White Paper

From numbers to action

Improving travel program management through strategic KPIs and meaningful savings measurements

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Executive Summary Introduction: The data challenge for travel managers Section 1: Strategic KPIs Section 2: Meaningful savings measurement Section 3: Sourcing, combining and managing data Final word: The role of benchmarking in strategic performance management 3 8 10 23 29 32
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Executive summary

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Travel managers know good data is crucial for their work. But which data do they need? Are they combining the appropriate measurements for true performance management, building a full and actionable picture of what is going on in their travel program? And do they have the information which tells them whether the travel program is being managed in line with their organization’s overriding strategic objectives?
Thiswhitepaperarguesthattravelmanagerscanimprovethe performanceoftheirtravelprogramsbycreatingstrategickey performanceindicators(KPIs)whichmeasurehowsuccessfullytheyare meetingcorporateobjectives,providesasamplesetofstrategicKPIs andsetsforthclearguidelinesforbuildingastrategicKPIprogram.

1.StrategicKPIs
Strategic KPIsmeasurehowwellacorporateprogram,suchasthetravel program,ismeetingcorestrategicgoals,forexamplecostcontainment, sustainability,processefficiencyorrevenuegeneration. Strategic travel KPIs TheoptimumnumberofstrategicKPIsforacorporatetravelprogramis eightto12,balancingcomprehensivenesswithavoidanceofover-complexity. AnexampleofabalancedselectionofKPIsappearsonpage4.

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e.Allrightsreserved ( Travelagencyperformanceindex Howwelldoesthetravelagencyperformintermsofcost.hotel.Executive summary BacktoIndex> StrategictravelprogramKPIs KPI Travelmanagementservicescoverage Relevance HowmuchofthetotalT&Espendisinfluencedbytravelmanagement? Definition Managedtravelspend TotalT&Espend Virtualmeetingindex Whatistheshareofmeetingsusingvirtualmeetingtechnology(i.etc) weightedbycategoryspendasshareoftotal Averagetotalcostpertripinpreviousperiod Averagetotalcostpertripincurrentperiod Currentclimateimpact(air+rail+rentalcar) previousclimateimpact(air+rail+rentalcar) previousclimateimpact(air+rail+rentalcar) Shareofcorporatecreditcardvolume Howmuchofthetotaltravelandrelatedspendcanbetracked? Managedtravelspend TotalT&Espend Agencycostproductivityindex Grosstransactionvolume 4 |From numbers to action©2010byAdvito. videoconferencing)incomparisontoallinternalmeetings? Howmuchhavewesavedbysourcingandsteeringeffectively? Numberof virtualmeetings Numberofinternaltrips + Numberofvirtualmeetings Sum Savingsagainstmarketindex + Cashdiscount Salesturnover+neworders 2 totalT&Espend Travelintensity Howmuchareouremployeestravelingtoconductbusiness? Sumofdistancetraveled Salesturnover+neworders 2 Policycompliance Howwelldotravelersadheretokeypolicycomponents? Compliancelevelspercategory(i.air..e.service deliveryandstrategicsupport? ( +Grosstransactionvolume +Travelersatisfactionindex +Supplierevaluationindex 3 ( Climateimpactofbusinesstraveltransport reduction Howenvironmentallysustainableareourbusinesstravelactivities? ( ( Changeintotaltravelcost Howmuchistravelmanagementcontributingtoabottom-lineimpact inoperatingexpenses? ( ( ( ( Travelexpenseproductivity Howdoesthechangeinourtravelspendcomparetothechangein businessrevenueovertime? ( ( Valueofmanagedtravel ( percategory currentnumber oftrips ( ( ..

Beyond procurement Travelprogramsavingsmeasurementsgobeyondthetraditional procurementcontextabove. Step 2–Mapoutyourcorporatestrategicgoals Simplifiedexamplesinclude:costcontainment. The procurement perspective Change in price–costsavingbasedonpricecomparisonwithpreviousyear Change in price compared to change in market index–costsaving/avoidance basedonpricecomparisonwithindex.Executive summary BacktoIndex> Value of strategic KPIs • Education–allowtravelmanagersandotherrelevantmanagerstogaina deeperunderstandingofthepurposeofthetravelprogram •  ecisive intervention–managerscanintervenequicklywithremediesif D targetrangesarenotbeingmet • Communication–effectivetoolsforconvincingdepartmentsorbudgetholderstochangetheirbehavior • Career progression–provideashowcasefortheissuestravelmanagers workonandprovetheyarecapableofhigh-levelstrategicthinking Tips on building a strategic KPI program Step 1–Takeitseriously Itisastraightforwardtaskforcompanieswithmaturetravelprogramsbutit doestaketimeandmanpower. Step 3–Mapyourtravelgoalstoyourcorporatestrategicgoals E..g.dutyof careandgovernance/compliance. Step 5–Indentifymasterdatasources ForeachKPI.usinge-auctions. someoftheirstrategictravelKPIswillalsobesavings-related.employeeproductivityandemployee satisfaction.Keysavings/costavoidancemeasurements include: Behavioral savings–equippingtravelerswithtoolsandmotivationto“dothe rightthing” Demand management–e.mapsuggesteddatasources.Allrightsreserved . 2.etc.g.reducedtravel processingcosts.costcontainment–reducedtravelpurchasingcosts.sustainability. Step 6–Actonthedata Investigateandtakeactiononresultswhichfalloutsideanticipated KPIranges.whohas responsibilityandtheprocessowner.e.usingvideo-conferencingandothertravel alternatives 5 |From numbers to action©2010byAdvito.demandmanagement.volumevariance(changein numberofbookingsmade)andmarketindex(benchmarkagainstaverage priceachievedbyothercompanies) Sourcing performance metrics–costsaving/avoidanceachievedbychanging requirements.reducedtripvolumes(travelprogramgoals:savings/cost avoidance..Meaningfulsavingsmeasurement Sincecost-containmentisacriticalcorporategoalformostbusinesses.g.theycanprove meaninglessandpossiblymisleading.However. unlesssavingsaregivenareal-worldcomparativecontext.frequencyofreporting.negotiation/sourcing) Step 4–DefinetheappropriateKPIstomeasureyourprogress ThencreateamatrixtogradetherelevanceofeachKPItoeachtravelgoal.

Executive summary BacktoIndex> What’s your savings hierarchy? ManyofthestrategicKPIsdiscussedinthispaperaredirectlyorindirectly relevanttoachievingsavings. KPIhierarchy:Savings StrategicKPIasfeaturedinthiswhitepaper Other/TacticalKPI Savings/CostAvoidance NetCostofServiceRatio ValueofManagedTravel ChangeinTotal TravelCost Savingsagainst MarketIndex ChangeinAverage CostperTrip TravelIntensity OnlineAdoption Rate TravelManagement ServicesCoverage CashDiscounts EconomyClass Ratio AdvanceBooking Ratio VirtualMeeting Index Changein NegotiatedPrice PolicyCompliance Process Efficiency 6 |From numbers to action©2010byAdvito. itisusefultomapthemoutasahierarchy.Allrightsreserved Sourcing Behavior Management Demand Management .Totiethemtogether.Theyincludeeverythingfromonlineadoption ratetousageofvirtualmeetingstopolicycompliance.

Analyzing data Manycompaniesconcludetheyneedspecializedconsultantswithpowerful analyticaltoolstoperformorassistwiththistask. Noneofthesesourcesisperfectinisolation.Allrightsreserved .travelexpensemanagementsystem(59 percent)andaccountspayable(50percent). Best practice is to combine several data sources for the fullest possible picture 4.workswellifdatateamhasatravelanalyst Eachoptionhasitsadvantagesanddrawbacks–the“best”choicedepends onanindividualcompany’srequirementsandconstraints.bestpracticeistocombine severaldatasourcesforthefullestpossiblepicture. Combining data Travelmanagersoftencombinedatasourcesthroughadatawarehouse.combiningandmanagingdata Sourcing data AsurveyofAssociationofCorporateTravelExecutivesbuyermembers carriedoutforthiswhitepaperonbehalfofAdvitofoundthemost popularsourcesfordataarecorporatecardprovider(86percent).consolidateddata Hybrid–thirdpartybuildsandhoststhedatawarehousebutitiscontrolled in-house. 7 |From numbers to action©2010byAdvito.Benchmarking Advitobelievescompanieswouldbenefitgreatlyfrommeasuringand thenbenchmarkinganagreedstandardsetofstrategicKPIs.The threebasicoptionsforcreatingadatawarehouseare: In-house–canbeslowandcostlybutguaranteedtobecompliantwith internalprocesses Outsourced–builtbysubjectmatterexpertswhoarefasttoimplementand wellawareofthebarrierstoaccurate.Sourcing.travel managementcompany(82percent).suchasthose outlinedinthiswhitepaper.Executive summary BacktoIndex> 3.

