Business Research. Business Travel eprocurement. Business Travel Process analog or web based?

Transcription

1 Business Travel eprocurement Business Travel Process analog or web based? A study by PricewaterhouseCoopers Unternehmensberatung GmbH Frankfurt/Berlin, November 2000

2 This report has been created by PricewaterhouseCoopers as requested by i:fao Aktiengesellschaft. We would like to take this opportunity to thank the following companies for their generous cooperation and for providing their valued expertise: Andersen Consulting, BASF AG, Continental Reifen AG, Siemens AG. The data for this report was gathered from June 2000 through September It will be published in November 2000 and will be available in both German and English. PricewaterhouseCoopers 11/2000 1

3 Directory Business Research Directory 1 Management Summary 5 2 Objectives 7 3 Comparison of the conventional and web based standard process Procedure Travel application Mining of basic travel data and authorization of the trip Travel Organization Registration of travel conditions/facts Conformity check on travel guidelines Travel booking Ticketing Travel billing Registration of travel expenses Audit of travel cost billing Authorization of travel expenses Billing and payment Reporting and Controlling Differences conventional and web based booking processes 18 4 Potential analysis SWOT analysis of web based business travel booking User perspectives Strengths Weaknesses Critical Success Factors 31 5 Financial Optimizing and Saving Potential Splitting Business Travel Volume Saving Potential Indirect Travel expenses Process Costs Personnel expenses Direct Travel expenses Investment Costs Hardware Costs Software Costs Process Optimizing Costs Cost-Benefit Analysis Scenario I Type A -Company 44 2 PricewaterhouseCoopers 11/2000

4 Directory Scenario II Type B -Company Scenario III Type C -Company Summary 49 ANNEX A 51 Table Directory 52 Illustration Directory 53 Abbreviation 54 Publisher s Information 55 PricewaterhouseCoopers 11/2000 3

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6 Management Summary 1 Management Summary The study at issue evaluates the potential and risk of Web-based Business Travel Management and analyses general conditions and improvements necessary for operation. The technical basis is established by the so called Internet-Booking- Engine (IBE), which determines the conditions of the whole booking process reorganization. Process steps in the phases of trip application, travel organization, travel cashing up, reporting and controlling can effectively be supported by a Webbased tool including an online-booking system and interfaces to external service providers. This procedure is applicable to all point-to-point bookings and establishes a direct link to the service providers. Such a Web-based process takes advance of optimizing potentials regarding standard business trips for the whole travel management of a company. Thereby a standard business trip is defined as a singular point-to-point booking, including flight, car rental, train and hotel booking. In the operational sector process costs (indirect travel costs) can be reduced about 25% by continuous IT-support and reorganization of the booking process. Increased transparency regarding to kind and amount of purchased services from service providers (flight, hotel, train etc.) lead to an improvement in lower purchasing conditions. The reduction of purchasing prices (direct travel costs) by 5% used as a basis for this study is a conservative approach and is focussed on companies already having optimized their travel management processes. Consistent and redundancy-free data maintenance as well as electronic archiving of the necessary documents leads to avoidance of media changes. Electronic validation of trip to be booked and travel guidelines guarantees conformity with the travel guidelines. In the future increased flexibility is required from both travelers and companies. An online booking tool guarantees this flexibility along the whole process chain by access to the booking process via web that is independent of location and time. Travel Management will be relieved of operational tasks and therefore can increasingly orientate towards strategic subjects. From a PwC point of view Travel Management will establish itself as an integrated part of the purchase department in the long run. In an optimum situation, using an Internet-Booking-Engine allows to bypass travel intermediaries. By shifting responsibility to travelers, a stronger integration into Travel Management s interests will occur; travelers can plan their trips more flexibly and independently. Basis for this is an automated securing of travel guide- PricewaterhouseCoopers 11/2000 5

7 Management Summary Business Research lines by the EDP-system and improved possibilities of steering by travel management. Realizing the mentioned optimization potentials requires management effort in order to guarantee that standard trips are booked exclusively utilizing the web based booking process. To implement the outlined Web-based processes the following critical conditions are to be assured: The establishment of a web based procedure assumes an IT-infrastructure that allows an integration of internal and external processes. Travelers need access to the internet. Necessary data protection for a Web-based booking process (e.g. firewalls) needs to be implemented. In order to realize all given potential, the system implementation needs to be supported by process reengineering. This requires detailed planning and project management. Referring to the poll by GfK 2000 only 5% of all interviewed companies use online booking tools with direct connection to reservation systems and automated travel guidelines so far. However, 19% of the interviewed companies intend to introduce this technology during the next two years. The most influential factors from a financial point of view are the number of travelers, the number of trips per traveler and the percentage of standard-trips. The developed scenarios and analysis show that at a level of about bookings per year amortization will already be reached within less than a year. that even with a conservative estimation of cost reduction (i.e. 25% costs of processes and about 5% direct costs) overall savings of about 6% per year can be realized. The developments in travel management are tightly correlated with the trends of e-procurement in purchasing. 6 PricewaterhouseCoopers 11/2000

8 Objectives 2 Objectives Due to increasing globalization business travel volume in Germany has increased extremely during the last five years. Besides wages and salaries and expenditures for research and development, travel expenses are one of the highest cost factors in German companies. The strong increase is reflected in a growing consciousness and new demands on companies Business Travel Management (BTM). Therefore, especially companies with a high volume of travel expenses analyze their direct and indirect business travel expenses and optimize their administrative processes regarding business travel. The present business case, drawn by PricewaterhouseCoopers on behalf of i:fao AG, examines the existence and nature of optimizing potential that can be realized by utilizing web based business travel management systems. Additionally these potentials are confronted with possible risks. Illustration 1 graphically depicts the procedure of the business case s elaboration. The present study is based on three pillars: workshop results, a reference model developed by PwC and topical analysis and evaluations and benchmarks related to business travel management (Step 1). The workshops were carried out in four German major companies, which represent a business travel volume of approx. DM 2 bn. Illustration 1: Procedure Elaboration Business Case Workshopresults PwCreference model Benchmarks Step 1 Construction of a conventional and a web based process model for business travel booking Step 2 Description and neutral comparison of the process models (Chapter 3) Step 3 SWOT Analysis: Elaboration of the monetary forces and weaknesses with regard to quality of an internet based travel management (Chapter 4) Step 4 Scenario Analysis: Focussing of the monetary aspects and the calculation of different scenarios (Chapter 5) Step 5 PricewaterhouseCoopers 11/2000 7

9 Objectives Business Research Based on these three pillars the PwC-reference models for business travel booking/-cashing up have been verified (appendix A). The conventional process model essentially derived from the PwC reference model represents one possible form, deputizing for many different practical alternatives. The web based process model established by PwC has been developed in the course of the study and verified in the workshops. The following step (step 3) describes and compares both models impartially in order to create a common initial position for the following drawing up (cf. chapter 0). Step 4 highlights the quantitative and qualitative optimization potentials as well as the threats. This is accomplished through the comparison of the conventional and the web based standard process model with the help of a SWOT analysis (cf. chapter 3). The strengths and weaknesses as well as the opportunities and threats of an internet based tool implementation are drawn up. Assuming different prevailing parameters, step 5 focuses on the sheer financial consequences (cf. chapter 5). In a cost benefit analysis the investments necessary for an implementation are confronted with the expected saving potential. 8 PricewaterhouseCoopers 11/2000

10 Comparison of the conventional and web based standard process 3 Comparison of the conventional and web based standard process 3.1 Procedure In the following paragraph, the current form of business travel booking is compared descriptively to an internet based business travel booking process. The conventional standard process of business travel booking has been defined on the basis of workshop results, a PwC reference model and current benchmarks of the business travel management. The intention of the conventional process is not to show all possible forms, but to define a usual process as a basis for discussion and comparison. The web based standard process for business travel booking has been developed in tight co-operation with operative Business Travel Managers, but independently from business travel booking tools existing on the market. This chapter deals with an impartial but comparing explanation of the processes, as they are shown in appendix A. It is the basis for the following SWOT analysis. The following description and comparison of the conventional and the web based standard processes is focussed on process phases which are independent of the models. These process phases could be identified in both process models. Illustration 2: Process phases and process steps Travel application Travel organization Travel billing Reporting/Controlling Process 1 Process 2 Process 3 Process 4 Process 5 Process 6 Process 7 Process 8 Process 9 Process 10 Process 11 Mining of basic travel data Authorization of the trip Registration of travel conditions and facts Conformity check on travel guidelines Travel booking Ticketing Registration of travel expenses Audit of travel cost billing Authorization of travel expenses Billing and payment Reporting/ Controlling Travel application, organization, cashing up and Reporting & Controlling were identified as the four main process phases. The process phase travel application is composed of the process steps Compilation of the basic travel information and Authorization of the planned trip, the process phase travel organization contains the process steps Registration of the travel conditions/ facts, Checking on travel guideline conformity, Booking the trip and Ticketing. The process phase travel billing consists of the process steps Registration of the travel costs and PricewaterhouseCoopers 11/2000 9

11 Comparison of the conventional and web based standard process Business Research Accounting and payment. The overall process booking business trip ends with Reporting and Controlling. Internal and external organization units can be involved indirectly as well as directly in the business trip booking process. Internal organization units are, in the following paragraph, the organizational Units Travel Management, Travelers, Decision Makers, Travel Cost Cashing up, Financial Accounting, Controlling and Human Resources. Travel centers, service providers (airlines, hotels, car rental companies, train) and credit card companies compose the external organization units. Web based business travel booking enables several efficiency enhancements along the process chain. In summary these changes are the integration and automation of process steps, the reduction of organization units involved in the process and the implementation of new concepts. These adaptations are made possible by information technology. The process is based on a workflow management system (WfMs) as a steering component, which basically takes on the task of the administration and the active arranging of the online document flow. The process clippings presented below compare the conventional sequence with the web based sequence from business trip application to travel organization. Presuming a smooth accounting sequence without process detour the clipping focuses on the main process only. The illustration shows the integration of different partial processes in a web based sequence. Travelers perform all activities necessary for the trip booking in interaction with the online booking tool. These activities can be executed uninterrupted, without switching the medium and without any further communication. All interim conditions which are necessary for the booking in the conventional process are archived in the web based process as well. 10 PricewaterhouseCoopers 11/2000

