Are you working with or about to hire a consulting services firm? Find out how much they are spending on their travel expenses in this guest blog from Brian Sommer. UK readers must wonder at how much our Treasure Island status (read expensive everything) translates into travel expenses on our side of the pond.
My friend and colleague, Vinnie Mirchandani, loves to advise buyers of software and services. It’s what he does for a living. Vinnie has bent my ear on more than one occasion when he speaks of the high overhead costs of major systems integrators, consultants, outsourcers and software vendors. Vinnie hates seeing waste and he’ll likely have some interesting remarks related to this blog posting.
Business Travel News published its annual Corporate Travel 100 special edition this month (August 2006). It ranks the top 100 buyers of air travel in the United States. Each of these companies is profiled with many profiles identifying the net change in travel spend year over year, the best practices each firm is employing and how many employees are currently participating in these programs. Sadly, the data is not complete or consistent for all of these firms.
I read many of these summaries and have placed key data on service firms in the table below.
| Service company | Travel spend ranking | 2005 US air travel | 2005 Global air travel | 2005 US T&E | 2005 Global T&E |
|---|---|---|---|---|---|
| IBM | 1 | 700.0 | |||
| Deloitte | 6 | 191.0 | 545.0 | ||
| McKinsey & Co | 7 | 184.0 | |||
| Accenture | 9 | 177.0 | 419.0 | 975.0 | |
| PwC | 13 | 157.2 | 259.2 | 490.0 | 774.6 |
| KPMG | 26 | 111.0 | 326.0 | ||
| Ernst & Young | 27 | 110.0 | 140.0 | 318.0 | 500.0 |
| Bearing Point | 53 | 65.0 | 88.0 | 154.0 | 200.0 |
| EDS | 64 | 54.3 | 114.0 | 131.4 | 298.0 |
| CSC | 76 | 49.0 | 75.0 | 127.0 | 179.0 |
| Booz Allen Hamilton | 91 | 43.0 | 73.0 | 102.0 | 147.0 |
If your firm is negotiating with a major service firm, you might want to ask them some tough questions regarding this big piece of their SG&A spend. Why? Because your firm is paying their high billing rates just so they can fly and entertain others. You need to determine how well they are spending their money and whether you should subsidize some of these costs.
I wish Business Travel News had captured the total number of U.S. employees (and the total number of U.S. employees who travel) for each firm. That extra data field would have permitted us to calculate travel costs/traveling employee. That number would have gone a long way to understand which firms are the most efficient in managing their travel costs.
In reviewing the Business Travel News materials I was surprised at:
- the sheer size of IBM’s U.S. travel costs
- the fact that McKinsey is outspending Accenture. Can that really be right?
- the enormity of the total U.S. T&E costs of these firms.
I must have missed a bunch of great meals during my Big 8 days.
I wasn’t surprised though at the much higher travel costs these firms encounter outside the U.S.
Great service firms have a number of great travel practices that I wish more used. For example:
- 100% of traveling employees using company booking tools
- 100% of employees using corporate travel/charge cards
- Mandated meetings policies
- Automated monitoring of airfares
- Use of collaboration technology in lieu of travel
- Consistent progress in reducing travel costs/employee
- Better monitoring for employee compliance
- Consistent travel systems in use throughout the global firm
- Negotiated travel agreements with hotel chains, airlines, etc.
Also, the top 100 travel spenders included a couple of software firms. Their data is presented below.
| Software company | Travel spend ranking | 2005 US air travel | 2005 Global air travel | 2005 US T&E | 2005 Global T&E |
|---|---|---|---|---|---|
| Microsoft | 17 | 143.0 | 290.0 | 600.0 | |
| Oracle | 22 | 120.0 | 180.0 | 100.0 | |
| SAP | 48 | 68.2 |
This blog has been cross-posted on Software Safari and Services Safari.
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