Because business travel expenses nasal area upward, companies are recognizing that better cost-management techniques can make a big difference
US. corporate travel expenses rocketed to more than $143 billion in 1994, according to North american Express’ most recent review on business travel management. Private-sector employers spend an estimated $2, 484 every employee on travel and entertainment, a 17 percent increase over the earlier four years. travel
Corporate T&E costs, now the third-largest controllable expense behind sales and data-processing costs, are under new scrutiny. Organizations are realizing that even a savings of just one percent or 2 percent can translate into millions of dollars put into their bottom line.
Personal savings of this order are sure to get management’s attention, which is a need for this sort of job. Involvement commences with understanding and evaluating the components of T&E management in order to control and monitor it more effectively.
Hands-on management includes setting responsibility for travel management, implementing a quality-measurement system for travel services used, and writing and releasing a formal travel plan. Only 64 percent of U. S. corporations have travel policies.
Despite having mature management’s support, the trail to savings is rocky-only one in three companies has successfully instituted an inside program that will help cut travel expenses, and the myriad facets of travel are so overwhelming, normally don’t know where to start. “The industry of travel is based on information, ” says Steven R. Schoen, founder and CEO of The Global Group Inc. “Until such time as a voyager actually sets foot on the plane, they’ve [only] been purchasing information. ”
In that case, information technology seems a feasible location to hammer out those elusive, but highly desired, savings. “Technological innovations in the business travel industry are allowing businesses to realize the potential of automation to regulate and reduce indirect [travel] costs, ” says Roger H. Ballou, president of the Travel Services Group USA of American Exhibit. “In addition, many companies are embarking on quality programs including superior process improvement and reengineering work designed to substantially improve T&E management processes and reduce indirect costs. inch
As companies look to technology to make potential savings a reality, they can get very creative about the strategy they utilize.
The Great Leveler
Central reservation systems were long the exclusive domain of travel agents and other industry professionals. But everything that changed in November 1992 when a Department of Transportation ruling allowed the general public use of systems such as Apollo and SABRE. Travel-management software, such as TripPower and TravelNet, immediately sprang up, providing corporations insight into where their T&E dollars are being spent.
The software tracks spending trends by interfacing with the businesses database and providing get to centralized reservation systems that provide immediate booking information to airlines, hotels and car rental companies. These programs also allow users to generate digital travel reports on cost savings with details on where discounts were obtained, hotel and car consumption and patterns of travel between cities. Actual data gives corporations added power when negotiating discounts with travel suppliers.
“When you own the information, you don’t have to return to square one whenever you choose to change agencies, ” says Mary Savovie Stephens, travel manager for biotech icon Chiron Corp.
Sybase Incorporation., a client/server software innovator with an gross annual T&E budget of more than $15 million, agrees. “Software gives us unprecedented presence into how employees are spending their travel us 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 entry to data, faster, in a timely environment, which is expected to bring us big savings in T&E. Today we have control of our travel information with out longer have to rely exclusively on the companies and airlines. ”
The price for this privilege will depend on the quantity 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 selling off software piecemeal for $5 to $12 per booked trip, still a significant financial savings from the $50 industry norm per transaction.
Forget about Tickets
Paperless travel is catching on faster than going paperless ever do as both companies and consumers come together to reduce ticket prices for people who do buiness travelers. Perhaps the most cutting edge of the advances is “ticketless” travel, which almost all major airlines are testing.
At the same time, travel providers and agencies are experimentation with new technologies to permit travelers to publication travel services on the net, e mail and unattended ticketing kiosks. Best Western International, Hyatt Hotels and several other major hotel chains market on the Internet. These types of services reduce the need for paper and give better service and such peripheral benefits as increased efficiency, improved tracking of travel expenses and trends, and cost reduction.
Dennis Egolf, CFO of the Experienced Affairs Medical Center in Louisville, Ky., realized that the medical center’s decentralized location, a quarter-mile from the hospital, made efficiency difficult. “We were burning off production time and things got lost, ” this individual admits that. “Every mentecato had to be hand-carried for approval, and we required seven different clones of every travel order. inches Because of this, Egolf tried an off-the-shelf, paper-reduction software package deal suitable for the us authorities.
The software allows the hospital to control travel across the internet, from tracking per-diem allowances and calculating expenses to creating cash loan forms and authorizing reimbursement vouchers. The software also lets the hospital keep a jogging account of its travel expenses and its outstanding travel budget.
“Today, for all practical purposes, the system is paperless, very well says Egolf. The application has helped the hospital reduce document processing time by 93 percent. “The original goal focused on taking care of employee travel without paper, ” he says. “We have achieved that goal, in part due to the efforts of employees and in part thanks to the accuracy of the software. “