Stages of Travel Management Excellence

1. TRAVEL ANALYTICS INC Stages of Travel Management Excellence Industry Scores and Future Goals Presented by Scott Gillespie, CEO

2. Scott Gillespie’s Background • Founder of Travel Analytics • Developed TANGO™ and BRAVO™ for negotiating and managing airline supplier contracts • Analyzed in excess of $10 Billion of annual air spend • Recipient of ACTE’s Industry Professionalism and Distinguished Fellow honors • Named by Business Travel News as one of the travel industry’s most influential executives • Previously A.T. Kearney’s expert in strategic sourcing of travel suppliers • MBA, University of Chicago • Concentration in Statistics

3. Some Past and Current Clients/Teachers • Hewlett-Packard • Hoffmann La Roche • Invensys • International Monetary Fund • Lockheed Martin • Microsoft • Lucent Technologies • Procter & Gamble • Nortel Networks • PricewaterhouseCoopers • Saint-Gobain • US Bank • AXA • Baxter • Capital One • Coca-Cola • Chevron • Compaq • DaimlerChrysler • Dell Computer • John Deere • Ernst & Young • ExxonMobil • Ford

4. Today’s Agenda • Framework, Methods, Limitations and Benefits • Who Participated and What Are Their Scores? • A Closer Look • The Road To Glory • What’s Working, What’s Not? • Where Are We Headed? • Is Bigger Better? • What’s Needed? • Individual Reports • Appendix

5. Some Appetizers: • Only 6% of firms rate their programs currently as Stage 4 (the best) • 98% of firms want to be either Stage 3 or Stage 4 • The highest-scoring dimension? Senior Management • The lowest-scoring dimension? Groups & Meetings • The two most important dimensions are Senior Management and Travel Policy – True or False? Stay Tuned!

6. Framework, Methods, Limitations and Benefits

7. Stage 4 Stage 3 Stage 2 Stage 1 What is the Stages of Travel Management Excellence Framework? A set of dimensions and criteria with prescriptive power World class program; Great support, Excellent results Advanced travel program; good support Basic travel program; limited support No real travel program; mostly fighting fires

8. Method for Conducting the Study • ACTE and Travel Analytics solicited a wide variety of participants • Drawn from the ACTE Global membership base • Drawn from Non-ACTE travel and procurement managers • All surveys were self-scored – no 3rd party validation • Data coded and analyzed by Travel Analytics • 63 Elements assigned to 14 Dimensions, in turn assigned to 4 Quadrants • Each Quadrant given equal weight • Each Dimension given equal weight within its Quadrant • Each Element given equal weight within its Dimension • Each respondent given equal weight; i.e, not weighted by air spend

9. 14 Major Dimensions • Senior Management • Suppliers • Transient Management • Travelers • Travel Organization • Travel Policy • Travel Strategy • Controls • Data • Demand Management • Feedback • Goals • Groups and Meetings • Procurement

10. Each Dimension Broken Down Into 63 Elements

11. Dimensions and Elements, Cont’d. (Deleted) Definitions were not provided

12. 3 3 3 3 1 1 1 1 2 2 2 2 4 4 4 4 Two Levels of Analysis Better Stage 1 Stage 4 Dimensions: Feedback Criteria Little or none sought Clearly drives future actions Obtained irregularly Obtained regularly Elements: Current Score & Goal Score Traveler Satisfaction Travel Policy Compliance Average Feedback Score: 2.0

13. 3. Gap to Goal The Study Focused on 3 Measures 2nd Most Important Least Important Overall Industry Scores 2. Goal Score (Where Are We Headed) 4.0 3.5 3.0 SOE Score 2.5 Most Important 2.0 1. Current Score (What’s Working, What’s Not) 1.5 Current Score Goal Score Scores are reported from the group’s Mean Average score

14. Some Limitations and Benefits Of This Study Limitations: • First application of Stages Of Excellence • Scores were not validated • Not a random sampling of the industry Benefits: • Broad and neutral scoring mechanism • Provides a common lens for assessing travel programs • Facilitates frank discussions and goal-setting

