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10 Jun 2014

From Regional to Global and Back Again….

Amon Cohen from The Beat penned a good article last week titled ‘From Regional to Global and Now Back Again’ that we think is worth calling out and reflecting on.

Please note that Cohen's article sits behind The Beat’s pay wall, so it’s important for us to respect the value contained in the article and not to reveal any of its content unnecessarily.

At the core of Cohen’s argument is the notion that there’s a measurable and meaningful shift happening in the way that global corporations source their corporate travel services.

Over the last ten years, in an effort to reduce costs and simplify processes, organizations have gone out to the market with big global managed travel RFPs to find a single global TMC capable of solving all of their travel problems. While this is great in theory and makes good sense in the boardroom, what many have found is that there simply is no single TMC capable of doing everything, for everyone, everywhere. And, as many have found out the hard way, that’s a problem that can easily end up costing them far more than they ever actually save.

The change, as cited by Cohen, is a shift towards localised procurement that allows organisations to work with best-in-class regional TMCs that have local knowledge and local expertise. The article suggests that as many as 30% of RFPs that start off global actually end up as regional deals, which is pretty significant. Of course going local does bring with it some additional complexity – particularly in terms of data consolidation – but the benefits, according to many of the people Cohen interviewed as part of his research, seem to outweigh the costs. 

What the article fails to consider is the role of technology and how OBTs have changed the supplier landscape. In a world of aggressive cost cutting and self-service OBT support by TMCs is becoming increasingly important. OBTs are proven to save money, empower travellers and, most importantly, allow procurement teams to move between TMCs without losing continuity of technology. With the OBT at the heart of the relationship between the customer and the TMC, the relationship between the TMC and the corporation changes quite considerably.

Just as TMCs struggle to deliver globally, so do OBTs. In many ways localization gaps are even more visible inside an OBT than they are inside a TMC. Without access to local low cost travel providers, taxi suppliers and other regional players it’s impossible for any single OBT to cut through on a global scale, which explains why there is no dominant global tool and why we invented the Mundi Global Alliance.

About three years ago we were introduced to the regionalization trend that Cohen talks to in his article. Global corporations, frustrated with the lack of regional expertise and support available in the market, came to us looking for a technology-centric solution that would give them access to regional content that they could over lay on whichever TMCs they happen to work with in each region, which could be one global supplier, or multiple regional suppliers. And so, with the help of NuTravel in the USA and KDS in Europe, the Mundi Global Alliance was born.

Through Mundi corporations get the best of all worlds. They get local content in a best of breed OBT, which can be supported by the TMC of their choosing. They also get a single global contract and SLA which Mundi Partners all adhere to.

For sure, it’s still early days for Mundi, but if the trend towards regional buying continues and the importance of OBTs continue to grow as they are forecast to do, then Mundi should be extremely well positioned to take advantage of the trend and we’re grateful to Amon for raising public awareness of the shift.

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