Ground Tendriling Journey Expenses

As organization travel costs nose upward, business are recognizing that much better cost-management methods can make a distinction in US. Business travel expenses rocketed to more than $143 billion in 1994, according to American Express' most current study on company travel management. Private-sector companies invest an estimated $2,484 per worker on travel and home entertainment, a 17 percent increase over the past 4 years.

Business T&E costs, now the third-largest controllable cost behind sales and data-processing expenses, are under new scrutiny. Corporations are recognizing that even a cost savings of 1 percent or 2 percent can translate into millions of dollars contributed to their bottom line. Cost savings of that order make certain to get management's attention, which is a requirement for this type of project. Participation starts with understanding and examining the components of T&E management in order to control and monitor it better.

Hands-on management consists of appointing responsibility for travel management, implementing a quality-measurement system for travel services used, and composing and dispersing an official travel policy. Just 64 percent of U.S. corporations have travel policies.

Even with senior management's support, the road to savings is rocky-only one in three business has actually effectively set up an internal program that will assist cut travel expenses, and the myriad aspects of travel are so overwhelming, many companies don't know where to begin. "The market of travel is based upon details," states Steven R. Schoen, creator and CEO of The Global Group Inc. "Until such time as a guest in fact sets foot on the plane, they've [only] been purchasing information."

If that's the case, information technology seems a viable place to hammer out those elusive, but highly sought-after, savings. "In addition, many companies are embarking on quality programs that include sophisticated process improvement and reengineering efforts designed to substantially improve T&E management processes and reduce indirect costs."
As business seek to innovation to make prospective savings a truth, they can get really imaginative about the approaches they utilize.

The Great Leveler

Centralized reservation systems were long the exclusive domain of travel representatives and other market experts. All that changed in November 1992 when a Department of Transportation ruling allowed the general public access to systems such as Apollo and SABRE. Travel-management software application, such as TripPower and TravelNet, instantly sprang up, providing corporations insight into where their T&E dollars are being invested.

The software application tracks spending patterns by interfacing with the corporation's database and supplying access to centralized reservation systems that provide instant appointment details to airlines, hotels and vehicle rental companies. These programs also allow users to create electronic travel reports on cost savings with information on where discount rates were acquired, hotel and vehicle usage and patterns of travel in between cities. When negotiating discounts with travel suppliers, actual data gives corporations added leverage.

" When you own the information, you do not need to go back to square one every time you choose to change agencies," states Mary Savovie Stephens, travel supervisor for biotech giant Chiron Corp. Sybase Inc., a client/server software application leader with a yearly T&E budget of more than$ 15 million, agrees." Software offers us unmatched presence into how workers are spending their travel dollars and much better leverage to work out with travel service suppliers, "states Robert Lerner, director of credit and corporate travel services for Sybase Inc." We have much better access to information, quicker, in a real-time environment, which is anticipated to bring us big savings in T&E. Now we have control over our travel details and no longer need to depend exclusively on the airlines and agencies."

The expense for this privilege depends upon the volume of organization. One-time purchases of travel-management software can range from under $100 to more than $125,000. Some software providers will accommodate smaller sized users by selling software piecemeal for $5 to $12 per scheduled trip, still a substantial savings from the $50 market norm per deal.

No More Tickets

Paperless travel is catching on faster than the paperless workplace ever did as both provider and customers collaborate to lower ticket prices for organization travelers. Maybe the most cutting-edge of the advances is "ticketless" travel, which practically all significant airlines are testing.

In the meantime, travel companies and firms are explore new innovations to allow tourists to book travel services via the Internet, e-mail and ignored ticketing kiosks. Finest Western International, Hyatt Hotels and a number of other significant hotel chains market on the Internet. These services reduce the need for paper and provide much better service and such peripheral benefits as increased efficiency, improved tracking of travel expenditures and patterns, and cost reduction.

Dennis Egolf, CFO of the Veterans Affairs Medical Center in Louisville, Ky., understood that the medical center's decentralized area, a quarter-mile from the medical facility, made effectiveness tough. "We were losing production time and things got lost," he states. "Every memo needed to be hand-carried for approval, and we required seven different copies of each travel order." As a result, Egolf tried an off-the-shelf, paper-reduction software application bundle created for the federal government.

The software application enables the health center to handle travel online, from tracking per-diem allowances and computing expenses to generating cash loan forms and authorizing reimbursement vouchers. The software also lets the medical facility keep a running account of its travel costs and its remaining travel budget plan.

" Today, for all practical purposes, the system is paperless," says Egolf. The software has helped the hospital reduce document processing time by 93 percent. "The initial objective concentrated on handling worker travel without paper," he says. "We have accomplished that objective, in part due to the efforts of the staff and in part due to the accuracy of the software."
With just a $6,000 financial investment, the hospital saved $70 each staff member journey and conserved practically half of its $200,000 T&E budget plan through the paper-reduction program.