theaveragetimeneededforatravelmanagement companytoanswerthephoneoraveragedailyhotelrateinthetopten cities.Corporationsfrequentlyfailtoanalyzetheirtraveldataholistically. Given the complexity of modern commerce. ortomaketheessentialconnectionthatisthekeytoperformance management:linkingwhattheymeasuretooverallcorporateobjectives. Datadoesnotbecomeusefulunlessitisactedupontomakepractical improvements. Performance management for corporate travel Travelmanagersknowgooddataiscrucialfortheirwork.theirmeasurementsareoftentacticalin nature—andsometimesmisleadingasindicatorsofprogrameffectiveness.Allrightsreserved . leadership based largely on “gut feel” has no chance of success. gets managed.Butwhichdata dotheyneed?Aretheycombiningtheappropriatemeasurementsfortrue performancemanagement.itisup totravelmanagementtotranslatethevalueofamanagedprogramintothe languageofthecorporation.ThesestrategicKPIswillallowthe travelmanagertoworksmartlyandquicklywithseniormanagementto makeappropriatedecisionstomeetcorporateneeds.travelmanagersgainnomeaningfulunderstandingofwhetherthe savingstheyhaveachievedmatchorunder-performtheirtruecost-reduction potentialandbenefitforthecorporation.withmeasurement.buildingafullandactionablepictureofwhatis goingonintheirtravelprogram?Anddotheyhavetheinformationwhich tellsthemwhetherthetravelprogramisbeingmanagedinlinewiththeir organization’soverridingstrategicobjectives? Inmanycasestheanswerisno.As aresult.Introduction | The data challenge for travel managers BacktoIndex> From measurement to management There is a well-known business dictum that what gets measured.Andthereisalsotheriskofcomplacency: themanagementprocessstarts.Ratherthanexpecting stakeholderswithouttravelbackground(usuallyamajorityinanygiven corporation)tolearntravelmanagementjargonandidiosyncrasies.therearealsodangersinherentinthisprinciple. 8 |From numbers to action©2010byAdvito. The crucial role of strategic KPIs Whilemosttravelmanagersusemetricstomanagetheirvariousprogram componentsandinitiatives. Frequentlyusedmetricstendtomonitorisolatedsilosofdatasuchasmissed savingsopportunities.theywillformamisleading pictureoftheirperformance. However.Ifcompanies makethewrongchoicesaboutwhattomeasure.ratherthanfinishes.Agoodexampleexaminedinthiswhite paperisthemeasurementofsavings. Advitobelievesbusinessesshouldcreateasmallset(aroundeightto12)of strategickeyperformanceindicators(KPIs)whichgaugetheoverallhealth andeffectivenessofatravelprogram.ThisiswhatstrategicKPIsdo.Corporationsoftenbringthewrong datasetstogethertomakecomparisonswhichlackimportantcontext.

Theymay beconsideredKPIsfortheparticularagreementinquestion.inturn. AnSLAisaformalnegotiatedagreementbetweenaclientandaservice providerwhichdefinesparametersandresponsibilitiesforthedelivery ofaservice.AdherencetotheSLAisjudgedaccordingtomeasurements thatquantifytheperformanceofthesupplieragainstthoseparameters. Thesemeasurementsarespecific.Butitisimportanttounderstandthedifference.change. andarguablyshould.Gettingthisprojectunderwaydoesnothave toentailaninordinateamountofwork.Introduction | The data challenge for travel managers BacktoIndex> Start collecting your strategic KPIs here NotmanycompanieshavestrategicKPIsinplacetoday. particularlywhenitcomestothestrategicKPIsunderdiscussioninthis whitepaper.operationaland/ortactical.youshouldreviewrelevant SLAstobesurethattheysupportthoseKPIs.suppliersadmittedlyhaveanimportantroletoplayinhelping companiesachieveprogramand. WealsobelievestrategicKPIsareanareawheretravelmanagerscanbenefit enormouslybybenchmarkingwitheachother. KPIs and SLAs What’sthedifference? ItcanbeeasytoblurtheboundariesbetweenKPIsandServiceLevel Agreements(SLAs)—perhapsbecauseSLAsaremorefamiliarterritoryfor managedtravelprograms. KPIs are an area where travel managers can benefit enormously by benchmarking with each other 9 |From numbers to action©2010byAdvito.giventhatsavings/cost-containmentisakeygoalfor nearlyallbusinesses.thatcould.corporateobjectivesOnceyou establishyourstrategictravelprogramKPIs. However.Allrightsreserved .Thiswhitepaperisintendedtoactas astartingpointfortravelperformancemanagementthroughestablishing strategicKPIsandimprovingtechniquesformeasuringsavings–whichis itselfastrategicKPI.buttheyare notstrategicKPIsfortheoveralltravelprogramanditslinktostrategic objectives.especiallyforcompanieswithhigh levelsoftravelprogramcompliance.Wethereforehopethiswhite paperwillprovidethelaunchpadforanindustry-wideefforttoestablish asetofKPIsthatbusinessescanusenotonlytotracktheirperformance internallybuttounderstandwheretheysitincomparisonwiththeirpeers.However.

Although all KPIs are. How many strategic KPIs? Webelieveeightto12istheoptimumrange.ifanairlineispayingalargediscountbasedonthe mostexpensivefarebuckets.reviewstheprogram’s datasourcesandstartsadialoguewithotherinternaldepartments (suchasfinanceorsustainability).they areinadequatetotellthewholestory.Totakeasimpleexample.a usefultacticalKPIistoknowhowmuchcashdiscountisbeingpaidby suppliers. such as the travel program. • Communication–StrategicKPIsareveryeffectivetoolsforconvincing departmentsorbudget-holderstochangetheirbehavior.Asmallernumbermayfail toprovideabroadenoughperspectiveofthetravelprogram.Alarger numberrisksleavingmanagersadriftinaseaofdata. Interventionisnotthesoleprovinceofthetravelmanager. ThetacticalrebateKPIthereforeneedstocontributetoamorecomplex strategicsavingsKPItoenablefullerunderstanding–andaction. Measurable. •  ecisive intervention–Bycreatingtargetrangesforeachstrategic D KPI.Itensuresthey arealigningtheprogramwithcorporategoals. they are the critical few metrics that link the travel program goals to corporate objectives. by definition.However. What is wrong with tactical KPIs? Nothing.TacticalKPIsareanyquantifiablemeasurementsthatcan betrackedandevaluated.However. strategic KPIs are the most fundamental of all. governance or sustainability. They measure how well a program.thenthepricereductionislessimpressive. Realistic and Time-limited.sotheyareveryimportant. The value of strategic KPIs • Education–TheprocessofcreatingstrategicKPIsallows travelmanagersandotherrelevantmanagerstogainadeeper understandingofthepurposeofthetravelprogram.Section 1 | Strategic KPIs BacktoIndex> What is a strategic KPI? Key performance indicators measure operational and management performance against a stated set of objectives. cost containment. such as revenue generation.managerscanidentifyataglancewhetherastrategicgoal isbeingmetandintervenequicklywithremediesifitisnot. C Notonlydotheyprovideashowcaseforthewiderangeofissuestravel managersworkon.unsurewhereand whattoprioritize.Allrightsreserved . These objectives should be SMART: Specific. is performing in meeting core strategic corporate goals.especiallyif theyareshowntobeunder-performingagainstotherunits. 10 |From numbers to action©2010byAdvito. important. Simply put. •  areer progression–StrategicKPIsmaketravelmanagerslookgood.actions mayneedtobeownedorimplementedbyotherstakeholders.usingstrategicKPIsalsoprovestheyarecapableof high-levelstrategicthinkingtodriveforwardcompanyobjectives. Achievable.

defenseelectronicsandsecurity systemsandspacesystems.Scorecards identifyasmallnumberoffinancialandnon-financialmeasurements andattachtargetstothemtoanalyzewhethercurrentperformance ismeetingexpectations. “We rely on tactical KPIs as baseline measurements of performance.thestrategicKPIsproposedbyAdvitowouldfit neatlyintoascorecard.managersareabletofocus attentiononthoseareaswheretargetsarenotbeinghit.suchasgovernanceandsustainability. Aswillbeseenlater. They help us to identify issues such as why our spend has risen or if we are missing opportunities to improve our savings.withsomeoftheKPIsmeasuringfinancial objectives. but more and more we are combining them to produce strategic KPIs which measure the management of our business.Allrightsreserved .Inconsequence.” James Westgarth Head of Extended Travel Enterprise. They are a value-adding set of tools which enable us to take decisions. It’s what lies behind the statistics in trending and more qualitative analysis of statistics that helps us identify areas of concern and what we have to deal with.Section 1 | Strategic KPIs BacktoIndex> Scorecards Readerstrainedinbusinessmanagementwillbeawareofastrong linkbetweenstrategicKPIsandtheconceptofscorecards. EADS Scorecards identify a small number of financial and non-financial measurements and attach targets to them to analyze whether current performance is meeting expectations 11 |From numbers to action©2010byAdvito.” “Strategic KPIs are not a collection of numbers. Case study WhyEADShascreatedstrategictravelKPIs EADSownsthecommercialaircraftmanufacturerAirbusandalsomakes militarytransportandfighteraircraft.butothersmeasuringasmallrangeofnon-financial objectives. Examples of strategic KPIs Advitohasidentifiedasamplesetofgenericstrategictravelprogram KPIsthatwebelievewouldbeusefulformanyorganizationstoconsider astheysupportvariouscorporategoals(seeFigure1). Without strategic KPIs. we cannot be relevant to stakeholders and take relevant actions.

hotel.e.Section 1 | Strategic KPIs BacktoIndex> Figure 1–StrategictravelprogramKPIs KPI Travelmanagementservicescoverage Relevance HowmuchofthetotalT&Espendisinfluencedbytravelmanagement? Definition Managedtravelspend TotalT&Espend Virtualmeetingindex Whatistheshareofmeetingsusingvirtualmeetingtechnology(i.Allrightsreserved ( Travelagencyperformanceindex Howwelldoesthetravelagencyperformintermsofcost.etc) weightedbycategoryspendasshareoftotal Averagetotalcostpertripinpreviousperiod Averagetotalcostpertripincurrentperiod Currentclimateimpact(air+rail+rentalcar) previousclimateimpact(air+rail+rentalcar) previousclimateimpact(air+rail+rentalcar) Shareofcorporatecreditcardvolume Howmuchofthetotaltravelandrelatedspendcanbetracked? Managedtravelspend TotalT&Espend Agencycostproductivityindex Grosstransactionvolume 12 |From numbers to action©2010byAdvito. videoconferencing)incomparisontoallinternalmeetings? Howmuchhavewesavedbysourcingandsteeringeffectively? Numberof virtualmeetings Numberofinternaltrips + Numberofvirtualmeetings Sum Savingsagainstmarketindex + Cashdiscount Salesturnover+neworders 2 totalT&Espend Travelintensity Howmuchareouremployeestravelingtoconductbusiness? Sumofdistancetraveled Salesturnover+neworders 2 Policycompliance Howwelldotravelersadheretokeypolicycomponents? Compliancelevelspercategory(i..air..service deliveryandstrategicsupport? ( +Grosstransactionvolume +Travelersatisfactionindex +Supplierevaluationindex 3 ( Climateimpactofbusinesstraveltransport reduction Howenvironmentallysustainableareourbusinesstravelactivities? ( ( Changeintotaltravelcost Howmuchistravelmanagementcontributingtoabottom-lineimpact inoperatingexpenses? ( ( ( ( Travelexpenseproductivity Howdoesthechangeinourtravelspendcomparetothechangein businessrevenueovertime? ( ( Valueofmanagedtravel ( percategory currentnumber oftrips ( ( .e.

