Travel & Entertainment
Technologies and Services
Overcoming Obstacles Through Data Insight
As reported in previous Aberdeen reports, Travel and Entertainment (T&E) expenses are significant within most enterprises. T&E is still an area of priority according to the 435 survey respondents. The top factor, according to 54% of enterprises, continues to be the reduction of corporate spend on T&E, and this is likely to remain as the major reason for T&E related initiatives.
This report explores the strategies and intentions enterprises have around: online booking, corporate card programs, expense management solutions and travel management companies (TMCs).
One of the key areas of focus is the access to and value of T&E related data. Data around corporate travel and entertainment is the key to monitoring compliance to policies which, in effect, drives negotiations and better deals with travel suppliers.
Best in Class Performance
Two key metrics used to determine Best in Class performance include the rate of compliance to corporate T&E policies and the adoption rate of preferred TMCs or online booking tools. As a result we were able to determine additional performance improvements in the following areas and more:
• Seventy-three percent (73%) of Best in Class enterprises have a consolidated T&E program in place, compared to 50% of others.
• Eighty-four percent (84%) of Best in Class enterprises have established T&E policies, processes and tools across the enterprise.
Business Value Findings
In the corporate T&E world, data is king. Data around flights, hotels, car rentals, meetings and many other categories drive corporate policies and affect leverage with suppliers.
• Eighty-five percent (85%) of respondents said data extracted from an expense management solution was essential or important to managing T&E.
• Eighty-eight percent (88%) of he respondents report that data is essential or important to monitoring spending patterns.
• Eighty-eight percent (88%) said that easy access to data and reports is essential or important to achieving savings around T&E.
• Consolidate or implement tight integration of T&E data sources to deliver accurate and complete intelligence.
• Establish key performance metrics by analyzing and identifying the greatest opportunities to generate costs savings. Equally important is developing strategies to improve the metrics. • Leverage enhanced travel data, such as city pairs, trip legs and hotel folio detail to ensure
Table of Contents
Executive Summary ... 2
Best in Class Performance... 2
Business Value Findings ... 2
Required Actions... 2
Chapter One: Benchmarking the Best in Class... 4
Driving Factors and Strategic Actions... 4
Maturity Class Framework... 4
Discounts and Booking Transaction Costs... 5
Best in Class PACE Model... 7
Chapter Two: Business Value Findings... 8
Data is King... 8
Competitive Assessment ... 10
Organizational Capabilities and Technology Enablers... 11
Chapter Three: Required Actions... 13
Laggard Steps to Success ... 13
Industry Average Steps to Success... 13
Best in Class Steps to Success... 13
Featured Underwriters... 15
Appendix A: Research Methodology ... 18
Appendix B: Related Aberdeen Research ... 21
FiguresFigure 1: Strategic T&E Actions... 5
Figure 2: Discounts by Company Size ... 5
Figure 3: Booking Transaction Costs... 6
Figure 4: Methods of Booking Travel... 6
Figure 5: Importance of T&E Data Sources... 8
Figure 6: Importance of Data in Accomplishing Key T&E Related Activities... 9
Figure 7: Actions/Strategies that Contribute to Savings Around T&E ... 9
Figure 8: Responsibility and Oversight for T&E Processes... 11
Figure 9: Current and Planned Usage of Technology and Service Providers ... 11
Figure 10: Using One Technology Vendor vs. Multiple Vendors Across All Sites ... 12
TablesTable 1: Companies with Top Performance Earn Best in Class Status... 4
Table 2: Best in Class PACE Framework... 7
Table 3: Competitive Framework... 10
Table 4: PACE Framework... 19
Table 5: Maturity Framework ... 19
Benchmarking the Best in Class
Driving Factors and Strategic Actions
Within the Travel and Entertainment (T&E) category, often a large expense item for enterprises, there are a number of technologies and/or services being used. Namely, online booking tools, expense management solutions, corporate card programs and travel management companies (TMCs). These are often looked at in individual silos with different organizational responsibility over them. However, one of the challenges facing enterprises today is the consolidation and aggregation of these various data sources and tools.
