Globalisation may seem at odds with the current mood of tentative economic recovery but, as Mark Frary discovers, thinking big can offer businesses some very real benefits...
The green shoots of recovery may be starting to appear, but that does not mean the pressure on travel buyers at multinational companies to keep their costs under control has subsided.
Indeed, the global economic landscape is still undergoing a seismic restructuring. As a result, merger and acquisition activity has increased as companies try to manage the huge piles of cheap debt they used to grow in the golden years, and companies with cash look to make clever buys of rivals in trouble.
Against this background, multinational travel buyers are looking at how they can squeeze out more savings and be cannier with their spend. For those who have already achieved a level of travel management sophistication in some parts of the world, the answer – at least sometimes – is to go global.
A white paper in 2009 by BCD Travel, the travel management company (TMC) – one of the four truly global players – noted that the number of tenders that were multinational in scope was expected to be up by 40 per cent on 2008. The company said there were four factors behind the rise:
- an increased corporate focus on cost reduction;
- the continually increasing role of procurement in travel buying;
- need for greater travel security; and
- desire for greater transparency and corporate governance.
American Express has also seen this same trend. The company’s general manager for global business partnerships, Europe, John Lyons, says: “Large companies are increasingly looking to implement a global travel programme for a number of reasons. It can be driven by consolidation and, of course, economies of scale result in savings opportunities, but just as attractive to many companies are the additional efficiencies of a global programme.
In the ever increasingly globalised business environment, companies want integrated global technology platforms, streamlined booking processes, aligned policies and control procedures, robust management information (MI) to maximise supplier savings, and 24/7 support for travellers accessible from wherever they are in the world.”
So, as a travel buyer, how do you go global?
Structure and culture
The first step is to look at how your organisation is currently managed around the world, whether that is by country or on a regional basis, and then make sure your travel is organised in a similar way, both internally and externally with your TMC and suppliers.
HRG’s group commercial director Stewart Harvey says it is important to have global objectives but regional variable methodologies. “There is nothing wrong with having same targets in what you do, but wrong in trying to do the same thing everywhere,” he says. “Your start point should recognise the different variations and diversity in different regions.”
Adam Knights, group sales director at ATP International, says that many buyers, particularly those in the US, looking to go global, make the mistake of taking a top-down approach and imposing what is right for America everywhere else around the world.
TMCs tend to try to mimic the corporate structure. If the organisation is regionally structured then the TMC will usually have a regional account manager structure.
Another consideration is the number of transactions in each country or region in the business. If your company is generating 200,000 transactions in France and only 200 in places like Indonesia and Vietnam then a sensible route to globalisation might be towards an Asian service centre in Singapore handling all of those 200. “That way those people can enjoy the benefits of dedicated service,” says HRG’s Harvey.
Even with the will to change, there are considerable barriers to doing everything the same around the world. Consider how things differ within countries: tiny Switzerland and Singapore both have four officially recognised languages. As a region, Asia has different currencies and languages in virtually every country. Europe is less complex than in the past because of the euro, but if the common currency starts to disintegrate, it could become a different picture altogether.
Buyers looking to globalise also need to understand the culture of the organisation, not necessarily the culture of the countries involved themselves. For example, despite country-level language variations, a company may use a single business language to conduct its business – English, French, Spanish or Mandarin, for example, and this establishes a framework for the travel programme.
After instituting how your organisation is structured, your next consideration is how it travels. Is there a lot of intercontinental travel? Is it all intra-country? Do you use rail extensively? What are the key destinations? You then need to establish an overview of process. Are there trip authorisation controls in place? What payment systems are used? How does the company’s treasury structure work?
Amex’s Lyons adds that buyers should review what they have, consider what will
suit the company culture and employees, and set out clear objectives for the programme. “If there are any ‘non-negotiables’, such as servicing in a local
language being a key service requirement, these need to be set out before the implementation process begins. Companies also need to consider stakeholder engagement and communications, and should be mindful not to underestimate the change management required to ensure ‘glocal’ value is delivered.”
Currency and language are not the only barriers – global distribution systems (GDSs) are, too. Take China, where TravelSky is the only GDS licensed to make bookings on the country’s domestic airlines. Outside the country, TravelSky is barely known, except among TMCs and GDSs trying to make inroads into that huge market.
HRG’s Harvey also recommends piggy-backing on other globalisation projects. “That way, you can be seen as part of a tidal surge rather than as some small tributary on the side. If you go with the flow of major projects, your company will be finding ways to overcome many of the differences anyway, and the job becomes one of fine-tuning the application for travel management rather than introducing completely new change.”
