As travel costs skyrocket, businesses are realizing that better expense management techniques can make a difference.
According to American Express’ most recent travel management study, corporate travel expenses have soared to more than 143 billion. Private sector employers spend about 2,484 per employee on travel entertainment, up 17% over the past four years.
Enterprise T&E costs, now the third most controllable cost after sales and data processing costs, are under new scrutiny. Businesses are realizing that savings of 1% or 2% can add millions of dollars to their bottom line.
The cost reduction of that order brings it to the attention of management, a requirement for this type of project. Engagement begins with understanding and evaluating the components of T&E management in order to control and monitor it more effectively.
Practice management includes assigning responsibilities for travel management, implementing a quality measurement system for travel services used, and creating and distributing official travel policies.
Despite support from senior management, the road to cost reduction is bumpy. Only 1 in 3 companies have successfully introduced an internal program to help reduce travel costs, and the myriad aspects of travel are so overwhelming that most companies don’t even know where to start. . “The travel industry is information-driven,” says the Founder and CEO of The Global Group Inc.
If so, information technology seems like a viable place to realize the elusive but cost savings many are looking for. “Technological innovation in the business travel industry is helping companies realize the potential of automation to control and reduce indirect [travel] costs,” said American Express’s Travel Services Group USA president. “Many companies are also embarking on quality programs that include sophisticated process improvement and reengineering efforts designed to substantially improve T&E management processes and reduce overhead costs.”
As companies look to technology to realize potential savings, they can be very creative about the methods they use.
Centralized reservation systems have long been the exclusive domain of travel agents and other industry professionals. But that all changed when a decision by the Department of Transportation gave the general public access to systems like Apollo and SABER. Travel management software such as TripPower and TravelNet immediately emerged, providing businesses with insight into where their T&E dollars are being spent.
The software tracks spending trends by interfacing with the company’s database and providing access to a centralized reservation system that provides airlines, hotels and car rental companies with instant booking information. The program allows users to generate computerized travel reports of savings, with details on where discounts were received, hotel and vehicle usage, and travel patterns between cities. Real-world data gives businesses additional leverage when negotiating discounts with travel suppliers.
“When you own the information, you don’t have to go back to square one every time you decide to change institutions.” Biotechnology giant Chiron Corp.
Sybase Inc., a leader in client/server software with an annual T&E budget of more than 15 million, agrees. “The software gives us unprecedented visibility into how our employees are spending their travel expenses and gives them better leverage when negotiating with travel service providers,” said Sybase Inc.’s director of credit and corporate travel services. It is a time environment that is expected to yield significant savings in T&E. Now we have control over our travel information and we no longer have to rely entirely on travel agents and airlines.”