Now, more than ever, a robust expense management system is seen as a vital weapon in the battle to control travel costs. Bob Papworth reports
SEARCH ALL YOU LIKE for shock-horror news stories about the decision by HRG Worldwide – once simply known as plain Hogg Rob – to change itself from a “travel management company” into an “international corporate services provider”, and you will search in vain.
In an age when Eddie Stobart and Norbert Dentressangle do ‘logistics’ rather than haulage, and office cleaning is known as ‘facilities management’, is one disconcertingly-vague company tagline much the same as another?
After all, it’s not so long ago that ‘travel management companies’ were mere ‘business travel agents’. So HRG has re-worded itself. So what? Oh, we of little foresight! As cash-strapped companies seek to outsource everything under the sun, ‘corporate services’ has actually become the more accurate name of the game, encompassing anything and everything from recruitment to payroll, IT to accounting, catering to legal services, and most things inbetween.
Some areas of business, nevertheless, have long remained sacrosanct, and travel managers and travel management companies (TMCs) have always maintained that ‘travel’ is – or should be – one of them.
Buying travel, the argument goes, is not like buying loo-rolls or flip-charts, because travel is ‘emotive’. Employees don’t much care if their phones aren’t disinfected on a nightly basis, but they care quite a lot if they end up in a seedy flophouse instead of the country house golf resort’n’spa to which they have become accustomed.
Should they then choose to spend their way out of the situation, and should their employer subsequently refuse to reimburse the outlay, then ‘caring quite a lot’ doesn’t really cover it. Expenses, like travel, are ‘emotive’.
Put the two together, as in ‘travel and expense management’, and you’re just asking for trouble.
Your averagely-disgruntled road warrior will grudgingly use his credit card to upgrade himself from back-of-bus to business class, but withhold or delay reimbursement of the subsequent expense claim, and you’re into blood/wall-interface territory.
However, the travel/expense combo is also desperately needed. According to a Carlson Wagonlit-sponsored study by the Global Business Travel Association
(GBTA), 65 per cent of travel managers who “most effectively achieve their business goals” use a travel expense management system. Only 49 per cent of “less successful” managers are using a system that consolidates both travel and expense data.
Consolidation is key. Those who are dealing with multiple sources of facts and figures, according to the GBTA, spend 442,000 man-hours, worth some US$22.7 million, manually reconciling and cleaning data.
The GBTA report suggests 64 per cent of those wasting all that time and money don’t even trust that they have all the data they need to calculate the total cost of a trip, and only 37 per cent believe their data is completely accurate.
Another 44 per cent would like it to be more timely, and a massive 82 per cent “strongly” or “somewhat” agree they have to manage multiple data sources to answer questions from management about travel spending. Nearly three-quarters (73 per cent) say they have challenges reconciling differences in reports because of variations in formatting.
“Capturing data is of the utmost importance for travel managers, as they rely on that information to drive supplier negotiations,” says CWT senior vice-president Nick Vournakis. “Without an accurate picture of their overall spend it’s difficult to prove the benefit that strategic deals can offer to both suppliers and corporations.”
Joseph Bates, senior director of research at the GBTA Foundation, the association’s research arm, says: “Corporate travel managers need accurate, timely and complete data to manage effectively the multitude of responsibilities they have. From this study, we’ve learned that the data management industry needs to provide consolidated, clear data so travel managers can control spending, deal with compliance issues, and better leverage the plethora of data they currently receive.”
The GBTA report concludes that travel data consolidation, where disparate data sources are combined into a single system, “may be able to solve many of the issues travel managers experience”. The problem is that only 15 per cent of the GBTA’s respondents say they currently consolidate all their travel data sources into a single system.
And the effects of joined-up expense systems – or lack thereof – impact on seriously large sums. Alan Gillies, head of UK sales for American Express Global Corporate Payments, says “indirect costs” are estimated at E1,300 billion annually for European companies. He says having the right card and expense programmes in place means “savings of between 5-10 per cent on processing and sourcing costs are easily achievable”.
Creating products that target those desirable savings is what all the key players in the field are working on. Expense management market company SAP is working with Airplus International to develop a new near-field communication (NFC) system of payment processing which, SAP says, will save travellers’ time and streamline the back-office task of clearing credit card transactions.
The new partnership was one of a string of new initiatives, announced at GBTA in Boston, to add to SAP’s Travel On Demand travel and expense (T&E) management solution. Working in conjunction with Open Text, described as “the leader in receipt recognition services”, the SAP system now automatically recognises expense receipts, no matter what language or currency they are in.
Travel On Demand turns the receipt images into machine-readable information and automatically pre-populates the traveller’s expense report.
Meanwhile, KDS’s Neo system is now at the beta-test stage. Whether a traveller is off to Ankara or Anchorage, Neo will tell the travel manager not just the likely cost of the business class air fare and the three nights’ accommodation, but also the price of the taxi transfer from the airport, the going rate for a half-decent restaurant meal and – probably – the price of a nightclub mojito or two.
To the travel manager and the chief financial officer (CFO), of course, this is manna from heaven. Joe Blow’s Anchorage trip will cost X, which is within budget. If Joe comes back with an expense claim for Y, there are corporate coals over which Joe can be hauled.
If he fraudulently claims that the taxi transfer set him back a week’s wages, and the system shows it should have cost only a day’s wages, questions will be asked.