Out There, Combination of corporate travel plans by less companies has been a growing trend since 1982. Almost 3 out of four companies now make itinerary for their organization places through a single company as opposed to 51 percent in 1988. Two significant benefits of agency combination are the facilitation of accounting and T&E budgeting, along with utilize in negotiating future travel discounts.
A significant technological advance that enables this consolidation pattern to grow is the introduction of satellite ticket printers (STPs). Utilizing STPs makes it possible for a travel bureau to consolidate all operations to one house workplace, and still send all necessary tickets to numerous places instantly by means of different wire services. As the term implies, the equipment prints out airline tickets on-site right away, getting rid of delivery charges.

For London Fog, STPs are a true blessing. London Fog's annual T&E budget of more than $15 million is split similarly between its two areas in Eldersburg, Md., and New York City. Each place purchases the very same variety of tickets, so equal access to ticketing from their company is a must. With an STP in their two areas, the company services both workplaces with one agency in Baltimore. Each workplace has access to immediate tickets and still handles to save by not needing to pay courier and reveal mail charges that can range approximately $15 for each of the more than 500 tickets each purchases yearly.

Conde Nast Publications' yearly T&E budget plan of more than $20 million is designated among its areas in Los Angeles, San Francisco, Chicago, New York and Detroit. Because 1994, travel plans have been managed by a centralized company, Advanced Travel Management in New York City, by setting up an STP in each of these five areas. In addition to increased efficiency due to consolidation, Conde Nast now has the ability to alter travel plans at a minute's notification and have new tickets in hand quickly.

The real advantage is that the makers are owned and preserved by the travel agency., so there is no expense to the company. Due to the major expenditure involved, nevertheless, STPs stay an option only for significant ticket purchasers. "STPs are a practical alternative in this process for any place that acquires more than $500,000 per year in tickets," says Shoen.

As airline tickets averages 43 percent of any business's T&E expenses, cost savings available through the various uses of innovation have ended up being dramatic. For instance, the capability of corporations to collect and evaluate their own travel patterns has resulted in the production of net-fare purchasing-negotiating a rate between a corporation and an airline company to acquire tickets that does not include the added costs of commissions, bypasses, deal fees, agency transaction charges and other discount rates.

Most major U.S. carriers publicly proclaim that they don't negotiate corporate discounts below published market fares, the American Express survey on business travel management found that 38 percent of U.S. companies had access to, or already had implemented, negotiated airline discounts. The accessibility and mechanics of these plans differ extensively by provider.

What's the Price?

Fred Swaffer, transportation manager for Hewlett-Packard and a strong advocate of the net-pricing system, has pioneered the concept of fee-based pricing with travel-management companies under contract with H-P. He states that H-P, which spends more than $528 million per year on T&E, plans to have all air travel based on net-fare pricing.

Frank Kent, Western regional manager for United Airlines, concurs: "United Airlines takes part in business volume discounting, such as bulk ticket purchases, but not with net prices. I have yet to see one net-fare contract that makes sense to us. We're not opposed to it, but we simply do not comprehend it right now."

Kent stresses, "Airlines should approach corporations with long-term tactical relationships instead of just discounts. We would like to see ourselves committed to a corporation instead of simply involved."

As company travel expenses nose up, business are recognizing that better cost-management techniques can make a distinction.

United States. corporate travel expenses soared to more than $143 billion in 1994, according to American Express' newest survey on business travel management. Private-sector companies invest an estimated $2,484 per employee on travel and home entertainment, a 17 percent boost over the past four years.
Business T&E costs, now the third-largest controllable expenditure behind sales and data-processing expenses, are under new analysis. Corporations are recognizing that even a savings of 1 percent or 2 percent can equate into countless dollars added to their bottom line.

Cost savings of that order make sure to get management's attention, which is a requirement for this type of task. Participation begins with understanding and examining the elements of T&E management in order to control and monitor it better.

Hands-on management consists of assigning duty for travel management, executing a quality-measurement system for travel services used, and composing and distributing an official travel policy. Only 64 percent of U.S. corporations have travel policies.

Even with senior management's support, the roadway to savings is rocky-only one in 3 companies has actually successfully set up an internal program that will help cut travel expenditures, and the myriad aspects of travel are so frustrating, many business don't understand where to start. "The market of travel is based on details," says Steven R. Schoen, creator and CEO of The Global Group Inc. "Until such time read more as a traveler actually sets foot on the airplane, they've [just] been buying details."

If that's the case, infotech seems a feasible place to work out those elusive, but extremely popular, cost savings. "Technological innovations in the organization travel industry are enabling companies to recognize the capacity of automation to control and minimize indirect [travel] expenses," says Roger H. Ballou, president of the Travel Services Group USA of American Express. "In addition, lots of companies are embarking on quality programs that consist of sophisticated process enhancement and reengineering efforts designed to significantly enhance T&E management processes and minimize indirect expenses."

As companies seek to innovation to make potential savings a truth, they can get really creative about the techniques they use.

