For a busy sales executive, saving 4 typical car journeys and 2 train journeys a month, along with a trip to Europe every 2 months, saves the business the equivalent of £15,000/yr, and saves him an average of 19 hours of travelling time a month.
The UK’s Committee on Climate Change reported this week on the environmental impact of a 3rd runway at London Heathrow. In the report they expressed an expectation that teleconferencing will significantly reduce the need for business travel. This is yet further recognition of the impact collaboration applications will have on travel, saving money and reducing the carbon footprint of businesses.
A successful executive needs to meet people to do business and no collaboration service, no matter how good or widely available, is going to reduce business travel to zero. Technology does though change the dynamics of business relationships, significantly reducing the need to travel and also increasing productivity.
Higher productivity comes not just from saved executive travelling time but by enabling executives to ‘meet’ and talk with more customers, suppliers or colleagues than is possible in a day by travelling. Meetings in Frankfurt, London, New York and again in Frankfurt, all in one day? Unlikely, other than by business collaboration and teleconferencing technology.
So can you quantify the business benefit - and is it significant ?
The Costs Today
A successful executive needs to meet people to do business and no collaboration service, no matter how good or widely available, is going to reduce business travel to zero. Technology does though change the dynamics of business relationships, significantly reducing the need to travel and also increasing productivity.
Higher productivity comes not just from saved executive travelling time but by enabling executives to ‘meet’ and talk with more customers, suppliers or colleagues than is possible in a day by travelling. Meetings in Frankfurt, London, New York and again in Frankfurt, all in one day? Unlikely, other than by business collaboration and teleconferencing technology.
So can you quantify the business benefit - and is it significant ?
The Costs Today
We have to firstly establish an average travelling pattern for our executive. No two meetings or people are the same. Some travel extensively by air, some drive and some let the train take the strain. We have to therefore develop some base numbers and flex a cost model accordingly.
By Car
Your average executive car costs around 45p/mile (according to the UK tax man). Most would probably agree its closer to 60p/mile. So for a trip to see a customer 50 miles away the costs of transport alone ranges between £45 and £60.
In addition we have our executives’ time. At an average speed of 40 mph our executive will have 2.5 hours in his car (probably most of the time on the mobile phone but lets ignore that cost). 2.5 hours will cost around £70 for an executive on £50k/yr.
So the overall cost of driving to the meeting 50 miles away is a minimum of £125.
Train
In addition we have our executives’ time. At an average speed of 40 mph our executive will have 2.5 hours in his car (probably most of the time on the mobile phone but lets ignore that cost). 2.5 hours will cost around £70 for an executive on £50k/yr.
So the overall cost of driving to the meeting 50 miles away is a minimum of £125.
Train
The alternative is the train. A 200 mile round trip, say Bristol to London, for a meeting has a ticket price ranging from £95 to £153 depending time of day and class of travel. Average travelling time is lower than the car being 3 hrs return, costing us £84 in executive time.
So the total cost for this trip ranges from £179 - £327. Lets say £250 for simplicity.
and Plane
So the total cost for this trip ranges from £179 - £327. Lets say £250 for simplicity.
and Plane
If however the meeting was in Paris, flying would probably be the chosen transport. A crush-class flight from London to Paris on a scheduled airline will cost around £230 return. Travelling time is around 6 hours allowing for check-in, security and flight time. Assuming the executive also drives to the airport (20 miles) plus parking for the day costs rise to around £460. Add in taxis in Paris and we’re close to £500 for the day. This assumes the meeting lasts all day so there’s no in-effective time and is reasonably close to Paris airport.
So to summarise, a 100 mile round trip by car costs £125, a 200 mile trip on the train around £250, and the same by plane £500.
So to summarise, a 100 mile round trip by car costs £125, a 200 mile trip on the train around £250, and the same by plane £500.
The Savings
We have to make some assumptions about travel patterns that reflect the average worker for any company, which varies between highly mobile sales people, project managers, procurement and supply side management, multi-site functional managers and the CXO traveller. Each business will therefore have a different profile and would need to develop possible saving targets for each type of role.
Lets assume though that our executive is in Sales and travels three times a week to customers in his car, once a week into London and into Europe once a month. This would mean he drives around 15,000 business miles a year.
With effective collaboration technology we should be aiming to reduce his car trips to customers by one a week. Reduce by half travel to London on the train, and reduce his trips to Europe also by half. Saving are therefore 4 car journeys/ month, 2 train journeys a month, and half a trip to Europe.
This saves around £1250 a month, £15,000/yr, or 30% of his base salary.
This ignores how he now puts to use the 19 hours a month of travelling time saved - hopefully talking to more customers.
The Costs of SaaS Collaboration
Deploying an enterprise wide business collaboration application can be an expensive undertaking if the traditional deployed approach is used. However with Software-as-a-Service now accepted as reliable and secure this would be the most cost effective route and fastest to deploy for most businesses. One has to remember that the PSTN is effectively a SaaS application. A simple subscription on a per seat/month basis covers all licensing, operations, support and on-going development costs. A fully featured business collaboration product should be costing less than £20 per seat per month, including VOIP and mobile client options.
The Green Case
There’s a compelling sustainability aspect to SaaS solutions which give them outstanding green credentials. Most SaaS applications run in existing internet browser or a thin Java client. This means there’s no need to renew PC’s, upgrade hardware, operating system or expensive Office applications, so extending the life of existing infra structure whilst getting the latest unified communications and business collaboration application.
Carbon emissions from business travel makes up 4% of the emissions from the National Health Service, Europe’s largest employer. Of the 18 million tonnes/yr of carbon emissions they are responsible for, a total of 740,000 tonnes/yr is due to business travel.
Carbon calculators enable you to define the emissions for the trip profiles we developed above. These equate to 0.025 tonnes for the car journey, 0.02 tonnes for the train, and 0.39 tonnes for the airplane.
The average NHS employee probably doesn’t fly on business trips, so cutting the NHS carbon footprint for business travel would require savings from car and train travel alone. Setting a target of a 10% cut would require a saving of 74,000 tonnes/yr – equivalent to nearly 3 million car journeys or 3.7 million train tickets.
However, the NHS is huge, employing 1.5million staff. If we assumed only 10% travel regularly, this is still 150,000 staff - so each does not have to change their behaviour significantly to hit the savings target.
If these150,000 regular travellers reduced their business travel by just 2 car trips a month, the NHS would cut 90,000 tonnes/yr of emissions – a 12% saving on today’s figure.
Could a business collaboration tool help achieve that ? Very probably.
And the direct cost savings of achieving that small level of travel reduction for the NHS ?
A cool £75 million
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