Before exploring this further, it’s important to look at some of the overarching factors that are driving improvements and strategies around T&E expenses. The top factor, according to 54% of enterprises, continues to be the reduction of corporate spend on T&E, and this is likely to remain as the major reason for T&E related initiatives. Second to that is an overall effort to centralize and control major areas of corporate spend (including categories like print, contract labor, telecom, etc).
Maturity Class Framework
As mentioned throughout the study, Aberdeen categorizes respondents into three buckets, Best in Class, Industry Average and Laggards. Table 1 shows the metrics that were used to determine which enterprises fall into those buckets.
Table 1: Companies with Top Performance Earn Best in Class Status Definition of
Maturity Class Mean Class Performance
Best in Class: Top 20% of aggregate performance scorers
•89% averagecompliance to corporate travel policies
•Over 85% adoption of preferred TMC or Online booking tool Industry Average:
Middle 50% of aggregate performance scorers
•70% average compliance to corporate travel policies
•50-85% adoption of preferred TMC or Online booking tool Laggard:
Bottom 30% of aggregate performance scorers
•55% average compliance to corporate travel policies
•20-50% adoption of preferred TMC or Online booking tool
Source: Aberdeen Group, 2007 To better understand enterprise strategies around this topic we researched the degree to which certain strategies have been implemented (Figure1) and compared them to what Best in Class (BIC) companies have already implemented.
The second driving factor for C-Level executives, after reducing spend is the pressure to streamline back-office operations (32%)
Figure 1: Strategic T&E Actions 20% 21% 22% 50% 54% 34% 39% 35% 29% 32% 30% 29% 31% 10% 10%
Implement strategies to increase employee adoption of the various tools Closer integration of various T&E technologies
Improve data reporting and analytical capabilities Consolidation of travel programs across the
Establish T&E policies, processes and tools across the enterprise (i.e., across all sites)
CURRENTLY IN PLACE PARTIALLY IN PLACE PLAN TO IMPLEMENT
Source: Aberdeen Group, 2007 Our research shows progress in terms of establishing policies, processes and tools is further along unlike reporting and analytical capabilities where a significant percentage of enterprises are either in the partial or planning stages. Consolidation of travel programs includes, for example, centralizing operations and largely standardizing processes and policies while also leveraging the entire travel spend of a company (across all divisions and locations). From the table above, 73% of BIC have a consolidated program in place, compared to 50% of others. In terms of establishing policies, processes and tools across the enterprise, approximately 84% of BIC enterprises have implemented these already. The 32% of others that report having this partially in place may still be in the process of establishing these across the enterprise.
Discounts and Booking Transaction Costs
Another metric collected is discount rates on various categories of T&E spend. A major part of the discounts that enterprises are able to secure
depends on their volumes, therefore, the discount rates are broken out by company size (Figure 2).
These figures help to illustrate the value of accurate data collection and aggregation (i.e., discounts on major T&E categories). The higher the compliance to policy within, the more leverage enterprises have with their suppliers. Stated another way, it is important to monitor and encourage the usage of preferred vendors.
Figure 2: Discounts by Company Size
15.3% 16.7% 10.0% 13.9% 7.4% 9.2% 5.4% 7.5%
Airfare Hotels M.I.C.E Car Rentals Large (Revenues > $1 billion)
Mid-Market (Revenues $50 MM to $1 billion)
M.I.C.E – Meetings, Incentives, Conferences and Events Source: Aberdeen Group, 2007
Currently in Place Best in Class 84% 73% 52% 59% 50%
When it comes to transaction costs, online booking solutions certainly present a great opportunity for savings. As shown in Figure 3, online booking costs are significantly lower than booking by phone with an agent. Best in Class enterprises compared to the average are benefiting from lower costs for all three methods of booking.
Despite the lower costs for online booking, on average about 42% of all transactions are made online without agent assistance (figure 4). Approximately 36% are still booking travel by phone through their agency, which begs the question of whether 100% of transactions can be made online.
From our interviews we have learned that moving everything online does not make sense for all companies, due to the complexities and the necessary adjustments to accommodate the changing nature of business trips. What we did find is that 29% of respondents book over 75% of their travel online without agent assistance.
