VideoAs technological endorsements go, "we didn't realize the ROI would be so great" is as good as it gets, particularly when it's coming from a finance person. And that's exactly how Bob Mendence, finance manager for corporate services at Applera, describes his company's adoption of a new travel-and-entertainment expense software system from Concur Technologies.
T&E software is not new, and it already enjoys decent market penetration (40 percent of large companies and 10 to 25 percent of small and midsize companies, according to PayStream Advisors). But analysts say the software is now playing a role in overall E-procurement and expense management, versus more-limited use as workflow systems that facilitate employee reimbursement. Data capture is the driving force, according to research firm Aberdeen Group, although the benefits of T&E systems don't end there.
"Our main goal was to streamline the process," says Mendence, "and develop a system with rules to enforce our policies. With the demands of Sarbanes-Oxley legislation, we knew we were going to be tested on internal controls."
These days, says A. G. Lambert, senior director of product management at Geac, compliance issues do help vendors get a foot in the door, but ultimately the promise of cost savings seals the deal. Companies using T&E software often eliminate unnecessary staff positions (one organization cut 10 people who did nothing but decode expense accounts, saving $500,000 annually) and rein in substantial overnight shipping and postage costs (another firm let employees overnight their expense reports, then did the same with the employees' reimbursement checks). They can also receive prompt-payment rebates from credit- and procurement-card companies (usually banks) that can be integrated into the system. And once travel data has been captured and analyzed, companies can use it to negotiate better deals with preferred airlines, hotels, and other providers.
Make no mistake, T&E software isn't cheap — a traditionally licensed in-house version could cost up to $1 million, while a hosted service might run in the low six figures annually, according to Lambert. But if you have thousands of road warriors, like the $20 billion pharmaceutical company AstraZeneca, the payback can be impressive. And, as with most other categories of software, hosted pay-as-you-go options can make the software accessible to companies with smaller IT budgets (see "Software as a Service").
Proponents also point to soft benefits such as employee satisfaction. T&E software usually enables companies to reimburse employees within two to three days after they submit expenses, versus the weeks or even months it typically takes when using manual processes. Employees can either enter or verify expenses (a credit-card link lets major items be entered directly into an online expense report) via the Internet or a company intranet. They simply add in out-of-pocket expenses and hit "Send." In many cases, employees are then reimbursed via direct deposit.
If that makes employees happy, it should also generate smiles in the finance department. "Finance executives are trying to get a clear picture of their expense cycles and how they are going to control them from division to division," explains Albert Pang, director of enterprise-applications research at IDC. The accounting and reporting capabilities that are built into T&E systems provide much-needed transparency and accountability for a category of spending that can sometimes be an organization's largest after payroll and benefits.
This can help clean up what Pang describes as "years of neglect" affecting a substantial expense category. As added incentive, credit-card companies now routinely break out more and more details from each transaction — dividing a hotel charge into meals, movie rentals, and spa treatments (for the truly fortunate travelers), for example. The IRS has responded positively to this increasing reliance on automated systems. Among its efforts: accepting electronic documentation versus paper receipts for individual line items (this is part of a "level three" program that the IRS is expected to expand next year). Capturing data at a much more detailed level can give companies plenty of insight into where exactly their expense dollars are going.
This new focus on data capture and cost reduction stands in stark contrast to the old days of business travel, when the corporate travel department received commissions from airlines and effectively operated as a profit center. And, says Lane Dubin, vice president at American Express Business Travel, there was a time when T&E was the ultimate type of "rogue spending": emotional, hard to control, decentralized, and handled very differently from one company to another.
No more. Today, a growing list of vendors offers a range of T&E service options, from licensed or hosted software to online services, with credit-card companies and banks either partnering with or competing with IT vendors and travel-booking firms. Necho Systems, Concur Technologies, and Outtask provide Web-based software; Geac offers licensed and hosted options; Gelco Information Network has a hosted product; and Ariba offers T&E among its spend-management applications, as do the big ERP and enterprise providers — SAP, IBM, Microsoft, and Oracle. Online-booking companies, including Orbitz, Expedia, e-Travel, Travelocity, Navigant, and Travelport, offer T&E spend-management services, along with American Express, Visa, MasterCard, and other financial-services firms.
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