Allrightsreserved . The travel expense productivity KPI incorporates major corporate measurements from beyond travel. Attheotherendofthescale.howmuchofthecompany’stotaltravel&entertainment (T&E)spendischanneledthroughthecard.Thereasonthisisimportant isthatmostcorporationshavelimitedmeanstotrackspendby employeeswhileonatripotherthanthroughtheircardtransactions.spendmaximizationthrough negotiation.discussedinmoredepthbelow.butagoodcasecanbe madeforittoobeingacriticalstrategicKPI. including incremental sales and turnover 13 |From numbers to action©2010byAdvito. incorporatesmajorcorporatemeasurementsfrombeyondtravel.shareofcorporatecardvolumemay initiallylooknarrowandrelativelytrivial.both financialandnon-financial.Therearealsomajorvariationsbetween themintheircomplexity.ThecorporatecardKPI assesseswhatpercentageofemployeeshavecorporatecardsand.intermsof: • Howmuchdatatheycombine •  heextenttowhichtheycoverdifferentaspectsofthecorporate T travelprogramandthecompany’swideractivities ThetravelexpenseproductivityKPI. Maximizingspendthroughthecardisthereforeessentialformeeting importantgoalssuchascost-containment.Section 1 | Strategic KPIs BacktoIndex> A broad range ThisselectionofKPIsaddressesabroadrangeofcorporategoals. includingincrementalsalesandturnover.more importantly. Carddataalsohelpsverifypre-traveldatagainedfromtripreservations.andcompliance.

8% 95.0% 13.0% 15.2% 81.2% 23.1% Source:Surveyofcorporatemembers.0% nessrevenue/turnover Spendundertravelmanagementcontrolin relationtototaltravelcategoryspend CO2emissionscausedbybusinesstravel Milesorhourstraveledperyearasaproportionofcorporaterevenues Volumeoncorporatetravelcardversustotal travelspend Costoftraveldepartmentinrelationtotravel spend Travelagencyperformancelevel Policycompliance Usageofvirtualmeetings Economyclassratio Advancebookingratio Customer(traveler)satisfaction 57.8% 9.being overwhelminglycomprisedofU.S.butwould liketoimplement 5.8% 19. Theresponsessuggestthatthisgroup oftravelmanagersusealargevarietyof KPIs.6% 4.6% 15.0% 15.0% 0.5% 4.1% 76.-based multinationalcompanieswithmature travelprograms. Thefiguresmustbetreatedwithgreat cautionbecausetherewereonly21 answers.1% 66.Section 1 | Strategic KPIs BacktoIndex> Figure 2–KPIscurrentlyinuseamongACTEcorporatemembers WhichstrategicKPIsarein usetoday? AnApril2010surveyofAssociationof CorporateTravelExecutives(ACTE)buyer membersforthiswhitepaperasked participantsonbehalfofAdvitowhether theycurrentlyusearangeofKPIs.3% 28.7% 42.7% 21.0% 40.0% 30.5% 0.8% 4.8% 9.8% 15.currentlyused 85.5% 80.5% 10.0% 26.AssociationofCorporateTravelExecutives.8% 57.8% 63.4% 85.7% 26.1% 9.5% 42.especiallythoserelated tospendandcompliance.althoughunsurprisinglyitisthemore traditional.However.3% 86.6% Notusedandnotplanningtoimplement 10.orisplanningtouse.Italso askedthosewhodidnothavetheKPIs intheirprogramsiftheywouldliketo introducethem.0% Travelexpensesinrelationtoincrementalbusi.3% Notused.0% 10.3% 5.0% 4.30. Doesyourtravelprogramcurrentlyuse.0% 77.8% 19.0% 9.9% 85.9% 66.8% 10.easilymeasurableindicators whichpredominate.1% 4.April2010 14 |From numbers to action©2010byAdvito.0% 81.anyofthefollowingKeyPerformanceIndicators(KPIs)? KPI Averagechangeinfare/rate Savings/Costavoidance Totaltravelspend Onlineadoption Operationalefficiencies/processcosts TMCfees Yes.9% 4.Allrightsreserved .5% 15.0% 78.the figuresalsoheraldsignificantpotentialfor growthintwodemandmanagement-related KPIs:virtualmeetingsandtravelexpenses relatedtoincrementalturnover.butthegroupwaswell-qualified andrelativelyhomogeneous.0% 13.0% 5.

unidentifiedspendisoftennon-compliant.However. • Governance–Ensuringtravelersarecomplyingwithaccountingand otherlegalobligationsisincreasinglycrucial.itcanstill beaccurateenoughforthepurposesofthisstrategicKPI.g.” Agoodplacetostartistheexpensemanagementsystem. Incontrasttootherprocurementcategoriesinwhich“managedspend” referstospendwithpreferredsuppliers.astheprogramstrategymightbeto combinepreferredsupplierprogramswithlowerspotprices(e.Ifitisfully automated.Risk managementisastrategicpriorityformanybusinesses.soitmaybe necessarytomakeafewsampleinvestigations(e. Furthermore..Advitofindsthatspendusing thedesignatedbookingchannelsinwhichthespendcanbeinfluenced tofitthecorporatepreferencesisagoodproxy.oneortwodepartments) andthenmakeeducatedassumptionsfortherestoftheorganization.Allrightsreserved . 1.forexample.. Abilitytocontrolspendrelatesdirectlytokeycorporategoalsinmore waysthanmayatfirstbeapparent: • Cost containment/competitive procurement –Onlyspendthatis identifiedandmanagedcanbeincludedinsuppliernegotiations.Withpolicy complianceoften“outsourced”tothetravelmanagementcompanyand configuredwithintheonlinebookingtool. thegreatertheirproductivity.meaning itisusuallymoreexpensivethanthatwhichischanneledtowards preferredsuppliers.” Thissortofforensicworkispotentiallyverytime-consuming. Travel management services coverage Thisisthevolumeoftravelandentertainment(T&E)-relatedspend managedorinfluencedthroughthetraveldepartment. althoughT&Eexpenditureisnotalwayscodedas“travel. ObtainingacombinedmanagedandunmanagedT&Espendtotalis.alwaysgoingtobeaninexactscience. Measurement difficulties TravelmanagementservicescoverageisadifficultKPItomeasure becauseitisdifficulttoascertainhowmuchT&Espendisunmanaged.findingthenumbers willbemuchharder.suchadefinitionwouldbe counterproductivefortravel. therefore.itiscriticalbecausespendwhichisnot managedcannotbecontrolled.itmaybecodedas“marketing.Thenextplacetolookistheaccountingsystem.Likethecard coverageKPIdiscussedabove. 15 |From numbers to action©2010byAdvito.makingitvery difficultforacompanytofulfillitsdutyofcareobligations.Thefactthat58percentofrespondentstothe ACTEsurveysaidtheydeploythisKPIshowsitcanbedone.Iftheexpensemanagementsystemis semi-automatedormanual(anExcelspreadsheet).whichisto provideaninsightintowhethertheorganizationiscontrollingitsspend toanacceptablelevel.Section 1 | Strategic KPIs BacktoIndex> A detailed look at two strategic KPIs WehighlighttwoKPIshere: • Travel management services coverage AgoodexampleofhowastrategicKPIcanhaverelevancetomultiple high-levelcorporategoals • Travel expense productivity Arguablythemoststrategic–andalsomostcontentious– ofalltravelKPIs • Security–Uncontrolledtravelerscannotbetracked.thencapturingthespendshouldberelativelyeasy— providedthatexpensecategoriesarewelldefinedandalignedacross regionsandbusinessunits. bestavailableratesorrestrictedpromotionalairfares). • Efficient management of overhead resources–Thehigherthe proportionofspendmanagedbythoserunningthetravelprogram. Expenditurebookedthroughthecompany’sretainedTMCand/or transactedthroughacorporatecardcanberegardedasmanaged butmuchoftherestconsistsofamixtureof“knownunknowns”and “unknownunknowns.”Ifitisa meeting.g.