15. Who Participated and What Are Their Scores?

16. Partial Participant List Eli Lilly Ericsson Ernst & Young FedEx Franklin Templeton Ingersoll-Rand Inter IKEA KPMG Lucent Microsoft Nike Novo Nordisk ON Semiconductor Oracle Parker Hannifin Pharmacia Praxair Procter & Gamble Schlumberger Seagate Technology SICPA Group Solvay Swift UCLA United Technologies US Bank Washington Mutual Xerox ABB Agilent Technologies Allied Domecq AMS Applera Avaya Baxter Bertelsman BP Canadian Pacific Chiron Coca-Cola Enterprises ConAgra Deloitte & Touche 84 participants with $4.5 Billion in annual air spend

17. Region from which the majority of travel originates 2002 Annual Air Spend Small is < $15MM Medium is $15MM to less than $50MM Large is $50MM or more Travel Operations and Management, including Procurement Travel Procurement Procurement of Travel and other categories Other Key Demographics of Participants Sample Size = 84 Participants

18. How Did We Score? • Very close to the 2.5 mid-point for Overall Current Score • Most firms aspire to one full higher stage of excellence

19. Are We Different by Spend? • At first glance, no obvious difference based on program size • More Large programs did better; Medium programs have higher goals

20. Are We Different by Region? • “Split” programs appear strongest, but… Non-North American sample sizes are too small to be meaningful

21. A Closer Look

22. The Study Drew a Broad Sample • Fairly well-balanced distribution • Indicates the scales, criteria and sample are reasonable Scale’s Mid-Point

23. Who’s Best In Class? • The top 25% of all respondents based on Current Scores were assigned as Group A; the other 75% were assigned as Group B • Group A’s average size = $71MM; half are larger than $35MM • Group B’s average size = $51MM, half are larger than $21MM

24. The Road To Glory

25. Stage 4 Stage 3 Stage 2 Stage 1 How Do “B” Programs Get To Be “A” Programs? World class program; Great support, Excellent results By taking a series of prioritized and often difficult steps Advanced travel program; good support Basic travel program; limited support No real travel program; mostly fighting fires

26. …And What’s Most Critical Let’s Look At What We Can Control… Moderate High Low Travel Manager’s Degree of Control Over the 14 Dimensions Suppliers Demand Management Groups / Meetings Senior Management Transient Mgmt. Data Travelers Travel Strategy Feedback Controls Travel Organization Travel Policy Procurement Goals

27. Why Are These “Big Six” The Most Critical? • Senior Management • Clearly necessary, but not sufficient • Travel Policy • Critical for controlling traveler behavior • Transient Management • The heart of delivering a managed travel program • Procurement • Smart sourcing means big savings • Data • The building blocks of business decisions • Travel Organization • Good programs are built by good people

28. Why Are These Dimensions Not As Critical? • Suppliers • Selected by the travel organization • Travelers and Travel Strategy • Good scores are more the result of a good program, rather than the cause • Control, Goals and Feedback • A function of the travel organization • Demand Management and Groups/Meetings • Often not in scope of Travel’s responsibility Important Dimensions, Yes – but Not on the Critical Path

29. Necessary Dimensions Travel Org., Data Senior Mgmt., Feedback, Travel Org., Data Suppliers, Control, Travel Org., Data Data, Feedback Suppliers, Travel Org. Senior Mgmt. - Maybe Are Any of the “Big 6” More Critical Than Others? (Understands and Owns Travel, Level of Support) • Senior Management • Travel Policy • Transient Management • Procurement • Data • Travel Organization

30. What’s Working, What’s Not Current Score Analysis Group A vs. Group B

31. Senior Mgmt. Senior Mgmt. Procurement Transient Mgmt. Transient Mgmt. Travel Policy Travel Org. Travel Policy Procurement Travel Org. Data Data Moderate Control Low Control High Control Both Groups Emphasize Senior Mgmt., Procurement , Transient Management & Policy

32. Senior Mgmt. Senior Mgmt. Procurement Transient Mgmt. Transient Mgmt. Travel Policy Travel Org. Travel Policy Procurement Travel Org. Data Data Moderate Control Low Control High Control Group A Has Done Much Better on the “Big Six” Dimensions A’s avg.= 3.4 B’s avg.= 2.5

33. Senior Mgmt. Procurement Transient Mgmt. Transient Mgmt. Travel Policy Travel Org. Travel Policy Procurement Travel Org. Moderate Control Low Control High Control Group A Does Much Better On 2 Key Dimensions Than Group B – Travel Organization and Data Senior Mgmt. Data Data

34. Data Travel Organization What’s Holding Group B Back? Recruiting, Career Advancement, Execution Hotel, Agency and Other Data; Unconsolidated Spend

