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Copyright © 2009 Accenture All Rights Reserved. Kansas City Business Travel Association Expense Management Strategies for an Economic Downturn 12 May 2009
2 Copyright © 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
3 Copyright © 2009 Accenture All Rights Reserved. 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 ServicesFinancial ServicesFinancial ServicesFinancial Services 21% Public ServicesPublic ServicesPublic ServicesPublic Services 12% Communication & High TechCommunication & High TechCommunication & High TechCommunication & High Tech 24% Products 26% Resources 17% Total revenue per region Europe, Middle East, AfricaEurope, Middle East, AfricaEurope, Middle East, AfricaEurope, Middle East, Africa 49% Americas 42% Asia, Pacific Accenture is a leading global services company with integrated capabilities in Consulting, Technology and Outsourcing Total revenue per industry Accenture Overview
4 Copyright © 2009 Accenture All Rights Reserved. Accenture Procurement BPO Finance and Accounting BPO HR BPO Procurement BPO Application Outsourcing Infrastructure Outsourcing Business Process Outsourcing Management Consulting Technology Services Outsourcing For the past two years, Accenture has been ranked the worlds 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 $224+ million of savings for clients in CY2008 Average 1,500+ Sourcing and Category Management initiatives and implemented 8000+ supply agreements last year Capital Buying Contract & Professional Labor Facilities and Real Estate HR Services IT & Telecom Marketing Services Travel & Entertainment Utilities / Energy ( ¹ International Association of Outsourcing Professionals)
5 Copyright © 2009 Accenture All Rights Reserved. Today's economic crisis is putting great pressure on companies to reduce costs and control spending wherever they can. Gunther Bright Senior Vice President American Express
6 Copyright © 2009 Accenture All Rights Reserved. You never want a serious crisis go to waste. It's an opportunity to do things you couldn't do before." Rahm Emanuel White House Chief of Staff
7 Copyright © 2009 Accenture All Rights Reserved. Financial Impact of Travel Spend Transformation Improvements in travel spend management have a significant impact on a companys profitability ($M)Baseline Revenues Cost of Goods Sold 5,000 2,500 Gross Profit2,500 SG&A Expenses1,500 Operating Income1,000 Addressable T&E Spend 150 Saving from Transformation % Increase in Operating Income Spend Reduction Scenario 10%15% 15.0 1.5% 22.5 2.25%
8 Copyright © 2009 Accenture All Rights Reserved. The key to sustained savings is continuous transformation of the functions that maximizes spend management. Time Benefit 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 Traditional Strategic Sourcing Demand Management Typical Current State Required Future State
9 Copyright © 2009 Accenture All Rights Reserved. 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 Specific Sub- Categories Spend 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 LeversSavings Tactics
10 Copyright © 2009 Accenture All Rights Reserved. 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
11 Copyright © 2009 Accenture All Rights Reserved. Identify Opportunities Savings IdeaEase of ImplementationPainImpact on Savings Airlines000 Maximize advance purchase & non-refundable fares Open airfare search window to X hours Eliminate 1st class and business class travel (except C's) Hotels000 Require use preferred hotels Reduce number of preferred hotels by market Move to lower tier hotels in all preferred hotel cities Ground Transportation000 Require use of personal automobiles or public transport to/from airport Eliminate reimbursement for limos, town cars & black cars Meetings/Events000 Schedule meetings in second-tier cities if possible Only 1 attendee to conferences/events Mandate use of collaboration options for internal meetings Corporate Card000 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)
12 Copyright © 2009 Accenture All Rights Reserved. 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)
13 Copyright © 2009 Accenture All Rights Reserved. Execute Ruthlessly! Create Internal and External Profile 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 Category Strategy Conduct Competitive Exercise with Supply Mkt Develop Sourcing Strategies & Tactics - AND/OR - Sourcing & Category Management Process Supplier Management Ongoing Supplier Management Demand Management Ongoing Demand Management Fast Track for Identified Quick Wins Business Case Change 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
14 Copyright © 2009 Accenture All Rights Reserved. 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?
15 Copyright © 2009 Accenture All Rights Reserved. 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
16 Copyright © 2009 Accenture All Rights Reserved. Questions?
17 Copyright © 2009 Accenture All Rights Reserved. Thank You!
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