Cost control and beyond the cfo s agenda for corporate travel
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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

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


Agenda

Agenda

1.Key findings

2.Demographics

3.Cost versus quality

4.One view of travel across the business

5.How to impress the CFO


Key findings

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


Demographics

Demographics

  • 127 senior finance executives

  • 50% Europe, 25% US and 25% Asia

  • Most major industries represented

  • Small to large companies


Cost control room for improvement

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


Which travel tools would help

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%


The value add

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.”


Looking beyond cost

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%


Two views of feedback tools

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.”


Is productivity a priority

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


Filling time

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.”


The green light travel and the environment

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%


Green drivers

Green drivers

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


One view of travel expenses

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%


Integration importance versus performance

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


The benefits of the single view

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.”


The finance travel services relationship

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%


What should the travel department focus on

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%


Increasing leverage with suppliers

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%


Conclusion speaking the language of finance

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


Conclusion speaking the language of finance1

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


Cost control and beyond the cfo s agenda for corporate travel1

‘Cost control and beyond’The CFO’s Agenda for Corporate Travel:

Amadeus’ PerspectivesJason LongHead of Global PartnersMultinational Customer GroupAmadeus, Madrid


Highlights

Highlights

  • Integration: SBTs and expense management

  • The green issue & feedback

  • Addressing productivity

  • Data and usage

  • Summary


On the bright side the tools cfos feel good about

On the bright side: The tools CFOs feel good about


Integration increasingly demanded

Integration: Increasingly demanded

How many of you have implemented SBTs and/orautomated expense management?

How can technology vendors help?


Highlights1

Highlights

  • Integration: SBTs and expense management

  • The green issue & feedback

  • Addressing productivity

  • Data and usage

  • Summary


Cfos ambivalent about green travel

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?


Cfos see cost savings impact of social networking feedback tools

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?


Highlights2

Highlights

  • Integration: SBTs and expense management

  • The green issue & feedback

  • Addressing productivity

  • Data and usage

  • Summary


Traveller productivity

Traveller Productivity

Are you focusing on this?

How are you measuring?

How could it be measured?

Ongoing Focus of corporate tools


Traveller productivity1

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.


When is it productive to travel

When is it productive to travel?

How would you determine the ‘return on travel’?


Highlights3

Highlights

  • Integration: SBTs and expense management

  • The green issue & feedback

  • Addressing productivity

  • Data and usage

  • Summary


One accurate view of travel across the company

One accurate view of travel across the company

  • Improving profitability

  • Track employees/projects

  • Budgets/ forecasts


So where does the data come from for the one accurate view

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?


Highlights4

Highlights

  • Integration: SBTs and expense management

  • The green issue & feedback

  • Addressing productivity

  • Data and usage

  • Summary


Relationship with finance how big is the gap

Relationship with Finance: how big is the gap?

And how can it be closed?


Summary

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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