Seasoned travel managers will have experience of outsourcing varying elements of travel programmes for different organisations. But it's often the case that procurement managers find themselves with responsibility for their organisation's travel category having had little or no experience of this very emotive service. With a procurement focus on cost it's important that other influencing factors are considered.
Completely overhauling a programme might deliver better value for the organisation but will it satisfy travellers' needs?
First things first
What are organisations trying to solve by outsourcing? It might not just be a question of an in-house skills shortage. Wage and salary costs are a large part of expenses for any business and reducing full time equivalent) on the company payroll is often a factor in outsourcing expertise.
One of the drivers for outsourcing is that travel is becoming part of a wider picture of employee experience – including recruitment, HR and payroll, learning and development, payment and remuneration etc. With travel playing a broader strategic part in safety and well-being there are wider pressures and solutions being considered at board level. It is leading to evaluation processes that draw down on differing skills to that of traditional travel manager roles.
Outsourcing means that businesses can keep costs down, safe in the knowledge that they can bring in the external experience when specific projects' timelines determine the need. Having this flexibility within human resources to respond to spikes in demand is an advantage and can also lead to fresh eyes on projects unrelated to the original outsource requirement.
The traditional scope of travel management
The industry is evolving at pace in a digital world where business must seek out efficiency and ensure duty of care but the traditional scope of travel management is already wide ranging:
- Transactional/booking management
- Safety and security
- Cost and value strategy
- Process effectiveness
- Internal stakeholder relationship management
- Behavioural change to influence outcomes
- Technology assessments
- Purchase to pay in travel and events
Early steps observed in business travel outsourcing
If we look back to the time when travel transactions were moved from in-house teams to TMCs and specialists such as HBAs there was a natural progression. As a result of specific sector knowledge we started to see outsourced travel managers become the norm and day-to-day travel administration activities and coordination functions moved to the agency.
Market expertise and the latest market information underpinned TMC consultancy in supplier sourcing, with a growing procurement approach to the travel supply chain. Meanwhile, travel category performance and travel provider tender reviews were being outsourced to consultants that were in tune with marketplace dynamics.
As the responsibility for policy creation also began to move to agency consulting services, process and technology direction naturally followed suit with a combination of TMC and independent consultants.
These days, organisations have a variety of stakeholder groups with at least one eye on travel. Procurement, HR, finance and key travel-buying budget owners, commercial teams responsible for the performance of many frequent travellers, communications and ever growing IT all need and want input. How, and, are these addressed and harmonised and where does ultimate responsibility for travel and meetings lie? With so many touch points in the business wider outsourcing trends are starting to shape around end to end solutions and the need for specialist understanding and deep market insight into travel planning and expense.
Once solutions are in place, changing traveller and travel planner behaviours is the key to success and businesses are using specialist expertise in communication management to support it.
As organisations seek to drive cost reduction and value creation, remuneration models will change too. Payment for reward will require ownership to shift to outsourced solutions to invest in and control the key levers of change with travel programmes. This will lead to complete outsource solutions from strategy to delivery. It is less about cost reduction of people and more about creating a focused and performance-led environment that treats travel and meetings as a business enabler.
A single travel manager or a multi-category procurement manager cannot optimise savings and value creation at the same speed and level as an effective outsource solution.
Too many cooks?
There has been a slow migration from simple transactional services to wider outsourcing. But despite commercial teams viewing travel as an investment in growth, rather than a cost to be reduced, travel still isn't regarded as an enabler of business.
If it was a question of what you can't outsource, rather than what you can, the answer would be the ultimate decision-making and management ownership and so organisations need to establish exactly what they want to achieve and how travel priorities and objectives relate to the overall business strategy and goals. There are many stakeholders, but few can see the very big picture and how it can join up across the multiple disciplines. Some organisations have a culture that affects the belief that everything is best done internally but in a market as complex and changeable as business travel the question businesses should ask is who do they trust?