PreApproval Systems and How they fit into a Managed Travel Programme

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Pre-Approval Systemsand How they fit into a
Managed Travel Programme

• Ingrid von Moltke
• HRG World Travel

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To Pre OrNOT to Pre

• That is the question!

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Lets start at the Beginning
What is a Managed Travel Programme?
Simply put Taking control of a companys TE
spend
Managing Costs Delivering Quality
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Accepted Wisdom for a Successful Travel
Programme

• Appoint a Travel Manager

• Implement a Travel Policy

• Tailor Policy to Company Culture

• Communicate Policy

• Apply KISS principle

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Accepted Wisdom for a Successful Travel
Programme

• Monitor Policy Compliance

• Address non-compliance

• Consolidate Suppliers to leverage spend

• Gather and aggregate data

• Use of charge / credit cards

• Consolidate all travel through a single TMC

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• And last, but not least
• Examine indirect cost of travel and expense
  management
• Fact Today, more often than not,
• travel resides within Procurement
• Implication Cost containment is the
• number one consideration
• in a managed travel programme

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So how does Pre-Approval fit into this vision?
Watchdog Effect
Establish reason to travel
Check against budget
Drives policy compliance
THE INTENTION
Drives usage of preferred suppliers/deals
Pre-Trip Monitoring Traveller Safety Security
TMCs Role
Keep travel costs down
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Life is what happens while youre busy making
other plans John Lennon
Does the reality live up to the intention?

• Factors to consider
• Actual pre-approval process
• manual
• automated
• complex
• simple
• Length of process
• Cost of process
• Loss of cost-saving opportunities

Indirect cost
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If the pre-approval process is manual, complex,
lengthy, it will, by definition be Costly Lead
to lost cost savings opportunities Encourage
traveller non-compliance
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INDIRECT COSTS Where do they hide?
Expense Claim Processing
Trip Planning
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Trip Booking
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1-21
Cash Advance
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1-21
Travel Request
Central Billing
Source Runzheimer International
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Illustrates the need to streamline processes
Simplify
automate
Capture data
Reduce costs
Increase traveller satisfaction
Streamlining processes, automating workflow, and
eliminating redundancies are fundamental
techniques for all businesses. Use of electronic
TE management systems support time and
cost-cutting initiatives Source Runzheimer
International
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Current Pre-approval systems that deliver less
than optimal value look like this
Request quote/s from TMC telephonic, e-mail
Complete travel requisition paper/electronic
Submit to line manager for approval signature
Check against budget
Fax / e-mail to TMC
Issue travel documents
Obtain order number procurement system order book
Not suitable for web bookings Labour / paper
intensive Time consuming Pre-Approval / Post trip
expense reconciliation cumbersome
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An HRG UK (previously BTI UK) study in November
2005
Revealed
Which means

• 45 of bookings are changed before travel
  commences
• 70 of bookings are for travel the same week
• 35 of bookings are cancelled

• The whole cycle starts all over again
• Quick approval required
• The Pre-approval effort was wasted

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To Preor not to Pre

• Some Companies have decided NOT
• Daimler Chrysler Europe
• Oracle USA
• Verizon
• Amex UK

Why Not?
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Daimler Chrysler Europe

• Early 2000 started a project to re-engineer its
  travel and expenses management system
• External research showed that one of the major
  blocks in the travel management process was
  approval, even though in pre-approval systems
  only 5 of trips were generally rejected
  Benchmark study Business Travel Europe, AT
  Kearney, 2003
• Most organisations were therefore opting for a
  complicated and expensive process to manage a few
  exceptional non-approved trips.
• It was clear that it would be simpler and more
  efficient to manage inappropriate travel after
  the fact Florian Tinnus, Travel Manager Daimler
  Chrysler Europe

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Oracle USA (2004)

• According to Ralph Colunga, (Director, Global
  Procurement Services,) T E expenses as a
  percentage of sales are neglible. To grow top
  line of the business people need to travel.
  Being too restrictive will restrict success.
• Communicate policy and empower staff to make
  right decisions
• Believes in a pre-awareness strategy versus
  pre-approval

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Verizon

• Firm, but flexible travel policy
• Communicate policy to staff
• Post-trip monitoring instead of pre-trip approval
• Exception reporting by TMC
• All departments have their own budgets, therefore
  more conscious of spend
• Encourage online booking
• Visual guilt factor influences people to make
  good decisions
• Use of corporate charge cards

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Amex UK (2002)

• Pre-approval is process-intensive and very few
  trips are rejected at this stage anyway
• Enforces the use of the corporate charge card to
  track and monitor expenses
• Out of policy behaviour is monitored and
  addressed with the individual
• All teams have a TE budget if budget is
  exceeded we have a word
• Communicate policy and give people the
  responsibility to do the right thing
• Andrew Buckley Amex VIP

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What do all these companies have in common?

• An investment in
• Well communicated travel policies
  encouraging compliance
• Technology simplified processes, online
  booking and post-trip expense management
• Data warehouse aggregating data from
  corporate cards, TMCs and suppliers

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Yetfor many companies, pre-approval remains an
integral component of a successful travel
management programme
So is there such a thing as an ideal system?

• Safe to say that one size does not fit all
• Company size (number of travellers) and company
  culture will determine level of sophistication
  required
• In general, automation is key
• from simple electronic approval
• to
• full blown e-procurement systems
• Many great TE systems, but ideally these should
  be integrated into companys ERP system
• eliminating double work in capturing,
  reconciliations and settlement
• making control before the fact a reality e.g.
  automated budget checks

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In Conclusion

• Technology should be viewed as a way to enhance
  rather than replace the way business is
  conducted.
• Determine what is more appropriate for your
  business pre-approval and / or after-the-fact
  exception reporting. Be prepared to invest in a
  solution that adds long-term value.

The key thing about managing change is knowing
when to let go of the past and when to
embrace the future David Radcliffe, CE HRG UK