Some organisations then lose sight of one of the most important points to consider when planning a global programme: future business objectives. Few other factors can derail a global programme more effectively than a failure to take into account the future direction of business. If a company-scale merger is on the cards, this will change everything – destinations, volumes, culture and even senior management support.
Policy
A global programme more often than not means a common travel policy. However, a global policy should not be overly prescriptive. It should act as a beacon of best practice for parts of the organisation spread around the world and also act as a statement of intent for the organisation’s global suppliers. The policy should be an umbrella policy that sets out the broad ethos of the organisation.
HRG’s Stewart Harvey says a global policy, particularly in the early days of a global programme, is “mostly high-level and strategic” and is often more directional and aspirational rather than practically defined.
“This is because when you start, you don’t know the numbers,” he says. “When you ask how many ticket refunds they are doing, how many hotel nights they book, how many hotels in their programme and how many events and meetings outside their travel policy, the response is often a gasp.
“What a lot of clients want to try to do is get into vision and strategy and detailed plans but many simply need compliance, risk management and data and, therefore, control and leverage with suppliers.”
“Policy is difficult,” admits ATP International’s Knights. “We spend a lot of time on peer
group policy benchmarking. The trick is to get a broad global policy and then use pre-trip reporting to manage it rather than trying to create a mandated policy and stop your business working.”
Global suppliers
A global programme with a global policy will also include something else – global suppliers. ATP International’s approach is then to look at whether that global deal would represent better value for money than what is already in place on a regional or country basis. ATP International’s Knights says: “If there is a big chunk of spend we can identify, we can then get a baseline. We then benchmark against deals we know are out there or are possible.”
Knights cites the example of a company with operations in both the UK and Norway. “In Norway, you have an SAS product which gives you a discount off the full fare where you swipe a card at the airport. The Scandinavians love it. We found that the English side, who were very cost-conscious, were taking far lower fares rather than the supposedly great deal that the Norwegians had.”
Amex’s John Lyons says suppliers are ready to do deals but buyers need to be able to deliver. “Buyers should consider their ability to control and manage spend country by country, particularly for negotiated air fares, and keep a close eye on their volumes and ensure they fulfil their obligations regionally and globally as required. Corporate rates will become more valuable in 2011 due to less availability of low published fares – that said, a reduction in average prices is mainly realised through changes in travel behaviour.”
Making a success of it
The above outlines what steps are required for companies looking to go global but, even with the best will in the world, globalisation sometimes comes unstuck and the reasons for failure are often similar. One thing is key to success: a global travel programme requires a global sponsor. “You need a big signature saying: I am behind this and I will make sure it works,” says HRG’s Harvey.
Amex’s John Lyons says the barriers to success changes from company to company. “For some a change in technology may be the most difficult, whereas for others it may be changing behaviours, whether by bookers or travellers as they adjust to new procedures or policies. Again, we find that the most successful global travel programmes are those where senior leadership has invested time upfront with business unit stakeholders to mandate a change in booking behaviour.”
He adds: “Globalising a travel programme obviously has many facets, but the most successful companies are those who set out with a clear vision of what they want to achieve, put the necessary resources in place to support implementation and roll-out, and partner with a TMC who can help navigate through the changes required and provide ongoing support for the programme.”
CASE STUDY: Monsanto
Companies don’t come much more global than agricultural giant Monsanto. The company, which has its international headquarters in St Louis, Missouri, has business operations in 82 countries and is best known for its industrial weedkiller Roundup, and for developing crops with biotechnology traits – better known to the general public as genetic modification.
The company wanted to leverage its global travel spend, boost operational efficiencies and track travellers for safety and security, and going global seemed the obvious route. The company had already been using Carlson Wagonlit in the US and Canada for four years, and the TMC was tasked with a global consolidation.
CWT teams worked with Monsanto’s regional and country stakeholders, conducting training sessions about the benefits of global consolidation and drawing up contingency plans to avoid coverage gaps as countries moved from existing TMCs, as well as schedules for updating and consolidating traveller profiles.
Within a year of the award to CWT, some 58 countries in the Monsanto network had moved into the global programme. Four Monsanto offices have CWT implants but others use CWT business travel centres.
The TMC has rolled out several of its technology tools to the 58 countries, including:
- country portal pages with single sign-on from the Monsanto network;
- global reporting with CWT Travel Management Center Traveller tracking and security alerts;
- CWT Policy Messenger to encourage travel policy compliance at point of sale;
- and global surveys to assess customer booking service.
Monsanto is reporting improved efficiencies as a result of better online reporting, including global reason codes for booking/not booking preferred suppliers to show lost and realised savings for every transaction, aggregated data for supplier negotiations, global service level agreements and monthly global billing for service fees.
This article was first published in ABTN's sister title Buying Business Travel, the award-winning magazine for company travel & meetings buyers and arrangers.
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