35. What’s Working, What’s Not - Summary • Six critical dimensions: • Senior Mgmt., Transient Mgmt., Travel Policy, Procurement, Data and Travel Organization • Group A programs have strong scores on all six critical dimensions • Of the six, Data is scored the lowest at 3.2 • Group B does fairly well at Senior Mgmt., Procurement, Transient Mgmt. And Travel Policy • Groups/Meetings and Demand Mgmt. are well below average at most firms • Group B scores below average on Travel Organization and Data – The two most critical dimensions

36. Where Are We Headed? (Goal Analysis)

37. Senior Mgmt. Senior Mgmt. Transient Mgmt. Transient Mgmt. Data Travel Policy Travel Policy Data Travel Org. Procurement Procurement Travel Org. Moderate Control Low Control High Control Both Groups Have Similar Relative Priorities

38. Moderate Control Low Control High Control Improving Supplier Quality and Pricing Is a High Priority; Groups and Dem. Mgmt. Are Not Senior Mgmt. Senior Mgmt. Transient Mgmt. Transient Mgmt. Data Travel Policy Travel Policy Data Travel Org. Procurement Procurement Travel Org.

39. Moderate Control Low Control High Control Group A Wants It All Senior Mgmt. Transient Mgmt. A’s avg.= 3.8 Travel Policy Data Travel Org. Procurement

40. Data Goals Feedback Controls Moderate Control Low Control High Control Group B Wants a Better Steering Wheel Senior Mgmt. Transient Mgmt. Data Travel Policy Procurement Travel Org.

41. Senior Mgmt. Transient Mgmt. Travel Policy Data Travel Org. Procurement Moderate Control Low Control High Control But Why Is Travel Organization Near the Bottom for Group B? Senior Mgmt. Transient Mgmt. Data Travel Policy Procurement Travel Org.

42. Where Are We Headed - Summary • Both groups set high goals (3.5+) for Senior Mgmt., Transient Mgmt., Suppliers, Travel Policy and Data • Group B wants much stronger ability to control their programs • Both groups put Demand Mgmt. and Groups at or near the bottom • Group B puts less emphasis on Procurement and Travel Organization (3.4, 3.3) • Travel Organization is ranked the second-lowest goal This looks like a self-imposed “Travel Ceiling”

43. Is Bigger Better?

44. Senior Mgmt. Procurement Procurement Transient Mgmt. Travel Org. Senior Mgmt. Transient Mgmt. Travel Policy Travel Policy Travel Org. Data Data Moderate Control Low Control High Control Having a Large Program Does Not Mean Strong Scores on Travel Organization or Data

45. Senior Mgmt. Transient Mgmt. Procurement Travel Policy Travel Org. Moderate Control Low Control High Control Medium Programs Show 1-Stage Difference Transient Mgmt. Senior Mgmt. Travel Policy Procurement Travel Org. Data Data

46. Small Programs Also Show 1-Stage Difference Senior Mgmt. Senior Mgmt. Travel Policy Transient Mgmt. Procurement Travel Policy Data Travel Org. Procurement Transient Mgmt. Travel Org. Data

47. What’s Needed?

48. Better Use of Numbers and People • Deliver better data across the board • Airline O&D data should be an “on tap” commodity • Hotel folio data will drive better deals for everyone • Develop integrated systems for stronger control of data, travel policies, goals and feedback • More executive dashboards and balanced scorecards • Likely anchored at the point of sale • Eliminate the ‘Travel Ceiling” – real or perceived • Re-write the role and reputation of the travel manager

49. Key Management Challenges What Role Are We Talking About? The Travel Manager, or… • General Manager • President • COO or CEO • Mission-Critical Processes • Globalization • Operations • Cost Control / Bottom-line Impact • Supplier Management • Strategic Sourcing • Customer (Traveler) and Stakeholder Satisfaction • Change Management • Staff Development • Distribution Channels • Information and Internet Technology Travel Management Is a Great Career Opportunity… …But Not Without Risk (Sales and Manufacturing)

50. Upgrading a Travel Program One Full Stage Is a Big Challenge – and Therefore a Risk • Get the best resources • Especially Travel Organization and Data • Don’t accept budget constraints as an excuse • Most Dimensions can be improved at no significant cost • Build a solid business case for those that do • Set priorities carefully – you can’t do it all at once! • What’s really on the critical path? • From whom can you learn and leverage?