Travel Management Software - Back-Office Best Practices
How Travel Management Companies can achieve greater efficiencies and a competitive edge with an integrated back-office solution
ERP for Travel Management - Overview
Does your back-office system provide your Travel Management Company (TMC) with a competitive advantage? In today’s environment, TMCs need to use every possible advantage to compete. Business travel agencies can no longer afford inefficiencies or dated technologies running their business because of pressure from mega-TMCs, online travel companies and regional players. TMCs that do not change their infrastructure are likely to become casualties as market competition intensifies and economic conditions worsen. The traditional, disparate set of disconnected travel agency software systems are dinosaurs of a bygone era and fail to provide the more sophisticated business information and analysis enjoyed in other industries. TMCs with the vision to embrace modern, enterprise-level technology can use these tools to gain competitive advantages over their more traditional rivals.
A Brief History of the Back-Office
Most of the back-office accounting systems in use today were created back in the 1980s by the GDS or third parties and were deployed by travel agencies primarily to automate the airline ticket settlement process. In those days, business needs were simple and expectations were low, but now, nearly 30 years later, these systems are sadly inadequate in their role as the foundation for management reporting and agency operations. Many TMCs still have independent, disconnected systems for quality assurance, report writing, accounting and operational infrastructure. This patchwork of systems requires handcrafted modifications, or even manual intervention to pass information from one system to another.
This process:
• Is inefficient and error-prone
• Increases costs and decreases productivity
• Is inherently brittle and unable to respond
to changing business needs
Enterprise Resource Planning (ERP) Explained
Many organizations outside the travel industry have abandoned the traditional “silos of information” approach, favoring instead a fullyintegrated, enterprise-wide solution. These systems, known as Enterprise Resource Planning (ERP) systems, are comprised of multiple, tightly integrated “modules” or applications that allow companies improved insight into and control over their internal business processes. Until today, they were rarely found in the TMC back-office.
Of course, travel accounting has a unique set of needs outside the scope of general purpose ERP systems. However, an integrated backoffice solution that included travel-specific components would provide an unparalleled tool for managing a TMC’s operations, customer service and profitability. In contrast to traditional back-office systems, an integrated solution:
• Offers superior efficiency with built-in error correction
• Increases productivity and reduce costs
• Provides the agility necessary to respond to changing business needs
An Enterprise-Level Solution – The Cost-Benefit Analysis
A TMC may initially experience “sticker shock” when evaluating enterprise systems in comparison to the traditional back-office. ERP systems can look expensive at first glance, but the value they bring to the organization will invariably offset the cost, especially when an integrated travel accounting module is present.
When evaluating a solution, the TMC should look at the Total Cost of Ownership (TCO), a process that evaluates not only the cost of the product, but also the cost of support, customization and integration, and then balance these costs against the savings achieved by implementing the solution.
This paper examines the core benefits of an integrated enterprise-level solution for TMCs. These benefits need to be compared to the cost of the system as well as to the total cost of current standalone applications or manual processes.
Economic Pressures Create Opportunities for the Prepared
TMCs need to recognize that the inefficiency of disparate systems hurts their bottom line. A fully integrated, enterprise-level application is a much more efficient solution and offers a substantial Return On Investment (ROI). For example, Michael Peranio, CFO of Omega World Travel, credited the integrated Sabre® CentralCommandSM (with Agresso platform) with “dramatically changing the process of branch consolidation (reporting). The prior process took two days and now takes five to six minutes for all 100 Omega branches.”
In addition, an integrated solution allows TMCs to equate the costs of doing business with the value of a given corporate account and assess the profitability of each account – critical knowledge in today’s competitive environment. Given these clear advantages of tightly integrated applications, every TMC should be evaluating its technological infrastructure and identifying the hidden costs of disconnected standalone applications. As we struggle through this economic downturn, TMCs that continue to operate on old 1980s and 90s technology will find themselves compensating for outdated technology with manual labor. This approach unjustifiably inflates their fixed cost structure and undermines their competitiveness putting them at risk of going under in the current environment (refer to table in the section Establishing a Business Case for Integrated ERP on page 7).