overallbusiness expenditure.althoughitremainscontroversialformeetingstoo.orpre-andpost-eventsurveysoftheir satisfactionwiththecorporation.revenueandprofitability.2010 1 16 |From numbers to action©2010byAdvito.However.2009.2.Section 1 | Strategic KPIs BacktoIndex> 2.thereare nomeasurableoutputs“robustenoughtoapplytomosttripsormeetings.September2009 2  OI on travel & meetings – why bother?.infinancialterms. TwowhitepaperspublishedlastyearstudiedtheU.”2 ROI AnappropriateKPIformeetings management? EvenifROIdoesnotconvinceasaconceptfortransienttravel.AsthetravelconsultantScottGillespiehaswritten.Oxford EconomicsandU.S.wordpress. Opinionamongtravelmanagementprofessionalsisdividedover whetherthestudiesprovedaquantifiablelinkbetweentravel investmentandprofitabilityatanationallevel.15. Business Travel.Feb.onlyasmallnumberofmeetingscanproducedirectly quantifiablefinancialreturnsofthissort.businesstravelmarket andattemptedtoestablisharatiobetweentheamountcorporateAmerica spendsontravelandtheincrementalprofitthisexpenditureachieves. Oneofthemanychallengesisthattravelisnot.since—putsimply—itcannotbestatedasanassetonabalance sheet.coulditbea usefulKPIformeetingsmanagement?Thephraseisusedmuchmoreoften inthiscontext.1 Thestudiessoughttobuildthisratiothrougheconometricmeasurements analyzingtherelationshipbetweentravelspend.butissimplyacostofbusiness.  an we afford not to invest in business travel?.Return on Investment of U.S.itis difficulttoisolatethatsingletripasthesoleinvestmentwhichgeneratedthe extrabusiness.TakingaflightfromLondontoBeijingdoesnotofitselfgenerate revenue.quantification couldnotbemadebyasinglecorporationforitsannualtravelbudget.Gillespie’sGuidetoTravel+Procurement R (http://gillespie411. Travel expense productivity Return on investment in travel – does it make sense? Thelastcoupleofyearshaveseenincreaseddebateaboutwhether companiescancalculateareturnontheinvestment(ROI)theymakein travel.theeffectivenessof meetingscanbemeasuredinotherways–suchastheimprovementin delegates’productknowledge.orwhethersalespeopleworkingtowardsatravelincentive improvetheirsalesfigures.S.TravelAssociation.IHSGlobalInsightandNationalBusiness C TravelAssociation.Andevenifatripclosesasale. Ofcourse. stilllessonatrip-by-tripbasis.ROIisappropriateformeetingsbecauseameetingisa discreteeventwithnotonlyanidentifiableinvestmentprogrambutalso identifiabledesiredoutcomes.com).Allrightsreserved .Certainly.Sept. andsturdyenoughtobemeasuredrepeatedlyandaccurately.Thishasresultedfromgrowingpressureonbusinessestojustifythe significantcost—bothfinancialandenvironmental—oftheirtravelprograms.Examplesincludewhetherthoseattendinga productlaunchforanewcarbuythevehicleingreaternumbersthanthose whodonot. Intheory.an investment.

asignificantlevelofstakeholderparticipation.thatitis impracticable. not an absolute TheideaofanROIforbusinesstravelishighlyalluringbecauseitwould betheultimatestrategictravelKPI.ifthisKPItrackswithinaconsistentpercentagerange eitheracrosstimeoracrossdifferentbusinessunits.Consideralsothematurity ofyourtravelprogram.reliabledatasources(suchasaconsolidatedcorporate cardprogram)arelikelytofindthistaskbeyondthem.perhapstocontaincostsontheonehandbuttoglobalize theirbusinessandincreaserevenuesontheother.Agrosslysimplified exampleofsuchalistcouldbe: • Costcontainment • Sustainability • Dutyofcare • Governance/compliance • Traveler(oremployee)productivityandsatisfaction 17 |From numbers to action©2010byAdvito.Ifoneconcurs. Clearly.arealreadylikelytohavesome.Iftheratio fallsdramatically.therecanbemanyreasonswhichwouldexplainamarked changeinthetravelexpenseproductivityKPI.astrategicKPIprogram cannotbebuiltinanafternoon.AlthoughthisKPI ishighlysophisticated.aboveall.Inparticular.Itwillrequiretimeand effort. Assuch.norcopiedandpastedfromanother company(orthiswhitepaper.andcanproveausefultoolwhen acompanyplansnewprojects.andanappetite forsweatingdataatamoreeffectivelevel. Tips on building a strategic KPI program Step 1–Takeitseriously Aswithanyworthwhilecorporateproject.Iftheratiorisessharplybeyondthenormalrange.Itistherefore idealforchallengingbudgetholders.ThisKPIcanhelp themassesswhethertheyhavethebalanceright.Section 1 | Strategic KPIs BacktoIndex> Travel expense productivity – an indicator.Companieslackingawell-observedtravelpolicy and.thenasudden moveoutsidethatrangecaneffectivelyraisearedflag.forthatmatter!).thenit couldcreatediscussionoverwhethercertainprojectsorsalesprospects justifythecostofpursuingthem.ThisKPItrackschangeintravelspendagainstchangeinbusiness revenue(salesturnoverandneworders)overtimetoprovidearough indexofwhetheracorporation’s(orbudgetholder’s)expenditureon travelisatanappropriateleveltotherevenuethecompanygenerates.theKPIgoesbeyondthetypicalaveragepriceperspective andincludesthenumberoftripstaken—animportantprerequisiteto capturetheimpactofdemandandbehaviormanagementinitiatives.seniormanagersoften findthemselvesunderpressurefrompotentiallyconflictingstrategic objectives.indeed.thentravelexpenseproductivitymaybethenextbest thing.Allrightsreserved . Step 2–Mapoutyourcorporatestrategicgoals Createalistofyourcompany’scorestrategicgoals.30percentofthetravelmanagersintheACTE surveysaidtheyalreadyuseitandanother30percentwouldliketo deployit. Inparticular.itmayindicatetravelhasbeencuttoomuchand thecompanyisfailingtobuildrelationshipsandpursuenewsales opportunities.however.Thosewitha matureprogramshouldfinditrelativelyeasytocreatestrategicKPIs and.butatleastconstant monitoringofthisindicatordrawsattentiontothesituationand promptsaninvestigationintotheunderlyingreasons.

etc.Allrightsreserved . traveler satisfaction T • Governance/compliance–e. 18 |From numbers to action©2010byAdvito. Asademonstrationofhowthatexercisemightgetunderway. S processingofexpensereportswithinagiventime.g.reducedtripvolumes  o  ravel program goals: savings/cost avoidance.safetyandwell-being  o  ravel program goals: security/duty of care. demand management • Duty of care–ensuringtravelersecurity.Rememberalsothatevenin publiccompaniessomegoalsarenotstatedformallybutareapplied aspartofacompany-wideinitiative(e.theranking oftheirimportancetothecompanyandtheirprecisedefinitionvary significantly. Case study TheEADSscorecard EADShascreatedascorecardfortravelthatbreaksdownintothefollowing fourcategories: • Demand management–Includesnumberofvideo-conferencingsessions per€1.tounderstand thecorporation’sgoalhierarchyandseniormanagementexpectations forthepresentandforeseeablefuture.g.creatingamatrixthat mapsKPIsandprogramgoalscanalsobehelpfultomanagecomplexity.anincreasedfocuson sustainability)oremergingconcepts(e. negotiation/sourcing • Sustainability–reducedCO2emissionscausedbybusinesstravel  o Travel program goals: sustainability.youcancreatestrategicKPIstomeasurehowwellyou areperforminginachievingeachofthem.Makeaninventoryofrelevant metricsyouusealreadyaspartofmanagingtheprogramonadayto-daybasisandidentifygaps..andutilizationofvideo-conferencingfacilities •  racking spend versus budget–WeeklymeasurementforeachcostT center •  rocess effectiveness–WiderangeofKPIs.000oftravel.aspartofthiseffort.afocusoninnovationby promotingcollaboration).suchasonlineadoption.reducedtravel C processingcosts.”saysheadof extendedtravelenterpriseJamesWestgarth. P coveringentireprocessfrombookingtoexpensereclamation •  upplier performance and value-add–Includestravelersatisfaction.butisstruggling tofindtheappropriateKPIs.Section 1 | Strategic KPIs BacktoIndex> Step 3–Mapoutyourtravelprogramgoals Mapoutwhichaspectsofyourtravelprogramrelatetoyourcorporate strategicgoals: •  ost containment–reducedtravelpurchasingcosts.. demand T management.“Iwouldliketoseemetricsintroducedthat measurehowwellwearelookingaftertheenvironment.g.BecausemanyKPIssupportseveralgoals.wehave groupedthesampleKPIsbytheirprimarygenerictravelprogramgoals (Figure3).Sarbanes-Oxley.Itisthereforecrucial. Step 4 –DefinetheappropriateKPIstomeasureyourprogress Onceyouunderstandhowyourtravelprogramgoalsrelatetoyour corporategoals. EADSisconsideringaddingafifthelementtoitsscorecardintheformof travelerwell-beingandcorporatesocialresponsibility.Considerapplyingsomeofthesample strategicKPIsprovidedinfigure1togetstarted.codesofcompliance forpharmaceuticalsindustrymeetings  o Travel program goal: compliance Eventhoughmanycorporationssharetop-levelgoals..

g. EachstrategicKPIistypicallysupportedbyseveralsimpler.Section 1 | Strategic KPIs BacktoIndex> Figure 3–KPIsgroupedbytravelprogramgoal Goal Savings/ CostAvoidance KPI Policycompliance Travelmanagementservicescoverage Valueofmanagedtravel Changeintotaltravelcost Climateimpactofbusinesstraveltransport reduction Travelexpenseproductivity Travelintensity Virtualmeetingindex Changeintotaltravelcost Shareofcorporatecreditcardvolume Travelmanagementservicescoverage Valueofmanagedtravel Policycompliance Travelmanagementservicescoverage Travelexpenseproductivity Valueofmanagedtravel Climateimpactofbusinesstraveltransport reduction Virtualmeetingindex Travelmanagementservicescoverage Travelintensity Travelagencyperformanceindex Asyoucanseefromtheselection.currentperiodagainstpreviousperiod).Itmaybeveryrelevanttowhatyouaredoingbutcannotbe usedasproofofprogressagainstspecificobjectives. NotalltacticalKPIshaveconnectionswithstrategicKPIswhich arethereforeultimatelylinkedtocorporateobjectives. TomapoutwhichtacticalKPIislinkedtowhichstrategicKPIisauseful exercisetodocumentthecause-and-effectofhowacertaininitiative (e.g.travel expenseproductivity).itdoesnotmeanitshouldbe abandoned.Theseareoftenmetricsthatyoualreadyuseandhavelistedinthe inventory. “averagesegmentfare”)whichultimatelylinktoastrategicKPI(e..g. WhilethestrategicKPIswillbeusedforpurposessuchasexecutive scorecardreviews.g.thetacticalKPIsbuildupmoreofthegranularinsight atravelmanagerneedsforday-to-daycontrolandquickperformance dashboards.Theyaremetricsrelatedtoagivenbaselineinordertobe meaningful.strategicKPIsarenotabsolute numbers.tactical KPIs.. Demand Management Negotiation/ Sourcing Compliance/ Behavior Management Sustainability Security/ DutyofCare TravelerSatisfaction 19 |From numbers to action©2010byAdvito.forinstance.eitherchangeover time(e.Buteven ifameasurementcannotbelinked...adrivetomaketravelersbookearlierasmeasuredbythetactical KPI“advancedbookingratio”)caninfluenceothertacticalKPIs(e..g.changeinpriceagainstchangeinmarketindex)ora travel-specificmeasureagainstabroadercompanymeasure(e.Allrightsreserved .thisrelationshipcouldbe.changeagainsta benchmark(e.g.. “changeintotalcostoftravel”).

