Copyright © 2009 Accenture All Rights Reserved. Kansas City Business Travel Association Expense Management Strategies for an Economic Downturn 12 May 2009

Copyright © 2009 Accenture All Rights Reserved.

Kansas City Business Travel AssociationExpense Management Strategies for an Economic Downturn 12 May 2009

2Copyright © 2009 Accenture All Rights Reserved.

Agenda

• Introduction

• Why do we need a different kind of travel management in an economic downturn?

• What should you do now?

• Best Practices

• Questions


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


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)


“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


“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


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%


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


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


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


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)


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)


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


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?


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


Questions?


Thank You!

Documents

Copyright © 2009 Accenture All Rights Reserved. Kansas City Business Travel Association Expense Management Strategies for an Economic Downturn 12 May 2009