Figure 3: Booking Transaction Costs
$8.1 $14.4 $24.2 $13.6 $22.2 $36.1
Online booking tool Online booking tool w ith agent assistance By phone through travel agent Best in Class Average
Source: Aberdeen Group, 2007
Figure 4: Methods of Booking Travel
Unauthorized vendor via phone, 3.8% Unauthorized vendor online, 8.5% Online booking tool 41.4% Online booking tool w ith agent assistance, 11.3% By phone through travel agent, 36.0%
Source: Aberdeen Group, 2007
“We can’t do everything online, there are too many variables, the online world has to fit into small boxes. However, for what we can do online, in the first year we had 30% adoption and now we are at 70% and overall transaction costs are down.”
- Corporate Travel Manager, Financial Services
Best in Class PACE Model
Using T&E Technologies and Services to achieve Best in Class performance requires a combination of strategic actions, organizational capabilities and enabling technology that can be summarized as follows.
Table 2: Best in Class PACE Framework
Pressures Actions Capabilities Enablers
• Efforts to reduce corporate spend on T&E • Establish T&E policies, processes and tools across the enterprise
• Consolidation of
travel programs, associated data and expense processes • Improve data reporting and analytical capabilities • Closer integration of various T&E technologies and services
• Access to accurate and
• Centralized approach to management of T&E related activities (e.g., by region, business unit)
• Travel policy management
• Corporate card
program, allowing for data capture
• More automated method of creating, submitting and approving expense reports.
• Online (self) booking
• Tools that allow easy interpretation of data and allow for dynamic reporting Source: Aberdeen Group, 2007
Aberdeen Insights – Strategy
For global enterprises considering consolidation, part of this includes the establishment of standard processes and tools, however, this does not necessarily mean standardization on policies across the enterprise. This is particularly due to regional differences in not only regulations but also cultures and business ethics. The other part of a consolidated program is being able to leverage the entire spend of an enterprise, a key enabler to achieving this is visibility into that spend.
Business Value Findings
Within our survey, the average T&E spend was approximately $12 million per year. For large enterprises (revenues over $1 billion) this number was $24.8 million and the average for mid market enterprises (revenues between $50 million and $1 billion) was $5.2 million. The top end of the T&E spend in the survey came in at over $100 million. With such large amounts at stake, enterprises are looking largely to technology for not only efficiency, cost reduction and visibility, but also employee convenience and productivity.
Data is King
In the corporate travel world, data is king. Data around flights, hotels, car rentals, meetings and many other categories drive corporate policies and affect leverage with suppliers. Unfortunately, enterprises face challenges in this area such as the gap that often exists between actual and booked data. Booking data on its may miss the potential policy violations due to trip changes after booking or the use of unauthorized vendors. On the other hand expense reporting data provides details into actual expenses, but typically does not reveal the user’s unselected options that can improve the understanding of potential savings and compliance. With the addition of travel management company reports and corporate card feeds, the complexity and value of T&E related data significantly increases. Figure 5 shows the importance that
survey respondents attribute to various sources of data. The data extracted from an expense management solution was reported by 51% to be essential and arguably is the most comprehensive and accurate actual data because it includes both expenses charged to the corporate card as well as those paid for through other methods.
In the end, the more data that is captured and the higher the accuracy of it, the better enterprises can monitor, track and control T&E spending. Therefore, it is critical to ensure that employees adhere to established policies and processes. If more than
one tool is used, integration of these tools can add significant value. For example, integrating a corporate card feed with an expense management solution to pre-populate expenses.
Figure 5: Importance of T&E Data Sources
34% 37% 39% 47% 51% 32% 36% 30% 30% 34%
Online Booking Tool Travel Data Reporting Application Travel Management Company Corporate Card Program Expense Management Solution
Source: Aberdeen Group, 2007
“We don’t have one
dashboard for everything and that’s a challenge, we get customized reports from our TMC, however it is booked data. Attaining actual data is a lengthy internal process and is very manual.”
- Corporate Travel Manager, Large National Bank
One of the key survey questions was aimed at learning more about where, specifically, this data is being used and how important it is to performing certain activities, such as tracking compliance, monitoring spending patterns or for use in supplier negotiations. As Figure 6 shows, data is essential to a number of activities. Over 85% of the respondents report that data and reports are essential or important to both tracking compliance and to monitoring spending patterns and trends. It is interesting to see how the actions and strategies enterprises are implementing, or have already implemented, are impacting savings around T&E. A majority of respondents, 91%, reported that compliance to travel policies is essential or important to achieving savings. Similarly, 88% said access to T&E reports and data is essential or important to achieving savings. It is clear from Figure 7 that there are several factors that contribute to achieving this savings; but, it is important to remember that the underlying structure (policies, processes and tools) is the key to improved results.