12 Comparison of the conventional and web based standard process Illustration 3: Comparison of conventional and web based process trip application and trip organization Application has to be explicitly authorized V Travel requirement has arised XOR Travel requirement has arised Compilation of the basic information of the trip Trip is applied for Authorization of the applied trip manual XOR Trip is authorized automatic media break Coordination travel conditions between traveller and Travel Center V Compilation travel conditions / facts Compilation of the basic information of the trip V Compilation travel conditions / facts V media break Trip is authorized Travel conditions coordinated and compiled Trip is authorized Travel conditions coordinated and compiled V V V V V Trip booking Trip booking automatic XOR XOR Trip is booked and changes (cancelling, change of booking) necessary Trip is booked and no changes necessary Trip is booked and changes (cancelling, change of booking) necessary Trip is booked and no changes necessary Medienbruch media break... manual Travel papers are sent (by intern mail) or deposited in the TC... Travel papers are sent electronically on demand only conventional Travel papers reached the traveller web based Travel papers reached the traveller PricewaterhouseCoopers 11/

13 Comparison of the conventional and web based standard process Business Research 3.2 Travel application Mining of basic travel data and authorization of the trip Conventional: The basic travel information in the conventional process is compiled by means of paper, mentioning name, personal number, cost center, telephone number, trip duration, destination, purpose of the trip reason and preferred means of transport. In the conventional process, the necessity of an explicit authorization is given in advance because of company related specifics concerning travel guidelines. From the process sequence point of view it is a matter of passive regulation. In the phase of trip application the traveler is responsible for the application of the guidelines. In general, there is an authorization intended for the trip and another one for the trip plan. There is a tendency to demand only an authorization for the trip application, as shown in the conventional PwC model (cf. appendix A). This authorization will be given at a time, when the exact trip plan is not fixed yet. In case of a paper based trip application, the authorization of a trip is often asked from the decision maker. In addition, employees of the travel center and the decision maker (representing another organization unit) might be involved in the process besides the traveler. Web based: In the internet based model of trip booking, the travelers compile their trip plan, the travel conditions and the existing travel facts online first. Based on this detailed data base the system checks the trip with regard to all necessary guidelines and rules, e.g. travel guidelines, travel budgets and personal profiles. Such detailed data allows a determined identification of exceptions, i. e. non conform trip plans. The checking takes place dynamically and standardized, so that changes in travel guidelines are immediately active and can be applied to all travel organizations. Only in the case of the identified exceptions, the decision maker will be involved as an additional organizational unit. The described procedure presupposes that the necessary guidelines and instructions are inserted centrally into the system. Thus, in the web based model, only the traveler and as an exception the decision maker are involved. I. e. if trips are booked in agreement with the guidelines they are automatically accepted by the system. Only if this is not the case the decision maker has to authorize manually. In accordance to PwC experiences about 95 99% of all bookings are in line with existing travel guidelines. In addition, the decision makers are provided with a better, i. e. safer and more detailed basis for decision making. In the case of web based booking the described steps cannot unambiguously be related to the phases Trip application or Travel organization because they are integrated embracing both phases by the online support. 12 PricewaterhouseCoopers 11/2000

14 Comparison of the conventional and web based standard process 3.3 Travel Organization Registration of travel conditions/ facts Conventional: For the conventional process which intends an explicit trip application, the authorization is followed by the actual travel organization. The traveler sends the authorized basic travel information to the responsible staff at the travel center. Different media like telephone, fax, or personal meetings are usually used in this procedure. Based on the transmitted basic information, the travel center agents prepare a travel plan, i. e. the travel conditions and facts are compiled. This phase is accompanied by a permanent coordination between the traveler and the travel center employee. Communication is primarily done by telephone. Other ways of communication, like fax or , are used as well. Web based: The sequences of a web based standard process have already been described in Conformity check on travel guidelines Conventional: Currently the travel center agents are in charge of checking on the travel guidelines. For this task the travel center agents are prepared by trainings and provided with access to the current travel guideline documents. Currently the subdivision of the process in application and organization and the missing IT-integration over the different process phases lead to multiple filing and maintenance of personal profiles. For instance, during the application, profiles are kept independently from each other, as a draft in the text processing, at the travel organization in the GDS (General Distribution Systems) and in addition, for example for the billing, in the travel center. Web based: The web based booking process requires centralized filing of all applied guidelines and data. As learnt from experience there must be access to the company specific and legal guidelines in addition to the personal travel profiles as well as also to other statistic data. As an example a credit card-cost center-classification or a classification between projects and project members is mentioned The system actively supports the checking rather than passively. A responsible person, often a travel manager, controls and maintains the checking centrally. That is to say that the active checking, which is currently spread among different travel center agents will be transferred to the system and will be made consistent Travel booking Conventional: In the current process of business travel booking, system support is limited because the information is made available passively only. The booking takes place within a communication process between the travel center agent and the traveler. Practical experience shows that the coordination process spans the time period from PricewaterhouseCoopers 11/

15 Comparison of the conventional and web based standard process Business Research first planning until the actual beginning of the trip. If there are any changes (change of booking / canceling), the referring booking case will be restarted. Both at the travel organization and at the booking and changes, external travel mediators, like travel centers and owners of GDS, like Amadeus, Galileo and Sabre, are utilized. In the current process of business travel booking availability is limited by the working hours of the travel center employees. Web based: Within the internet based process, booking is carried out by directly linking the booking tool to the booking system. Travelers are the only ones who are responsible for their travel organization and booking. The activities shown in illustration 3 between the status travel requirement has arised and travel papers reached the traveler are bundled and integrated by an internet/ and intranet travel interface. For any changes, travelers have access to their own booking. Within a web based process travel mediators can be avoided by directly linking the service providers to the internet interface. Considering the whole process, the aim is a bundling of all external service providers. To achieve this objective, an opening of the external systems is necessary, in order to establish access to these systems over standardized interfaces. Because of the division of further organization units and the system shifting, a permanent temporal and spatial availability by internet access is enabled Ticketing Conventional: During ticketing, travel documents like trip schedules and paper tickets, are either deposited for pick-up or distributed by internal mail. Web based: In a process with integrated IT-infrastructure, the travel documents are transmitted and can be retrieved electronically when needed. For example when applying Payas-you-fly, the actual booking is only confirmed with actual boarding. This will trigger the debiting process. Such a redesign of the ticketing process results in an avoidance and therefore relief of the distributing unit. Following this trend, Deutsche Bahn for example already directs travel booking and ticketing towards WAPtechnology and mobile devices. 3.4 Travel billing The travel cost billing is composed of the incurred costs before beginning of the trip on the one hand and all during the trip incurred costs on the other hand. 14 PricewaterhouseCoopers 11/2000

16 Comparison of the conventional and web based standard process Registration of travel expenses Conventional: Currently the travel expenses are transferred from the CRS/GDS (e.g. START Amadeus) or other travel center systems into the ERP system in advance of the trip. The data transfer is realized utilizing different media (e.g. automated online data balancing, by CD ROM etc.). Costs accuring during the trip are often added over a decentral travel cost registration tool by the travelers themselves. The registered data is directly transmitted to the respective ERP system. Also a hardcopy of the billed items is created. This along with the corresponding receipts is the basis for authorization of the actual travel costs by the decision maker. As a consequence, it is necessary to proceed to an explicit assignment of the receipts. Web based: In a visionary process the transmission of travel cost in advance of the trip is automated and fed into the purchasing company s ERP system based on open interfaces via online linking. Invoices are issued by the service providers themselves. One has to note that the invoices are not activated until actual utilization of the service by the traveler, so this is a consistent enhancement and application of the Pay-as-youfly principle. Regarding the cost registration during the actual trip ( decentralized completion of travel cost billing ), immediate registration by mobile devices like cellular phones or hand-held-pcs is strived for Audit of travel cost billing Conventional: Currently an audit of the demanded travel expenses is performed manually before the travel expenses are actually accounted and a paying takes place. In most cases an in-house organizational unit for performing the travel expenses billing is established. The intensity of this audit ranges from a complete audit of all billed item to a spot check of individual billings. Web based: In a visionary process booking is automatically checked for travel guideline conformity, supported by comparable historic data. Automated preparatory work facilitates the checking authority s efficient checking. Not even in the future a deletion of the sub process manual accountancy audit is not desired. The manual spot check of travel expenses takes on two more functions. Quality assurance of the automated travel guideline is carried out. Also, manual checking data guarantees quality. PricewaterhouseCoopers 11/

