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Copyright © 2009 Accenture All Rights Reserved.
Kansas City Business Travel AssociationExpense Management Strategies for an Economic Downturn 12 May 2009
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Agenda
• Introduction
• Why do we need a different kind of travel management in an economic downturn?
• What should you do now?
• Best Practices
• Questions
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Accenture details
• FY08 revenues of US$ 23bn, with a compound annual growth rate of 16%
• Over 181,000 professionals in 200 cities across 52 countries
• Significant annual investment in technology R&D (US$ 250m) and internal training (US$ 776m)
• Working with 96 companies listed in the Fortune Global 100
• 99 of top 100 clients served more than five years and 87 have been clients for 10 years
• Numerous “Top Place to Work for” awards
Financial
Services21%
Public
Services12%
Communication
& High Tech
24%Products
26%
Resources
17%
Total revenue per region
9%
Europe, Middle
East, Africa
49%
Americas42%
Asia, Pacific
Accenture is a leading global services company with integrated capabilities in Consulting, Technology and Outsourcing
Total revenue per industry
Accenture Overview
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Accenture Procurement BPO
Finance and AccountingBPO
HR BPO Procurement
BPO
Application Outsourcing
InfrastructureOutsourcing
Business ProcessOutsourcing
Management Consulting
TechnologyServices Outsourcing
For the past two years, Accenture has been ranked the world’s number one outsourcing service provider ¹.
Our Procurement Capabilities
• End-to-end Source-to-Pay (S2P) includes
• Sourcing and Category Management (S&CM)
• Sourcing Support
• Procurement Operations
• Category-centric strategy is integrated across business lines
• Source and manage $30+ billion in annual spend and delivered $224+ million of savings for clients in CY2008
• Average 1,500+ Sourcing and Category Management initiatives and implemented 8000+ supply agreements last year
•Capital Buying•Contract & Professional Labor•Facilities and Real Estate•HR Services
•IT & Telecom•Marketing Services•Travel & Entertainment•Utilities / Energy
(¹International Association of Outsourcing Professionals)
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“Today's economic crisis is putting great pressure on companies to reduce costs and control spending wherever they can.”
Gunther BrightSenior Vice President
American Express
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“You never want a serious crisis go to waste. It's an opportunity to do things you couldn't do before."
Rahm Emanuel
White House Chief of Staff
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Financial Impact of Travel Spend Transformation
Improvements in travel spend management have a significant impact on a company’s profitability
($M) Baseline
Revenues
Cost of Goods Sold
5,0002,500
Gross Profit 2,500
SG&A Expenses 1,500
Operating Income 1,000
Addressable T&E Spend 150
Saving from Transformation
% Increase in Operating Income
Spend Reduction Scenario
10% 15%
15.0 1.5%
22.52.25%
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The key to sustained savings is continuous transformation of the functions that maximizes spend management.
Time
Ben
efi
t
Savings will erode without ongoing stake holder and supplier management
• Huge opportunities
• Supplier and buyer leakage
• Weak change management approach
• Lack of category expertise
• Policies & procedures unclear
• Inefficient procurement tools and processes
The Case for Procurement Transformation
• Transformational and integrated approach
• Active stakeholder management
• Change management investments
• Holistic category strategies• Compliance built into
sourcing requirements• Spend and compliance
analytics• Continuous improvement
TraditionalStrategic Sourcing
DemandManagement
Typical Current State
Required Future State
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Travel Sourcing Strategy
Travel cost management produces optimum cost savings through a holistic strategy focused supply-side, demand management and processes efficiencies.
• Consolidate suppliers globally• Create competition among
suppliers • Negotiate on market share & spend• Expand & deepen discounts
• Increase spend & behavior visibility• Avoidance & substitution• Non-compliance consequences• Change management practices
• Maximize online systems • Industrialize & centralize S&CM
operations• Best Practice / High Performance• Performance Management
SpecificSub-
CategoriesSpend
Demand Management
Procurement & Management Processes
Supply Management
(Price)
(Usage)
(Transactional / Administrative)
• Maximize sourcing automation • Drive long term supplier deals• Include value-add components• Mix alliances & specific suppliers
• Communicate compliance goals• Measure and report compliance• Task preferred suppliers for
improved behavior
• Leverage low cost sourcing & category management model
• Deliver exception reporting• Deploy dashboards reporting• Implement SLAs & KPIs
Savings Levers Savings Tactics
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Program Assessment
• Traveler / Travel Arranger behaviour viewed across key buying dimensions (e.g. preferred suppliers & channels, advance purchase, etc.) and by Business Unit • “As – Is” T&E policy is evaluated: “As Written” and “Is Applied”• Performance metrics reflect critical outcomes for key stakeholders
– Savings tracking– Process Quality, Cost and Satisfaction KPIs
(US$, Millions - Illustrative)
Meetings & Events• Conference facilities• Support services
Air Transportation• Scheduled Domestic & International• Corporate and Fractional Aircraft
$6.5
$1.1
Ground / Other Transportation• Rental Car• Parking• Fleet, Personal Car
Lodging• Hotels• Long Term Rentals
$15.8
$21.8
100%
• Meals & Entertainment• Restaurants, Entertainment, etc.
