Advances in procurement technology and business travel
Digital transformation transcends customer engagement. Transformation can and should also affect your internal operations. For example, with advances in procurement technology the Chief Financial Officer (CFO) and Chief Procurement Officer (CPO) can be agents of positive change and increased profitability. In this context, travel emerges as a candidate for reinvention.
The internal impact of evolving procurement technology
Digital transformation leverages advanced technology to build stronger, deeper, and more sustainable relationships with customers. This is wonderful, but it’s only part of the story. Data-driven platforms, API-based integration, and mobile devices also fuel new customer experiences because they allow for the reimagining of business processes and workplace culture. Basic cost cutting is one of the prime benefits of new procurement technologies. You can expedite purchasing processes, fast-track vendor onboarding, and make better buying decisions based on fresh data. There’s more, though. Technology also makes it possible to strategically align procurement with the business initiatives it supports.
The changing role of the CFO and CPO
Traditionally, CFOs and CPOs saw themselves as executives who negotiated costs and balanced budgets. No more. These roles have evolved to play a more significant part in helping shape a company’s strategy to grow revenue, increase profitability, and create efficiencies. A Deloitte research study revealed that more than 70 percent of finance executives polled said that supporting decision-making is their number-one goal. CFOs and CPOs also still retain responsibility for managing costs.
Using technology to make business travel a driver of profitability
Aligning procurement with digital strategy produces demonstrable results for business travel. CFOs and CPOs now have the ability to use technology to make travel a driver of profitability by unifying and enhancing current processes. This is the future of business travel. A partnership with a travel management company (TMC) is essential for success. With such a partnership, and the TMC’s technology platform, a business can move beyond costly and inefficient manual travel management and unregulated employee self-booking. A TMC partnership could also help with talent, which the Deloitte study shows to be a related challenge facing CFOs and CPOs striving to transform business travel. Sixty percent of CPOs don’t believe their current teams have the skills to execute their procurement strategies. Instead, it makes sense to leverage the most efficient and innovative partner, one that can strengthen and challenge the business travel team to meet its goals.
Why data matters
A TMC and its travel procurement platform provides travel data to travel managers, CFOs, and CPOs. The platform’s data reporting capabilities are critical to operationalize an internal digital transformation of corporate travel. The better the platform’s ability to help with data visualization and analysis, the more it can be an effective and strategic lever for your company. A platform with analytics and data visualization capabilities lets travel managers and buyers see total travel spend as well as compliance with travel policies and preferred booking channels. The platform can offer insights into missed savings, advance booking windows, and online adoption. Data also enables meaningful communication about travel with vendors and internal stakeholders. For example, travel data insights can provide the CFO with information to make the case for travel spend that contributes to revenue growth.
Benefit: Increasing travel policy compliance
Compliance with travel policies saves money and contributes to better traveler satisfaction — an important factor in business performance. With a TMC and its platform, organizations can establish and monitor compliance with air purchase policies. Advance air travel purchase policies, in particular, can deliver significant savings. Hotel policy compliance is another prominent area where you can realize savings. According to the Egencia 4th edition Business Travel and Technology study, 60 percent of companies have a travel policy in place. However, more than half of the business travelers surveyed are allowed to book their travel using any method they choose. A full 46 percent have done so for hotel bookings. Business travelers book out-of-policy because either they couldn’t find a hotel close enough to their destination (37 percent) or they found a better price or hotel within their per diem (37 percent). With a TMC, you can access resources that help your company better understand the behavior of out-of-policy travelers. A travel management platform lets employees efficiently book hotels that are within policy and budget. Now is an auspicious time to consider this approach, given that Hotel Business projects a 3.7 percent rise in global hotel prices for 2019.
Benefit: Reducing hidden costs
Travel buyers often spend an average of 40 hours a month reconciling travel expenses and payment data. A TMC automates purchasing and record keeping, greatly reducing this laborious manual task. Freed from expense and payment reconciliation, employees have more time to focus on doing their jobs and executing strategic business plans. Advances in procurement technology and data analysis can have a profound and positive impact on business travel. Travel is an area where CFOs and CPOs can evolve their roles to be drivers of internal digital transformation. The potential results that point to the future of business travel include improved travel policy compliance and reduction in cumbersome manual processes. More broadly, new travel platforms align travel with the execution of business strategies for revenue growth and intelligent cost cutting. To learn more about Egencia and the future of procurement and travel, download our white paper here.