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Pre-Trip Lever Easier To Pull
By Jay Boehmer
OCTOBER 19, 2009 --
The percentage of companies with a pre-trip authorization policy has crossed firmly into the majority in the past year, as cost-conscious corporations have sought to manage traveler demand and bolster compliance.
While the dismal economic landscape has made pre-trip authorization a popular policy lever to pull, maturing online booking and mid-office technologies have removed many associated bottlenecks, giving companies a wealth of pre-trip options from requiring managerial approval for all bookings to simply notifying approvers that an employee will take a trip.
Nearly 60 percent of 210 travel buyer respondents to a Business Travel News survey have deployed pre-trip authorization, up by nearly 10 percentage points from 2008. "A decade ago, anybody who practiced travel management would have advised against a formal, rigid pre-trip authorization process," said Tom Wilkinson president of travel management consultancy TRW Consulting. "What's happened since is the automation has gotten a lot better and online tools emerged to become a core part of travel management."
"During the past year, we've certainly seen almost all of our customers step in and do something in their program, including adding pre-trip approval or extending it to a broader set of trips," said Sabre Travel Network senior vice president of global accounts and GetThere president Chris Kroeger. "The tough economic times of the past 12 months have given travel managers a platform to implement new things and bring perhaps some mandates to their program."
With demand management rising to a priority at many companies, pre-trip mechanisms emerged as a preferred way to reduce discretionary spending. Deloitte Services senior manager of travel procurement and operations Brian Nichols instituted a pre-trip process this year for three of the company's four client-facing business divisions.
"Like many companies with the downturn, we were faced with the pressures of revenues declining, and the main problem for us was to scale back T&E in proportion to the falloff in revenue," Nichols said.
Deloitte deployed its pre-trip system to enable trips considered necessary, while curbing those Nichols characterized as "internal, non-client-facing, non-revenue-generating" travel. Nichols said such "discretionary travel" this year declined 71 percent in the March through June period compared with the same period in 2008, thanks in part to the new pre-trip process. As such, Nichols said Deloitte instituted pre-trip "not just to go after noncompliance, but to reduce discretionary travel."
Concur director of travel industry relations Suzanne Fletcher said the incarnations of pre-trip policies are as vast as the companies that implement them, with some requiring pre-trip authorization or notification for itineraries booked outside of policy, with others for bookings made within 14 days of travel, and still others for international itineraries only or for bookings that exceed the lowest logical airfare by a certain dollar threshold. The list goes on, Fletcher said.
"The company can decide just how much visibility the managers would want or need," she said.
"You can assign separate workflows to any traveler, or trip or project code," Wilkinson said. "It's pretty much infinitely customizable. Some companies don't really want to have a pre-trip approval on that trip from New York to Chicago, but they probably do want to have a better handle on your costs for a trip to Australia."
Wilkinson said advancements in mid-office technology in the past couple years have enabled a great deal of that flexibility. "Because they can break apart the data element in a PNR, it's much easier to extract what a traveler wants to book, then reformat that into an e-mail message and send it to the manager."
UnitedHealth Group rolled out a pre-trip process in the past year, ultimately deciding to seek pre-trip authorization only for noncompliant itineraries.
"Anything noncompliant to our travel policy that was booked would go to the compliance personnel who are operating the tools," said former UnitedHealth Group global travel and meetings director Tamara Gordon at the National Business Travel Association's convention in August.
Gordon, who now serves as director of travel, meetings and fleet at Boston Scientific, said that fares that exceed lowest logical airfares are moved up for notification, but air bookings only require pre-trip approval if the fare exceeds the lowest airfare by $350 or more. "Then we actually stop the ticketing," she said.
Gordon said raising travel policy compliance was the chief benefit of instituting the policy. "If you have a tool that is measuring noncompliance, people are going to adhere to the policy a little bit better," she said, claiming the implementation also yielded cost savings and helped drive preferred supplier agreements.
For years, one of the biggest concerns of implementing a pre-trip policy was that it would create bureaucratic bottlenecks and even cause reservations to miss booking windows while awaiting approval.
Concur's Fletcher said that prohibited widespread deployment. "Very rarely did you see U.S. companies dealing with it," she said. "They found it was kind of an obsolete or unnecessary tool, because people would go through the hassle of chasing down managers and getting the paper signed. Now, pre-trip has grown a bit more prevalent. What we're seeing, though, is not the old piece of paper where you're chasing your manager down—or even the e-mail version—but companies are looking at us to build it in to the technology."
Placing a bureaucratic burden on managers was a concern as UnitedHealth Group rolled out its pre-trip policy. "We issue about 1,600 to 2,000 tickets a week, so if you have one or two people being the approvers and running this technology, that's going to be their full-time job," Gordon said. "If you're going to have managers approving, that's OK too, but you have to train every single supervisor on the rules of travel."
Gordon said the company ultimately selected a group of around 20 people to act as approvers, dividing them among business units.
Eastman Kodak last year required that all international travel be approved by the CFO. However, to help curb bottlenecks, agents do not stop the ticketing process when travelers book outside of policy. Instead, exceptions are reported to the traveler's supervisor, and noncompliant bookings over a certain dollar amount are reported to manager of global travel and fleet Bill Lasky (BTNonline, Oct. 12).
Wilkinson said managers are more connected today than ever. "Going back a decade ago, even the whole e-mail thing wasn't carved in stone," he said. "Now you really can reach a manager anywhere in the world within 24 hours."
Though the severity of pre-trip authorization and other policies ebb and flow with business cycles, it's not clear whether companies will pull the pre-trip policies they've embraced this year back once travel budgets grow. "I don't think pre-trip will go away," Wilkinson said. "Once it's possible and implemented, why turn it off? Unless you have a business manager who's getting too many e-mails, there's no real cost to keep it going."
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