Making sense of business travel expenses
We live in a shrinking world, thanks to the speed and efficiency of international travel, and it is a world full of opportunity. Companies have great potential for growth through forging new relationships and exploring new markets, and the importance of travelling to cement bonds between people and companies face-to-face, and to learn about new business environments, has never been greater. Yet it remains a difficult task to precisely quantify - and justify - the cost of business travel.
To make this task simpler, Amadeus IT Group has commissioned a report entitled 'Managing Every Mile', which is intended to help companies get a greater return for the money they spend on travel and expenses. LSE Consulting, which was set up by the London School of Economics and Political Science to support the application of its academic expertise and intellectual resources to practical business issues, makes the case for taking a more holistic and strategic approach to travel and expense management.
"If there is one thing we know about, it is travel, and we are also running a corporation with more than 15,000 employees travelling around the world, so we know that business travel can be a hassle. Our mission is to shape the future of travel, and one of the important parts of that is to get corporate travellers and travel companies to handle it in a much more efficient way," says Ana de Pro, CFO of Amadeus IT Group.
Founded in 1987 and headquartered in Madrid, Spain, Amadeus serves the global travel industry with groundbreaking technology solutions. In 2016, the company reported revenues of €4.4 billion and its cloud-based, hosted and on-premises systems boarded more than one billion passengers and processed 595 million bookings. Its solutions serve 709 airlines, 110 airport operators, 110 ground handlers, 16 insurance provider groups, 90 rail operators, 580,000 hotel properties, 233 tour operators, 50 cruise and ferry lines, and 43 car rental companies. It has also invested more than €4 billion in R&D since 2004.
"The challenge is to have efficient policies, compliance and reporting, while at the same time allowing employees to arrive safely, on time and prepared to do business at their destination. You need to find that equilibrium, and at Amadeus we are trying to provide the tools to ensure that all of those things are managed properly," says de Pro.
"With this report, we wanted to show that travel is really a corporate matter, not something that is solely the responsibility of travel managers or human resources or the procurement organisation. Everybody has a part to play and it is a holistic matter that occupies many parts of the organisation. It must be upgraded in terms of priority and how it is managed. It must be looked at in terms of the holistic, end-to-end travel experience, and it should be managed at corporate level with a clear strategic view of what its purpose is."
Insight from IT architecture
There is no one-size-fits-all solution that meets the needs of every organisation, but the report highlights that a bespoke and cost-effective approach to corporate travel can be found, if the right framework is in place. In its simplest form, this means tackling travel and expenses in the same way as other elements of corporate activity - with a strategic focus, and a balance between the needs of employees and the needs of the finance team.
As the report notes, travel represents a significant cost for many companies, but it is an area in which best practices are often missed or are poorly implemented. This can lead to inefficiency and, in many cases, frustrated travellers. Capturing best practice is partly a matter of policy and oversight, and partly a technology issue. The latter can be addressed fairly simply through vendors such as Amadeus.
"We provide a self-booking tool that allows you to comply with internal travel policy and an expenses tool that ensures that if you are complying with your policy, then the trip will most likely be cheaper and, therefore, improve cost-efficiency," says de Pro. "And [we provide] tools that enable reporting and duty of care to be handled, so that all of the pieces that are required for business travel can be taken care of.
"There are three types of travellers. Firstly, people who work in customer implementation, who travel quite a lot back and forth from their offices to customers' premises. Secondly, commercial people, who handle a company's commercial relationships. And finally, there are corporate people, who travel for corporate events or internal meetings. You need to tackle the needs of all three groups in more or less the same way, but taking into account their different needs."
The key, according to the report, is to have a proactive approach to management through automation and best practice processes. It found that, with these in place, the cost of processing a travel transaction can be cut in half, while an online booking tool alone can deliver a 10% cost saving. Furthermore, employee satisfaction will improve, as will the detection of fraudulent activity on expense reports compared with paper-based processes.
"Managing processes is not the easiest thing, because trying to standardise the peculiarities of travel is always a big challenge. So, corporations need to have reasonable policies and they need to ensure employees comply with those policies. They also need to have the right tools, of the kind that we supply to our customers, as solutions to ensure that those policies can be applied efficiently. Then you need to manage the cost and time elements. It is no use having the cheapest fare if you have hundreds of connections at impossible times," de Pro says.
"At Amadeus, we use the same tools we provide to our customers and we have a policy that has taken time to build, because we are working in nearly every country around the world and you sometimes need to try to experiment. We are improving the reporting part now, as that is a difficult area in which most companies do not have the right information to analyse whether they are being efficient while achieving their goals."
Finance will shape the future of travel
Solution providers such as Amadeus are constantly investing in new technologies that will help to make corporate travel simpler and more cost-effective. Companies will only be able to maximise the benefit from those efforts, however, if they ensure that the finance team and the other strategic decision-makers employ that technology in an environment where travel is given the emphasis it deserves. As a CFO, de Pro understands this from the perspective of the systems vendor and service user.
"Technology is changing and giving us more tools to do things in a better way. So we should take all of those new technologies and apply them. Anything related to mobile solutions or geo-location will help. Translating documents into information and analytics, big data and even artificial intelligence will probably be used to mechanise and standardise processes in order to better manage one of the costs that every corporation has, and which is quite a hassle for employees. It is a complex area, but one in which there are many things that can be done to improve processes," she says.
"We are trying to power smarter business travel. The CFO has to deal with it, and we have to help manage it internally. As the CFO of a corporation that employs more than 15,000 people, I see it from both sides - as a company that has to manage travel internally, and as the provider of technology to the travel industry. We have to help ensure that our own employees, and our customers, have more satisfying and efficient solutions for business travellers."
To learn more, please view the full interview on FDE TV's YouTube Channel.