Figure 7: Actions/Strategies that Contribute to Savings Around T&E
27% 34% 37% 38% 40% 44% 45% 46% 55% 59% 48% 35% 47% 42% 36% 44% 39% 36% 36% 30%
Supporting preferred vendors Adoption of an online booking tool Auditing of T&E expenses Strategic sourcing of various T&E categories Corporate card usage Easy access to T&E reports and data Automation of expense reporting and processing Consolidation of travel programs across the enterprise Compliance to travel policies Establish T&E policies, processes and tools across the enterprise
Source: Aberdeen Group, 2007 Figure 6: Importance of Data in Accomplishing Key
T&E Related Activities
19% 21% 32% 40% 48% 52% 54% 46% 45% 46% 37% 39% 37% 34%
To improve the travel experience for corporate travelers
Benchmarking To update/improve travel policies For use in supplier negotiations Auditing purposes To monitor spending patterns and
To track compliance to travel policies
Survey respondents fell into one of three categories – Laggard, Industry Average, or Best in Class — based on their characteristics in four key categories.
Table 3: Competitive Framework
Laggards Average Best-in-class
31% 59% 84% 23% 48% 73% 17% 23% 52% 40% 62% 76% 24% 62% 89% 62% 73% 80% 64% 76% 86% 27% 50% 69% Organizational Structure Knowledge and Data
Consolidation of travel programs (e.g., centralize operations, travel management company) across the enterprise
Technology and/or Service Provider
Travel data reporting application Travel Management Company
Corporate card program
Data reporting and analytical capabilities
Online booking tool
Expense management solution
Establish T&E policies, processes and tools across the enterprise (i.e., across all sites)
Source: Aberdeen Group, 2007 It is clear that Best in Class enterprises are doing something differently. Table 3 helps to illustrate some of the differentiating factors. For example, Best in Class enterprises are more than three times as likely to have some sort of an expense management solution than Laggards.
The surprisingly low percentages for data reporting and analyticalcapabilities, which does not include simpler tools like Excel, reflects the somewhat lagging nature of analytics in the corporate travel world. Enterprises are looking for more dynamic tools that enable the interpretation of complex data and metrics into simple (visual) messages, while also offering the capability to dig into a more detailed level of data.
“At our company data was originally only used by the accounting dept for G/L purposes. With our current solution we can create reports for our VP’s, analyze trends and as a result realize savings.”
- Director of Procurement, Retail Services Group
Organizational Capabilities and Technology Enablers
The category of T&E management involves different functional groups because of the various activities that take place, including finance, procurement and of course, corporate travel. From the survey base, we can see that a large portion of responsibility for the various areas (reimbursement, corporate cards, auditing, etc) lies with the finance and account payable functions.
Figure 8: Responsibility and Oversight for T&E Processes
33% 11% 10% 54% 41% 43% 42% 57% 22% 10% 18% 22% 15% 40% 45% 15% 16% 7% 5% 8% 2% 5% Travel planning and booking management Expense Reporting and management Corporate card management Receipt management Employee reimbursement Auditing Corporate Travel Finance Procurement Accounts Payable Human Resources/ Administration
Source: Aberdeen Group, 2007 In terms of the various technologies that have been discussed here, the current usage of those mentioned in Figure 9 is fairly high with additional that are planning to use them within the next year. The technology around travel data reporting and expense management showed some significant interest with an additional 28% and 27% respectively citing plans to use such applications over the next year.
Figure 9: Current and Planned Usage of Technology and Service Providers
56% 54% 45% 22% 27% 11% 11% 28% 68% 73% Online Booking Tool Expense Management Solution Travel Management Company Corporate Card Program Travel Data Reporting Application Currently Use Others that Plan to Use over Next 12 Months
For enterprises with multiple sites or regional locations, we studied whether they were using multiple vendor solutions or a single solution environment across the enterprise. For example, take corporate card programs, 22% reported using multiple vendors currently, however, 51% plan to use a single vendor across the enterprise in the future. The area of expense management shows that 54% of survey respondents plan to use one vendor across the enterprises.
