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01/10/2009 - Business Travel Now - Kim Cochrane

Kim Cochrane speaks with Nedbank�s Howard Stephens about how Nedbank has redesigned its travel processes in a quest for optimised management of such a significant portfolio.

Howard Stephens takes travel very seriously because he sees how Nedbank can change things. As a lifesaving and swimming judge at national level, Howard Stephens, Nedbank�s chief procurement officer in the Group Shared Services Centre Division, is no stranger to rescue, resuscitation and first aid. As such, he�s breathed new life into travel management processes at the bank, with cumulative savings of R50 million over three years just by changing behaviours, he says.

An accountant by trade, Stephens has been in banking at different financial institutions for close on 40 years, both in SA and overseas, and he brought this experience to procurement about six years ago when the group (including Old Mutual SA and Mutual & Federal) decided to work closer together to leverage spend better across various commodities, including travel.

�We wouldn�t have been able to do it if we couldn�t do it together,� says Stephens of his close working relationship with Old Mutual�s Roddy Mann (BTN August 2009). �But while we�re essentially the same in approach, we�ve gone different ways. We�re both vanilla, but he�s got a strawberry coating and I�ve got lime!�

Of all the companies within the group, he says Nedbank has the biggest travel spend. �We spend over R100m a year and it was even more before we started actively managing the portfolio. A high percentage of cost in the bank is staff expenses as well as professional fees and IT. After that it�s probably travel, so it�s within the top five costs we can control.�

In terms of managing the travel spend more effectively, Nedbank began its journey in 2003, the first step of which was to give more focus to the responsibility for travel and negotiate directly with suppliers instead of leaving this role to the two travel management companies.

�We�ve taken more accountability for the portfolio and because of my executive status, travel procurement is recognised and taken seriously, particularly as I control the bank�s vendors. It�s no longer the high-level purchasing of the past.�

Assessing spend from a holistic perspective meant that Nedbank and its sister companies could negotiate better group deals with suppliers as well as separate individual contracts in cases where it made more sense to do so.

�We looked at everything and at the time, this included whether we were getting the right level of rebates, which have subsequently been replaced by upfront discounts and corporate rates. It�s also about reciprocal business. If we bank a supplier, we tend to use their services, but only if they have the right price and the right model.�

In essence, one of Nedbank�s best wins, according to Stephens, has been this collaboration, both within the group and with suppliers. �For example, I talk to Southern Sun for the whole group in Johannesburg and in Cape Town, Roddy is talking with 1time. We focus on our strengths and respective financial services relationships.�

Another plus has been to negotiate at the top table, he says, which going forward has helped build the mutually sustainable partnerships enjoyed with suppliers today.

The next step in the overhaul was to assess travel management best practice through research, participation in industry forums such as ACTE and ITMSA, as well as consulting with TravelWorks� Digby Johnson.

�This was all to help us understand the total cost of travel and its benefits, and to grow with the bank�s strategy in terms of wise spending as opposed to �cost cutting�.�

There is a very simple travel policy of a big corporate in the US, which Stephens loves. All it says is: �We are frugal with money, but please don�t arrive tired for a meeting with one of our customers.�

�We are in a similar space,� he states. �We want to cut the cost of travel, but not if it means the passenger is sitting at an airport for five hours, or so cramped up in a car he can�t move or is booked into the wrong hotel.

Particularly important for international travel is to look at the total cost of a trip including traveller time and energy. If you�re going to an important meeting the next day, fly business class. If you�re going for training, fly economy, but leave a day earlier and spend an early night at the hotel.�

He says it�s about using common sense when travelling. �If you asked people to write down what they did for their own leisure travel versus for the bank�s travel, it would be two different things. We�re trying to move them closer to what they�d do for their own travel.

If you�re going home tonight to eat crayfish thermidor then I have no problem if you order it at the hotel while on bank business. But if you�re going home to eat a slice of bread, and you order the crayfish at the hotel, then I have a problem � unless it�s with a prospective or current customer. If you�re travelling with a customer, does the customer cover the cost of the flight? You don�t want to be in the front of the plane while the customer is in economy.�

The third aspect was to look at the value Nedbank�s TMCs � American Express Travel Services (Amex) and Carlson Wagonlit Travel (CWT) � were adding and to which roles they were best suited, he adds.

�We moved to a transaction fee remuneration structure and incentivised them to help us move more bookings to low-cost carriers.�

Then in December 2008, Nedbank launched its own travel desk to facilitate domestic travel (about 75% of total travel) and because of this, in addition to recent advances in eprocurement (i.e. e-tickets and the like), there was no longer a justifiable business requirement for two TMC in-houses at the Sandton head office. As such, the TMCs moved offsite in July this year.

This was not a sudden decision, he elaborates, and the change was communicated with bank employees for at least six months before the move. Travellers still have access to TMC services so there hasn�t been any negative feedback. In the short term, the TMCs are also providing an after-hours support service for all travellers.