(Figure4).rail) Cardprovider Expensemanagementsystem Procurementtool Communityrating/Travelmanagementsocial mediatool TMC Policycompliance Travelersatisfaction Changeintotal travelcost Climateimpact ofbusinesstravel transportreduction Shareofcorporate creditcardvolume Travelagency performanceindex Even the best-defined and most carefully considered KPIs are useless if they cannot be supported by quality data 20 |From numbers to action©2010byAdvito. Bepreparedtolookinsomeunfamiliarareasfordatasources.Allrightsreserved . Formoreonsourcingdata.For example..Mostcorporationsuse avarietyofdatasourcestomanagetheirtravelspend—allwith adifferentscope. Figure 4–KPIdatasources(sampleforillustrationonly) KPI Travelmanagement servicescoverage Virtualmeeting index Valueofmanaged travel Travelexpense productivity Travelintensity Suggesteddatasource Onlinebookingtool(OBT) Travelmanagementcompany(TMC) Financialsystem Expensemanagementsystem Facilities/IT Procurementtool Externalstudies.g.Section 1 | Strategic KPIs BacktoIndex> Step 5–Identifymasterdatasources Eventhebest-definedandmostcarefullyconsideredKPIsareuseless iftheycannotbesupportedbyqualitydata.theEADStravelteamisworkingwiththegroup’sfacilities managementdepartmenttoobtaindataonvideo-conferencingforits demandmanagementKPIs.etc.levelofdetail.seepage29.marketindexreports Expensemanagementsystem Enterpriseresourceplanningtool(ERP) Expensemanagementsystem TMC OBT Travelmanagementservicescoverage Travelintensity TMC OBT Expensemanagementsystem Expensemanagementsystem Cardprovider TMC Individualsuppliers(e.forthepurposeof trackingKPIsitisinitiallyjustasimportanttoidentifywhichdatapoint intheformulaforeachKPIshouldcomefromwhichdatasource.While consolidateddataisthe“holygrail”(seeSection3).rentalcar.reliability.

2005 21 |From numbers to action©2010byAdvito.alerts Linkedtosystems Scorecard Displaysprogress Performancemanagement Monthlysnapshots Summaries Targets.Recallthat variancefromatargetrangecanbenoteworthy:IfyourKPIstrackwithina consistentpercentagerangeeitheracrosstimeoracrossdifferentbusiness units. Travelmanagerswillgenerallyfindthattheyhaverecoursetodashboards and/orscorecardsfortherepresentationoftheirKPIdata. Jan.dashboardspresent rawnews.whichisusuallypartofabroadercorporatemethodologyand isareportcardofhowagivenperson.businessunitorentityperformswith respecttocertaingoalsoveragiventimeperiod. Atrafficlightsystemisaclassicdashboardcomponent.bothpurelyvisuallyandinthecontextofoverallcompany expectationsorprecedentsfordatarepresentation.scorecards Bothdashboardsandscorecardsdisplayperformanceinformationina compactway. Useyourdatatoestablishbaseline.Section 1 | Strategic KPIs BacktoIndex> Step 6–Trackandactonthedata Stepsonethroughfivewillonlyproveworthwhileifyoutrackandact onthedata.workwithstakeholderstoestablisha targetortargetrangeagainstwhichprogresswillbemeasured. Dashboardsvs. Crucialtomakingdataactionableistheefforttomakeitquicklyandeasily understandable.isoftenmostusefulforstakeholdersinvolvedin the“nutsandbolts”oftheprogram. The Data Warehousing Institute.dashboardsneednot.placingamberflags againstKPImeasurementsthatfallslightlyoutsideanexpectedrangeand redflagsagainstmeasurementsmoresignificantlyoutsidethoseranges.whilescorecardsareeditorialsofsorts.thenasuddenmoveoutsidethatrangecaneffectivelyraisearedflag.buttherearedifferencesbetweenthetwo.thresholds Linkedtoplans Source: “Dashboard or Scorecard: Which Should You Use?”.asasetofindicatorsaboutthe stateofandreal-timechangestotacticalinformation(oftendisplayedas charts. Dashboard Purpose Usage Updates Data Context Source Displaysperformance Performancemonitoring Real-timefeeds Events Exceptions.Adashboard.Allrightsreserved .thechoiceshould bedrivenbytheneedsofthetargetaudienceforthedata.graphsorgauges).canbeusefulinpresenting KPIstoC-suitemanagement. Ascorecard.Scorecards inherentlymeasureagainstgoals.

travelmanagerscaninfluencebutnotcontrolthenumber oftripstaken.Itshouldthenbepossibletomonitor whethertheactionstakenhavebeensuccessfulbyseeingwhethertheKPIs returntotheirexpectedranges.Section 1 | Strategic KPIs BacktoIndex> Amberandredflagscanthenbeinvestigated. Forinstance.Thisshouldnothindertravelmanagersfrom proactivelyapproachingthestrategicprogramKPIsthatgobeyondtheir directresponsibility. Thetravelteamrespondstothisdatawithdetailedinvestigationsto understandwhythefareswentupandhowtoremedythesituation.reducingcompetition • Themainfareclassusednolongerexists •  naccuratefareloading I Asaresult.theyneedto identifywhoholdsultimateresponsibility.Thetravelmanager. understandandauthorizeresponses. ThegoodnewsisthatstrategicKPIsareinherentlypowerfulcatalysts foractionbecausetheyaredesignedforseniormanagementtoview.however.withthetravelmanagerasfacilitator andadvisortothebusiness.manytravelmanagersarestillnot measuredbeyondthesavingstheyachieveinindividualtripcomponents andonlineadoption. Eveninthepost-recessionlandscape.ForeachKPI.boththroughquantitative andqualitativesources.Among thereasonsforincreasesittypicallydiscoversare: • Negotiationsshouldhavebeenmoreaggressive • Anairlinehasquittheroute.theKPIsoftravelintensityandvirtualmeetingindexare typicallycontrolledbytheactions(andnon-actions)ofdepartmentheads orbusinessunitleaders.Atravelmanagercan—andshould—playtheroleof a“processowner”whoensuresthatthebiggerpictureisbeingaddressed andmanagedfromatotalprogramperspective. Suchdialoguewithkeystakeholders.remedieswhichcanbeappliedinclude: • Betternegotiation • Re-configurationofbookingtooltoreflectnewbookingclass • Loadingofcorrectfares • Bettercommunicationwithtravelersaboutwhichairlinetouse 22 |From numbers to action©2010byAdvito.promotesoverallprogramstrengthand highlightsthevaluethattravelmanagementcanbringtothecorporation. Case study EADStakesactiononhighfares EADSregularlysummarizesitstoptenaveragecity-pairfareincreases.canusetheKPIto discusswhatdrivestravelerbehaviorandrecommendwaystoimprove performance.tounderstandwhathascausedthevariationfrom theexpectedrange.Qualitativesourcescouldincludetalkingtocolleaguesinlocal markets.Allrightsreserved .Quantitativesourceswillmostlikelyincludescrutinyof tacticalKPIs.

Consequently.com).  Anadditionallimitationisarelianceonaforecastedorexpected definitionof“price. Stage 1–Layeredmeasurement Thekey. so savings measurements naturally feature among their strategic KPIs.Thisanimportantdrawback.see F Savings Metrics. Goingfurther. Theimportanceofunderstandingtheoptionsofhowsavingsmaybe defined.indexingcreatestwochallenges: •  hatistherightindex?Thelevelofgranularitycanmakeabig W difference. Thatmaysoundobvious.Knowinganaverageticket priceis$200.forexample.3 3 savingsmeasurementswhicharemeaningful.29.travelmanagerscanapplygenericprocurement/finance measurementapproaches. Change in price against change in market index Averagefaresandhotelratesaresubjecttomarketdynamicsandvolatile unitpricesresultingfromyieldmanagement(eitherthroughactualprice fluctuationsorinventorymanagement).andofunderstandingtheimplicationsandprosandconsof thedefinition(s)yourorganizationchooses.Thismeansthat“savings”whichbeatthe marketbutarenot“realsavings”arereferredtoas“costavoidance.e.ForaccommodationinNewYork. Rat Farms and KPIs Gone Bad. 2.2010. 23 |From numbers to action©2010byAdvito. Asastartingpoint.forexample.thecasecanbemadethatsomeKPIsarepotentiallycounterproductive.cannotbeoverstated.restrictedavailabilityandother factorsoftencreatingamajordifferencebetweennegotiatedprices andactualprices.willvaryfromcompany tocompany—butyourprogramwillbenefitfromyourawarenessofyour choicesandtheirconsequences.” Eitherway..ontheotherhand.atbest.Gillespie’sGuidetoTravel+Procurement (http://gillespie411.wordpress. isuseful.(averagepreviousprice–averagecurrentprice)x C currentunits) Thisisanattractivemeasurementbecauseitiseasytomake.”Oftenprocurementtracksthenegotiatedprice  oranexcellentintroductiontocommonsavingsdefinitionsandtheirimplications.However.Jan. these measurements need to be the right measurements—ones which provide true insight into whether the actions the company is taking are reducing the cost of travel.since itmeansthatsavingsmighthavebeenachievedonpaperonly. 1.Section 2 | meaningful savings measurement BacktoIndex> Cost containment is a primary strategic objective at most corporations.allhotelsinthestateoran evenbroaderbase? •  anyfinancedepartmentsinsistonastrictsavingsdefinitionofa M bottom-linepricedecrease.amorerealistic perspectivecanbeobtainedbylinkingachievedfaresandratestoan indexshowingotherpricesbeingpaidinthesamemarket. businesshotelsinthewholeofNewYorkCity.butinrealitybusinessesdonotalwayscreate ratherthanactualpriceachieved.isnotparticularlyhelpful.butits lackofcontextmakesitoflimiteduseinisolation.doyoumake yourindextheaveragedailyrateforupperupscalehotelsinManhattan.Withtravelbeinga recurringdemandthislookslikeagoodapproach(andisoftenmandated bythefinancedepartment).therefore.especiallyforastakeholderina hurryandwithoutfullunderstandingofthepricedriversintravel. However.Allrightsreserved .with travelerpreferenceandbehavior.Theycandrivebuyingbehaviorthatpushesupthecostoftravel asbuyersorbudget-holdersmakedecisionswhichhelpthemmeettheir targetsbutarenotbeneficialoverallforthebusiness.wesuggesttrackingbothmeasurementsandbeingconsistent inthewayapricechangeismeasuredandpublished.tomeaningfulsavingsmeasurementistoprovidecontext.themeasurementcanbe deceptivebecausecomparingspendyear-over-yearormonth-over-month givesanillusionofmeaningfulcontext.  hange in price(i.Knowingyouhadthe potentialtobringitdownto$180butonlyachieved$200. Inturn.Evenknowingthat lastyearitwas$250isnotnecessarilyhelpfuleither.The “perfect”definitionmaynotexist—or.

