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Travel
Task Force -- Final Report
Co-Chairs, Jeff Brenzel and Diane Palmeri
July 9, 2004
1.
Summary recommendation
Based
on our task force review, the IBM presentation on June 3 and the
ASSET meeting on June 7, the co-chairs recommended to John Pepper
and Janet Lindner that they attempt to negotiate a second stage
engagement of IBM Business Consulting Services to design and implement
a new, end-to-end program integrating expense reimbursement, travel
credit card, travel agency, travel management and operations , and
travel policy.
While
IBM has been identified as having the potential to assist Yale with
achieving its goals in this area, we wish to note that we recommend
Yale seek to develop an integrated, end-to-end travel services solution
whether or not it proves feasible or desirable to retain IBM for
all or part of the design and implementation work.
The
critical argument for an integrated, end-to-end solution is that
it both measures and fosters concentration of spending with contracted
providers, while increasing customer satisfaction through improved
booking and expense reimbursement processes.
The
argument for retaining IBM is that IBM has what Yale lacks, the
expertise both to select and help us to implement an end-to-end
system and also to obtain maximum benefit from contract negotiations
with travel providers. IBM is also in place and up to speed as a
result of work undertaken so far.
Those
points noted, the interaction with the IBM consultants and the work
of the task force itself leads the task force to raise several specific
concerns that should be addressed before any decision to move forward,
either with IBM Business Consulting Services or with any other new
travel partners.
2.
Activities update since the interim report of March
3
Since
our last report, our task force work has focused largely on engaging
IBM Business Consulting Services for an initial consulting agreement
and seeing the IBM team through an assessment and set of recommendations
for Yale. The IBM team made a presentation to the full task force
on June 3, at which a number of members of the ASSET team were present,
in addition to Phil Long, University CIO.
On
June 7, the Travel Task Force co-chairs met with the ASSET group
to discuss the IBM presentation. On June 9, Jeff Brenzel met with
Janet Lindner, John Pepper and the IBM team so that John and Janet
could query the team directly and determine next steps toward the
construction of a second-phase IBM engagement. On June 14, Janet
Lindner convened a group of senior administrators to discuss several
issues raised about the IBM recommendations that involve University
accounting and IT systems. Between June 14 and June 29, university
officials and the co-chairs entered into various discussions with
the IBM team as they proceeded with the construction of a business
case and pricing proposal for their services. On June 29, the co-chairs
convened the final formal meeting of the task force to convey these
developments and to obtain feedback from task force members about
their primary hopes and concerns about the outcomes to be sought
if the University decides to move forward.
3.
Principle factors supporting a second-stage project
Potential
for enhancing user satisfaction : We anticipate that a
well-implemented, end-to-end travel service system that offers a
clean, easy to use interface for purchasing; a unified credit card
system for payment; and streamlines reimbursement could make life
significantly easier for both travelers and business offices.
Potential
for hard dollar savings: The IBM consultants are estimating
that the University can save $400,000 to $1,000,000 annually in
airline travel costs and $330,000 to $660,000 in hotel costs. These
are gross savings, exclusive of implementation and annual maintenance
costs for a new program, which are yet to be estimated and presented.
In addition, there may be substantive hard dollar savings available
from an improvement in ground transportation arrangements from campus
to various airports. These have not yet been quantified.
Potential
for soft dollar savings: The time and energy costs associated
with Yale's paper-based expense reimbursement system is significant,
for the travelers, the business offices in the various units and
the disbursements system. By any means of measurement, the soft
cost of processing travel transactions can be dramatically reduced.
4.
Principal questions and concerns
There
are several substantive issues that Yale will need to consider seriously
before entering a contract:
Weak
existing data and consequent uncertainties regarding hard savings
potential: Because Yale's current travel agency is not
technologically well equipped and because only a portion of the
Yale spend flows through the agency, the IBM team has had to estimate
critical numbers on which savings through better procurement sourcing
will depend. These estimates may prove to be in error.
Overall
balance of economic factors and potential for greater customer
satisfaction: The process owners for procurement, accounting
and information technology will need to assess carefully the relationship
of cost for a new system to hard dollar savings, soft dollar savings
(through workflow streamlining) and potential for customer satisfaction
with the new processes. There is no easy formula by which this
decision can be analyzed and made, and the principal process owners
will need to make a detailed review of the business case presented
by the IBM team. The task force is not in a position to and lacks
the expertise to conduct this review.
Need
for consideration to be given to the people aspects of a transition
– specifically the formulation of a pilot program introduction
to debug the system, a strong communications/education effort,
and an adequate set of incentives : In their final meeting,
the faculty members of the task force especially emphasized their
strong concern over both the willingness and the ability of many
faculty to adopt new administrative procedures, particularly if
some aspects of those procedures (say the use of a single credit
card for purchasing) is mandated. The task force strongly recommends
that in the event a decision is made to move forward, volunteer
high frequency travelers or travel purchasers who are also respected
opinion leaders in the community be enrolled in a pilot program
before full rollout, that an exceptional communications and education
effort be made to provide justification and motivation for use
of the new system, and that Yale consider what incentives can
be provided to encourage compliance. With respect to communication,
central administration and the various principal deans will need
to make a strong case for the benefits both to the common good
and to the individual user for a new system. With respect to education,
task force members specifically recommended an instant response
help line and the availability of one-on-one training on demand
for faculty. In addition to the plain fact that many faculty have
a strong sense of independence from or skepticism about central
administration systems and protocols, many are also either unattuned
to or uninterested in software-driven solutions. With respect
to incentives, the primary concern surrounded the issues of frequent
flyer status and airline miles. There was a strong sense that
many Yale travelers not only use their personal credit cards to
circumvent cumbersome administrative systems for travel requisitions,
but also to build their credit in various airline miles programs.
