The Benefits of an Integrated Travel ERP Solution
The key difference between using standalone solutions and an travel-aware ERP approach is the level of integration between the systems. The integrated ERP approach provides a TMC better insight into and control over all business processes, allowing greater efficiency between related functions. For example, automating the procurement function for the company may involve accessing the hierarchy contained in the human resource application, the budget details in financial systems and the accounts payable module once the product or service is acquired.
A Complete View of Corporate Financials without Manual Compilation
A true enterprise-level accounting platform goes beyond simply managing accounts receivable, accounts payable and postings to the general edger. Indeed, an ERP solution will provide the TMC with a complete view of how the company’s financial resources are employed at any given time. The ability to go from a consolidated P&L and drill down to performance by branch and, even further, to find out why one of the branches is experiencing a drop in profitability is a result of tight integration between the travel applications and all applications within the accounting suite. Without this integration, many of the questions from Presidents and CFOs could only be answered after spending days compiling and recompiling information in spreadsheets and MS Access databases, often resulting in incorrect results that cannot be duplicated.
Informed Marketing Strategies
An integrated ERP system allows TMCs to examine and analyze customers’ explicit and implicit preferences and to determine whether different industry types are more profitable across accounts. An in-depth analysis of the value of a given account or an industry sector enables TMCs to target their marketing initiatives and retain and win new clients. Many travel agencies still depend primarily on the profile system in the GDS. This is a limited flat file residing in the mainframe, which is tightly integrated into the Passenger Name Record (PNR). Rather than simply ‘handing off’ files from a travel accounting platform, an integrated ERP solution for TMCs allows analysis of all modules through a single common interface that shares a common foundation. There is concrete value to integrated systems that blend customer information throughout the process. For example, by using Sabre CentralCommand with Agresso, HRG North America was able to “look at revenue by type of industry (e.g., banking, entertainment) to analyze if a particular industry is more profitable,” said Jim DeGroot, Accounts Manager. He went on to say that “project costs and billings can be more accurately tracked, exposing the true value of the agent to our customers.”
Faster Billing and Collections
For TMCs that still offer credit to their corporate clients, an integrated accounting system provides not only visibility into information on receivables, but also into the impact of aging cycles on the financial health of the agency. By looking at a customer’s total impact, a true cost of sales can be calculated, which helps the TMC understand a given corporate client’s impact on its bottom line.
Maximizing Purchasing Power
When a TMC reaches a certain size, it should consider a more formal procurement process to drive discounting and to facilitate service to remote offices and employees, while maintaining control over expenses. This process must encompass all aspects of products and services purchased by the TMC. Just as the TMC’s corporate clients have embraced purchasing to drive more value from their travel expenses, TMCs need to use procurement processes to closely control all expenditures and drive more effective supplier management techniques. Procurement systems can control all capital equipment purchases and services used by the agency. This is particularly important with respect to TMCs that are rapidly growing, opening new offices or acquiring existing competitors. Agencies need to standardize – e.g. share a common phone system, computer hardware vendors and/ or service provider. An integrated ERP system will include a procurement module that is directly tied to budgets, HR hierarchies for approval levels and the accounts payable module to monitor payments to vendors. The goal is to allow the TMC to monitor and control all expenses.
Realistic Budget Creation and Management
It is amazing that many mid to large sized TMCs lack a formal budgeting process; budgets are sometimes created simply by adjusting last year’s expenditures. Whether your existing budgeting process is non-existent or you are suffering from having to update and maintain complex spreadsheets linked together like a bowl of spaghetti, many ERP solutions will offer a way to simply and effectively manage the budgeting process and facilitate budget to actual reporting. An integrated enterprise budgeting module can look at various factors to allow division managers to create a more realistic budget that can be monitored and tracked. Sales projections, customer trends and the changes in various divisions or departments can be used to provide senior management with a more clear projection of next year’s expenses. These budgets can then be monitored and integrated into the procurement technology of an ERP solution, ensuring that no product or service is purchased without proper approval and funds.
Improved Internal Project Management
In an age where TMCs are evolving their businesses by offering more and more consulting services, internal project management software can be very valuable. For example, many TMCs manage the selection and implementation of Corporate Booking Tools (CBTs). Managing this implementation process and projecting the impact on agency service fees can better establish fees for future implementation. This is also true for specific projects that focus on supplier contract analysis, a service being offered by more and more TMCs.
Tracking Productivity and Assessing Service Fees
Managing a TMC as a large enterprise should also include employee monitoring tools that consider the cost of an employee’s time. The amount of time a travel counselor spends on a given account is an important benchmark in establishing the true cost of that corporate client. Balancing productivity with service fees that reflect the true amount of time required by a client can help the TMC understand its cost of sales and affect its pricing and sales process. Managing and Controlling Expenses Large regional or global TMCs often spend a great deal in Travel and Expenses (T&E) whether for client visits, sales calls or attending conferences. TMCs need to control their own internal T&E. Integrated ERP systems often include an expense module that is tightly integrated into budgets, and can help the TMC understand how travel and expenses contribute to its cost of sales. There is also value in automating the expense process - doing so makes it easier to file expenses and reduces the turnaround time for reimbursements.
Improved Human Resources (HR) Management
Many TMCs either have no formal HR database or a standalone HR software solution. An integrated HR module of an ERP system can help manage employee services and help the TMC understand the impact of employees on the overall company’s bottom line. These systems contain the hierarchy of the company and can store signing authority. They also contain employee files, which include annual performance reviews and can be used by management to evaluate employee roles and their true contribution. Additionally, HR must adapt to changes in organizational structure that are often part of a company reorganization or merger. Other modules such as purchasing or budgeting also need to be integrated with the HR database. The high level of integration needed between HR and other internal systems can only be achieved through an integrated ERP platform approach.
Tying Employee Compensation to Performance
By bringing payroll into the integrated enterprise system, employee compensation can be tracked against performance and adjustments to grade level can be implemented across individual employee categories throughout the company. An integrated payroll module of an ERP solution can contribute to a better understanding of the true cost of sales. Additionally, during mergers an integrated payroll module can be invaluable in standardizing employee compensation for varying offices.
The Ability to Respond to Industry Paradigm Shifts and Other Changes
The travel industry itself is in a constant state of change. For example, travel-specific accounting systems that were based on commission models needed to be altered as the era of service fees emerged in the 1990s. Legacy systems are generally ill-equipped to respond to significant change, often incurring significant cost and business disruption. Responsiveness to change should be an early selection criterion when choosing a long-term solution.
Leveraging Current Technology for Better Information
Today there is a stronger focus on business intelligence and systems that generate simple reports are now considered archaic compared to true BI insight. But there tends to be a lag between the evolution of enterprise systems and travel-specific technology. For example, large ERP systems have been web-enabled for years while many travel accounting applications still have a Microsoft Windows, or even DOS-type interface from the 1980s. As a result, enterprise systems with integrated travel accounting are more likely to anticipate changes in computing and react with product enhancements. Most ERP systems have a BI component embedded into the core system.