380 3.760 117.000 77.000 115.000 2.000 21.420 44.53 94.484.000 369.47 -12.48 -1.000 377.700 -29.106.500 105.100 127.514.356.400 -107.619.056.000 -52.Section 2 | meaningful savings measurement BacktoIndex> Case study HowNestlémeasureshotelsavingsthroughvolumevariance andmarketindices Nestléistheworld’sleadingnutrition.24 -13.284.592.500 -46.200 -7.46 2.200 2.51 -1.150 Costevolution duetoprice variance -26.510 •  olume variance–Howmanyroomshasthecompanybookedatthat V destination?“Iflastyearwehad17percentfewerbookingsthanthe yearbefore.340 165.340 Totalrevenue‘08 50.000 8.48 363.500 -27.thatwillhavehadaneffectonsavingsbecauseitmeantwe didnothavethevolumetonegotiateforthisyear.107.076.300 -17.893.760 6.000 2.51 -1.30 -26.000 398.500 1.000 -72.220.714.000 2.294.576.54 2.880 10. •  arket index–ThistrackshowNestlé’saveragenegotiatedrateata M destinationcompareswiththebenchmarkedaveragenegotiatedrate achievedbyotherbuyers.200 2.40 22.688.”saysBrendaMiller.600 497.70 3.976.50 -9.005.200 279.00 -86.16 -396.76 -419.800 -536.800 200 400 600 1.153. globalmanagerfortravelandmeetingserviceswithNestlé.000 32.400 9.000 124.54 4.50 36.100 -39.300 1.45 -7.260 Definitions: Market index development =currentmarketindex-previousmarketindex Volume variance=(currentroomnights-previousroomnights)xcurrentprice Roomnights (total) Jan-Jun‘08 240 60 60 50 600 900 80 1.800 9.000 -64.Allrightsreserved .41 Addedvalueof procurement 27.670 960 -1.62 66.60 -30.S.57 50.IfNestléisalreadyachievingagoodrate relativetoitspeers.dollars) Market /Destination SYDNEY SHANGHAI CAIRO DELHI SEOUL BRUSSELS COPENHAGEN PARIS FRANKFURT BARCELONA LONDONUK MEXICOCITY VANCOUVER HOUSTON NEWYORK Average RNprice Jan-Jun‘09 160 168 134 94 235 185 178 199 147 164 155 164 128 185 205 Average RNprice Jan-Jun‘08 212 167 96 130 175 275 270 242 193 187 199 153 147 163 276 Roomnights (total) Jan-Jun‘09 500 50 70 40 500 800 700 2.651.005.120 -1.500 148.43 -28.730 Costevolution duetohotel industry priceevolution 1.600 363.900 -79.Itthenadds twoindicestogivethefiguresmeaningfulcontextandcalculatethevalue createdbytheeffortsoftheprocurementdepartment: Figure 5–Nestlésamplehotelsavingsmatrix(AllfiguresinU.000 140 300 780 1.500 21.34 7.315.920 Cost evolution due to price variance=(currentprice-previousprice)xcurrentroomnights Costevolutionduetohotelindustrypriceevolution=(previouspricexmarketindexdevelopment)xcurrentroomnights Added value of procurement=((previouspricexmarketindexdevelopment)-currentprice)xcurrentroomnights 24 |From numbers to action©2010byAdvito. Itstravelprogrammanagementprovidesamatrixofitsyear-on-year incrementalroomratesavingsineverydestinationworldwide.000 50 2.34 -305.500 147.200 10.407.000 247. Marketindex development 1% -13% -6% -21% 4% -3% -4% -2% -5% -7% -8% 15% -1% 0% 1% Volume variance 55.660 -1.500 167.180 14.54 130.179.600 671.healthandwellnesscompany.500 600 2.55 57.523.800 51.440 30.140 331.thenitcannotexpecttoseeitsaverageratefallas fastastherestofthemarketinthenextroundofnegotiations.59 Totalrevenue‘09 80.200 -127.157.”Millersays.800 13.800 374.200 56.38 -5.200 111.311.548.584.00 450.020 5.221.400 242.“The newratewillstillbebetterthantherestofthemarketbutthesavingis notgoingtobeasmuchincrementally.600 13.16 -3.

Allrightsreserved .itisimportanttodefinerelatedmetricsandachieveconsensus onhowtheymightbeconsideredinthesavingframework. Sourcing performance metrics (e.Itisimperativetounderstandthe overlapandavoiddouble-countingthesuccessachieved.looking atnegotiatedunitpriceisinanycasebecominganincreasingly anachronisticformofanalysis. using e-auctions. 25 |From numbers to action©2010byAdvito. Behavioral savings Theaimofbehaviormanagementistoimprovecompliancetopolicy and—ideally—toachieveresultsbetterthanpolicy.g.thenumbersalsoshowthevaluewebringtothecompany’s travelprogramratherthanjusttakingadvantageofthedownturn.butsincebudgetairlinesdonotusuallyoffer corporatediscounts.  Published unit price versus negotiated unit price Thismeasurementpotentiallyencouragesbuyerstoworkwith high-marginsupplierswhohavethegreatestcapacityforoffering discounts.Thecorporationmightobtainfarlowerpricesbyusing alow-costcarrier. Withmostorganizationswithsignificanttravelspendhavingmature preferredsupplierprogramsandminorincrementalsavings. Withincreasinglysophisticatedyieldmanagementtechniques andtheincreasingprevalenceofbestavailablerates.givea muchmoreaccuratepictureofhowherdepartmentisperforming. butcanbemisleadingifitinadvertentlyrewardsbuyersfor concentratingonthehighest-pricedfareorratecategorieswherethe potentialforobtainingdiscountsisgreatest. Onepointofcaution:Oftensavingsareclaimed“predictively”following negotiation.On theotherhand.) Thesespecificmeasurementsarehelpfulforassessingwhatimpact theprocurementprocesshadinachievingalowerprice.thebuyerwouldnotberecognizedorrewarded.“Inthe firsthalfofthisyear. discounts achieved by changing requirements.whichshealsousesforairtravel.“Thatincreasedaccessfortherestofthemarket tolowerfaresandbroughtaverageticketpricesmuchclosertothegood fareswewerealreadygetting.airlinesmademorefaresavailableinlowerbusinessclassbuckets. etc.Thenumbersweprovideexplainedthat.Section 2 | meaningful savings measurement BacktoIndex> Millerbelievesthetwoindices.Asthesesavingsfalloutsidetraditionalprocurement metrics.Savingsthrough behaviormanagementthusrefertoequippingtravelerswiththetools andmotivationto“dotherightthing.”shesays.” 3. onceagaintherearepotentialpitfallstobeawareof:  Unit price of old contracts versus unit price of new contracts Thismeasurementtracksthelevelofdiscountbuyershaveobtained.However..the potentialthatcanbeachievedthroughbehaviormanagementis significant.Behavioralsavingsinitiativeswilltendtohelpyourealize thesavingsyou’vealreadyclaimed.” Travelmanagerscancomplementsupplierprogramswithbest availablemarketprices(alsoknownas“spotairfares”and“spothotel rates”).initiateprojectstoincreasetheadvancebookingratioandrun educationandawarenessprograms.

but… •  hereisabigdifferencebetweenclaimingnegotiatedsavingsand T actualsavings.Thereportincludes: • Ticketsissuedwithinsevendaysoftravel • Lowestfareswithinpolicynotaccepted •  issedroomnights–i.becauseprocurementhasnotbeeninvolved inmakingdecisionsonwhethersomeoneshouldtravelornot. Traditionally.forexamplethroughencouragingvideoconferencing andothertravelalternatives.Howcanonedemonstratethat aspecificprocurementortravelmanagementprojectreallyled tosendingonlyoneemployeetoameetinginsteadofseveralor replacingthattripwithavirtualmeeting? Forthetimebeing. •  avingscriteriaalwaysneedtobeclearedwiththefinancedepartment S inyourorganization–sometimescostavoidancecanbeclaimed. Demandmanagementappearstobemakinganimpact.Forexample.e.whentravelershavebookedaflightinvolving M overnighttravelbutnotbookedahotelroomaswell • Onlinebookingadoption Itmaysoundobvious. sometimesnot! 26 |From numbers to action©2010byAdvito.Section 2 | meaningful savings measurement BacktoIndex> Demand management Butalloftheabovecontextualizationstillfailstopresentacomplete savingspicture. Case study Nestlémeasuressavingslostthroughtraveler behavior NestléprovidesadashboardreporttoC-levelexecutivesdetailinglost savingsowingtotravelerbehavior.“savings”consideredattributabletodemand managementaretypicallycategorizedas“costavoidance”butthey remainimportanttotrackaspartofthetotalcostperspective.butitis animpactthatishardtoquantify.Allrightsreserved . Suchattitudesarenowchangingwiththeevolutionofdemand management.whataboutdemandmanagement?Most ofthediscussionabovehasbeenaboutcostpertrip.Some ofthestrategicKPIsprovided.butthenumber oftripsacompanymakesaffectsitsleveloftravelexpenditureeven moreprofoundly.numberoftripshasnotbeenconsideredrelevantto savingsmeasurement.suchastravelexpenseproductivity.. travelintensityandvirtualmeetingindexwillhelpcompaniesget closertoprovidinghardfacts.

