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The Travel Hub Project
01/08/2009 - Business Travel Now - Kim Cochrane

Kim Cochrane caught up with Old Mutual's Roddy Mann and Somaya Parker in Cape Town to learn more about how the correct choice of systems partners has contributed towards containing a cost that was not quite under control.

THREE years ago, the boardsof Nedbank, Old Mutual SA (OMSA) and Mutual & Federal decided to look collectively at the various commodities within the procurement space and travel was one of those up for assessment, advises Roddy Mann,
Old Mutual procurement analyst at the Group Procurement Office, who heads up travel procurement at OMSA.

"This was the beginning of a group awareness of travel spend and what is now known as the Travel Hub project at Old Mutual. The combined review incorporated an assessment of trends, benchmarking and total spend, which was thought
to be over R200m across the group, excluding MICE spend."

Speaking with BTN specifically about travel management changes at OMSA, Mann clarifies that OMSA and Nedbank work closely together in terms of sharing best practice and leveraging volumes across the group to secure better travel deals.
This profile focuses on the OMSA case study and our October issue will feature Nedbank's story.

Mann, who has an accounting and engineering background, subsequently contracted the services of independent business travel consultant, Digby Johnson of TravelWorks, to help analyse travel activities and various savings opportunities.

There was a suspicion we didn�t have our travel costs under control. As an example, when we had access to Galileo, we could see fares available at costs lower than we were being offered. We were also informed by ex-travel agency staff
on several occasions that the fares offered were not the lowest available due to pressures on TMCs to meet airline turnover targets.

�OMSA staff were being overcharged for fares and therefore using webfares to save money. There was also a lack of travel policy enforcement.�

To date, the Travel Hub project has focused on general corporate travel, but incorporating MICE spend within the total travel portfolio is a future project.
The greatest challenges at the project�s outset were that reporting was late and often full of errors, which made accurate trend analysis difficult. �OMSA staff were being overcharged for fares and therefore using webfares to save money.
There was also a lack of travel policy enforcement.�
Additional concerns included travel requisitioning, approval, accounting and payment reconciliation processes that were manual, labour intensive and slow.

�We wanted to avoid billbacks and get direct access to suppliers to enable electronic uploads for multiple payments to the same vendor.�

Under the microscope
OMSA was also missing out on achievable cost savings because its TMCs across all the major groupings were finding it challenging to rapidly search for the best available deals across multiple suppliers.
Furthermore, group leverage on supplier deals was not effective. �We would negotiate rates with Supplier A and then find the TMCs had placed bookings with Supplier B where they enjoyed higher revenue through kickbacks and rebates.
Use of low-cost carriers (LCCs) was the most prominent example.
We were given pages of reasons by TMCs suggesting why LCCs did not suit corporate requirements. Even when we asked specifically for LCCs, we were told that agency consultants did not like doing LCC bookings because they had to do
more bookings to make historic turnover targets. Some suppliers asked if we could book direct so they could avoid GDS charges and TMC payments.�

With a project methodology to secure upfront funding, Mann and his team subsequently presented the Travel Hub business case at executive board level in 2006/7.
�Funding required was less than one percent of our annual travel spend. The business model suggested that the transaction fees required to recover internal staff and overhead costs was less than the value of fees paid externally
at that time. This has since been vindicated.
Old Mutual had purchased a company which had moved travel bookings inhouse and subsequently enjoyed a reduction of 20% on domestic travel costs. Their policy was similar to our existing policies so we didn�t require major changes
in that regard. We had a live pilot site that was already delivering the promised benefit percentages so all we had to do was align the rest of the group. This comforted our executives.�

A multi-pronged approach
The solution was to adopt a multi-pronged approach that included a more aggressive approach to travel policy implementation and enforcement as well as a re-assessment of business systems, processes and partners.
�We started implementing the project by accommodating travel requests that called for a LCC.
The use of LCCs surged. The results of the additional savings encouraged our managing director to lend his support to tougher policy compliance, which directed more staff to use LCCs � even if for only one leg of the journey � and manage
their expenses more assertively. The md wanted all the business units to reduce expenditure, including those who did not want to use LCCs. The expense reduction approach was extended to hotel selection as well.�

Adds Mann: �Our view is that our business travellers know their needs. We see senior executives flying on LCCs, but if they have important meetings, they fly in Business Class on a traditional carrier.

