The best way to control any cost is to closely track it, and travel is no exception, according to Todd Stoneman, vice president of information services for Professional Travel.
“Travel is one of the largest controllable expenses, but it has become the single most volatile cost facing companies today,” says Stoneman. “As with all expenses, the goal with travel is to maximize your return on investment while minimizing your spend. The year 2008 has seen one of the most dramatic impacts on travel since the post-Sept. 11 recovery, and fuel costs continue to impact the value proposition throughout the industry.”
So, by implementing a system that uses your data to scrutinize your travel, you’ll have the tools to make well-informed decisions to positively impact your bottom line.
“Not only can companies control their spend, they can examine all elements and factors contributing to the total cost more effectively,” Stoneman says. “For example, if you see your spend and sales going down, there may be a bigger problem. So it’s not just about travel, it’s about total fiscal management throughout the organization. Often, there are other factors impacting a situation, and without the proper data and reporting, it’s impossible to make prudent decisions.”
Smart Business spoke to Stoneman about the best approaches to implementing a travel reporting system and how it can enable nearly any company to run more efficiently.
How do you approach setting up a system?
Generally, you look at how you integrate front-end expenses with your back-end reporting systems to manage your other internal costs. Typically, companies break out spend by departments, cost centers, SAP numbers, P&L numbers and so on. Some may have multiple structures within their organization — for example, one for accounting, one for executive-level reporting, Sarbanes-Oxley (SOX) compliance and review and so on. Whatever metrics you use internally, follow it for travel.
It makes it much easier to analyze and disseminate throughout the organization.
Does a company’s size matter?
Customized travel reporting is not necessarily tied to company size. A company may only have 50 travelers, but $2 million or $3 million in spend because of the frequency or amount of international travel. Another company might have 1,000 employees but spend only $100,000 due to the nature of their business. Traditionally, when the spend is within your top five costs or approaches $500,000, corporations want higher visibility and focus on costs containment.
What are some mistakes companies make while implementing a management system?
The primary issue occurs when you do not consolidate your travel spend through a single source travel management supplier. Multiple source bookings eliminate the ability to accurately aggregate and analyze your travel spend. Once you have established single source aggregation, you need to ensure all measurements (departments, codes, SAP numbers) are established at the onset. Make sure you involve your accounting, finance and IT departments in the initial discovery phase. It’s difficult to go back and expand the scope after the fact, so try to talk to as many departments as possible upfront. And of vital importance, keep your travel management company updated with any personnel changes so your reporting is accurate. With a little vision and participation, you will save everyone considerable time and money.
What benefits can a company see?
Data aggregation and analysis enable you to make decisions on fact, not perception, and immediately provide you with the necessary tools to negotiate pricing and savings across your major suppliers — hotel, car and air.
Analytical tools available will enable you to see trends within each region, state, city, cost center and individual employee to help increase efficiencies and drive costs out of your system.
Does a company expose itself to risks without such a system?
The truth is in the details and your ability to manage your travel is solely reliant on your ability to measure your data. While looking for cost savings by reducing your travel activity may save you money in the short-term, it can also negatively impact your sales and revenue. By implementing proper controls and measuring the aggregated data, you’re able to identify inefficiencies and gaps within your travel programs and deal with the root causes. In most cases, merely improving efficiencies will generate considerable overall savings without making arbitrary cuts to your overall travel budget.
TODD STONEMAN is the vice president of information services at Professional Travel. Reach him at email@example.com or (440) 734-8800 x4050.