Totiethemtogether.theactionsoftheprocurement departmentandthebehavioroftravelers. Figure 6–KPIhierarchy:Savings StrategicKPIasfeaturedinthiswhitepaper Other/TacticalKPI Savings/CostAvoidance NetCostofServiceRatio ValueofManagedTravel ChangeinTotal TravelCost Savingsagainst MarketIndex ChangeinAverage CostperTrip TravelIntensity OnlineAdoption Rate TravelManagement ServicesCoverage CashDiscounts EconomyClass Ratio AdvanceBooking Ratio VirtualMeeting Index Changein NegotiatedPrice PolicyCompliance Process Efficiency 27 |From numbers to action©2010byAdvito. Theseincludemarketdevelopments.Lookingatthebigpicture makesitclearthatmanyofthestrategicKPIsdiscussedearlierinthis whitepaperaredirectlyorindirectlyrelevanttoachievingsavings. Theyincludeeverythingfromonlineadoptionratetousageofvirtual meetingstopolicycompliance.bothinternalandexternal.trueunderstandingofsavingscanonlybeachieved bymeasuringnumerousinfluencingfactors.Section 2 | meaningful savings measurement BacktoIndex> Stage 2–Puttingitalltogether:thesavingsKPIhierarchy Ashasbeenseen.Allrightsreserved Sourcing Behavior Management Demand Management .itisusefultomapthemoutasahierarchy.An exampleofsuchahierarchythatincludesstrategicandtacticalKPIsis includedinFigure6.

e.judicioususe ofKPIsandanunderstandingthatsavingshavetobemeasuredfrom multipleperspectivescangivebuyersmorethanenoughvisibilityto reducecostwithintheirorganization.EADStakesatop-downapproach.demandmanagementand fareriseinvestigations–howEADSmeasures itssavings LikeNestlé. Itshouldbeclearbynowthatthequestforaperfect. •  ransactioncost–e.forexample.usageofrestrictedticketsandnumber ofhotelbookingsinpolicy.Onlineadoption ratecould..Allrightsreserved .sustainability. “Financialcontrollersarewellawareofwhatthetargetsare.20/20visionof savingsisonethatcanneverbefullyachieved.includingaveragetime betweenbookinganddeparture.e.LikeNestlé. initiatives and company culture 28 |From numbers to action©2010byAdvito. U thereissignificantfocusonbookingbehavior. Tracking spend versus budget Primarily.“Wefinditmuchmore meaningfulifthegroupsetstargetsforhowmucheachbusinesscan spendontravel. Case study Budgettracking. The structure of the hierarchy will depend on an individual company’s priorities.) Thisillustrationisalsosimplified.travelersatisfaction.Anyduplicationishighlightedinthe travelers’itinerariesanditisloggedifoneofthemcancelstheirtripin consequence.EADScollectsdataonuseofvideoconferencingandhasalsointroducedaprogramtotrackwhether twopeoplefromthesamecost-centeraretravelingtothesame destinationonthesameday.However. strategy.beplacedunderBehaviorManagement.readersmayrightlynotethatthereare potentialoverlapsintheassignmentofKPIsto“foundation”categories (i.initiativesandcompanyculture.Section 2 | meaningful savings measurement BacktoIndex> Thehierarchicalapproachillustratedhereforasavings/costavoidance strategicobjectivecanofcoursebeappliedtoallstrategicobjectives (i.BehaviorManagement).ProcessEfficiency.therearesomedistinctiveaspectstotheEADStravelsavings strategy.etc.g.The structureofthehierarchywilldependonanindividualcompany’s priorities.”saysheadofextendedtravelenterpriseJamesWestgarth.onlineadoptionrate(bookingofflinegeneratesa T higherTMCfee) •  ffectivemanagementofdemand–attemptingtoquantifyhowmuch E issavedbyeliminatingtravel...Wemeasure whethertheyhitthem.strategy.” Cost analysis EADSdividesitscostanalysisintothreecategories: •  nitcost–thetraditionalareaoftravelmanagement.

This section outlines some of the most important points for dealing with these logistical tasks. then combining and managing it is therefore an essential part of a strategic travel team’s job description.Allrightsreserved Ac cou nts pa yab le Ot he r .S. 86.AssociationofCorporateTravelExecutives. Sourcing data Oneofthechallengesfacedbytravelmanagersisthattheyhavetocoordinatefeedsofdatafrommultiplesources.8% 18. Corporatecardprovider(86percent)andTMC(82percent)arethemost popularsourcesbuttravelexpensemanagementsystem(59percent) andaccountspayable(50percent)arealsousedbyatleasthalfof respondents.-basedglobalcompanieswithmature travelprograms)carriedoutinApril2010provesthepoint(Figure7). Sourcing data.8% 50. combining and managing data BacktoIndex> Creating actionable intelligence is only possible if the travel manager has access to clean.April2010. Figure 4–Whatareyourprimarysourcesoftravelexpensedatafor reportingandbudgeting?Checkallthatapply.4% 81.2% ER Ps Cre yst em dit ca (fr rd om Ge ne ral Le dg On er) lin eb oo kin gs yst em Tra Tra vel vel ex ag pe en nse cy MI m S an age me Sp nt en sys dm tem an age me nt sys tem Source: Surveyofcorporatemembers.Section 3 | Sourcing.ThesurveyofACTEtravel buyermembers(mostlyfromU. comprehensive data. 29 |From numbers to action©2010byAdvito.0% 31.

somedegreeofprioritizationisalsonecessary: selectamastersourceforeachdatapointthatdrivesaKPIandthen selectothersourcestoprovidecomplementaryinformation.Asanexample—leavingasidedataconsolidationcapabilities.formanyreasons.especiallycomparedwithcentral billingaccounts(alsoknownaslodgecards).However.andsomecardshavebetter levelsofacceptancethanothers.manyprograms—evenifthey offercorporatecards—cannotmandatetheiruseandthusmissout onimportantspendinformation.therecan. Case study WhereEADSsourcesitsdata Initially.Also.Ifahighpercentageofspend isnotdirectedthroughthesetwochannels.video-conferencingutilization Itisthereforecriticaltoconsolidatedifferentdatasourcestoobtaina fullpicture.” However..personnelhierarchies • Travelerdata:e.g.”saysNestléglobalmanagerfortraveland meetingsBrendaMiller.satisfactionsurveys • Facilitiesdata:e.begapsandoverlapsinthosesources’ coverage. thetravelmanagementcompanyprimarilyprovidesdatabasedon bookingsmadeviatheagency..“Travelhas abigadvantageoversomeotherprocurementcategoriesbecausewe havegreatdatasuppliers.anyattemptstoanalyze andactupondatawillproveanuphillstruggle.Thedetailprovidedby individualplasticcardsisoftensparse.g.Section 3 | Sourcing.Allrightsreserved . Andevenacardcannotoffereverything.benchmarkedspendingofpeercompanies.forexample.theEADStravelteamgathereditsdatafromthreeprincipal sources: • Pre-trip:ReservationsdatathroughTMCandonlinebookingtool • Ontrip:Corporatecard • Post-trip:Expenseprocessingprovider Ithasnowaddedfourmorecategoriesofdata: • Technicaldata:e.g. 30 |From numbers to action©2010byAdvito.Theexpensemanagementsystemis thesourcethatshouldhavethebroadestviewontravel-relatedspend information. Data for negotiation Themoresophisticatedtypesofspendandsupplieranalysisrequire companiestosynthesizedataabouttheirownexpenditurewithexternal information.thereiseverychanceofsuccess.e.asthesurveyindicates..onlinebookingresponsetimes • FinancialandHRdatafromERP:e. Combining data Eventhoughtravelmanagershaveaccesstosomeexcellentsourcesof data.g.Sothissourcemissesmostoftheon-trip expensessuchasmealandtaxi.butunfortunatelyoftendoesnotprovidesufficientdetail.Thisleadstosometravelrelatedexpensesbeingmissediftheyare. combining and managing data BacktoIndex> Workingwithinternalsourcescanbeproblematicbecauseexpense categoriesoftenvaryacrossthebusiness..managersofmaturetravelprograms usuallyhaveaccesstohigh-qualitydatafeedsthroughthosetwocrucial externaldatachannels—cardandTMC.g.labeledas “training.oreven airlineschedules..Ifahighpercentage isdriventhroughthem.