17 Comparison of the conventional and web based standard process Business Research Authorization of travel expenses Conventional: As indicated in chapter 3.4.1, the current process requires an authorization of charged travel expenses. For this purpose the decision makers receive a hardcopy of the charged travel expenses and the corresponding receipts for signature. Web based: With IT support any billed travel expenses are checked automatically regarding conformity with legal and company specific regulations and guidelines. As a consequence, only exceptions are reported and will be explicitly authorized by means of conventional methods (cf. previous paragraph). This acting on exceptions stipulates that all guideline-conform bookings do not cause any further expenditures through authorizations. Through system support, conspicuousness is set on a consistent, standardized level. Actual exceptions ask for more precise manual checking and authorizations. Basically the decision maker is enabled to see all actual travel expenses. A media change is avoided by electronic signing Billing and payment The explicit authorization of a trip, as far as required, and the audit of the trip billing are conditions for payment the traveler. For both processes, for the conventional as well as for the internet-based, the travel costs in the ERP-system, already checked and authorized, are cashed up automatically. Conventional: Referring to the conventional process there are basically two known methods of payment. Either the company makes a down payment in advance or the company introduces company credit cards. As the tendency shows payments by company credit cards, down payments are no further taken into account here. The company credit card account is charged with the costs of the trip. The credit card is drawn on a private bank account or a company bank account. In the conventional process both ways of payment are common. To leave the travelers account unaffected when charging the private bank account, the credit card has to feature a sufficient credit period. Web based: A web based process is focussed on the travelers own responsibility. Therefor travel expenses are charged to their private account. Again the travelers are actually not burdened because of a sufficient credit period. The final payment takes place with authorization and flawless auditing by credit advice. 3.5 Reporting and Controlling Conventional: Analysis and evaluation of the trip are used as a controlling tool for the internal travel management, as plan control for the cost center responsible and as basis for condition negotiations for the travel management. 16 PricewaterhouseCoopers 11/2000

18 Comparison of the conventional and web based standard process Current reports are based on external data. The information sources are EDPsystems of credit card organizations (e.g. PC Netto), travel centers and other external service providers like car rental companies. Especially the turn over is analyzed and evaluated regarding different procedures (flight, rental cars, train, etc.) and the number of tickets or room nights respectively. In the analysis the canceling and change of booking and the data integration, e.g. the compilation of data from different sources, are difficult. In addition, in most cases a balancing between the current and the planned data cannot be done, because no consistent evaluation basis can be defined. An integration of the actually billed travel expenses has not taken place yet. The point of time and structure of the evaluation strongly depend on the means of data transmission by external service providers. Web based: A web based process intends to abolish existing dependencies on external data regarding to frequency and behavior of travel. All bookings over the internet/ intranet interface are recorded internally. In a Travel-data warehouse this data is brought together with the corresponding data from travel cost billing. The data is kept on the transaction level, so that an evaluation broken down to the smallest detail regarding to a variety of different characteristics becomes possible. Furthermore a balancing between the planned and current data is possible. The separate filing of data assures an improved control of the imported external data. All authorized organization units can, if required, access the current processing status of the travel data. That way the system produces a dissociation of communication and report processes. On that occasion previously involved mediating organization units, like e.g. decision makers which transmit authorizations, or an accounting department, which confirms the payments, can be excluded. PricewaterhouseCoopers 11/

19 Comparison of the conventional and web based standard process Business Research 3.6 Differences conventional and web based booking processes Table 1: Overview main differences conventional web based process business travel booking Process phase Process step conventional Web based Travel Mining of basic When? Before booking Integrated in registration application travel data of travel conditions/facts How? Paper based, Mail Integrated in registration of travel conditions/facts Who? T Integrated in registration of travel conditions/facts Authorization of When? Before registration of Only in exceptional the trip travel conditions/facts cases: upon registration of travel conditions/facts How? Paper based Electronic, Workflow supported Who? T, TC, DM IBE, T, DM Registration of When? Before booking Before booking travel conditions/ How? By CRS and Systems of By a company specific facts direct service providers online booking tool Who? TC T, IBE Travel Conformity check When? During registration of With registration of travel Organization on travel guidelines travel conditions/facts conditions/facts How? Travel guidelines know- Automatic guideline how TC-employees balancing Who? TC IBE Travel booking When? Before Ticketing Upon registration of travel conditions/facts How? GDS/CRS Internet/intranet based interface Who? T, TC T, IBE Ticketing When? Before beginning When needed of the trip How? Intern mail or Electronic collection Who? TC, T IBE Travel Registration of When? Before and after the trip Before and during the trip billing travel expenses How? ERP-data balancing Invoice input through with CRS/GDS and service provider travel center systems electronic receipt input paper based receipt through T (e.g. WAP) input through T Who? TC, CC, T KP, T, S Audit of travel When? After registration of the Automatically during the cost billing actual travel expenses registration of actual travel expenses, spot checks/exceptions after registration of the actual travel expenses How? manually Spot checks/exceptions manually, workflow supported atomization Who? TCA IBE, exceptions through TCA 18 PricewaterhouseCoopers 11/2000

20 Comparison of the conventional and web based standard process Table 1: Overview main differences conventional web based process business travel booking Process phase Process step conventional Web based Authorization of When? After audit of the travel Only in exceptional cases travel expenses cost billing after audit of travel cost check How? Paper based signing of Electronic, workflow the travel cost billing supported signing Who? DM DM Billing and When? Upon authorization of Upon audit of the travel payment the travel expenses cost billing and after possibly necessary authorization How? By company and/or By private company private company credit credit card card Who? FA FA Reporting/ Reporting/ When? After travel cost check Before, during and after Controlling Controlling trip How? Analysis and evaluation Analysis and evaluation of extern data in a internal travel data warehouse Who? CO Everyone provided with access T = Traveler KP = Service Provider TC = Travel Center CC = Credit Card Company DM = Decision Maker TCA = Travel cost accounting unit IBE = Internet Booking Engine FA = Financial accountancy CO = Controlling PricewaterhouseCoopers 11/

21 Potential analysis Business Research 4 Potential analysis In the following paragraph, potentials of a web based business travel management are worked out by means of a SWOT analysis. It is focussed on developing Strengths and Weaknesses as well as Opportunities and Threats of an e-business oriented travel management. In the subsequent chapter 4.2 all critical success factors influencing or presupposing an exploitation of the demonstrated potentials are examined. 4.1 SWOT analysis of web based business travel booking The following SWOT analysis helps companies confronted with the decision to implement a web based standard software for business travel booking, to identify relative strengths, weaknesses, opportunities and threats of the accompanied change for travel management. The analysis shall help to better evaluate market opportunities and competition components as well as critical success factors related to a tool implementation. Most of the quoted strengths, weaknesses, opportunities and threats have been worked out in the course of different business travel management workshops with operative representatives. Also, current business travel studies as well as benchmarks and experiences from PwC business travel management projects are considered in the analysis. In the SWOT analysis, the strengths and the derived opportunities are confronted with the weaknesses and the arising threats. The objective is to bring together and to structure all strengths and opportunities as well as weaknesses and risks that have to be considered. At this point of time monetary and qualitative aspects are not yet differentiated. The following paragraph is structured by the factors internal and external as well as strategic and operative. The differentiation internal versus external is related to the respective organization unit from the tool implementing company s point of view. From a strategic point of view all aspects oriented towards medium- and long-term objectives and changing the fundamental orientation of the travel management are considered. Accordingly, higher expenditures and potential improvements or savings are correlated with the strategic aspects many times. For management purposes the related opportunities and threats are more significant than the operative aspects. The operative aspects are considered as aspects with short-term effect and with a minor change potential. In an overview table all aspects of the SWOT-analysis, categorized by process, organization and IT, are summarized. That way transparency regarding all opportunities and threats related to a system change can be created, distinguished by internal and external processes as well as strategic and operative effects. 20 PricewaterhouseCoopers 11/2000

22 Potential analysis The subsequent SWOT analysis shows the following structure: Strengths Weaknesses Process Process Organization Organization IT IT Chances Risks Internal Operational Internal Operational Strategic Strategic External Operational External Operational Strategic Strategic As far as applicable, different user perspectives are demonstrated. Starting-point is the management s point of view. The analysis is completed by the travel management s, the traveler s, and the external service providers point of view. Thereby PwC strongly understands travel management as strategic procurement rather than organizing operational processes. In the last section 4.2 all aspects are discussed with regard on the background of critical success factors. PricewaterhouseCoopers 11/

23 Potential analysis Business Research Table 2: Overview SWOT-analysis Strengths Process: Quality assurance master data Central administration of master data and transaction data guarantees consistency and avoids redundancies in data keeping/ registration Authorization process current data through onlineconnection and realtime reporting automatic check of travel guidelines and further restrictions Standardized and consistent authorization guidelines (Travel-) guideline flexibly, without delay and company wide adjustable Application of traveler s personal profiles Transparency of before trip cost Weaknesses Process: Purchase Travelers motivation and technical understanding are required Additional time constraints for potentially more expensive employees Classification of standard vs. non standard trips Permanent maintenance of travel data through Travel Management necessary Transparency guaranteed only if all bookings use the online booking tool Online booking tool only partly suited for non standard trips Purchase Guarantee Best Buy Only available trips are indicated Comprehensive check of settlements Intuitive user interface No time/ location restrictions Company internal analysis and evaluation Accepted service providers are suggested or set in advance by the Travel Management Reporting Adjustable workflow Transparency of actual and planned travel data 22 PricewaterhouseCoopers 11/2000

24 Potential analysis Table 2: Overview SWOT-analysis Strengths Organization: Direct contact to service providers Bypass travel intermediaries Transmission of responsibility Introduction of credit cards for employees Reduction of communication need Weaknesses Organization: Expenditures for the integration of new knowledge of partner management (key function) Expenditures for 1. Change Management, 2. Manual Development, 3. Employee training IT: Access restrictions to a single system Minimization of expenditures for data maintenance Avoiding media changes Opening of the system through standard interfaces Integration of travel data at short term Direct interface linking to external service providers Automation of data flow IT: Agreement on general interfaces to external service providers is necessary PricewaterhouseCoopers 11/