There will be strong resistance to giving up the airline miles
potential, and Yale should seek in a credit card agreement to
balance the costs and benefits that would be involved in providing
an equal or better miles premium to those in place on most personal
credit cards.
Need
for changes in institutional travel policy : The IBM
team has drafted a streamlined travel policy for Yale. Though
it would have to be adjusted in certain ways for both content
and tone to fit the Yale culture, its virtues are apparent. At
the same time, management will need to review the policy carefully
to determine whether these policies are in fact those that should
apply to travel at Yale. Further, a new policy should be vetted
by focus groups of frequently traveling faculty, business managers
in units with high travel expenditures and special groups such
as those responsible for administering federal grants and contracts
and those in athletics responsible for team travel.
Mandated
purchasing methods: To achieve both hard dollar and
soft dollar savings, Yale must capture relevant data and encourage
use of preferred providers. To do this properly means consolidating
reimbursable credit card purchasing with one credit card company
capable of delivering “level 3” data. It also means consolidating
as much purchasing as possible through an integrated travel agency
/ online booking system that incorporates Yale's preferred provider
contracts and Yale's travel policies. The challenges with implementing
a unified corporate credit card will be eliminating or consolidating
or otherwise changing the current P-card and Amex card programs,
including the handling of non-travel expenses and the mileage
rewards programs that provide many travelers with incentive to
use personal credit cards (as also noted above). A decision will
also need to be taken on whether credit cards retain the personal
liability feature versus adopting a true corporate card. The primary
challenges with a unified purchasing method are that some travel
vendors (Jet Blue, Southwest, etc.) may not appear on a particular
agency's system and that some price-sensitive travelers may be
able to find better pricing for a particular trip through an alternative
source. Yale must determine whether and how off-system purchasing
will be allowed.
Possible
technical problem with expense reimbursement software: One
of the key factors driving customer delight and therefore acceptance
and use of a new system will come with a solution to the current
problems surrounding expense reimbursement. The customer survey
showed this to be a primary issue for users. Apparently, however,
neither IBM's proprietary expense administration software nor
the principal commercial competitors with which IBM is also familiar
are able to support Apple MacIntosh Web browser environments.
Because about 20% of Yale faculty and a small but significant
number of administrative staff use MacIntosh computers, this factor
could sharply constrain the utility of the expense administration
component of the proposal. IBM has indicated a willingness and
ability to support the MacIntosh environment, but Phil Long and
his staff at University ITS will have to further assess this challenge,
which could make successful implementation quite difficult.
Need
for change in travel services staffing: The IBM team
has indicated that with one full-time person in travel management
(Darlene Corgan, the current travel services manager), Yale in
understaffed in this area, even with respect to deployment of
an outside partner such as IBM. During a transition project, Yale
will need to supply additional personnel resources to the project
and may need to look to adding at least one additional FTE on
a permanent basis.
Addressing
the “mixed trips” challenge: The IBM team should be asked
to inquire into and consider how a new expense reimbursement process
will address a common challenge that face s
faculty who often serve Yale interests, another organization's
interests, and/or private interests on a single trip. An example
would be a professor flying to Europe to attend a professional
conference, continuing to another city for a consulting engagement
with a foreign government, all the while accompanied by a spouse.
Purchasing and accounting systems will need to allow professors
(and others) to construct, purchase and readily report and account
for such trips.
Transition
realities: The IBM team has warned that although choosing
a new travel agency should not be a difficult matter, making the
transition to the new agency from the old agency will be painful.
Traveler profiles must be ported over, the new agency must program
its systems for Yale's travel policies and all users must become
accustomed to a new purchasing method. These steps require strong
communications, executive backing and patience.
5.
Other Relevant Matters
Resolution
of challenges regarding ground transportation: Yale travelers
spend a great deal on ground transportation and experience considerable
frustration with New Haven's location with respect to major airports.
It seems clear that IBM's analysis of the airline “opportunity”
for savings will to some degree determine the nature of possible
ground transportation solutions. For instance, the preliminary opportunity
analysis apparently shows that Yale should try to concentrate its
air travel with American and Delta airlines. Depending on the analysis
of most frequently traveled routes, we could find that certain kinds
of frequent shuttle service to selected airports would address a
significant fraction of ground transportation needs. In any case,
this matter will require further study.
Potential
for videoconferencing as a replacement for travel : The
task force expects that the process owners of both travel services
management and videoconferencing will continue to discuss ways in
which a greater investment in and greater use of videoconferencing
might significantly affect travel costs.
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