BBT garners the advice of industry experts on building a business case for your travel programme
THE ADS MAY DEPICT BUSINESS TRAVEL as a well-dressed person being offered a glass of champagne to sip while snuggling into the lie-flat bed. But back at the office, the finance manager is more concerned about the cost than whether the organisation’s travellers are drinking Pol Roger or Moët.
If your company has a culture which believes travel is a fixed cost, you will be persistently asked to review spend. However, an alternative response might be to build a business case that demonstrates that investment in improving travel management will yield cost savings. Positioning travel as a positive investment is an increasingly attractive alternative. A travel strategy can underpin corporate strategy and contribute to growth of revenue rather than merely holding down costs to protect the bottom line.
Whichever way to go, you will need to build a business case. Remember that some elements of travel management, such as appropriate service levels, traveller well-being and risk management, are more qualitative than quantitative and so cannot be measured in any traditional sense. And those that are quantitative, such as the size of the travel management company (TMC) fee, are far from the whole story.
ANDREAS WELLAUER, chief executive, Galiant Consulting
THIS IS REMINISCENT OF THE OLD ‘COST CENTRE-VERSUS-PROFIT CENTRE’ DEBATE. Who asks HR if it has a measurable value for the company, or IT if upgrading to Windows 10 increases productivity? In travel, individual efficiency gains, productivity or security are very difficult to measure and the results are often meaningless. Productivity of business class travel-versus-economy cannot be measured, sales volume can hardly be equated to travel volume and staff security can only be measured if something happens.
In short, a case based on monetary value is hard, if not impossible to make. The exception may be increased use of an OBT [online booking tool], which will lower the transaction costs. Even negotiating better fares/rates depends largely on your spend or how strategic a client you are for the supplier, rather than how good a negotiator you are.
There are two distinct stakeholder-groups – management and users. Management is in charge of any overall decision to proceed, but if users are not involved they may not support any investment/tool and risk any investment. All stakeholders must be part of the benefit analysis in order to have the broadest acceptance and highest benefit. Any business case should clearly state the benefits for the company and not just for travel.
‘Trip reason codes’ and ‘trip project code’ can demonstrate any effect on the bottom line. The ‘reason’ code will clarify if a trip is for sales purposes, internal, for training, billable to client and so on. The project code will allow managers to better monitor the spend per project – that is, travel costs-versus-total project costs. While travel will have little to no influence on the actual spend, being able to deliver such granular reporting will.
With cost-saving being very limited and/or hard to quantify, the main focus of travel should shift from the classic ‘daily travel management’ and ‘procurement focus’ to overall data-management.
THOMAS LORENZ, group head of category management, multinational transportation firm
TRAVEL MANAGERS HAVE HAD TO ADDRESS THIS QUESTION ever since travel commissions finished and corporate travel stopped being a source of revenue and became a cost.
If your company doesn’t have a TMC, it becomes more and more the responsibility of procurement to convince senior stakeholders of the business case – both the financials and the soft benefits – for appointing a TMC, an action that will cost money before it yields benefits.
Some benefits, such as savings on supplier rates and spend, can be quantified. Others, such as traveller well-being and duty-of-care, probably can’t be quantified but, if anything goes wrong, they [the TMC] know who is where, and have a recovery plan to ensure they have access to the data to find the people in case of an emergency.
Appointing a TMC when there has not been one before can look as if you’re just adding 5-7 per cent on to the travel budget, so it’s incumbent on the travel manager to explain how that uplift in costs is likely to deliver savings on the other 95 per cent of travel cost.
This investment will enable you to get the data to address your hotel and airline spend. Until everyone has moved over to booking via an online booking tool or the TMC, booking data will be lost.
One generally needs six months’ quality data to decide whether what your travellers do is right and aligned with travel policy. Once you have the data you can analyse it, build a plan of action and use it with your supplier base, especially hotels and airlines. You’ll be able, in some cases, to give your employee a better experience for a cost-effective price.
In my experience companies do not necessarily always code expense data in a consistent way. Therefore, you really need the fine detail that only the TMC data can provide you. For example, you can’t influence your spend with airlines unless you know city pair, time of booking and class of booking.
TRAVEL MANAGER, aerospace company
WE ALWAYS HAVE THE CHALLENGE of whether we are finding the cheapest ticket – but that is not the same thing as questioning whether your department is value-for-money. But we do have to build a business case for any major change of supplier, such as implementing a new TMC or booking tool.
For that we would build our business case around service but factor in the cost of change. For example, one TMC or booking tool might be £100,000 cheaper than another but it might cost us £300,000 to change our own IT systems. This comes from internal labour time and charges required to change interfaces to other internal systems, such as HR databases and finance databases.
We have to convince our managers within the travel procurement team that it is worth incurring this cost of change, and that’s where we have to build a business case. We can work out the cost of change and the cost of the service, but we have to estimate the effect on the service that a new supplier will provide.
If we change from supplier A to supplier B the question, “would the traveller be affected and if so, how?” is not easily measurable. If I say, “you’re now going to book through this tool rather than this one,” how do I know if you’re going to love it or loathe it?
For me if you’re doing a business case for travel, you would get the numbers – for example, the cost of change – but you also have to consider people’s feelings and the impact of travel on them.
Employee welfare counts for more in some organisations than in others.