T&E Management: Pound-foolish, penny-wise?

Carl Jones |

In Asia, as I’ve written about before, companies tend to squeeze their travel management companies (TMCs) for the lowest prices and fees possible. From my experience, they’re wasting their time – or at least spending it rather inefficiently.

The reason why is that TMCs’ fees only make up an exceedingly small fraction of what a company spends on travel and expenses (T&E) – around 2% or so. That means most Asian companies are ignoring the other 98% of spend which is ripe for optimisation. And, with the technology available to us today, they could be reducing that 98% by up to tens of millions of dollars every year. That should offer ample incentive to curb leakage and inefficiency in how Asian companies book their travel, instead of fixing their sights on TMCs’ margins. Customers have lower and lower expectations of TMCs’ services and technology, traveller counsellors’ wages continue to rise – and still transaction fees get driven down at each annual RFP. 

Failing to plan…drives up your costs

From my experience, well-organised travel plans can shave off around 10% of total T&E spend. For large companies which spend between $100-300 million on T&E, those savings make a huge dent on the bottom line. Yet most Asian business travellers are anything but well-organised. Some employees book their flights only at the last minute, when prices are usually highest – though client-facing staff they may not have much choice in this. Those lapses can not only drive up T&E costs from where they ought to be, but also create greater risk of compliance issues that, in turn, cost even more to resolve.

Data analytics and automation can help identify these sources of inefficiency, and plug them with due rigour. I heard recently about one company that has begun trialling bots that cross-check employees attending one-off events against flight tickets to make sure they’ve booked their trips. The software automatically alerts more tardy employees that they haven’t booked, and – if they don’t do so past a certain point, their travel plan will be rejected! From what managers at this company told me, the business saved several hundred thousand dollars across various events in its first month, much more than you would by pressurising your TMC and with much less hassle too.

Put your data in its (one) place

Optimisation, however, only becomes possible with centralisation. Businesses need to consolidate data from all their travel, card, and service providers in a single location if they want to get a reliable picture of what goes on within their T&E spend, find where leakage occurs, and make comparisons. Analytics will play a critical role in T&E management in the days ahead, but only if businesses give platforms like SAP Concur’s the right data to analyses.

To plug the leaks, you need data sources which are not just consistent, but comprehensive. In Asia, there’s a perception that you only need to source for three options to find your cheapest travel choice – but even a basic search on any travel aggregator site will suggest otherwise. This becomes particularly relevant given how many Asian business travellers insist on personalising their travel options, and how flexible most companies are when it comes to travel policies.

Businesses also need a way to act on the data that they consolidate. Some companies I’ve talked to are already exploring platforms which not only track real-time ticket prices, but automatically rebook the ticket if it satisfies certain parameters (including the amount of savings that warrant a rebooking) set by the company. Such a system effectively drives your T&E costs down to their bare minimum over time, with little to no effort on the part of the traveller or T&E manager themselves. After Concur’s merger with SAP, we’ve also found ourselves with the scale and stack depth to build on our existing breadth of data sources and explore potential solutions like these.

For businesses in Asia, analytics and automation are the real keys to meaningful T&E savings – not multiple phone calls to a distressed TMC account manager. I’m seeing this shift in mind-set slowly starting to play out, and it can’t come fast enough. Has your business started using data to tackle the 98% of costs? What has your experience been like so far?