in order to control and monitor it more effectively.
Hands-on management includes working out responsibility for travel management, implementing a quality-measurement system for travel services used, and writing and distributing a formal travel policy. Only 64 percent of You. S. businesses have travel policies.
Even with senior management’s support, the road to savings is rocky-only one in three companies has successfully instituted an internal program that will help cut travel expenses, and the myriad issues with travel are so overwhelming, most companies don’t know where to start. “The industry of travel is based on information, ” says Steven 3rd there’s r. Schoen, founder and CEO of the Global Group Inc. “Until such time as a voyager actually sets foot on the airline, they’ve [only] been purchasing information. “
If that’s so, information technology seems a viable spot for their hammer out those elusive, but highly sought-after, savings. “Technological innovations in the business travel industry are allowing firms to realize the potential of automation to operate and reduce indirect [travel] costs, ” says Roger H. Ballou, chief executive of the Travel Services Group USA of American Express. “In addition, many companies are embarking on quality programs that include sophisticated process improvement and reengineering efforts designed to appreciably improve T&E management processes and reduce indirect costs. “
As companies look to technology to make potential savings a reality, they can get very creative about the methods they employ.
The great Leveler
Centralized reservation systems were long the exclusive domain of travel agents and other industry professionals. But all that changed in November 1992 when a Department of Transportation lording it over allowed the general public access to systems such as Apollo and SABRE. Travel-management software, such as TripPower and TravelNet, immediately sprang up, providing businesses insight into where their T&E dollars are usually now being spent.
The software tracks spending trends by interfacing with the corporation’s database and providing access to centralized reservation systems that give immediate reservation information to airlines, hotels and car rental agencies. These programs also allow users to generate computerized travel reports on saving money with specifications where discounts were obtained, hotel and car usage and patterns of travel between cities. Actual data gives businesses added leverage when discussing discounts with travel suppliers.
“When you own the information, you don’t have to go back to rectangular one every time you determine to change agencies, ” says Mary Savovie Stephens, travel manager for biotech giant Chiron Corp.
Sybase Inc., a client/server software leader with an annual T&E budget greater than $15 million, agrees. “Software gives us unprecedented visibility into how employees are spending their travel dollars and better leverage to negotiate with travel service suppliers, ” says Robert Lerner, director of credit and corporate travel services for Sybase Inc. “We have better access to data, faster, in a real-time environment, which is expected to bring us big savings in T&E. We have now control over our travel information and no longer have to depend exclusively on the agencies and airlines. “
The cost for this freedom depends on the volume of business. One-time purchases of travel-management software can run from under $100 to more than $125, 000. Some software providers will accommodate smaller users by selling software piecemeal for $5 to $12 per scheduled trip, still a significant savings from the $50 industry usual per transaction.
No more Tickets
Paperless travel is catching on faster than the paperless office ever did as both service providers and consumers work together to reduce ticket prices for business travelers. Perhaps the most cutting-edge of the advances is “ticketless” travel, which almost all major airlines are testing.
For the time being, travel providers and agencies are experimenting with new technologies allow travelers to book travel services via the internet, e-mail and unattended ticketing kiosks. Best Western International, Hyatt Hotels and several other major hotel chains market on the internet. These services reduce the need for paper and offer better service and such peripheral benefits as increased efficiency, improved tracking of travel expenses and trends, and cost reduction.
Dennis Egolf, CFO of the Veterans Affairs Infirmary in Louisville, Ky., realized that the medical center’s decentralized location, a quarter-mile from the hospital, made efficiency difficult. “We were losing production time and things got lost, ” he says. “Every memo must be hand-carried for approval, and we required seven different copies of each travel order. ” As a result, Egolf tried an off-the-shelf, paper-reduction software package designed for the government.