Figure 10: Using One Technology Vendor vs. Multiple Vendors Across All Sites 31% 20% 31% 20% 22% 45% 41% 48% 51% 54% Online Booking Tool Expense Management Solution Travel Management Company Travel Data Reporting Application Corporate Card Program Currently Use Multiple Vendors Across the Enterprise
Plan to Use One Vendor Across the Enterprise
Source: Aberdeen Group, 2007
“Currently, we are using spreadsheets and are evaluating solutions for expense-reporting, and considering a booking tool. Along with the efficiency, a big part of this decision is to give employees a better tool and to have a better database. Also, we want to get corporate agreements in the near future.”
- Vice President and Controller, Consumer Products Company
Whether a company is trying to move its T&E performance from “Laggard” to “Industry Average,” or “Industry Average” to “Best in Class,” the following actions will help spur the necessary performance improvements:
Laggard Steps to Success
• Centralize and consolidate T&E programs. A central organization that oversees T&E
expenses and related processes not only makes the collection of data easier, but also the monitoring of compliance and communication of policy updates more effective.
• Ensure that T&E policies are well established and communicated with close
monitoring and regular updates. While distributing soft copy policy manuals via intranet posting or email has some level of effectiveness, communication of policy at the point of purchase is significantly more effective.
• Establish key performance metrics by analyzing and identifying the greatest
opportunities to generate cost savings. Equally important is developing strategies to improve the metrics. These metrics could be online adoption, restricted fare usage, advanced purchase, etc.
• Utilize technology, such as online booking tools, corporate cards, expense
management solutions and reporting applications. These solutions offer significant opportunities for improvement, in terms of processing cost savings, efficiency of back-office operations and improving overall monitoring and level of visibility. Integration of these tools can produce even better results and should be taken into consideration early on.
Industry Average Steps to Success
• Promote the usage of corporate cards and integrate with expense management
software. A corporate card is effective in capturing a higher percentage of spending data, and depending on the corporate card provider, there is access to fairly-detailed data (e.g., line-item charges for hotels). This type of data, when integrated with an expense management system, can pre-populate expense reports, making the process simpler and quicker for employees.
• Leverage enhanced travel data for negotiations and compliance. Enhanced travel
data such as city pairs and trip legs or hotel folio detail can be used to strengthen negotiations with suppliers. Transaction details also allow you to more closely monitor travel policy compliance, such as mini-bar usage.
• Work toward improving reporting and data analytics capabilities. Capturing T&E data and having the ability to analyze it is a key enabler to improving and understanding your enterprise T&E program. For example, more advanced enterprises use tools that allow them to analyze actual air spend per city pair, carrier, segment or other supplier. Also, the ability to perform “what if” scenarios with ease is a major step forward.
Best in Class Steps to Success
• Implement closer integration of the various tools and data sources to benefit from more accurate and complete intelligence. Even though Best in Class enterprises have displayed the most sophistication in their integration, there is still room for improvement when it comes to aggregating the multiple sources of data.
• Offer easy access to detailed data in an easily consumable format. Dashboards, for example, offer visual and easily understandable intelligence with the ability to dig deeper into the data if need be. Such capabilities allow for example, executives to monitor business unit spend and compare to budget or to view key performance metrics by business unit. • Work with procurement departments to develop a strategy to determine how
much value a current program (e.g., policy, booking, expense reporting, etc) is creating. For example, certain suppliers or policy changes may not add much value or savings. Having the ability to perform scenario analysis can significantly help strategic planning.
This research report was made possible, in part, with the financial support of our under-writers. These individuals and organizations share Aberdeen’s vision of bringing fact based research to corporations worldwide at little or no cost. Underwriters have no editorial or research rights and the facts and analysis of this report remain an exclusive production and product of Aberdeen Group.
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During May 2007, Aberdeen Group examined the use of T&E Technologies and Services, the strategies, and intentions of more than 435 enterprises in a diverse set of enterprises.
Responding retail executives completed an online survey that included questions designed to determine the following:
• The degree to which various T&E Technologies and Services are deployed in their operations. • The structure and effectiveness of these technologies and services.
