TA2 – From Blocking and Tackling to
Strategic Managing: Meeting Your CFO’s
Expectations
August 25, 2009 – Session A
Travel...
Lagging Indicators
Yasuo Sonoda, CCTE
Sonoda Travel Management Solutions
Principal Consultant
TravelGuru@SonodaTMS.com
Int...
Lagging Indicators: Statistical Statements
 Fewer than 40% of CFO’s are satisfied with
how their company is managing thei...
Lagging Indicators: Key Takeaways
 Know your geography (baseline)
 Track the “right” metric
 Collaborate with your key ...
Know Your Geography
 Complete the baseline analysis
 What do we spend?
 How are we spending it?
 How can we control it...
Report Distribution Example
• Benchmark
• Pareto
• Common Sizing
• Big Picture
• Region
• Organization
• Smaller
Chunks
• ...
Interactive Dashboard
(Informersion - Business Objects – SAP - Xcelsius)
 KPI gauge each unit’s target rates
 Trend by q...
Pareto Chart to Show Category Spend
Cumulative total % by $
Air sub-category spend by region (stacked)
6 of 13
GL Level Report Example
7 of 13
Company Spend by Expense Category
8 of 13
Creating the “Right” Metrics
 Complete the baseline analysis
 Focus on unit cost control
Controllable vs. non-controlla...
Track the “Right” Metrics
Issues:
 Managers are inundated with reports/data
Solutions:
 Keep your metrics simple and tra...
Metrics Example: Pre-Program Baseline
Rank City Pair Total $ (All Airlines) # Trips Average $
% Spend
by $
%
Cumulative
1 ...
Metrics Example: Post-Program Results
Results (Top city pair example)
AdvPurch PaidFare #Tickets
Average
$
% Total by # % ...
Cost Avoidance Example
• Calculate spend if the same % of tickets from the previous period were
purchased with less than 7...
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NBTA_TA2_GLP_PRESENTATION 8.6.09_Sonoda

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NBTA_TA2_GLP_PRESENTATION 8.6.09_Sonoda

