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 protected] or (440) 734-8800 x4050.
