Travel program optimization. It sounds so desirable, doesn’t it? A worthy goal. A complicated process. A successful achievement.
“Program optimization” is a phrase deeply embedded in every TMC sales pitch. It’s a phrase that travel managers put at the top of their strategic goals.
It’s a phrase that’s nothing more than a convenient fiction. Convenient because we really want to believe it can be delivered. Fiction because it can’t. At least not in the way we usually think about it.
Here’s the optimization problem: Companies want to get the most value from their travel spend. That means maximizing the gap between a trip’s expected value and it’s total cost. A trip’s total cost is the sum of the trip’s expense plus the cost of the trip’s traveler friction.
So now we see the source of the fiction. TMCs and travel/procurement managers don’t know two key pieces of the puzzle. They don’t know the trip’s expected value, and they don’t know the cost of a trip’s traveler friction.
Instead, they take the need for trips as a given, meaning they must have more expected value than whatever those trips’ “in policy” costs will likely be. Then they go about trying to come up with a set of policies and suppliers that will, on average, deliver some fuzzy sense of “good value”. As they should.
But without knowing two pieces of the puzzle – the true costs of traveler friction for each trip, and the trip’s expected benefit, they’re optimizing in the dark. Hard to argue otherwise.
Instead, the problem gets placed with those who are closest to the issues. In this case, that means three stakeholders:
- Travelers’ Managers
- Travel Budget Owners
These stakeholders are much better positioned to optimize a company’s travel spend. TMCs, travel and procurement managers are not. Want proof?
Ask this simple question: How many TMCs or travel/procurement managers have budget accountability for a company’s travel spend? As in the ability to control travel spending?
None that I know of. Instead, they work to establish sensible travel policies and achieve effective pricing from reliable travel suppliers. Value-added roles, for sure, but it doesn’t rise to the bigger test of true travel program optimization.
Up next: The Rise of Managed Travel 2.0 Previous posts in this series:
Author’s note: Evan Konwiser contributes significantly to this series.
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