  1. 1. TA2 – From Blocking and Tackling to Strategic Managing: Meeting Your CFO’s Expectations August 25, 2009 – Session A Travel Procurement Team Janice Crawford, Kelly Henry Luedtke, CCTE, Susan Long, CCTE, Yasuo Sonoda, CCTE, Karin Thompson, CCTE & Karen VanBuskirk, CCTE
  2. 2. Lagging Indicators Yasuo Sonoda, CCTE Sonoda Travel Management Solutions Principal Consultant TravelGuru@SonodaTMS.com Introductions Today’s World Lagging Indicators Leading Edge Indicators Speaking Their Language Jeopardy! Q & A
  3. 3. Lagging Indicators: Statistical Statements  Fewer than 40% of CFO’s are satisfied with how their company is managing their travel spend.  “While CFOs clearly view travel through a cost-control lens, travel cost management has so far made a minimal contribution to companies’ overall cost control programs.”  Best-in-class companies have 87% of T&E spend under management with 90% average compliance to travel policy.  62% of best-in-class companies measure KPI’s relating to T&E monthly or more frequently. 1 of 13  Only 27% of the respondents felt that their relationship with the travel departments was effective.
  4. 4. Lagging Indicators: Key Takeaways  Know your geography (baseline)  Track the “right” metric  Collaborate with your key stakeholders (i.e. procurement, finance, etc.)  Use the right metrics to drive strategy 2 of 13
  5. 5. Know Your Geography  Complete the baseline analysis  What do we spend?  How are we spending it?  How can we control it?  How can we spend less?  Where should we focus for better control? 3 of 13
  6. 6. Report Distribution Example • Benchmark • Pareto • Common Sizing • Big Picture • Region • Organization • Smaller Chunks • Department • Analysts • Category• Budget Groups • Organization • Department • CC Mgrs • Smallest Units • Cost Centers • Individual Mgrs 4 of 13
  7. 7. Interactive Dashboard (Informersion - Business Objects – SAP - Xcelsius)  KPI gauge each unit’s target rates  Trend by quarter  Grouped by organization/department 5 of 13
  8. 8. Pareto Chart to Show Category Spend Cumulative total % by $ Air sub-category spend by region (stacked) 6 of 13
  9. 9. GL Level Report Example 7 of 13
  10. 10. Company Spend by Expense Category 8 of 13
  11. 11. Creating the “Right” Metrics  Complete the baseline analysis  Focus on unit cost control Controllable vs. non-controllable Apply 80/20 rule  Provide periodic management reports and integrate findings into financial reports to C-suite execs  Measure ROI and performance quarterly and annually 9 of 13
  12. 12. Track the “Right” Metrics Issues:  Managers are inundated with reports/data Solutions:  Keep your metrics simple and transparent. Benefits:  “The right metrics drive the right strategy.”* *“Strategy Execution- Linking Values, Metrics, and Rewards ©2007 CFO Publishing Corp 10 of 13
  13. 13. Metrics Example: Pre-Program Baseline Rank City Pair Total $ (All Airlines) # Trips Average $ % Spend by $ % Cumulative 1 SJC-AUS 637,998$ 1,180 541$ 24% 24% 2 SJC-CHICAGO 325,658$ 658 495$ 12% 36% 3 SF-New York 325,541$ 523 622$ 12% 48% 4 SF-Boston 215,365$ 452 476$ 8% 56% 5 Dallas-SJC 156,258$ 421 371$ 6% 62% 6 Seattle-Chicago 148,652$ 326 456$ 6% 68% 7 Denver-SFO/SJC 102,325$ 268 382$ 4% 71% 8 AUS-Chicago 99,658$ 163 611$ 4% 75% 9 LAX-SJC 96,542$ 325 297$ 4% 79% 10 SF/SJC-MIA 68,547$ 165 415$ 3% 81% Top 10 Total 2,176,544$ 4481 486$ All Other 501,259$ 1171 428$ Grand Total 2,677,803$ 5652 474$ 2004 Top Domestic City Pair by # of Trips (US POS) AdvPurch PaidFare #Tickets Average $ % Total by # % Total by $ < 7days 445,628$ 621 718$ 53% 70% 7-13Days 113,625$ 324 351$ 27% 18% >= 14Days 78,745$ 235 335$ 20% 12% Grand Total 637,998$ 1,180 541$ 100% 100% TransType PaidFare #Trans. #Trips Original 637,998$ 1,180 1,180 Exchange* 12,685$ 321 0 SVC Fees** 21,470$ 113 0 Grand Total 672,153$ 1,614 1,180 570$ *Includes agency fees **No add/collect, just the change fee, includes agency fees 2004 SJC-AUS Advance Purchase Analysis 2004 SJC-AUS Ticket Change Cost Analysis True Average Cost Per Trip ABC Corporation Top City Pair Spend Analysis*1. Identify top city pairs to apply 80-20 rule; 2. Establish KPI; 3. Reduce unit costs Above example is roundtrips only (90% of company trips). If this is not true, use the O&D segment analysis instead.) Reduce tickets w/less than 7 days advance Reduce changes to itinerary 11 of 13
  14. 14. Metrics Example: Post-Program Results Results (Top city pair example) AdvPurch PaidFare #Tickets Average $ % Total by # % Total by $ < 7days 445,628$ 621 718$ 53% 70% 7-13Days 113,625$ 324 351$ 27% 18% >= 14Days 78,745$ 235 335$ 20% 12% Grand Total 637,998$ 1,180 541$ 100% 100% TransType PaidFare #Trans. #Trips Original 637,998$ 1,180 1,180 Exchange* 12,685$ 321 0 SVC Fees** 21,470$ 113 0 Grand Total 672,153$ 1,614 1,180 570$ 2004 SJC-AUS Advance Purchase Analysis 2004 SJC-AUS Ticket Change Cost Analysis True Average Cost Per Trip AdvPurch PaidFare #Tickets Average $ % Total by # % Total by $ < 7days 386,541$ 529 731$ 42% 61% 7-13Days 185,621$ 535 347$ 42% 29% >= 14Days 79,258$ 198 400$ 16% 12% Grand Total 651,420$ 1,262 516$ 100% 102% TransType PaidFare #Trans. #Trips Original 651,420$ 1,262 1,262 Exchange* 9,864$ 254 0 SVC Fees** 18,050$ 95 0 Grand Total 679,334$ 1,611 1,262 538$ 2005 SJC-AUS Advance Purchase Analysis 2005 SJC-AUS Ticket Change Cost Analysis 1. # of tickets issued w/less than 7day notice reduced by 21% (from 53% to 42%) 2. Average ticket price reduced from $541 to $516 (5% or $32K reduction) 3. Airfare per trip reduced from $570 to $538 (6% or $40K) Issues: What if the average cost increased even after shifting? Answer: Calculate cost avoidance 12 of 13
  15. 15. Cost Avoidance Example • Calculate spend if the same % of tickets from the previous period were purchased with less than 7 days advance # TKTs % Total by# Fare$ 669 53% 533,081$ 341 27% 125,052$ 252 20% 125,695$ 1262 100% 783,828$ 2004 Numbers AdvPurch PaidFare #Tickets Average $ % Total by # % Total by $ < 7days 445,628$ 621 718$ 53% 70% 7-13Days 113,625$ 324 351$ 27% 18% >= 14Days 78,745$ 235 335$ 20% 12% Grand Total 637,998$ 1,180 541$ 100% 100% 2004 SJC-AUS Advance Purchase Analysis AdvPurch PaidFare #Tickets Average $ % Total by # % Total by $ < 7days 421,548$ 529 797$ 42% 59% 7-13Days 196,256$ 535 367$ 42% 27% >= 14Days 98,512$ 198 498$ 16% 14% Grand Total 716,316$ 1,262 568$ 100% 100% 2005 SJC-AUS Advance Purchase Analysis •If the % of tickets issued less than 7days advance did not change, company would have paid additional $67,512 (=cost avoidance) 13 of 13

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