25 Potential analysis Business Research Table 2: Overview SWOT-analysis Chances INTERNAL Strategic: Increased flexibility Guarantee of conformity with travel guidelines Reduction of process costs Cost control Concentration on core competencies Strengthening of employees motivation Introducing higher level of flexibility for authorization hierarchies Enabling permanent communication between Travel Management, travelers and decision makers Risks INTERNAL Strategic: Insufficient steering through inadequate data quality Insufficient acceptance of the reorientation in the Travel Management caused by bad change management INTERNAL Operational: Saving potentials 1. Travel expenses 2. Personnel expenses 3. Process costs Process acceleration Reduced communication- and transaction-costs Reduced billing expenditures Company wide internal, operative steering of the travel bookings Availability of current data Process can be oriented towards exceptions Improvement in quality of work Relief of the travel center clerks Minimizing expenditure for data maintenance Joint use of existing IT infrastructure INTERNAL Operational: Insufficient acceptance of new oriented Travel Management caused by inadequate Change Management Poor data quality Technology dependent risks: 1. System stability 1. Capacity of network 1. Telecommunication standards Performance problems Permanent connection to CRS/GDS * Evaluation and controlling of external service providers 24 PricewaterhouseCoopers 11/2000

26 Potential analysis Table 2: Overview SWOT-analysis Chances EXTERNAL Strategic: Optimization of travel conditions Efficient collaboration with partners Ability to steer service partners Re-organization and optimization of partner management Increase employees motivation and satisfaction Cost savings in the company and in the travel center Risks EXTERNAL Strategic: Potential loss of business partners through insufficient relationshipmanagement and changed market conditions EXTERNAL Operational: Improved travel conditions Reduced fees for travel intermediaries Integration of additional functions Increased motivation of external service providers employees Closer cooperation Potential for release of work capacity for external companies Technical integration of external service providers EXTERNAL Operational: Organizational adaptation in the travel centers through modifications in booking procedures User perspectives Strengths Management: The most important strategic, external strength of a Web-based booking tool for the management is the transparency of the performances of business travel partners. On basis of a company internal analysis and evaluation very detailed and secured data material can be worked out. Thus not only dependency is lost in relation to the analyses of the external service providers, which are partly the negotiation partners at the same time. Rather also an accurate evaluation and a founded Controlling of exactly these service providers becomes possible. With the gained cost transparency, the possibility of performance partner control mentioned in section Travel Management and the potential direct binding of the external service providers, management has the chance of reorganizing and optimizing the whole purchase- and partner management-process as well as appropriate travel conditions. PricewaterhouseCoopers 11/

27 Potential analysis Business Research Direct booking at travel providers using the online-booking tool accelerates the booking process itself. Besides a closer cooperation between all parties involved, as intermediaries, credit institutes, travel service providers and the company itself, becomes possible. Process acceleration saves potentials for cost lowerings both in the travel agency and within the enterprise by saving of process costs per travel reservation. Media breaks are avoided by an automation of data flow. Such a technical infrastructure significantly reduces costs for transaction and communication. This applies both to the enterprise and to their external service provider. Travel Management: A major strength of the e-business based business travel booking as it is described in chapter 3 is situated in the adjustableness of the Workflow. That way new internal, strategic adjustments can be supported. The adaptation of the authorization hierarchy, the automatic checking on travel guideline conformity as well as the modified internal payment conditions support the tendency towards larger personal responsibility of the travelers. A transmission of the billing responsibility on the employees is realized by e.g. first loading the personal account of the employee with the business travel expenses. Thus the coworker is sensitized for booking business trips correctly and efficiently. Through central adjustments of the tool, travel management can assure the travel guideline conformity automatically and can react flexibly on changes. By doing so cost and time savings are implemented. Thus, the process involved persons (travel management, decision makers, travelers, travel mediators) get the chance to use their respective core competencies and concentrate on the core business. The web based process enables a quick balancing of the actual and the planned costs. As a result the decision maker can perform a short-term, central cost steering. The constant availability of the Internet-based tool for business trip reservation (24 hours on seven days a week) enables permanent communication between travelers, enterprises and performance providers. This way a short-term travel cost and travel data registration is enabled; at a longterm basis a direct transfer of the costs in the account system is aimed by mobile terminals during the journey. Increased internal flexibility due to traveling on one s own responsibility takes advantage of the reorganization s potential. Transparent real-time reporting enables the travel management to choose only those service providers who act contract conform. Service partner control can be supported online. On the basis of these data and the steering capability through an integrated suggestion and controlling system during the decentralized trip organization, the position of the travel management is strengthened at company condition discussions with external partners. 26 PricewaterhouseCoopers 11/2000

28 Potential analysis Besides the direct cost reduction potentials due to improved conditions, indirect savings as a result of more efficient collaboration with the partners can be realized. Tight collaboration can be reflected e.g. in a better information flow or in the fixing of a special status for travelers. I. e. by implementing the Web-based process, Travel Management gets the basis for focusing on and optimizing strategic purchasing. Setting up a central travel data warehouse leads to advantages for the internal operative handling of business travel booking. Besides the central master data maintenance, all transaction data are brought together according to standardized criteria. This way a consistent data keeping without redundancy and without delay can be assured. Especially the short-term adjustments of the travel guidelines and the maintenance of the personal profiles hold opportunities for optimizing the current state. That means concretely that e.g. coworker profiles do not have to be maintained any longer separately and several times in the organizational units enterprises, travel agency, GDS / CRS and credit card companies. Concerning the transaction data, e.g. through the online linking the topical data are permanently available, so that an early availability of accounting data (actual travel expenses) is realized. The automatic checking of travel guideline conformity is based on standardized criteria which have to be defined. As a consequence of the strictly guideline conform bookings, potential savings in the areas travel, personnel and process costs arise. Travel expenses are saved e.g. through travel guideline conform utilization of the best conditions which are compiled with the so called best-buy functionality. Potentials for savings of personnel expenses are identified for the traveler, the booking person and in the travel management through travel guideline conditioned process acceleration. Process costs can be economized through the reduction of communication and transaction costs. Concrete examples for savings are the discontinuation of telephone and postage costs, the permanent availability of topical offers, the only showing of available trips as well as the discontinuation of communication expenditures and communication errors. Because incurred travel expenses are already fully checked by the system on their guideline conformity, the checking expenditure of the traveler, decision maker and of the travel cost accounting unit can be reduced, respectively be utilized more effectively. In a Web-based booking system, travel guidelines can be adapted flexibly without delay. So through intern steering the travel guidelines can be modified online and company wide, e.g. with regard to authorized credit cards, travel booking partners, company conditions for flights, hotels and rental cars or preferred airlines. Since the system can already prove presumably resulting costs of a trip before the start of the trip transparently, travel permission by decision makers is based on high data quality and security. PricewaterhouseCoopers 11/

29 Potential analysis Business Research The system flexibility can be line up booking processes with exceptions as far as special measures, like an explicit authorization, are only taken if the system recognizes an exception. This procedure is in contrast to the conventional process where an automatic checking on exceptions, like budget exceeding, is not possible. Another operative force of the implementation of an Internet-based booking tool is the reduction of internal organizational interfaces between e.g. traveler and travel center or traveler and accounting unit. The internal restructuring enables the redefinition of the employee profiles in the travel management, e.g. in regards to the updating of the travel guidelines. Through online booking processes, capacities in the travel center are released and clerks are relieved. The opportunity for a work improvement in quality is given. The IT support of the Web-based booking tool through a workflow management system enables an expenditure minimization for data updating. Already existing IT infrastructure in the company, like an internet browser, can also be used after the implementation of a booking system. Through an internet interface software updates can be brought in automatically. The user advantage in the IT area is over all the access to only one system. GDS/CRS costs are minimized by a direct interface linking to the service providers ( bypass travel mediators). In addition the opportunity occurs to integrate additional functionalities on the basis of the existing online interface. An example for that would be the availability of further data fields to be filled when booking trips. Traveler: From view of the traveler the stabilization of the personal responsibility means in as much a temporal discharge as that the traveler is freed from some process steps, for instance travel permission. In addition, the employee shall be motivated as he takes over more responsibility on his own. Another motivation factor is the possibility of online booking tools that the employee can care for his personal profile from a central point. Every traveler is responsible for the maintenance of his own personal profile. Through the introduction of employee credit cards the necessity of capital binding travel cost advances lapses. The previously indicated closer collaboration also holds a decisive strength for the traveler. So special travel stati or better information raise the travel comfort. This is in the end reflected in an increased satisfaction of the employees. For the traveler the mentioned assurance of the best-buy including the automatic balancing of travel center data and company specific conditions represents through the Web-based booking tool an important support for business travel booking. 28 PricewaterhouseCoopers 11/2000

30 Potential analysis A web based business travel booking tool can be operated intuitively by the travelers and assures the application of the personal profiles. Media breaks are avoided by an extensive use of online documents. The implementation of a web based travel booking process releases the traveler from restrictions in time and space. As far as internet access exists a trip can be planned and booked. The traveler increasingly takes over responsibility. During the web based process a major part of the additional communication expenditures lapses. Through the direct linking, the traveler has additional functions at his disposal that he could not or only in a more complicated way access before, as e.g. the administration of his mile account. Service provider: If online bookings are done, as far as possible, directly at the service providers, the booking process is accelerated. The process speeding up holds cost saving potentials for both the travel center and the tool implementing company through a reduction of necessary work time per trip booking Weaknesses Travel Management: The quoted changes in the strategic orientation require new knowledge, especially in the partner management, i.e. choosing the right partners and collaboration. The tasks of the involved travel manager show a shifted main focus away from an operative organization and controlling to a so called relationship management. The complete transparency of actual and plan costs, specified as strength of the tool, can be only given, if all business trip reservations are handled exclusively over the tool, resp. all trips not posted over the tool are brought in automatically. Like every re-organization, the redesign of the business travel booking holds in advance some threats. All company political influences fall into this area. In principle a cultural change, as a re-orientation of the intern travel management causes, is built on the basis of company wide agreement and acceptance. The software technical state of current web based booking tools presupposes insufficient support of non point-to-point trips. Up to date more complex trips can not be booked online without problems because e.g. an automated application of the travel guidelines is not yet matured fully. Therefore necessity for the traveler arises to categorize trips to be booked as standard or more complicated trips. The operative steering through the travel management requires a permanent updating of the travel guidelines. In addition the centralization of the responsibility for the application of the travel guidelines in the travel management holds the risk of an organizational dependence. System stability and reliability, network capacity and the current telecommunication standard fall within technology depending risks. The data quality of an online PricewaterhouseCoopers 11/