The Great Leveler

Centralized appointment systems were long the unique domain of travel agents and other industry specialists. All that changed in November 1992 when a Department of Transportation ruling allowed the general public access to systems such as Apollo and SABRE. Travel-management software, such as TripPower and TravelNet, instantly emerged, providing corporations insight into where their T&E dollars are being spent.

The software tracks spending patterns by interfacing with the corporation's database and supplying access to central reservation systems that provide immediate booking details to airline companies, hotels and car rental companies. These programs also enable users to create digital travel reports on expense savings with information on where discounts were obtained, hotel and vehicle usage and patterns of travel between cities. Real data provides corporations included utilize when working out discount rates with travel providers.

" When you own the details, you do not need to go back to square one every time you decide to change agencies," states Mary Savovie Stephens, travel supervisor for biotech huge Chiron Corp. Sybase Inc., a client/server software application leader with a yearly T&E spending plan of more than $15 million, concurs. "Software offers us extraordinary presence into how staff members are investing their travel dollars and much better utilize to work out with travel service providers," says Robert Lerner, director of credit and corporate travel services for Sybase Inc. "We have better access to data, faster, in a real-time environment, which is expected to bring us huge cost savings in T&E. Now we have control over our travel details and no longer need to depend solely on the airlines and agencies."

The cost for this privilege depends upon the volume of company. One-time purchases of travel-management software can run from under $100 to more than $125,000. Some software application suppliers will accommodate smaller sized users by offering software piecemeal for $5 to $12 per booked journey, still a substantial cost savings from the $50 industry norm per deal.

No More Tickets

Paperless travel is capturing on faster than the paperless office ever did as both service providers and customers collaborate to decrease ticket prices for organization tourists. Possibly the most cutting-edge of the advances is "ticketless" travel, which nearly all significant airlines are testing.

In the meantime, travel suppliers and companies are experimenting with brand-new innovations to enable tourists to book travel services through the Internet, e-mail and ignored ticketing kiosks. Finest Western International, Hyatt Hotels and several other significant hotel chains market on the Internet. These services reduce the need for paper and offer better service and such peripheral benefits as increased efficiency, improved tracking of travel expenses and trends, and cost reduction.

Dennis Egolf, CFO of the Veterans Affairs Medical Center in Louisville, Ky., realized that the medical center's decentralized location, a quarter-mile from the hospital, made efficiency difficult. As a result, Egolf tried an off-the-shelf, paper-reduction software package designed for the federal government.

The software allows the hospital to manage travel on-line, from tracking per-diem allowances and calculating expenses to generating cash advance forms and authorizing reimbursement vouchers. The software also lets the hospital keep a running account of its travel expenses and its remaining travel budget.
" Today, for all practical purposes, the system is paperless," says Egolf. The software has helped the hospital reduce document processing time by 93 percent. "The original goal focused on managing employee travel without paper," he says. "We have achieved that goal, in part due to the efforts of the staff and in part due to the accuracy of the software."
With only a $6,000 investment, the hospital saved $70 each employee trip and saved almost half of its $200,000 T&E budget through the paper-reduction program.

A major technological advance that allows this consolidation trend to flourish is the introduction of satellite ticket printers (STPs). Using STPs enables a travel agency to consolidate all operations to one home office, and still send all necessary tickets to various locations instantly via various wire services. As the term implies, the machinery prints out airline tickets on-site immediately, eliminating delivery charges.

Each location purchases the same number of tickets, so equal access to ticketing from their agency is a must. Each office has access to immediate tickets and still manages to save by not having to pay courier and express mail charges that can range up to $15 for each of the more than 500 tickets each purchases annually.

Conde Nast Publications' annual T&E budget of more than $20 million is allocated among its locations in Los Angeles, San Francisco, Chicago, New York and Detroit. Since 1994, travel arrangements have been handled by a centralized agency, Advanced Travel Management in New York City, by installing an STP in each of these five locations. In addition to increased efficiency due to consolidation, Conde Nast now has the ability to change travel plans at a moment's notice and have new tickets in hand get more info instantly.

The real benefit is that the machines are owned and maintained by the travel agency., so there is no cost to the company. Due to the major expense involved, however, STPs remain an option only for major ticket purchasers. "STPs are a viable option in this process for any location that purchases more than $500,000 per year in tickets," says Shoen.

As airfare averages 43 percent of any company's T&E expenses, savings obtainable through the various uses of technology have become dramatic. The ability of corporations to collect and analyze their own travel trends has led to the creation of net-fare purchasing-negotiating a price between an airline and a corporation to purchase tickets that does not include the added expenses of commissions, overrides, transaction fees, agency transaction fees and other discounts.

Although most major U.S. carriers publicly proclaim that they don't negotiate corporate discounts below published market fares, the American Express survey on business travel management found that 38 percent of U.S. companies had access to, or already had implemented, negotiated airline discounts. The availability and mechanics of these arrangements vary widely by carrier.

Ground Tendriling Journey Expenses

The Great Leveler

No More Tickets

What's the Price?

The Great Leveler

No More Tickets

What's the Price?

Leave a Reply Cancel reply