By Andrew K. Reese
Gregg Brandyberry is living proof that Janan Johnson's philosophy on controlling travel and entertainment (T&E) expenses works.
Johnson is director of procurement for corporate services at pharmaceutical giant GlaxoSmithKline, and she believes that by using technology to give her company's business travelers a clear view of their choices for flights, hotels and other T&E expenses, "visual guilt" will drive them to choose lower-cost alternatives that don't compromise quality or impose undo burdens.
And Brandyberry, vice president of procurement, global systems and operations at GlaxoSmithKline — as well as a veteran road warrior who regularly shuttles between the company's U.S. and European operations — seems to be proving Johnson right. "I probably have reduced hotel costs at least 25 percent, and many different times I have moved a flight by a couple hours to get savings of 25 or 30 percent," Brandyberry says.
It appears that in the world of T&E, more really can be less.
A Controllable Expense?
Travel and entertainment has been widely accepted as the second largest controllable expense for companies after labor costs. But T&E also has been widely acknowledged to be very difficult to control. "Travel is a complex spend category with a human element," says Charles Brossman, solution owner for travel and expense solutions at spend management specialist Ariba, based in Sunnyvale, Calif. Brossman has more than 18 years of travel industry expertise, including in corporate-level travel management positions. He says that T&E's complexity makes it problematical for companies to apply uniform business rules to travel in the same way that they have applied rules to other spend categories. In addition, travel has traditionally been managed outside the purchasing function and therefore not necessarily aligned with the same best practices for spend management that procurement has learned to apply to other categories.
And yet the need to address T&E spend is more urgent now than ever. "Right now in the travel industry, it's definitely a supplier's market," says Rex Heineman, policy leader at American Express. Earlier this year, for example, American Express reported in its Business Travel Monitor that U.S. domestic airfares had increased 7.2 percent in 2006, and daily car rental rates were up 4.5 percent. Even budget hotel rates were up significantly, rising 19 percent in the fourth quarter of 2006 compared to the same period in 2005. It's no surprise, then, that Heinemann says, "We seeing companies really focusing on how they can manage these costs."
Except they don't seem to be having much success. A recent survey by American Express Business Travel Advisory Services (BTAS) found that 62 percent of business travelers don't use the preferred vendors specified by their companies. Part of the reason may lie in the types of tools that companies have been offering their travelers, according to Dan Ford, director of product marketing at Rearden Commerce, a Foster City, Calif.-based provider of solutions targeted at employee business services. Ford cites figures from travel industry research firm PhoCusWright indicating that while two-thirds of all consumer travel reservations will be placed online by 2008, fewer than half of corporate travel reservations will be made online in that year. Ford pins the difference on the corporate tools' slow adoption of the types of "user-friendly" features commonly found on consumer travel sites. "The quality and usability of the tools in the corporate online booking market have not advanced significantly," he says, "and so we see a growing number of employees opting out of using these corporate tools." With adoption rates remaining low, compliance with corporate policies also lags, Ford says, complicating efforts to rein in T&E spend.
Tackling T&E at GSK