31 Potential analysis Business Research booking tool is always dependant from the technical system development and stability. Direct online booking with service providers for example can lead to performance and network capacity problems depending on the data volume that needs to be transmitted on to the in-house system. The technology depending risk state of the technology exists not only because of the current state of development in the telecommunication technology but also because of missing legal basis s of e.g. electronic business travel accounting by WAP. In addition the coordination with legal accountancy restrictions (e.g. fiscal aspects of automated transactions) can only be controlled with difficulties because the transactions pass off in the background. A direct linking of the service providers results in increased negotiation needs with a higher number of direct travel service providers. The organizational as well as the IT changes that accompany the implementation of the web based process include financial expenditures. Traveler: Along with increased responsibility the travelers face higher expectations. All traveling employees must have the motivation and a minimum of technical understanding to do the additional activities, like e.g. the care of the centrally kept personal profiles or to do an online travel organization. At the same time, the responsibilities for such additional tasks depend on the actual organizational arrangement of the booking process. Through the possible debiting of the employees accounts per credit card cashing up acceptance problems might occur. Besides introduction expenditures result during the introduction of coworker credit cards. Additionally it applies to consider that the mentioned process cost savings are also potentially facing price raisings. They result from moving number of process steps (cf. chapter 0) from e.g. the travel center clerks to the company employees whose utilization might cause higher costs per time unit. This might lead to a rise of the total travel booking costs if better earning employees, doing Web-based booking of their trips, provoke higher personal and process costs than with the conventional telephone booking via travel center. The implementation of a Web-based booking tool includes expenditures for change management, drawing up of a manual and employee training which have to be taken into consideration. If these aspects are not sufficiently taken into consideration, there might occur acceptance problems, based on distrust, missing user knowledge or passed on status thoughts. The necessity of decentralized maintenance of the personal profiles by the traveler can because of the additional work-load lead to missing tool acceptance. In addition the quality of the stored personal profiles directly depends on the quality of the data input by the travelers themselves. 30 PricewaterhouseCoopers 11/2000

32 Potential analysis Service providers: Through the possibility of direct communication with the service providers, the market relations between service providers, service mediators and service consumers move. For that reason extern service providers need to position themselves in a new way, like the tool implementing company faces additional demands mainly driven by an extended relationship management. Especially for the service providers the complexity of the partner management increases, through the potentially higher number of directly linked business partners. The opening of the systems eases non authorized data access into both the internal and the external systems. Especially external service providers who administrate external data have to fulfill high security requirements. The necessary booking tools need to be as far neutral as the selection and the maintenance of external service providers should exclusively under control of the company s travel management. 4.2 Critical Success Factors The opportunities and threats, confronted in the SWOT analysis, have to be evaluated before the background of critical success factors: To realize the given potentials the management needs to make sure that all bookings are done in accordance to the defined Internet-based process. The implementation of a Web-based booking tool has as a consequence that the tasks and responsibilities of the people involved in the booking process change fundamentally. The whole re-organization must as a result be accompanied by a change management which guarantees that all process involved people are enabled and motivated to cope with these changes. The system acceptance of all tool users is the basic condition for a successful implementation and therefor has to be guaranteed in advance. Hardware and software inclusive Internet/ Intranet access must be available for all potential users of the company. The implementation of a web based process presupposes an IT infrastructure that enables an integrated procedure inside the implementing company and to the external business partners. This presupposes an agreement on interfaces, interchange protocols and data formats. A Web-based booking tool can only work and take advantage of all saving potentials if a travel management structure exists in the company and if the internal travel processes are optimized to a large extent. Therefore processes have to be analyzed and reorganized. PricewaterhouseCoopers 11/

33 Potential analysis Business Research The process optimizing is preceded by a detailed planning which has to be followed by a consistent project management. Into this area fall e.g. decisions about who takes over the required maintenance of the Web server ( Web-hosting vs. Web-homing ), how generally accepted interfaces and logs are defined or how the exact division of responsibilities and organizational figure of the process are arranged. 32 PricewaterhouseCoopers 11/2000

34 Financial Optimizing and Saving Potential 5 Financial Optimizing and Saving Potential The following chapter quantifies the potentials of financial optimizations and savings, which can be realized through a Web-based tool implementation, in order to compare them to the average investment which comes with an implementation of an online booking tool. To estimate the saving potentials of the different business travel management segments correctly, the average travel costs of major German companies during the financial year 1999 are taken into account. Based on PwC benchmarks the costs have been split into the different segments flight, hotel, process costs, expenses, car and train. This is followed by a the presentation of the different possibilities for travel cost savings in chapter 5.2. When analyzing the given monetary potentials, which can be realized by implementing a Web-based booking tool, the direct and indirect travel expenses are mainly focussed. A reduction of direct travel costs for example can be caused by improved procurement conditions. In comparison indirect travel cost basically consist of personnel expenses and process costs. Potentials for reducing process costs can be realized by accelerating the process itself or by improving communication efficiency. In addition to monetary improvements an introduction of a Web-based booking process can take advantage of non-monetary potentials, such as increased flexibility, motivated travelers and optimized data material. These improvements in quality are not taken into account during the following calculation of the financial saving potentials, as they can not be sufficiently assessed regarding to their monetary impacts. In chapter 5.3 all investments necessary for the implementation of a Web-based booking tool are quoted. The chapter Financial Optimization and Saving Potentials ends with a costbenefit analysis. In this analysis the saving blocks which are identified through the implementation of a Web-based tool for business travel booking, are confronted with the costs for procurement, implementation and maintenance of such a tool. PricewaterhouseCoopers 11/

35 Financial Optimizing and Saving Potential Business Research In different scenarios the expected savings and the duration of amortization are calculated regarding to a variation of expected travel cost volume and expected number of booking processes. 5.1 Splitting Business Travel Volume Based on PwC benchmarks and additional figures taken from workshops held in major German companies that cover a business travel volume of more than 50 million DM, the percentage of direct and indirect travel expenses in 1999 is represented as follows: Illustration 4: Average Share of segment Business travel expenses 1999 per cent Flight Hotel Source: PricewaterhouseCoopers Unternehmensberatung Process costs Expenses Car Train The largest block of costs with 26% of the total travel cost volume in 1999 represent the flight costs, closely followed by the costs for overnight stays. Altogether, on average 47% of all business travel expenses have been dedicated to the employees transportation (flight, car and train), whereof the share of the overnight stays makes about 23%. The shares of process costs and general expenses both represent about 15% of the overall travel expenses. The 13% car outputs consist of the costs of rented cars and company cars as well as gasoline costs by the use of private cars. According to the interviewed Travel Manager, between 70% and 95% of all flight costs arise at point-to-point destinations. Regarding national flights only the share of point-to-point flights shows the highest percentage (between 80 and 95%). The Wirtschaftswochen-GfK-Study of Business Travel Climate 2000 reveals average travel expenses of DM 661. (297 USD) for national trips and DM (887 USD) for international trips in the financial year PwC benchmarks estimate the average total costs per trip, as an average of international and national trips, at DM 940 (423 USD). 34 PricewaterhouseCoopers 11/2000

36 Financial Optimizing and Saving Potential For the financial year 2000, travel managers interviewed within the context of the present study, expect on basis of an increasing business travel volume a rise of total travel expenses of about 3 to 10%. According to above mentioned travel managers, especially rental car companies, but also airlines and hotels cause higher costs through rising wage rates and salary scales. The increasing cost pressure of hotels is due to an improved transparency of international costs as well as to the German hotel prices, which are low compared to the other European countries. 5.2 Saving Potential In the following paragraph, saving potentials for business travel bookings are worked out, which can be realized through the introduction and implementation of a Web-based booking tool. According to a recently released GfK-survey, only five percent of all German major companies use online booking tools with direct linking to a reservation system and deposited travel guidelines. But within the next two years, 20% of the people interviewed take an implementation of an online booking tool into consideration and therefore intend to examine the potential savings. In the following discussion saving potentials within the area of the indirect and direct travel expenses are examined. Thereby the emphasis of the view is put on standard trips, which can be handled by a Web-based online tool over the entire process chain of the reservation. Here a standard trip is defined as a point-to-point flight with a hotel overnight stay and a car rental. Saving potentials of more complex non standard trips, still handled the conventional way by the companies employees, are not taken into consideration. Nevertheless savings e.g. in the area of the company conditions can be realized for non standard trips as well, they are neglected in the following paragraph. Here, tool related saving potentials of standard bookings is given priority and economies of e.g. direct costs in the area of non standard trips can be realized independently from the tool Indirect Travel expenses As already mentioned in the introduction of chapter 5, personnel expenses and process costs fall within the saving potential of indirect travel expenses. In the following paragraph, communication and transaction costs incl. personal costs of the companies internal employees are considered as process costs. All in the booking process involved persons apart from the travel center clerks are described as internal employees of the company Process Costs In workshops, which were part of this study, travel managers of German major companies estimated the average process duration of their standard business travel bookings. To define the average needed time scope of each booking step, average values on the basis of the figures raised in the workshop and other benchmarks have been calculated. As a result, Illustration 5 presents the average duration of the total process of standard business travel booking. PricewaterhouseCoopers 11/