So does the system have the potential to become prescriptive, deterring travellers from using their initiative to circumvent the travel gremlins? Heading for an important meeting at London Paddington, Joe Blow arrives at Heathrow to discover that the Heathrow Express – for whatever reason – is temporarily inoperable. Does he take a cab, knowing this will ring alarm-bells back at base, and fearing the fare might not be reimbursed? Does he call in to seek clearance for the additional spend (and how long will that take?), or does he simply postpone, or even cancel, a potentially business-critical meeting?
“The easiest way to save money is often not to spend it in the first place,” KDS told Buying Business Travel. “Modern reporting tools have the ability to cut your costs: by seeing all the expenses in advance of someone booking a trip, you can then assess whether the business trip is really worthwhile.”
And, in light of the concerns highlighted in the GBTA report, KDS stresses: “The next big opportunity for organisations is to unify their travel and expense management. A unified T&E process allows the management team to get an accurate view of the total cost of trip, but also means it’s able, from the travel booking, to automatically populate an expense report and, therefore, remove all the pain from the end users, due to its complete level of automation.”
So far, so good – but then: “Ancillary charges are often a challenge for organisations, as you cannot truly forecast the cost of your trips, and you must be very flexible on your travel policy but without compromising on control.”
So by seeing potential expenses in advance, travel managers can assess whether the trip is worthwhile, but then they cannot “truly forecast” the price of that trip – thereby raising the spectre of cancelling trips on the basis of inaccurately-predicted costs.
Shane Bruhns, chief executive of Spendvision – now 100 per cent owned by HRG – is adamant that any shortcomings are more often the fault of people using the systems, rather than of the systems themselves. “It’s a tool. Any expense management system is a tool – how you use it is entirely up to you,” he says candidly. “There is the potential for any organisation to enforce policy to the nth degree – but it’s not the technology that’s enforcing it.”
However, Bruhns is unconvinced by the concept of predictive technology. He argues that in most cases, corporates already know what their approximate average cost-per-trip is; TMCs already have that data, presented in the form of management information. “It’s happening anyway. Why do you need predictive technology?”
The next big thing, he believes, is to move away from the idea of travel and expense management altogether, and focus simply on the ‘expense’ bit alone – embracing Spendvision’s parent company’s holistic “corporate services” ethos. “Travel is just one category of spend,” Bruhns says. “So if you have a guy who buys travel as well as other goods and services, why does he need to use multiple systems?”
Describing its products as “total transaction management solutions”, Spendvision’s latest coup is to furnish Lloyds Bank with just such a system – technology that manages, processes and pays all expenses, no matter how or on what those expenses are incurred.
The bank’s larger customers will be issued with a ‘payables card’ which will hold details of regular suppliers; when an invoice comes through, the card will automatically be uploaded with the appropriate funds, and the payment made. The accounts department is then left to process only the one-off or occasional transactions.
Smaller corporate customers will not necessarily need the card, but they will have access to an online system that will “help them manage everything from reporting and statements right through to more sophisticated expense management automation that allows them to capture, manage and report on all their corporate expenditure”.
Allister Mitchell, Lloyds Banking Group’s head of card products, transaction banking, is quoted as saying: “Organisations of all sizes are under pressure to identify ways to monitor and manage their business expenditure. Working capital is a particular concern for businesses looking to maintain growth during the current challenging economic conditions. We believe this service gives us an edge, and places us firmly at the front of the pack.”
No mention of “travel”. No use of the word “emotive”. Lloyds Bank doesn’t care what you spend your money on, or which suppliers you spend it with. Loo-rolls, flip-charts, trips to Anchorage – it’s all the same to them.
But not, apparently, to Concur, which stresses the fact that around 20 per cent of all travel and entertainment expenditure is out of policy. Given that Concur last year processed around 500 million claims with a total value in excess of US$50 billion, that’s quite a chunk of off-piste activity.
Road to happiness
Concur’s answer is to provide a system designed to keep both employer and employee happy. For organisations, Concur helps ensure that corporate travel is booked within policy before the trip is taken and reconciles expenses after travel is completed. And by delivering electronic receipts – from airlines, hotels, and car rental companies – directly into expense reports, the system virtually eliminates the need to track and manage paper receipts.
To keep the road warriors productive – and smiling – while travelling, Concur’s mobile applications enables them to keep track of and share their travel plans, create, review and approve expense reports, and book and change travel itineraries, all from a smartphone.
Conferma commercial director Shaun Hinds would agree with all the above but his emphasis is on flexibility. Cost is obviously best controlled before a trip takes place, and Hinds urges Conferma clients to book, and even pay for, as many trip components as possible upfront. “Anything you can pre-order, anything you can reserve, anything you can pre-pay – do it,” he says.
However, he also recognises the “stranded traveller scenario”. He asks: “How much control do you really want? You might know that the hotel costs £89 a night, but it makes sense to build in some leeway – maybe 20 per cent either way – and our system allows you to do that. It’s highly configurable.
“And configurability is important – you will never find two identical clients. Because of the expertise we have, we are pretty good at taking a view on the best set-up for any particular client. We can build in lots of fields which can be mandatory – which is what the CFO wants – but then if you talk to the operations manager or the travel manager, you get a different set of requirements.
“Establishing the client’s specification can be a bit of a learning curve – for both sides. The one thing nobody wants is a system so onerous and cumbersome that it becomes an inhibitor.”