�Overall, we�ve seen a decrease in terms of where we might have been if we hadn�t put the controls in place. Our executives agree that millions have been saved (as confirmed by an independent audit review).�
OMSA presently works with three systems partners, namely Oracle, TravelLinck and Galileo. �Internally we developed an Oracle requisition system, which links into our Oracle reporting and HR systems. It will be integrated into our
TravelLinck system during the project�s next phase. Our internal systems have complicated existing workflows, which we were able to use for travel approval. We are able to validate that cost centres are active before approving
travel against them. This is critical in our organisation where we close a lot of project cost centres and change business structures frequently. We also use Galileo SA for times when we are unable to access the internet.�

The big picture
Says TravelLinck CEO, Roderick Ross: �OMSA had been investigating various travel technology solutions on offer, locally and internationally, before they approached TravelLinck in late 2005. We�ve been in consultation with
OMSA for the past few years to design and develop a travel management platform to proactively manage expenditure from request through to reconciliation. We don�t underestimate the need to use technology in conjunction with a
well thought-out change management strategy to enforce (revised) policy and achieve various goals. The strategy was to obtain executive support at an early stage and then to implement a phased roll-out, combined with internal
communication to enforce the revised travel policy, at various levels across the group. The need for cost containment was communicated at an executive level and any reasons for slow uptake were addressed. Highlighting the
benefits of the big picture helped to overcome any resistance to change.� Adds Mann: �The value delivered by TravelLinck is now bigger than any investment we put in. We�ve probably taken 10%-20% off all travel costs through
this process. The investment in the widest sense has paid for itself. Included are all costs paid to external consultants and costs of staff who have managed the project, systems, licenses, etc.�

Mann says OMSA has achieved savings that were a few million rands more than expected. �And we�re not half-way yet. The change will become the new way of managing travel, with TravelLinck staying onboard. It�s comfortable to
know the project is clearly self-funding and as such, we hope to extend it through to Old Mutual park, OMSA offices in SA and possibly to the rest of the group.�

Future projects
Going forward, there are still opportunities to book travel smarter based on underlying trend analysis. �We�ve also noted that staff who have a better understanding of travel find it easier to cope with the changes inherent in business travel.�

Other plans include looking at the B&B sector and hosting more travel forums. �These sessions really helped with the recent implementation of UK visas, which impacted us significantly, as we have a head office in London.�

Mann says the Travel Hub system enables OMSA to report back on the best and worst travellers in terms of spend patterns. �We also identify the best booker and approver � and then send it to the business units so they can acknowledge the
relevant people. We find this to be very powerful change management tool.�

He expects to see a continued relationship with the various TMCs for consulting purposes, but to rely less on them for bookings fulfilment.

TravelLinck�s mandate

TravelLinck�s mandate was to design and develop a platform that could deliver:

� Huge cost savings
� Cost transparency, with direct access to suppliers for flights, cars, accommodation and conferencing
� Technology that would prevent �lock-in� to any one TMC. Old Mutual wanted to own and control its destiny and data
� The freedom to choose the role that any third party travel agency plays in the fulfilment of travel requirements
� Direct payment of suppliers with no third party billback fees
� Real-time data to manage travel portfolios proactively, with pre-emptive reports prior to travellers commencing trips
� An end-to-end solution

Illustrated is an internal travel hub (OMSA�s approach) where travel consultants, employed by the corporate, use TravelLinck as the technology platform. �Our data now has better integrity,� says Mann.
�We don�t just capture that someone�s flown � we capture why they�ve flown, who approved it, right down to the staff code of those people.�

�Overall, we�ve seen a decrease in spend with regard to where we might have been if we hadn�t put the controls in place,� says Roddy Mann.

Says Ross: �Corporates and suppliers are seeing the benefits of embracing technology. Suppliers want to move closer to their clients to offer better
deals and foster stronger relationships. TravelLinck facilitates this move on behalf of the corporate�s preferred suppliers.
TravelLinck is independent of any TMC. There are no hidden costs or management fees associated with our solution.�

 
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