37 Financial Optimizing and Saving Potential Business Research Illustration 5: Process duration of a standard business travel booking Average conventional process (total c. 43 min.) c. 43 min. Cancelling/ Trip application Trip organisation Change of Trip billing booking c. 7 min. %part: c. 15 c. 18 min. %part: c. 42 c. 1 min. %part: c. 3 c. 17 min. %part: c. 40 The different standard process steps are calculated by the multiplication of work and transaction expenditures per process with an average rate per hour of 36 USD. So for an average of 43 minutes which are required for the handling of a standard booking process costs of appr. 26 USD arise. In the in 1998 released study by CSC Ploenzke about the Business Process Business Travel Management a reduction potential of up to 50% of the total process costs through the application of electronic media in the travel management is estimated. Based on a current survey accomplished in cooperation with German travel managers PwC estimates that saving potentials in the area of standard booking of between 25 and 50% can be expected. On the basis of these workshop results and PwC benchmarks, a saving potential of between 25 and 35% seems realistic. Therefore in the following cost comparison of a conventional and a web based standard booking a conservative saving potential of 25% is assumed to be realized along the entire process chain after process optimization and implementation of a Web-based booking tool. 36 PricewaterhouseCoopers 11/2000

38 Financial Optimizing and Saving Potential Illustration 6: Process cost confrontation of conventional and web based process Average conventional process (total c. 43 min. = 26 USD) Trip application and organization Cancelling/ Change of booking Trip billing c. 25 min. c. 15 USD c. 1 min. c. 1 USD c. 17 min. c. 10 USD Average web based process (total c. 32 min. = 19 USD) Trip application and organization Cancelling/ Change of booking Trip billing c. 19 min. c. 11 USD c. 0,5 min. c. 0,5 USD c. 13 min. c. 7,5 USD The Web-based booking process of a standard trip is as a consequence feasible in appr. 32 minutes, which corresponds to process costs of appr. 19 USD. This calculation is based on the assumption of a constant rate of process costs per hour. With the implementation of a Web-based standard software, the discontinuation coming with media breaks and the tool related process acceleration based on the optimized process chain, authorization and checking processes (cf. chapter 3 and 4) as well as the assurance of guideline conform bookings, on average about 11 minutes can be saved for each standard booking. This corresponds to an average reduction of process cost of about 7 USD per standard booking process (26 USD 19 USD = 7 USD). PricewaterhouseCoopers 11/

39 Financial Optimizing and Saving Potential Business Research Illustration 7: Comparison process costs conventional and web based USD ,5 10 7,5 Conventional Standard accountancy Web based standard booking 0 Phase Trip organization Phase Trip billing Entire process trip booking Personnel expenses Due to the current state of the art a global direct binding of the service providers is unrealistic at present. That is why PwC assumes that for travel centers the implementation of a Web-based standard software leads to a 25% reduction of the expenditures in time concerning standard bookings (SB). Illustration 8: Calculation released personal capacities in travel center Travel center clerk works 8 hours a day Travel center clerk works 230 days a year Travel center clerk dedicates 60% of his work time with SB (standard bookings) General Travel center clerk handles 1 SB in 20 minutes = 3 SB per hour Travel center clerk can handle a maximum of 5,520 SB (24 daily x 230 days) Actually travel center clerk handles only 3,450 SB a year (60% of 24 x 230 days) Without tool Travel center clerk handles 1 SB in 15 minutes = 4 SB per hour Actually travel center clerk handles 4,600 SB a year (60% of 32 x 230 days) with tool Released personal capacity through tool 1150 (4,600 3,450 = 1,150) 38 PricewaterhouseCoopers 11/2000

40 Financial Optimizing and Saving Potential Figures drawn from recent experiences prove that without the possibility to book online, a standard booking (flight, hotel and rental car) can on average be handled in 20 minutes time. This involves telephone inquiries as well as invoicing and sending the invoices. With 230 working days and 8 working hours a day (52 weeks 4 weeks vacation 2 weeks public holidays + training + illness x 5 days = 230), each travel center clerk can handle maximum 5,520 standard bookings (24 SB x 230 days = 5,520). If one supposes that 60% of the working time of the travel center clerks are dedicated to the handling of standard bookings (appr. 5 hr.) and 40% with other bookings and tasks (appr. 3 hr.), 3,450 standard bookings can actually be handled per employee and year. If the handling of a standard booking through a tool implementation can be accelerated by 25%, travel center clerks can handle 4 instead of 3 standard bookings per hour. With a five hour activity for standard bookings, a travel center clerk can handle 4,600 standard bookings a year (5 hr. x 4 SB x 230 days = 4,600). On the above mentioned premises the process acceleration allows 1,150 additional handling of standard bookings per year. This means an increase of about 33%. To calculate the possible staff-capacity which can be set free, the maximum number of bookings per travel center clerk needs to be correlated to potential of acceleration in the booking processes. The additional tool related handling of 5 travel center clerks (5 x 1,150 = 5,750 ) makes possible that one travel center clerk (5,520 SB) can be economized (5,750 > 5,520). Over all, accepting the above stated premises, the personnel expenses in the travel center can on average be reduced by entrusting every 6th clerk with other tasks. This represents savings of 16.7% of the personnel expenses. Illustration 9: Comparison staff costs conventional and web based per cent Conventional standard Web based standard Variation of number of clerks in travel center Direct Travel expenses Especially the in chapter 4.1 quoted strategic strengths of a Web-based tool have direct influence on the travel procurement and realization and as a result on the direct travel expenses. PricewaterhouseCoopers 11/

41 Financial Optimizing and Saving Potential Business Research Potentials for cost reduction of the travel procurement can be implemented by direct bundling and controlling of the travel volumes. Internal cost transparency and the possibility of specific service partner steering permit to negotiate favorable conditions in terms of costs with the service providers (flight, hotel, rental car, train). In addition there is according to a survey of Deloitte & Touche a positive relation of guideline conform bookings to the total number of handled bookings and the negotiation success with service providers (so called compliance rate ); e.g. the higher the rate of conform bookings, the better the conditions are negotiated. A further cost reduction potential holds the trip handling. So e.g. through directly linking airlines pay-as-you-fly-programs can be realized. Concerning point-topoint flights which represent more than 80% of all national business travel flights, the exclusive utilization of electronic tickets (e.g. ETIX) costs can also be economized. According to the recently published GfK study, ETIX is used by 83 percent of the companies in Germany. In addition, from 2001 on, electronic train tickets can be printed out at appr. 1,700 long-distance traffic ticket machines in Germany. The potentials for savings in the area of travel procurement and handling can be seen between 2 and 7% of the total travel cost volume, according to participants of the workshop. That assumes that after a process optimization with a subsequent tool implementation, 5% of the total travel cost volume in the areas flight and hotel as well as 2,5% of the travel cost volume of the rental car and train bookings can be economized. The percentages stated here are in as much conservatively set as these are realizable also for enterprises with one on base of the conventional processing concept optimized travel management. Illustration 10: Comparison direct travel expenses conventional and web based per cent Conventional standard booking Web based standard booking Changed travel costs vol. flight Changed travel costs vol. hotel Changed travel costs vol. car Changed travel costs vol. train 40 PricewaterhouseCoopers 11/2000

42 Financial Optimizing and Saving Potential 5.3 Investment Costs With the implementation of a Web-based booking tool occur in principle three cost blocks: 1. Hardware costs 2. Software costs 3. Process optimizing costs. The form of the cost blocks shall be examined in the following paragraph for different companies, differenciated on the basis of trip volume. Following the example of the PwC benchmarks, the cost-benefit analysis distinguishes between companies with about 500 tool users (Type A), with about 4,000 tool-users (Type B) and with 20,000 tool-users (Type C) Hardware Costs The implementation of an online tool for business travel booking causes hardware costs in the subsequent areas: GDS Communication Server GDS wires Application software Application server Database server The amount of the several cost blocks is directly related to the number of users. If one supposes that every business traveler disposes of a PC with Internet/ Intranet access, the following average hardware costs occur, staggered by companies Type A, B and C. The cost information assumes the number of tool users quoted above and is based on average market values: Tabelle 1: Übersicht Hauptunterschiede konventioneller und internet-basierter Prozess Geschäftsreisebuchung Number tool users Hardware costs in USD 500 Type A c. 14,000 4,000 Type B c. 56,000 20,000 Type C c. 180, Software Costs The following software investments have to be realized for the implementation in relation to the expected tool users: Server license Web hosting costs Transaction costs per booking Maintenances of data bases PricewaterhouseCoopers 11/

43 Financial Optimizing and Saving Potential Business Research Graduated after the different number of necessary user licenses the following average software costs per year result according to predicate of providers and as a function of the number of posting transactions: Tabelle 1: Übersicht Hauptunterschiede konventioneller und internet-basierter Prozess Geschäftsreisebuchung Number tool users Software costs in USD between 500 Type A 13,000 und 45,000 4,000 Type B 47,000 und 280,000 20,000 Type C 160,000 und 1,350, Process Optimizing Costs As already described in chapter 4, a Web-based booking tool can only work and exhaust all saving potentials if a travel management structure is constructed inside the company, and if the travel processes are optimized as far as possible. The related costs are estimated as follows: Tabelle 1: Übersicht Hauptunterschiede konventioneller und internet-basierter Prozess Geschäftsreisebuchung Company Type Process Optimizing Costs in USD Type A c. 160,000 Type B c. 740,000 Type C c. 1,305, Cost-Benefit Analysis In the subsequent cost-benefit analysis, the through the implementation of a Webbased booking tool identified saving blocks are confronted with the costs for procurement, implementation and maintenance of such a tool. In together three different scenarios the expected economizing potentials through variation of the number of travel bookings per year are examined with regard to the duration of amortization of the realized investments. The scenarios are oriented towards three companies of different size that are distinguished by the number of active travelers. The calculations are realized with reference values of 500, 4,000 and 20,000 travelers per company. The scenarios are also oriented towards the average booking number per traveler and year. The worked out scenarios are based on 2, 10, and 18 yearly bookings per traveler. As already described in chapter 5.1, topical PwC benchmarks estimate the average total travel cost expenditures per trip, as an average of international and national trips, at 423 USD. To determinate the total travel cost volume, in the following paragraph the corresponding total bookings of the year are multiplied with the average costs per trip. The scenario calculation also presumes that 80% of all bookings are standard bookings. 42 PricewaterhouseCoopers 11/2000

