- Suppliers’ impact on the traveler experience plays a role in the company’s choice of supplier. Traveler friction also factors into the cost/savings equation procurement loves to calculate.
- Plans that require too much change management or present a weak cost benefit won’t make it past procurement executives.
- Procurement execs want T&E that’s broken down into meaningful subsets, and they like to benchmark against peer companies.
When Aon director of global travel operations Hillary Dallas talks to executives in procurement, the conversation is not as straightforward as their discussions with other procurement category leads. Instead, she finds herself talking about the underlying travel ecosystem and its unique economics.
Unlike other categories, travel comes with an operational and management component that is critical, said Dallas, who actually runs both travel operations and procurement. Travel buyers have to identify the suppliers that travel spend already is flowing to, negotiate the best discounts and implement controls and policies to drive spend to preferred suppliers. On top of that, there’s a huge demand-management component, as travel buyers and managers have to write and review policy, track program compliance and forecast spend.
“Procurement is pretty straightforward,” Dallas said. “You are sourcing agreements and then giving them back to the business; whereas, [in travel] we are really managing it. We are taking discounts off our spend with the goal of continuously improving our agreement and driving share.”
The travel experience also lies somewhere underneath procurement’s choices. LinkedIn global travel manager Leslie Hadden said her job is to ensure a positive travel experience and enhance productivity. She monitors when and what travelers include in their bookings, as well as which suppliers they choose and their comfort on the trip via post-trip surveys. To choose suppliers, she factors in not only discounts but also service. “If my program is based on experience and service, they better have the best customer service or support for my travelers,” she said.
Ultimately, procurement always will be measured on unit cost and efficiencies gained, according to Aon Americas global spend management lead Jason Cesta, to whom Dallas reports.
The key metrics for any procurement category are the spend baseline, the strategy, the projected spend outcome of the strategy and the cost benefit of such a strategy, according to Hogan Lovells global travel manager David McDonald. All these metrics, of course, revolve around savings. Hadden echoed that priority: “Savings is huge. That’s the No. 1 thing. It’s always about the savings, right? How much are you going to save the company?”
Let Procurement Execs Be the Judge
Procurement’s Stake in Managed Travel
Because procurement departments and travel buyers focus on different things, mutual trust can be hard to establish, and that can slow down supplier contracting, said LinkedIn global travel manager Leslie Hadden, who has extensive experience working under procurement departments. Wasted time, she added, leaves savings on the table and can strain travel managers’ relationships with suppliers, who become frustrated with stalled revenue. “It does put pressure on the travel manager because they either take a stance and jump in and help out or they stay out of it and say [to suppliers], ‘Sorry, it’s your problem with procurement. You and I are good, but you guys got to figure it out yourself,'” she said. Thus, many travel managers view procurement as a roadblock to their goals.
Aon director of global travel operations Hillary Dallas has talked a lot with procurement executives about why it’s so important to build managed travel programs. “You can negotiate a contract with an airline or hotel, but if that isn’t embedded correctly within your agencies, there is a good chance that it isn’t working,” she said.
“The first step in our priorities is to find the business need, the business growth and the cost drivers,” said Cesta. “Next is to create transparency and awareness around where we do spend money and whether those monies spent on discretionary expenses are aligned to the business growth objectives or not. Then create controls for finance, operations and other business leaders to make decisions on how to allocate resources that are scarce across different entities.” Basically, Dallas said, leaders want to know where they can find savings and if the company is managing its program the right way compared to similarly sized organizations.
Cesta, who oversees all procurement categories in the Americas, said his biggest concerns come down to balancing the “traditional corporate travel levers” of costs, safety and efficiency.
Cesta travels just six to eight times a year. He relies on Dallas and her team to review supplier use and performance, to measure the impact on travelers and to find opportunities for improvement. For example, “if we see a lot of issues on on-time performance or cancellations and we know we’ve got a lot of colleagues traveling on an airline, then we know we have an issue around irregular operations and we work with our carriers to solve and manage that,” Cesta said.
Hadden reports to LinkedIn VP of workplace Jim Morgensen, who also oversees other service functions, as well as global real estate and facilities. He travels at least twice a month, and at least once a quarter, he flies from his homebase in San Francisco to Asia or Europe. An administrative assistant books his travel because his itineraries “get complicated really fast and take up a lot of time,” and he understands that friction can really frustrate travelers.
“I do see kind of how people get hung up with things and changes in airports. Just changes in hotels or directions on even simple stuff,” he said. Morgensen recalled a trip to a country where LinkedIn recommended travelers use Uber for ground transportation. Once on the ground, though, he discovered Uber didn’t operate there.
LinkedIn recognizes that travel is less a perk and more an imposition—on employees, their well-being and their families. Morgensen said minimizing friction and streamlining travel processes is a priority. “We really want that to be a very positive experience for them as much as we can and make it as simple as possible, make sure there’s no big surprises in it. We try to take care of them absolutely as much as we can,” he said.
In McDonald’s experience, executives he has reported to have rejected travel procurement plans when they require too much change management, have a weak cost benefit or appear to be taking something away from people. He learned that procurement leaders, and indeed all leaders, are short on time, aware of their businesses and smart. So cut to the chase in your reporting, he said. “If you cannot get what you want to say in the first three to four slides, you will have lost them. You also have to present your business case, shall we say, in a way that it almost becomes self-evident by the third or fourth slide.”
Dallas avoids throwing total T&E at procurement leaders. Instead, her team breaks spend down by business division, geography, billable versus nonbillable and in other ways. She also builds dashboards with metrics that answer questions from the basic, like, “How is our spend trending?” to the more complex, like, “Is what we are purchasing aligned with our policy?” or, “Are we adopting the lowest logical fare?” or, “Are we going over our threshold amounts on a market-by-market basis?” Aon procurement leaders also like to gauge the company’s performance by benchmarking with similarly sized organizations.
Procurement is pretty straightforward. You are sourcing agreements and then giving them back to the business; whereas, [in travel] we are really managing it. We are taking discounts off our spend with the goal of continuously improving our agreement and driving share.”
Aon’s Hillary Dallas
Dallas talks with procurement leaders about travel buying in the following veins:
- Demand management: Should we travel, or shouldn’t we travel? Do these trips need to occur?
- Suppliers: What are we actually buying, and should it be bought differently? Should we be staying at luxury hotels or mid-tier properties?
- Policy: Should we change our policy to drive savings? Should we allow people to fly to the U.S. from Europe in business class?
- Sourcing agreements: Should we structure our deals differently? Should we put more agreements in place to cover more spend?
Hadden takes a collaborative approach based on trust, clarity of expectations and mutual understanding with procurement stakeholders. She speaks to them in terms of spend volume, discount impacts, benchmarking and, obviously, savings. They, in turn, trust her expertise, help vet and validate her supplier recommendations and make sure the discounts she has negotiated are in effect and that the service-level agreements she has contracted are met. In this way, the procurement team complements her strategy.
Her credibility flows all the way up to Morgensen, who relies entirely on Hadden’s supplier recommendations. “She will bring me her recommendation, but I rarely get involved in picking this [supplier] versus that one or those kinds of things. I really rely on the team. They’re the experts at it, and they’re much closer to it than I am,” he said.