More significant, in Johnson's view, is the high completion rate for bookings initiated through the online system. "We started tracking whether people actually submitted reservations for purchasing because we wanted to see whether they were just surfing Rearden and then picking up the phone and calling the agency," Johnson explains. "We found that we have a 99.6 percent submit-for-purchase rate, so people really are transacting the business, not just playing." That's good news, she adds, because it reduces expenses on the agency side, and it also means that more users are subject to the force of "visual guilt" implicit in the solution.
"Visual guilt" maintains that if users are presented with various service options and shown the costs for different levels of service, the users will most likely choose to go with a lower-cost option. Someone shipping a package, for example, might choose delivery by end of the business day rather than delivery by 10:30 a.m. based on the significant difference in the rates. Or, like Gregg Brandyberry, the sponsor of the Rearden project at GlaxoSmithKline, a business traveler might opt to leave a couple hours later or earlier to save a few hundred dollars on an airfare. "If people are presented with a better buying opportunity, they will make better buying decisions," Johnson says.
Those better options add up to cost savings, too. "Our average ticket price and average hotel price are creeping down," Johnson says, while acknowledging that the company will need to drive adoption rates somewhat higher to achieve more significant savings. The company has been helped by the fact that it already had a very high compliance rate for air carriers and hotel. Still, GlaxoSmithKline has estimated that it easily paid for its investment in the Rearden solution early on in its adoption of the tool.
The Convenience Factor
For his part, Brandyberry praises the convenience of an online tool for handling all travel-related tasks. "In the past, if I wanted to travel, I had to call an administrative assistant and we would exchange a couple of phone calls back and forth before the travel was booked," he says. "Now I can do the whole thing myself in five to seven minutes." He also appreciates the updates that the system sends to his mobile devices, reminding him of upcoming travel, as well as the ability to have the system include the travel in his Lotus Notes calendar.
Ariba's Charles Brossman says that convenience and usability are keys to gaining widespread adoption of this type of tool. "You have to win over the end users that it's going to be easy to use and that it's not going to be cumbersome for them," he says. "Usability is the No. 1 concern." Being a spend management suite provider, Ariba has integrated its T&E module to the rest of its offering, providing a way for travel and entertainment spend to be ported into the expense reporting tool, adding a further layer of convenience for the user. That kind of integration, of course, can bring T&E data into a larger e-procurement system, giving procurement executives the opportunity to have greater visibility into, and control over, this category of spend. Exception reporting, for instance, can alert executives to maverick spending and help them understand where business rules need to be strengthened or better enforced. "We're giving travel managers and procurement managers visibility into what's going on, and the exception reports are critical to make sure that maverick spend doesn't get out of hand," Brossman says.
Rex Heineman, with American Express, emphasizes that companies looking to get a handle on their travel and entertainment spend should take a systematic approach to implementing their T&E strategy. "You can spend a lot of time putting a policy together, but that's really just the foundation," Heineman says. "After that, you need to determine what controls and compliance measures you are going to put in place." Those controls depend to a large extent on a particular company's culture, Heineman continues. "I can take a look at a policy and quickly get some general idea of the culture of the company just by the language that's used in the policy — whether it says ‘should" versus ‘required,' or ‘mandated' versus ‘please spend reasonably.' There is not one clear-cut policy that fits all."