44 Financial Optimizing and Saving Potential The segment splitting of the total travel cost volume is realized accordingly to the in chapter 5.1 described cost splitting percentage in German major companies. The only exception is the segment expenses which is left out of consideration in the following cost-benefit analysis, as it cannot be influenced by the tool. So the calculated total travel cost volume without consideration of the expenses divides itself into the following relation: Table 3: Calculation of the segment splitting percentage without expenses Travel segment Segment splitting percentage Segment splitting percentage according to PwC benchmark according to PwC benchmark with expenses without expenses Flight 26% 30.6% Hotel 23% 27.1% Process costs 15% 17.6% Expenses 15% / Car 13% 15.3% Train 8% 9.4% Total 100% 100.0% The saving potentials through the tool utilization are exclusively related to standard bookings and are estimated conservatively. That means, that PwC assumes that the presented percentages are viable even for companies who already optimized their travel management processes. All savings which can be realized through process optimizing in the area of non standard trips, are left out of consideration in the scenario description (cf. chapter 5.2). All scenarios are based on the conservative premiss, that in the flight and hotel area can be economized 5% of the total volume per segment through service partner steering, improved cost transparency and automatic choice of the travel guideline conform booking class. For the cost blocks rental cars and train, a conservative saving potential of 2.5% of each volume is expected. Whereas the amount of expenses is not diminished through the tool, process costs can be reduced through the tool implementation by 25%. The scenarios confront the tool related saving potentials in the area of direct and indirect travel expenses with the required investments in hardware and software as well as with the process optimizing. So the corresponding duration of amortization of the investments is calculated. The tool related savings of travel center clerks is calculated by dividing the number of yearly standard bookings through the maximum of the realizable standard bookings by one employee (reference value for the scenarios: 5,520). The result shows the number of employees working to full capacity. In the scenarios, as a reference value is given a saving potential of 1/6, as it has been derived in chapter PricewaterhouseCoopers 11/

45 Financial Optimizing and Saving Potential Business Research Scenario I Type A-Company The scenario I is gone through at the example of a company with 500 tool users, where the tool related travel cost savings of a Type A company are calculated. The calculation starts from the assumption that every user realizes on average 10 transactions per year, which consist of flight, hotel and rental car booking. The calculation is based on following premises: Table 4: Premises Scenario I Type A company Premiss Value Calculation Description Number of bookings 5, x 10 Multiplication of number of tools users per year with Ø number bookings Average Travel 423 USD PwC benchmark: Ø Total cost volume/booking expenditure per trip (incl. flight, hotel, RC) Total travel volume 2,115, x Ø Total cost expenditure per trip USD 5,000 x number bookings per year Share standard 80% Share of SB of total bookings bookings (Relation SB : non-sb = 80 : 20) Number standard 4,000 80% von 5,000 Yearly number of pure standard bookings per year bookings Number of TC clerks 0 4,000 : 5,520 : 6 Quotient of number SB, the who potentially can maximum of the realizable SB by one be released TC clerk and 6 (every 6 th TC clerk can be economized through process optimizing) In the following paragraph the travel cost volume without Web-based tool application is confronted with the travel expenses with tool application. The resulted savings are, at the same performance, calculated in detail for the first year. The calculated savings of the years 2 and 3 assume a 5 percent increase of the total travel cost volume. Table 5: Calculation tool related travel cost savings Type A company Travel expenses by segments travel expenses without tool saving- travel expenses with tool tool-related (10 yearly bookings per traveler) implementation (year 1) pot. implementation (year 1) savings 80% 20% SB 80% 20% (year 1) SB non-sb SB non-sb Flight (30.6% of total travel expenses) 647, , , % 621, , ,000 26,000 Hotel (27.1% of total travel expenses) 573, , , % , ,000 23,000 Car (15.3% of total travel expenses) 324, ,000 65, % 318, ,000 65,000 6,000 Train (9.4% of total travel expenses) 199, ,000 40, % 195, ,000 40,000 4,000 Travel expenses TC-related 1,743,000 1,394, ,000 1,684,000 1,335, ,000 59,000 Process costs (17.6% of total travel expenses) 372, ,000 74,000 25% 298, ,000 74,000 74,000 total travel expenses year 1 2,115,000 1,692, ,000 1,982,000 1,559, , ,000 total travel expenses year 2 (5% increase) 2,221,000 1,777, ,000 2,081,000 1,637, , ,000 total travel expenses year 3 (5% increase) 2,332,000 1,866, ,000 2,185,000 1,719, , , PricewaterhouseCoopers 11/2000

46 Financial Optimizing and Saving Potential If one confronts the calculated tool related travel cost savings with the on the market customary investment costs in hardware and process optimizing as well as the yearly software costs, it is demonstrated that already in the year after the implementation the tool related savings in smaller companies lay almost always above the investment costs. The only exception is a company, where the average number of standard bookings per year is only appr. 800, which corresponds to 2 average bookings per tool user and year. In this case, an amortization of the tool costs is only reached after four years. In all other examined scenarios the investment is already amortized within the first year. Table 6: Calculation duration of amortization of the tool investment Type A company bookings bookings bookings per user p.a. per user p.a. per user p.a. tool-investment costs software (yearly) 14,000 27,000 41,000 hardware 14,000 14,000 14,000 additional implementation costs 18,000 18,000 18,000 total investment costs 46,000 59,000 73,000 tool-related savings (year 1) flight, hotel, car, train 12,000 59, ,000 process costs 15,000 74, ,000 number of potential savings of travel center clerks total savings year 1 (without personnel expenses TC) 27, , ,000 savings after 2 years (cumulated) 55, , ,000 savings after 3 years (cumulated) 84, , ,000 amortization in years Scenario II Type B Company The scenario II will be simulated with the help of the example of company of 4,000 tool users. Here the tool related travel cost savings of a Type B company are calculated. The calculation is based on the assumption that each user realizes per year on average ten bookings, consisting of flight, hotel and rental car booking PricewaterhouseCoopers 11/

47 Financial Optimizing and Saving Potential Business Research The calculation is based on following premises: Table 7: Premises scenario II Type B company Premiss Value Calculation Description Number of bookings 40,000 4,000 x 10 Multiplication of number of tool users per year with Ø number bookings Ø Travel volume/ 423 USD PwC benchmark: Ø Total cost booking expenditure per trip (incl. flight, hotel, RC) Total travel volume 16,920, USD x Ø Total cost expenditure per trip USD 40,000 x number bookings per year Share standard 80% Share of SB of total bookings bookings (Relation SB : non-sb = 80 : 20) Number standard 32,000 80% of Yearly number of pure standard bookings per year 40,000 bookings Number of TC clerks 1 32,000 : 5,520 : 6 Quotient of number SB, the who potentially can be maximum of the realizable SB by one released TC clerk and 6 (every 6 th TC clerk can be economized through process optimizing) In the following paragraph the travel cost volume without Web-based tool application is confronted with the travel expenses with tool application. The resulted savings are, at the same performance, calculated in detail for the first year. The calculated savings of the second and third year assume a 5 percent increase of the total travel cost volume. Table 8: Calculation tool related travel cost savings Type B company travel expenses by segments travel expenses without tool saving travel expenses with tool tool-related (10 yearly bookings per travel) implementation (year 1) pot. implementation (year 1) savings 80% 20% SB 80% 20% (year 1) SB non-sb SB non-sb Flight (30.6% of total travel expenses) 5,178,000 4,142,000 1,036, % 4,971,000 3,935,000 1,036, ,000 Hotel (27.1% of total travel expenses) 4,585,000 3,668, , % 4,402,000 3,485, , ,000 Car (15.3% of total travel expenses) 2,589,000 2,071, , % 2,537,000 2,019, ,000 52,000 Train (9.4% of total travel expenses) 1,590,000 1,272, , % 1,558,000 1,240, ,000 32,000 Travel expenses TC-related 13,942,000 11,153,000 2,789,000 13,468,000 10,679,000 2,789, ,000 Process costs (17.6% of total travel expenses) 2,978,000 2,382, ,000 25% 2,383,000 1,787, , ,000 total travel expenses year 1 16,920,000 13,535,000 3,385,000 15,851,000 12,466,000 3,385,000 1,069,000 total travel expenses year 2 (5% increase) 17,766,000 14,213,000 3,553,000 16,644,000 13,091,000 3,553,000 1,122,000 total travel expenses year 3 (5% increase) 18,654,000 14,923,000 3,731,000 17,476,000 13,745,000 3,731,000 1,178,000 If one confronts the calculated tool related travel cost savings with the on the market customary investment costs in hardware and process optimizing as well as the yearly software costs, it is demonstrated that already in the year after the implementation the tool related savings in mid-size companies are almost always situated above the investment costs. 46 PricewaterhouseCoopers 11/2000

