New Models for Business Travel Management

1

• New Models for Business Travel Management
• Chicago, IL
• February 4, 2004

2
and Business Transformation Outsourcing

• Mike Polosky IBM
• Travel Services Manager
• Business Transformation Outsourcing

Debbie Gittinger PG Global Travel Product
Manager Employee Services
3
Business pressures are challenging corporate
management and many are looking to non-
traditional outsourcing opportunities

• Business pressures due to market conditions,
  acquisitions and mergers and reorganization are
  key drivers
• Costs of all services are being scrutinized as
  well as how they are acquired
• Companies are looking at their core competencies
  and determining if there are non core activities
  that can be handled more efficiently, effectively
  at a reduced cost while maintaining a high level
  of customer satisfaction

Source IBM survey of CPOs, 2003
4
Savings and spend reduction clearly outweigh
other priorities for organizations
Relative Importance of Topics Survey Results
Source IBM survey of CPOs, 2003
5
PG Corporate Strategy
6
Global Business Services

• AFR Accounting and Financial Reporting
• IT
• Workplace Services
• Employee Services
• HR
• Payroll and Compensation
• Benefits
• Web Delivery
• Travel Services

7
GBS Service Centers

• 3 Consolidated Global Centers

Newcastle
Costa Rica
Manila

8
Service Centers Key Performance and Cost Levers

• Drivers Current Capability
• Web Enablement Global
• Self Service Manager and Employee Enabled
• Shared Service Centers Shared Service Centers
• Centers of Excellence Program and Delivery
• Location Low Cost 82
• Capital Investment Mostly Completed
• Policies Practices Reengineered Enforce
• IT Infrastructure Benchmark
• Scale Scope Significant Global

9
ES Outsource Rationale

• PG was looking to sell the capability to an
  external service provider who would leverage our
  capability to achieve the following goals
• Maximize return on this asset to PG via lower
  costs
• Join with a supplier who will continue to deliver
  high quality, low cost services to PG
• Provide opportunities for PG ES employees

10
Why Outsource Travel, the question Corporate
Executives are asking themselves

Cost Cutting

• Travel is one of the top spend category for most
  corporations
• The questions that every travel organization
  should ask
• What activities are core to the success of our
  business?
• How effective are our current operations and what
  will it take to improve and maintain their
  effectiveness?
• Should we invest internally or should I buy the
  service?
• Are there companies that can do it more
  effectively and efficiently

Reinvention
11
Travel Planning and Services Objectives

• Keep Travel Management and Travel Expense
  holistic
• Partner would bring incremental resources
• Partner would offer career development
  opportunities
• Align with GBS ES as part of a broader strategy

12
Scope of Outsourcing

• Travel Services
• Travel Expense Accounting
• Card Management

13
Scope of Outsourcing

• Travel Management
• Operations
• Communications
• Customer Service
• Sourcing
• Consulting

14
The effectiveness of IBM procurement is crucial
to our bottom line financial performance
Direct versus Indirect Spend In Billion (US)
IBM Revenue versus Spend In Billion (US)
Direct 16.5 B
Revenue
Procurement Spend
Indirect 20.4 B
Other 2.0 B
15
IBMs procurement story begins in the early 1990s
US Billions
Our near death experience in the early
1990s...
was a catalyst for change
16
Clients became interested in leveraging IBMs
investment in procurement and supply chain
Business Transformation Outsourcing
The Journey to On Demand Procurement / Supply
Chain
PwCC Acquisition
Procurement Medal of Excellence
On Demand
Reengineered and standardized business processes
and integrated applications

• Responsive
• Variable
• Resilient
• Focused

Integrated Supply Chain
Began offering Procurement Outsourcing
Web enablement and supplier linkage
Established procurement governance and sourcing
councils
Optimize operations / infrastructure and adapt
dynamically
e-Business
Enterprise Transformation

Establish Foundation
1994-1995
1995-1997
1998-2002
2003
17
IBM Business Transformation Outsourcing offers
comprehensive services and global operations

Service
Sourcing
Operations
Global Operations Centers
Travel Management
Budapest
Greenock
Newcastle
Sourcing Operations
Tulsa
Shanghai
Operations Management
Contract Management
Endicott
Supplier Management
Customer Satisfaction
Manila
San Jose
Bangalore, India
Travel and Expense Management

18
Summary

• As businesses focus on procurement and
  operational effectiveness, outsourcing is
  emerging as a strategic alternative to investing
  in building and maintaining non-core procurement
  and operational processes in-house
• IBM brings unmatched capabilities as a world
  class procurement and process practitioner,
  thought leader and services provider with proven
  experience
• IBM can provide resources in all regions and
  countries globally with travel expertise
• IBMs consulting practice can bring enhancements
  in both sourcing and operational activities in
  travel management
• IBM Business Transformation Outsourcing offers
  comprehensive outsourcing services that can be
  tailored to meet a clients complete needs

19
Mike Polosky Michael.J.Polosky_at_us.ibm.com Debbie
Gittinger Gittinger.dj_at_pg.com