Travel, Procurement Seen Converging as Enterprises Apply Spend Management to T&E

More companies putting travel under procurement, ramping up cross-functional collaboration to improve compliance, reduce costs, Aberdeen survey finds


Boston — November 19, 2007 — Enterprises are increasingly turning to procurement departments to not only help cut costs but to apply various procurement principles in order to improve the management of this area of spend, according to a new benchmark report by consulting firm Aberdeen.

Business travel is often considered to be a vital part of any organization and is thought to be a cost of doing business, but not always as a category of spend that can be controlled and reduced.

However, in its recently published study "Travel and Procurement: The Convergence," which draws on a survey of some 370 enterprises, Aberdeen reports that more than half (53 percent) of survey respondents stated that there has been a significant increase in the procurement and travel management departments working together over the last few years.

In addition, half the respondents reported that this collaboration has resulted in improved compliance to policies and to preferred vendors, both key factors in negotiations and achieving discounts.

Best-in-class Practices

Best-in-class enterprises, while outperforming their peers, have seen a variety of benefits from collaboration between procurement and travel with an effective utilization of various T&E technologies and services, according to Aberdeen.

The consulting firm reports that these top-ranked enterprises have an average compliance rate of 90 percent to corporate travel policies and procedures, and also place 87 percent of their T&E spend under management.

In addition, 87 percent of best-in-class enterprises either have the travel department fall under procurement or work closely with them, contributing to their impressive T&E performance metrics.

"Procurement should really not be seen as the bad guy; they are becoming more strategic in nature and can add significant value in a category such as T&E," said Vishal Patel, senior research analyst at Aberdeen.

The sourcing and negotiating side of procuring travel and travel services is meaningless without clear visibility into the measurement of internal travel processes, compliance to travel policies and performance metrics, Aberdeen writes. Therefore, the consultants made recommendations that may help enterprises improve their performance, some of which include:

  • Consolidating of enterprise-wide T&E data;
  • Establishing key performance metrics;
  • Establishing service-level agreements (SLAs) where appropriate, with travel management companies, travel suppliers and / or technology providers;
  • Improving T&E reporting and data analytics capabilities.

http://www.aberdeen.com/link/sponsor.asp?cid=4187


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