• Current and planned strategies and actions around process, organization and technologies within T&E
Aberdeen supplemented this online survey effort with telephone interviews of select survey respondents, gathering additional information on T&E strategies, experiences, and results.
The study aimed to identify emerging best practices for Technology and Service usage and provide a framework by which readers could assess their own management capabilities.
Responding enterprises included the following:
• Job title: C-Level executives (13%), Vice President (11%), Director (18%), Manager (48%), Staff (10%), Other (6%)
• Job function: The research sample included respondents with the following job titles:
Procurement/Supply Chain (29%); Finance (27%); Corporate Travel (12%), HR and Administration (10%), IT (5%), Business Process Management (5%), Other (12%)
• Industry: The research sample included respondents exclusively from retail industries. Financial Services (24%), Pharmaceuticals, Medical Devices and Life Sciences (21%), High Tech (12%), Consumer Products (15%), Telecom (8%), Distribution and Wholesale (7%), Other (13%).
• Geography: The majority of respondents (70%) were from North America. Remaining
respondents were from Europe (17%) and the Asia-Pacific region (9%).
• Company size: About 50% of respondents were from large enterprises (annual revenues above US$1 billion); 36% were from midsize enterprises (annual revenues between $50 million and $1 billion); and 14% of respondents were from small businesses (annual revenues of $50 million or less).
Solution providers recognized as sponsors of this report were solicited after the fact and had no substantive influence on the direction of the T&E Technologies and Services Report. Their sponsorship has made it possible for Aberdeen Group to make these findings available to readers at no charge.
Table 4: PACE Framework
Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities, and enablers (PACE) that indicate corporate behavior in specific business processes. These terms are defined as follows:
Pressures — external forces that impact an organization’s market position, competitiveness, or
business operations (e.g., economic, political and regulatory, technology, changing customer preferences, competitive)
Actions — the strategic approaches that an organization takes in response to industry pressures
(e.g., align the corporate business model to leverage industry opportunities, such as product/service strategy, target markets, financial strategy, go-to-market, and sales strategy)
Capabilities — the business process competencies required to execute corporate strategy (e.g.,
skilled people, brand, market positioning, viable products/services, ecosystem partners, financing)
Enablers — the key functionality of technology solutions required to support the organization’s
enabling business practices (e.g., development platform, applications, network connectivity, user interface, training and support, partner interfaces, data cleansing, and management)
Source: Aberdeen Group, May 2007 Table 5: Maturity Framework
Maturity Framework Key
The Aberdeen Maturity Framework defines enterprises as falling into one of the following three levels of practices and performance:
Best in Class (20%) — T&E practices that are the best currently being employed and significantly
superior to the industry norm, and result in the top industry performance.
Industry norm (50%) — T&E practices that represent the average or norm, and result in average
Laggards (30%) — T&E practices that are significantly behind the average of the industry, and
result in below average performance In the following categories:
Process — What is the scope of process standardization? What is the efficiency and effectiveness
of this process?
Organization — How is your company currently organized to manage and optimize this particular
Knowledge — What visibility do you have into key data and intelligence required to manage this
Technology — What level of automation have you used to support this process? How is this
automation integrated and aligned?
Performance — What do you measure? How frequently? What’s your actual performance?
Table 6: Relationship between PACE and Competitive Framework
PACE and Competitive Framework How They Interact
Aberdeen research indicates that companies that identify the most impactful pressures and take the most transformational and effective actions are most likely to achieve superior performance. The level of competitive performance that a company achieves is strongly determined by the PACE choices that they make and how well they execute.
Related Aberdeen Research
Related Aberdeen research that forms a companion or reference to this report includes: • Expense Management Automation, February 2007
• Global Commercial Payment Cards, March 2007
Information on these and any other Aberdeen publications can be found at www.aberdeen.com.
Author:Vishal Patel, Senior Research Analyst, Global Supply Management (email@example.com) Founded in 1988, Aberdeen Group is the technology- driven research destination of choice for the global business executive. Aberdeen Group has over 100,000 research members in over 36 countries around the world that both participate in and direct the most comprehensive technology-driven value chain research in the market. Through its continued fact-based research, benchmarking, and actionable analysis, Aberdeen Group offers global business and technology executives a unique mix of actionable research, KPIs, tools, and services.
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