Stephens says once the travel department is completely bedded down, Nedbank may consider doing point-to-point international travel such as the JNB-LON sector. �But we don�t really want to be involved with visa issues etc. I�m also not sure all my staff know where Luton is compared with Heathrow, whereas everyone knows where Lanseria is. For this know-how and experience, we still need our TMCs.�

He says within six months of operation, however, the travel desk had paid for itself and achieved at least 20% additional cost savings.

�We charge for our services,� he says. �We charge less than the TMCs, but it goes back into funding the project. To help with traveller discipline, we also charge double for a change and that fee goes directly back to the relevant cost centre so they can see there�s a cost to a particular behaviour.�

He says Nedbank invited the divisions who were the most challenging in terms of travel to use the travel desk first � those divisions whose travellers booked late on a Friday for Monday morning travel � before it was opened up to other divisions.

�In January this year, we had 100 transactions per month through our travel desk and now we�re on about 1 300 transactions.�

The travel department has five members of staff whom the travel manager � Jenny Burnell � selected from the travel industry. Last year, only Burnell was onboard.

�Instead of opting for someone with travel experience, in 2008 we chose a travel manager from within the bank. We wanted someone who�d been in the bank for a while and knew the culture and the executives � and who could learn travel.�

Another success has been to separate travel strategy from day-to-day travel operations, and as such Shantel Liebenberg, a commodity specialist, was employed to look after strategy.

�If either was doing both jobs, it would be a failure.�

He says they are currently about 70% of where they want to be and by the end of this year, he hopes that all domestic travel will be facilitated through the travel desk. �As part of business continuity, we�ve got a back-up in that we can still send the business or any overflow to our TMCs.�

Systems and processes that helped behavioural change

Since Nedbank already had an effective procurement system � Procure to Pay (P2P) � the idea was not to spend millions purchasing an ERP system, but rather to use the existing best-ofbreed inhouse systems, in addition to a solution that TravelLinck has customised for the bank.

TravelLinck ceo, Roderick Ross, adds that after reviewing the savings that were being achieved at Old Mutual SA, Nedbank approached TravelLinck in late 2007 to help improve the bank�s quality of travel management.

�We worked closely with their IT team to determine what requirements would be met by their internal systems and what TravelLinck would handle. A travel requisition and pre-authorisation system was built on top of P2P. Careful thought was given to the type of data required. Nedbank chose a pre-approval process based on a catalogue of estimated travel costs, which TravelLinck keeps updated. This has greatly streamlined the travel desk�s task and led to faster end-to-end turnaround times and policy compliance.�

Stephens adds that one of the behavioural changes technology has enabled is that travel has to be authorised before it can be booked. �From December last year, no domestic travel has gone through to the TMCs or to our travel desk without authorisation. This simple step has made such a difference. We�ve set up a catalogue, a rough estimate of travel prices, which effectively operates as a travel budget and assists with the visual guilt factor. It�s not 100% accurate, but it gives travellers an indication of what they�ll be spending and what impact their trip will have on the environment.�

He says quotes are no longer allowed.

�Travellers look in the catalogue. When we get the actual cost of the flight, we can say to the travellers that we are better or they�re 10% over budget, as an example. Travellers can choose on P2P whether they want to utilise CWT, Amex or the Nedbank travel desk. Along the way, though, the only option for domestic travel will be the Nedbank travel desk.�

TravelLinck also works in partnership with American Express Corporate Card to streamline travel expenses and with the Nedbank Card and Acquiring business to provide innovative travel payment solutions for large suppliers and micro SMMEs, says Ross.

�To seek out additional productivity enhancements, Nedbank opted to install a leased line directly to the TravelLinck servers at Vox DataPro. This meant that TravelLinck had to pass very strict requirements for bandwidth usage, application speed, security and firewalls.

We are busy with an integration project to electronically integrate Nedbank�s P2P travel requests into TravelLinck so that the Nedbank travel desk can use TravelLinck�s workbench to determine prioritisation of bookings.�

According to Ross, the Nedbank travel desk uses the online TravelLinck portal to select, book, pay and change travel arrangements.

�TravelLinck also provides real-time reporting, all the monthly detailed MIS reporting and reconciliation of Amex card statements. This has meant that the payments processors� role of allocating costs to cost centres has been greatly simplified. The MIS reports include the C02 impact per trip, total monthly spend on �training� and a detailed breakdown of supplier usage; car, hotel and flight spend; traveller behaviour; trends etc. We will be incorporating MICE spend within the total travel portfolio as a future project in 2010.�

While Nedbank�s MICE spend is not completely under Stephens� operation, it�s under his strategic watch. To help manage this spend, which is about 10% of overall travel, it has been incorporated into travel strategy and preferred partners allocated so people can no longer do their own thing when it comes to appointing PCOs etc.

The travel policy was also amended to incorporate important aspects such as Duty of Care, use of internal processes, reimbursements and environmental issues, he says.

While P2P still needs to be upgraded to accommodate multiple travellers (i.e. group travel) on multiple legs, and to offer alternatives to a traveller�s first choice, Stephens says if Nedbank had seen a year ago where they are today with regard to travel, the team would have been delighted.

It�s not only about saving money, but about saving the environment, which incorporates the protection of travellers and supplier relationships. Something Stephens knows all about.

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