$0.7 • Program Management• Reservation transactions• Ancillary services
$1.8
Spend visibility into all sub-categories must align with operating budgets and expense reporting systems
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Identify OpportunitiesSavings Idea Ease of Implementation Pain Impact on Savings
Airlines 0 0 0
Maximize advance purchase & non-refundable fares
Open airfare search window to X hours
Eliminate 1st class and business class travel (except C's)
Hotels 0 0 0
Require use preferred hotels
Reduce number of preferred hotels by market
Move to lower tier hotels in all preferred hotel cities
Ground Transportation 0 0 0
Require use of personal automobiles or public transport to/from airport
Eliminate reimbursement for limos, town cars & black cars
Meetings/Events 0 0 0
Schedule meetings in second-tier cities if possible
Only 1 attendee to conferences/events
Mandate use of collaboration options for internal meetings
Corporate Card 0 0 0
Implement individual liability / individual paid travel card program
Lower retail limits to limit fraud
Remove reward programs from card in lieu of additional revenue sharing
(Sample excerpt of Savings Hypotheses)
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Program Components 1. Consolidation of global travel spend
2. Consolidation of global travel management
3. Multi-supplier competitive evaluation
4. Market share-shift based strategies
5. Broadened and deeper discounts
6. Industrialization of resources
7. Comparative Analytics
8. Demand recognition and management
9. Supplier year-over-year productivity gains
10.Inventory analytics, positions & optimization
11.Senior leadership active support
12.Aggressive change management expectations and practices
13.RFX templates
14.Supplier / program scorecards
15.Channel management
16.Advanced category-specific sourcing strategies
17.Assessment templates / comparison to best practices
18.Key stakeholder surveys
19.Resources productivity reporting
20.Client internal information management
21.Portal content management strategy
22.Spend data visibility and management
Prioritization of Key Opportunities
(Sample excerpt of Opportunity Map)
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Execute Ruthlessly!Create Internal and ExternalProfile
Screen
Suppliers &
Selection
Factors
Negotiate & Develop Sourcing
Recommen-dation
Implement
Agreements
Market & Supplier Profile
Conduct“Fit” Analysis
Spend & Demand Model
Develop Sourcing
Objectives
Conduct Supplier Analysis
Create Supplier Selection Criteria
Complete eRFx Process
Collaborate w/ Incumbent Supplier(s)
Prepare Fact-Based
Negotiation Packages
Negotiate Agreements
Rollout Agreements and Monitor
KPIs
Implement Supplier
Development Plan
Develop CategoryStrategy
Conduct Competitive
Exercise with Supply Mkt
Develop Sourcing
Strategies & Tactics
- AND/OR -
Sourcing & Category Management Process
Supplier Management
Ongoing Supplier
Management
DemandManagement
Ongoing Demand
Management
Fast Track for Identified “Quick Wins”
Business CaseChange Management & Performance Management
Prioritized Opportunities for Quick Wins• Selected for ease of implementation and value• Driven for fast realization• Integrated into overall Travel Category Strategy
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Transformation = Action
• Develop / Review your strategy
– 3 Levers: Supply side, Demand side and Process
• Be aggressive in assessing your current program
– Comprehensive data view
– Expand focus, e.g. M&E, meals
• Be opportunistic about benefits and align them with stakeholder support
• Improve supplier management with stretch goals
• Anticipate customer needs, e.g. mobile, 2.0, collaboration
• Execute Ruthlessly!
What should you do now?
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Leading companies adapt to short term shifts in market opportunities while driving toward long term goals with a clear focus
Best Practices for managing Travel spend in a Downturn
Hold Employees Accountable– Communicate repeatedly and via multiple channels, especially portal and mobile– Educate & reinforce benefits of traveling “smart” (e.g. only preferred suppliers)– Enforce non-compliance predictably
• Leverage data-driven management system– Consolidate multiple data sources– Fact-based support for business case recommendations– Ongoing analysis supporting sourcing and category management– Performance Management outputs linked to Business Unit actions
• Plan for Long Term– Standardize and automate sourcing and travel transactions– Integrate toward end-to-end system (e.g. Meetings, Virtual Collaboration, expense
management)Excerpted from : Expense Management Strategies for an Economic Downturn
Prepared by Accenture in collaboration with American Express, January, 2009
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Questions?
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Thank You!