“If you cannot measure it, you cannot improve it,” said Lord Kelvin. Lord Kelvin, who defined the absolute temperature scale, was onto something. Kelvin heavily emphasised the importance of measurement in science, believing the first essential step in learning any subject is to find principles of numerical reckoning and practical methods for measuring some quality connected with it. Measurement has often been used in management studies. This is because managers fundamentally believe measurement is a key indicator of business performance within a department. Corporate Travel departments are no different.
The term KPI (Key Performance Indicator) has been used extensively in management. According to Investopedia, KPIs are “a set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their strategic and operational goals.” KPI’s are commonly used in business practices to measure performance of employees, departments and the business as a whole.
Create a hypothesis… by establishing a set of goals
One of the most valuable assets KPI’s bring is they encourage executives to determine set goals and objectives- giving the business a sense of direction. These goals do not need to be company-wide. They can be used to steer the function of a single department. The Travel department aims to achieve objectives such as lowering average hotel rates, reducing the number of trips booked outside of TMC contract, and even reducing CO2 emissions from booked travel.
Conduct an experiment… by setting KPIs
The next step after determining Travel objectives would be to decide on the KPIs measuring the success. Measurement has now become the main player.
In Travel, we have a problem- the primary source of data Travel Managers use to measure performance does not include all the information necessary for accurate measurement. If we want to measure whether travellers are booking within TMC contract, for example, we need to examine the bookings themselves. Travel managers have access to TMC, Card and Expense data yet most are only able to use these systems separately.
Measure the results… Is TMC data enough?
As the TMC data has the most information, it becomes a Travel Manager’s main source of measurement. In the last year, close to 70% percent of business travellers whose company uses a TMC say they booked at least one business trip directly with a supplier.
Furthermore, when we analysed over $8.5 billion of travel-related spend. It was no surprise that TMC data only accounted for 41% of it.
As TMC data cannot measure the total amount of spend created within the department, it may not be the best source of measurement to prove any actionable result.
Measurement of the full picture is sometimes the only way we can access accurate information. Parents may be well acquainted with the assumption that eating sugar makes children hyperactive. This well-accepted belief has, in actual fact, been scientifically disproved through measurement. In a 1994 study on the behavioural effects of sucrose on preschool children, kids were given Kool-Aid- first with sugar and later with sugar-free sweetener. A sensor was placed on the children’s wrist to measure activity. It recorded that sugar, in actual fact, made the kids more subdued than usual.
The well-accepted belief that kids get hyper on sugar was perhaps built on observations made by parents. As children often consume sugar at times of high excitement where rules are loosened like birthday parties and holidays, the unruly behaviour may be a response to this hyperactive environment rather than any rise in blood sugar levels. While limiting sugar intake is valuable in decreasing risk of conditions like diabetes and childhood obesity, scientific observation and measurement has proven a widely-believed assumption to be inaccurate.
If Travel Managers are only seeing less than half of the travel data, they are, like these parents, making assumptions based on half the observations they have access to. Before Travel Managers take action on any travel data insight, it may be well-advised to ensure the measurements are both accurate and complete.
Refine the results… by accessing ALL travel data
Travel Managers can access direct bookings through TMC, card and expense systems, yet still have to manually add these results just to get an accurate measurement of spend across a single trip. If the average number of employees in a typical Fortune 500 company is above 53,000, Travel Managers should have their work cut out for them in terms of extracting relevant data and combining it into a single source.
Factor in that each different system used often has different naming conventions for each hotel or carrier and you will see that getting the whole picture involves painstakingly cleaning and consolidating scores of data-a task not all Travel Managers have time to perform.
Reach a conclusion… through new data analytics software
Luckily, we have advanced tools to measure multiple sources of travel data and combine it into a single system. Just as the wristbands allowed scientists to accurately measure activity rates in children, deep data analytics software, using Artificial Intelligence (AI) models are utilised to combine data sources while combing through it to extract the relevant information in real-time.
A total trip cost view is just the beginning. Travel managers can now use the software for contract management, controlling meetings and events spend as well as receiving automatic, personalised reports delivered to each department.
Knowledge is power. Once Travel data can be scientifically measured and truly used to guide management- the entire department will have the transparency needed to achieve their KPIs. I am sure any child that has been denied sugar before bed will agree that having access to all measurable information might not be such a bad idea.