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Dave Stephens on technology and business trends

Corporate Travel Revisited – An Interview With Ralph Colunga

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Ralph Colunga

Ralph Colunga was appointed to lead Oracle’s travel management program this past October. He works out of Rocklin, CA, and is Director, Global Procurement Services. He reports directly to Greg Tennyson, Oracle’s Vice President of Global Procurement. Ralph’s organization consists of 5 parts he calls “TMSDC” – Travel, Meetings, Sourcing, Data, and Card.

I interviewed Ralph to learn about his plans and progress transforming Oracle’s global travel practices. And as an Oracle shareholder, what I learned made me a little more comfortable with my ongoing investment.

[For background on Ralph’s prior experience at Cisco, look here and here.]

The Problem

Ralph started by defining the need for change at Oracle. He found a fragmented global organization which was run, for the most part, very much regionally.

“There was no defined global strategy,” Ralph said. “And there was limited communication between regions and with our customers.” And worst of all, “there was a lack of meaningful travel data” to determine the best course of corrective action.

Ralph is concentrating his efforts on establishing what he calls “a plug-and-play environment.” And he’s making progress. Oracle now has regional teams reporting with a solid line up to his central group. They’ve also instituted global policies – ones that can be consistently applied within regions. Once complete, resources will be more interchangeable. For instance, an AsiaPac travel manager can fill in for a European travel person in a pinch. They will truly form more of a global team. But procedures and processes must be standardized and aligned first!

“Look at why Southwest is successful. They have 1 type of aircraft, which means 1 type of pilot, 1 kind of maintenance crew. In addition, they have employees with broad enough skill to be flexibly applied to changing conditions. It’s a great operating model.”

Ralph stated Oracle is moving to build a best in class travel model that includes:

  • Identifying and leveraging travel patterns and volumes to the supply base creating focused spend with an optimized number of suppliers resulting in economies of scale (English translation: analyzing spend, aggregating it, and negotiating volume deals)
  • Increasing and improving user discipline and policy compliancy
  • Providing comprehensive, meaningful reporting
  • Standardizing global travel processes and procedures
  • Establishing simplified pricing models
  • Implementing technology to improve operating efficiencies such as self booking
  • Mitigating risk and enhanced emergency assistance

It’s an ambitious agenda and will take quite awhile to progress.

On Travel

One quick win Ralph is pursuing is the global consolidation of travel sites servicing Oracle’s needs. “When I joined, no one knew how many travel sites there were. You can’t fix a problem you don’t even know exists.” So, the travel team surveyed the situation and found 71 Carlson-Wagonlit centers and 19 others. Now his people are working to get these numbers down, thereby reducing costs of operations and improving the consistency of service at the same time.

Out of the 600 or so airlines worldwide, Oracle has contracts with 28. “Our challenge is to communicate to the masses (employees) about why it’s in their collective best interest to go with a contracted carrier. Communicating policy and our supplier logic is critical.”

If there was an area of disagreement I had with Ralph, it was probably around how the LOB needs to manage travel in concert with the central travel group. I’m a fan of pre-trip approval and other “no surprise” policies. But Ralph countered: “If you don’t trust your employees, why are they here.” He believes in a pre-awareness strategy versus pre-approval (which he knows sometimes results in manual processes). When I pressed further, expressing a desire for LOB overrides on “expensive” yet corporate-approved standards, Ralph held his ground: “Our employees are our most important asset. We have to have a travel program that makes common sense from their viewpoint. If it comes down to a few hundred dollars difference for more convenience or safer travel, so be it.”

Ralph continued his argument. “Travel is the 3rd largest controllable expense. But what are travel and entertainment expenses as a % of sales? A point? We could implement a system that would get people to stop traveling. But when you are trying to grow the top line of your business and ensure your success that’s the last thing you should do.”

So Ralph is pro-travel, but don’t mistake him for someone who doesn’t care about the bottom line. “I believe in the three T’s: track it, trend it, then trim it.”

On Event Management (Meetings)

Ralph remembers a shift in the early 90’s when it came to hotel policy around events. “It used to be group rates were lower than contracted rates, but Marriott and others changed that. They started charging more for blocking out rooms for a group. It doesn’t make sense, but often they can get away with it.”

Ralph’s group works in concert with Marketing to make sure Oracle’s gigantic events and even smaller, more intimate gatherings have the logistical support they need. And the strategy for hotels? “Our transient, contracted rates will be the same as our group rates.”

On Sourcing

Ralph believes in organizationally separating operational management from the sourcing practice. “We want our operational teams to be focused on improving customer service and dealing with the day-to-day tactical issues.” Separately, Ralph will have Sourcing teams who perform contract negotiation and oversee supplier management. “Their role is more strategic in nature,” Ralph adds.

On Data And Card

“Travel data is always fragmented. It comes from 3 sources, and none are perfect: your card program, your agencies, and your suppliers. You need to aggregate these to get a complete view of your spend.”

“We are pursuing a data warehouse which will combine supplier, card, and agency data sources to get the best possible view of Oracle’s travel spend. It will never match GL perfectly, but it will be close.”

Summary

“Our program is still in it’s early days. We are just completing our ‘Discovery Phase’ and are now in a ‘Recovery Phase’ where we are deciding which programs we will introduce, re-evaluating key suppliers, and negotiating new contracts. Then it’s on to our ‘Implementation Phase’.”

Ralph is an experienced professional well on his way in transforming Oracle’s travel programs. And the destination appears well worth the trip!

Know someone who has a great Procurement story and is willing to share it? Send ‘em my way at drstephe at gmail dot com.

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Written by Dave Stephens

03/13/06 3:46 PM at 3:46 pm

Posted in Historical

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