48 Financial Optimizing and Saving Potential In all examined scenarios the investment is already amortized within the first year. Table 9: Calculation duration of amortization of the tool investment Type B company bookings bookings bookings per user p.a. per user p.a. per user p.a. tool-investment costs software (yearly 45, , ,000 hardware 56,000 56,000 56,000 additional implementation costs 90,000 90,000 90,000 total investment costs 191, , ,000 tool-related (year 1) flight, hotel, car, train 94, , ,000 process costs 119, ,000 1,072,000 number of potential savings of travel center clerks total savings year 1 (without personnel expenses TC) 213,000 1,069,000 1,925,000 savings after 2 years (cumulated) 438,000 2,191,000 3,946,000 savings after 3 years (cumulated) 674,000 3,369,000 6,068,000 amortization in years Scenario III Type C Company The scenario III will be simulated with the help of the example of company of 20,000 tool users. Here the tool related travel cost savings of a Type C company are calculated. The calculation is based on the assumption that each user realizes per year on average ten bookings, consisting of flight, hotel and rental car booking The calculation is based on following premises: Table 10: Premises Scenario III Type C company Premiss Value Calculation Description Number of bookings 200,000 20,000 x 10 Multiplication of number of tool users per year with Ø number bookings Ø Travel volume/ 423 USD PwC benchmark: Ø Total cost booking expenditure per trip (incl. flight, hotel, RC) Total travel 84,601, USD x Ø Total cost expenditure per trip volume USD 200,000 x number bookings per year Share standard 80% Share of SB of total bookings bookings (Relation SB : non-sb = 80 : 20) Number standard 160,000 80% of Yearly number of pure standard bookings per year 200,000 bookings Number of TC clerks 5 160,000 : 5,520 : 6 Quotient of number SB, the who potentially can be maximum of the realizable SB by one released TC clerk and 6 (every 6 th TC can be economized through process optimizing) PricewaterhouseCoopers 11/

49 Financial Optimizing and Saving Potential Business Research In the following paragraph the travel cost volume without Web-based tool application is confronted with the travel expenses with tool application. The resulted savings are, at the same performance, calculated in detail for the first year. The calculated savings of the second and third year assume a 5 percent increase of the total travel cost volume. Table 11: Calculation tool related travel cost savings Type C company travel expenses by segments Reisekosten ohne Tool-Einsatz Einsp.- Reisekosten mit Tool-Einsatz Tool-bedingte (10 yearly bookings per traveler) (Jahr 1) poten- (Jahr 1) Einsparung 80% 20% zial 80% 20% (Jahr 1) SB Nicht-SB auf SB SB Nicht-SB Flight (30.6% of total travel expenses) 25,888,000 20,710,000 5,178, % 24,853,000 19,675,000 5,178,000 1,035,000 Hotel (27.1% of total travel expenses) 22,927,000 18,342,000 4,585, % 22,010,000 17,425,000 4,585, ,000 Car (15.3% of total travel expenses) 12,944,000 10,355,000 2,589, % 12,685,000 10,096,000 2,589, ,000 Train (9.4% of total travel expenses) 7,952,000 6,362,000 1,590, % 7,793,000 6,203,000 1,590, ,000 Travel expenses TC-related 69,711,000 55,769,000 13,942,000 67,341,000 53,399,000 13,942,000 2,370,000 Process costs (17.6% of total travel expenses) 14,890,000 11,912,000 2,978,000 25% 11,912,000 8,934,000 2,978,000 2,978,000 total travel expenses year 1 84,601,000 67,681,000 16,920,000 79,253,000 62,333,000 16,920,000 5,348,000 total travel expenses year 2 (5% increase) 88,831,000 71,065,000 17,766,000 83,216,000 65,450,000 17,766,000 5,615,000 total travel expenses year 3 (5% increase) 93,273,000 74,618,000 18,655,000 87,977,000 68,722,000 18,655,000 5,896,000 If one confronts the calculated tool related travel cost savings with the on the market customary investment costs in hardware and process optimizing as well as the yearly software costs, then it shows up that in Type C companies already in the first year after the implementation tool related savings are always situated over the capital outlays. In all examined scenarios the investment is already amortized within the first year. Table 12: Calculation duration of amortization of the tool investment Type C company bookings bookings bookings per user p.a. per user p.a. per user p.a. tool-investment costs software (yearly) 162, ,000 1,305,000 hardware 180, , ,000 additional implementation costs 135, , ,000 total investment costs 477,000 1,053,000 1,620,000 tool-related savings (year 1) flight, hotel, Car, train 474,000 2,370,000 4,267,000 process costs 595,000 2,978,000 5,360,000 number of potential savings of travel center clerks total savings year 1 (without personnel expenses TC) 1,069,000 5,348,000 9,627,000 savings after 2 years (cumulated) 2,191,000 10,963,000 19,735,000 savings after 3 years (cumulated) 3,369,000 16,859,000 30,349,000 amortisation in years PricewaterhouseCoopers 11/2000

50 Financial Optimizing and Saving Potential Summary A cost-benefit analysis has been carried out for three companies of different size, while proceeding on the following premises: Saving potential of direct travel expenses: Flight: 5% Hotel: 5% Hired car: 2,5% Train: 2,5% Saving potential indirect costs: Process costs: 25% Number of standard bookings per year depending on: Number of travelers Average travel frequency of travelers Percentage of standard journeys (80%) Average travel volume Per booking: 423 USD An amortization of necessary tool-investments is attainable within the first year in almost all scenarios. The point of amortization period hangs crucially of the number of standard reservations resulting off in an enterprise, i.e. the more standard bookings are carried out per period the higher are the savings. The cost-benefit analysis has shown, even with conservative calculated saving values (25% process costs and around 4% direct travel expenses) an overall saving of travel expenses of around 5% per year can be realized. Thus a saving of 5% at an overall volume of travel expenses of 85 million USD excluding expenses and around 200,000 booking transactions corresponds to a saving of about 5 million USD per year (see scenario III). At scenario Type C it turned out with only two bookings per user and per year an amortization time of less than a year can be expected. Proceeding from the above mentioned positive contexts the time of amortization can be shortened because of higher savings the more the travel frequency increases. In comparison, at scenario Type A with not more than 500 travelers and two bookings per user and per year only after 4 years the contribution to profit exceeds the necessary costs. Companies should evaluate the number of travelers and their travel frequency as well as the percentage of standardized journeys before introducing the tool and reorganization. Based on these decisive points an approximate classification according to the above mentioned scenarios can be done, which allows an estimation of monetary effects. PricewaterhouseCoopers 11/

51 Financial Optimizing and Saving Potential Business Research The crucial results of the calculated scenarios are summarized in table 13: Table 13: Overview cost-benefit analysis number thereof without tool with tool of total SB total travel savings investments bookings expenses direct travel process- total soft- hard- process- total year of revenue expenses costs ware warre optim. amort. Type A-company (500 user) 1, ,000 12,000 15,000 27,000 14,000 14,000 18,000 46, ,000 4,000 2,115,000 59,000 74, ,000 27,000 14,000 18,000 59, ,000 7,200 3,807, , , ,000 41,000 14,000 18,000 73, Type B-company (4,000 user) 8,000 6,400 3,385,000 95, , ,000 45,000 56,000 90, , ,000 32,000 16,920, , ,000 1,069, ,000 56,000 90, , ,000 57,600 30,457, ,000 1,072,000 1,925, ,000 56,000 90, , Typ C-company (20,000 user) 40,000 32,000 19,920, , ,000 1,069, , , , , , ,000 84,601,000 2,370,000 2,978,000 5,348, , , ,000 1,053, , , ,280,000 4,266,000 5,360,000 9,626,000 1,305, , ,000 1,620, PricewaterhouseCoopers 11/2000

52 ANNEX A ANNEX A can be requested electronically via: PricewaterhouseCoopers ([email protected]) and from i:fao Aktiengesellschaft ([email protected]) I. Conventional process model II. Web based process model PricewaterhouseCoopers 11/

53 Table Directory Business Research Table Directory Table 1: Overview main differences conventional web based process business travel booking 18 Table 2: Overview SWOT-analysis 22 Table 3: Calculation of the segment splitting percentage without expenses 43 Table 4: Premises Scenario I Type A company 44 Table 5: Calculation tool related travel cost savings Type A company 44 Table 6: Calculation duration of amortization of the tool investment Type A company 45 Table 7: Premises Scenario II Type B company 46 Table 8: Calculation tool related travel cost savings Type B company 46 Table 9: Calculation duration of amortization of the tool investment Type B company 47 Table 10: Premises Scenario III Type C company 47 Table 11: Calculation tool related travel cost savings Type C company 48 Table 12: Calculation duration of amortization of the tool investment Type C company 48 Table 13: Overview Cost-benefit analysis PricewaterhouseCoopers 11/2000

54 Illustration Directory Illustration Directory Illustration 1: Procedure Elaboration Business Case 7 Illustration 2: Process phases and process steps 9 Illustration 3: Comparisation of conventional and web based process trip application and trip organization 11 Illustration 4: Ø Share of segment Business travel expenses Illustration 5: Process duration of a standard business travel booking 36 Illustration 6: Process cost confrontation of conventional and web based process 37 Illustration 7: Comparison process costs conventional and web based 38 Illustration 8: Calculation released personal capacities in travel center 38 Illustration 9: Comparison staff costs conventional and web based 39 Illustration 10: Comparison direct travel expenses conventional and web based 40 PricewaterhouseCoopers 11/

55 Abbreviations Business Research Abbreviations BTM Business Travel Management c. circa CD-ROM Compact Disk Read Only Memory CRS Computer Reservation System EDP-System Electronic Data Processing-System ERP-System Enterprise Resource Planning-System etc. et cetera GDS Global Distribution System GfK Gesellschaft für Konsum-, Markt- und Absatzforschung hr. Hour i.e. id est IBE Internet Booking Engine IT Information Technology PC Personal Computer PwC PricewaterhouseCoopers SB Standard Booking SWOT Strengths, Weaknesses, Opportunities, Threats TC Travel Center vs. versus WAP Wireless Application Protocol WfMs Workflow Management system 54 PricewaterhouseCoopers 11/2000

56 Publisher s Information Publisher s Information Frankfurt am Main, November 2000 Publisher: PricewaterhouseCoopers Unternehmensberatung GmbH PricewaterhouseCoopers 11/