ortospecialisttraveldataconsolidatorssuchas TRXorPrism.andthencreateanalgorithmto providearangeofnegotiatingoptions.butonemajoradvantageisthatthefinalproductis guaranteedtobecompliantwithinternalprocesses.suchasanERPsystem. Yetanotheroptionistocreateahybridtheotherwayround. Theirflexibilityandsecuritystandardsareofanacceptablestandardfor mostcorporations. Ifthatisthecase.However.butitneedsfunctionalskillstodelivertherightreports ontime.” Analyzing data Addedtothequestionofoutsourcingdatamanagementisthequestion ofwhetheratravelteamhasenoughexpertisein-housetoanalyzeits data.“Thebestanswerforusistohavethedatawarehouse createdinternallybutmanagedexternally.However.usuallyinwhatiscalledadata warehouse.notonlydoestheoutsourcedpartyneedgood technicalskills. Hybrid Ahybridsolutionisforathirdpartytobuildandhostthedata warehousebuttomanipulateandcontrolitin-house.extraresourceswill beneededeitherwaytosupportaninternalsolution.thenfeedinglinksfromkeytravelproviderscanbe straightforward. combining and managing data BacktoIndex> Data warehouses – the options Travelbuyerswhousemorethanonesourceofdataoftenconcludethey needamechanismtocombinethem. requirepowerfulanalyticalenginesandscenariomodeling.Thiscanbedone throughasoftware-as-a-servicelicense.anoption favoredbyEADS.However.”says EADSheadofextendedtravelenterpriseJamesWestgarth.whichis thepossiblereluctanceofotherdatasupplierstohandoffdatatothe outsourcedprovider.butonceinplaceitpaysfor itselfrepeatedly.“Ican’temphasizehowimportantadatawarehouseis.discountdata.Settingthisupcouldbe slowandcostly. Outsourced Thistaskcanbehandedtoanexistingtraveldatasupplier.whetherstandaloneoraspartofalargerdatawarehouse.bewareofonepotentialproblem.Oneadvantageofoutsourcingisthatthirdpartiesare subjectmatterexpertswhoarefasttoimplementandarewellaware ofthepitfallswhichobstructthepathtoaccurate.” Therearethreebasicoptionsforcreatingadatawarehouse: In-house Thiscouldbeastand-alonedatawarehouseoritcouldbeonealready usedforotherfunctionswithintheorganization.Allrightsreserved .“Iamvery interestedinoutsourcingourdatamanagementbecauseitisnotacore competence.andthetraveldatawillbereportedonthecompany profitandlossstatementsasalineitem.”saysWestgarth.Section 3 | Sourcing. 31 |From numbers to action©2010byAdvito.consolidateddata.suchasa TMCorcardprovider.Many buyersconcludetheycannotperformsuchtasksaloneandturntoa consultancywhichcanintegrateflightscheduledata.suchasforairlinecontracting.Someofthemostdetailedanalyses. marketforecastandairlinecostdata.Itworksparticularlywellifthe travelteamincludesadedicateddataanalyst.“Thereisan initialinvestmenttogetitupandrunning.

forexample. 2. companies often find it useful to compare performance between business units internally. Therearenohardandfastruleshere.butalsowithin organizations—businessunitagainstbusinessunit. Wehopethiswhitepaperwillactasacatalysttoconvertthatvicious circleintoavirtuousone.  nitiateactionstoclosethegapswhereyouidentifyyour I performancelagsbehindyourpeers.cancomparisons everbemeaningful? Theskepticismcouldarguablybeevengreaterforbenchmarkingof strategicKPIs.Beawarethatthedefinitionofpeermaychange accordingtothepracticeyouwanttobenchmark.someofthestrategicKPIsmayprovideabasisforhelping youselecttherightpeergroupandmakebenchmarkingmoremeaningful.butthestartingpointcouldbe someofthestrategicKPIsoutlinedinSection1.Thisisnotjusttruefor companiescomparingthemselveswithothercompanies.Whileformalandinformalsharingofbest practiceforprocessiswidelyrecognizedasextremelyvaluable.Butthisisaviciouscircle:one reasonnotmanycompanieshavestartedproducingstrategicKPIsis thattheyhavefewrolemodelstocopy.Ideally.Thiscreatesadoublebarrierofpotentialincompatibility: differentstrategicaimsanddifferenttravelprogramconfigurations.feelings aremoremixedaboutdata. Benchmarkingtravelprogramsbetweendifferentcorporationshasa longandcomplicatedhistory.Allrightsreserved AdvitobelievesbenchmarkingstrategicKPIswouldbeextremely beneficialforcompanieswithmaturetravelprograms.benchmarkingisafour-stepprocedure: 1. and they also like to make comparisons externally with peer companies. Turning a vicious circle in a virtuous one OnereasoncompanieshavenotbenchmarkedstrategicKPIsisthat therearestillnotmanywhichtrackthem.  ompareyourownbusinessperformanceagainsttheanalysisofthe C peercompanies. Comparisons of this nature— especially externally—are known as benchmarking. such as historical comparisons and market perspectives.On theotherhand.the purposeofstrategicKPIsisnottoproduceabsolutefiguresbutanindex orarangeagainstwhichtomakecomparisons.includingcomparingstrategies.) . In addition.final word | the role of benchmarking in strategic performance management BacktoIndex> As the section on measuring savings demonstrated. 4. Mapoutyourownexistingbusinesspractice. They need context.Withsomanyvariables.similarspend.similarpolicy.namely: • • • • • • • • • • Travelmanagementservicescoverage Virtualmeetingindex Valueofmanagedtravel Travelexpenseproductivity Travelintensity Policycompliance Changeintotaltravelcost Climateimpactofbusinesstraveltransportreduction Shareofcorporatecreditcardvolume Travelagencyperformanceindex (Seepage4foradefinitionofeachofthesestrategicKPIs. Atitsmostbasic.processesandperformance.itwillencouragemorecompaniesto createstrategicKPIsandtheywillprovetherolemodelforstillmoreto joininwiththem.).Ofcourseeach companyhasadifferentstructureandstrategicpriorities.  nalyzethebusinesspracticeofpeercompanies(similarindustry A sector.similargeographic spread. Therearenumerouswaysinwhichcompaniescanbenchmarkagainst eachother.However. measurements cannot be looked at in isolation.similarsize. 3. 32 |From numbers to action©2010byAdvito.etc.

final word | the role of benchmarking in strategic performance management BacktoIndex> Conclusion Benchmarkingisperhapsthelastlinkinachainwhichrunsthroughout thiswhitepaper.Theyensuretheprogramremainsrelevantand appreciatedbyseniormanagement.Allrightsreserved .However.Travel doesnotexistinitsownbubble. StrategictravelKPIsareimportantforpreciselythisreason.Assuchthis whitepapercanprovideaframeworkandsomefoodforthoughtbut shouldnotbeseenasablueprintthatcanbeappliedidenticallyfor everyorganization. Widerstill.EADS. Association of Corporate Travel Executives Costs generated by travel affect profitability significantly and therefore it is important to find accurate ways of measuring those costs and monitor how successfully they are being contained 33 |From numbers to action©2010byAdvito. cangaugewhethertheleveloftravelexpenditureisappropriatefora company’srevenues.Atthesame time.BrendaMiller.asiscompliance.Nestlé.allowingtravelmanagerstomaintain optimumperformancemanagementoftheirtravelprograms.AdvitofirmlybelievesthatstrategictravelKPIsaretheglue whichjoinatravelprogramtothecorefunctionsofthecompanythat theprogramserves.Itisavitalfunctionwhichensuresa companyconstantlyrenewsitself.actionable insightintohowacompanyisrun.whetherintermsofseekingnew marketsandcustomersordevelopingnewproducts.JamesWestgarth. Thatsaid.thecostsgeneratedbytravelaffectprofitabilitysignificantlyand thereforeitisimportanttofindaccuratewaysofmeasuringthosecosts andmonitorhowsuccessfullytheyarebeingcontained.Issueslikesustainabilityanddutyofcarearealsoattheforefront ofboardroomagendas. Itisworthrepeatingthecautionarynotethateffectiveperformance managementrequiresahighdegreeofstakeholderparticipationduring thedesignphase.Theyalsoprovideapermanently evolvingagendaforaction.forexample.Itaddsyetanotherlayerofcontexttodataand remindsusthatgooddataisallaboutachievingdeeper.ThetravelexpenseproductivityKPI.Italsoneedstobefullyalignedwiththeperformance managementframeworkandterminologyusedinthecorporationand linkdirectlytothecompany’sspecificgoalprioritization.nocompanycanmeasureitprogresspurelyinfinancial terms.theyarenottheonlyimportantstrategic financialindicator. Theprioritizationofcostcontainmentwhichcharacterizescorporations indevelopedmarketsmeanssavingsKPIsareperhapsthefrontlineof strategictravelKPIs.  Acknowledgements Advitowouldliketothankthefollowingforthesignificant contributionstheymadetothiswhitepaper: ScottGillespie.Eachoftheseissuesaffects travelandtherearestrategicKPIstomeasureallofthem.

BCD Holdings N. The BCD Holdings companies are BCD Travel (global corporate travel management). VakantieXperts (leisure).bcd-nv. 34 |From numbers to action©2010byAdvito.com. For more information. Airtrade (consolidating and online travel).com advice@advito. a Dutch family-owned company founded in 1975 by John Fentener van Vlissingen. procurement and outsourcing services that guide clients through a complex travel environment. visit: www. is a market leader in the travel industry..advito.$ 14.BacktoIndex> For more information please contact Six Concourse Parkway NE.000 people and operates in more than 90 countries with total sales. unbiased counsel and a customized approach for every client and every engagement. owned by BCD Holdings N. including franchising. Advito is headquartered in Atlanta and London and operates in key business markets around the world. Advito’s focus on consulting delivers proven value. of U. Park ‘N Fly (off-airport parking). GA 30328 www. BCD Holdings employs approximately 13. Atlanta.com About Advito Advito provides travel-management advisory. Advito is an independent operating unit of BCD Travel.S. TRX (travel transaction processing and data integration). together with industry expertise and access to data to drive quantifiable decision-making.8 billion.V. Vayama (online travel USA) and Parkmobile International (mobile parking and traffic applications). the world’s third-largest travel-management company. Suite 2400. About BCD Holdings N.Allrightsreserved .V.V.

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