How does your organization automate T&E expenses? Many still use spreadsheets. Business travelers enter their expenses into Microsoft Excel, print out the spreadsheet, and attach receipts using Scotch tape or staples. From there they pass it to somebody for approval, maybe even overnighting it back to HQ, which adds about $15 more. Once approved, the data gets reentered into the expense management system for processing, and finally a reimbursement payment is generated.

Spreadsheets aren't automation. They represent a slow, costly process that lacks any effective management visibility into the data. At a time when companies are desperate to rein in expenses, the old spreadsheet-based T&E process is counterproductive.

"In the current economy, expense management has been magnified in importance," says Rod Radojevic, director of solution marketing at Infor. And so too has travel and entertainment (T&E) cost control. Yet still, after a decade or longer of sophisticated automated expense management systems, an exclusive Infor/Business Finance study shows that just over one-third of survey respondents either have not automated their T&E systems and processes or are just starting to evaluate such automation.

But the need to automate expense management and T&E has never been greater. "You can't get away from the economy of the past 18 months. It has been particularly hard on cash flow," says Andrew Bartelini, vice president at Aberdeen Research, Boston. Since managers can't count on an economic recovery to boost revenue anytime soon, all they can do is focus on what they can control, such as T&E expenses. Controlling T&E expenses, however, requires automated systems and processes.

T&E managers certainly are struggling with the economic pain. "Across the board, we've seen a 25 percent cut in T&E spend," said one Infor/Business Finance survey respondent. "All nondiscretionary travel and entertainment has been curtailed," complained another. One manager reported: "Business travel has been curtailed to only that which is customer-facing and/or commercially necessary."
And when Infor asked survey respondents about changes in company T&E strategies, their responses were equally dispiriting:

• Reduced travel
• Reduced T&E
• Avoid travel where possible through use of online meeting tools
• Stricter controls and higher-level approvals
• Stricter review and preapproval of international travel

World-class enterprises take a different approach. Hackett Group recently looked at how companies manage T&E costs. It found that world-class companies used automated tools 70 percent of the time. Other companies, by comparison, used automation only 30 percent of the time.

The Business Case for T&E Automation

The difference in bottom-line dollars between the world-class companies and the rest is striking. "World-class companies spent $4 less per expense report to process, which is 40 percent less than the others," says Bret Gelbert, Hackett Group senior business advisor and transformation leader responsible for T&E. For a company processing thousands of expense reports each year, a $4 cost difference can really add up.

For example, Infor recounts the experience of one company that had 12 FTEs handling T&E expense reimbursement when it was only partially automated. "When it was fully automated, they were able to do it with just five FTEs," says Radojevic. That's a savings equivalent to seven FTEs.

On average, the Infor/Business Finance study found that large companies processed over 3,000 expense reports each month. Of all companies, nearly one-quarter reported managing 500 or more regular business travelers and processed 1,000 or more expense reports monthly.

In terms of recouping T&E costs, 24 percent of the companies surveyed capture employee time for recharge internally, while 13 percent capture time spent for chargeback to the client. Surprisingly, 63 percent do not capture employee time at all for T&E expense management purposes.

T&E Automation Drivers

To capture and manage these expenses, the Infor/Business Finance survey shows only 28 percent of the respondents with fully automated and integrated expense management systems and processes. "This suggests that there is considerable room for improvement. Even among larger organizations, less than half were fully automated," says Radojevic. With today's focus on curtailing costs, organizations should be pushing for more automation and integration.

As it turns out, this apparently is happening. Aberdeen, in its latest T&E management automation study, identified four primary drivers. Most important by far was budget reduction, which was a direct response to the global financial downturn. Second was the fluctuating cost of travel, closely followed by the high cost of processing expense reports. Finally, companies turned to T&E expense automation to meet financial reporting and regulatory requirements.

The Infor/Business Finance study identified similar drivers. The top two, statistically tied, were improved visibility and analysis of company spend and expense policy management enforcement, each cited by 26 percent of respondents. Following right behind, cited by 25 percent of respondents, was reducing the time it takes to enter, approve, and pay expenses. The need to control spending came next, cited by 24 percent.

Often corporate credit cards constitute the initial step in management's efforts to understand and control T&E costs. "The corporate card has become the link between travel booking and expense processing," says Gelbert.

Corporate cards certainly loomed large in the Infor study. Among larger companies with over $1 billion in revenue, nearly 80 percent had integrated corporate cards with expense management. Even among smaller organizations, those with less than $100 million in revenue, half had integrated the cards with expense management.

Integrating T&E Management

As much as automating the T&E expense process is integrating the different automated tools that support the end-to-end management process, from planning and budgeting to reimbursement, the integration of corporate cards with expense management is just one piece. Many survey respondents have gone beyond that.

For example, 74 percent of large companies have integrated payment processing with expense management. Among smaller companies, the integration level drops to 44 percent. Similarly, about two-thirds of respondents have integrated their finance/GL with expense management. Respondents also are likely to integrate reporting and budgeting with expense management.

Of all the corporate management functions with a role in the T&E cost management, procurement and procurement systems were the least likely to be integrated with expensive management. According to the survey respondents, only 20 percent reported procurement fully integrated into the process.

Infor found, however, that just over half handled procurement is separately. For organizations intent on controlling T&E spend, this is a serious oversight. A determined procurement effort based on recent accurate information about the use of airlines, hotels, and rental cars can make a significant dent in T&E expense from the outset by securing the most favorable volume discounts and terms. "This looks like an area where procurement can have a big impact on costs," notes Radojevic.

"You want procurement involved in the negotiation with vendors," advises Bryan DeGraw, a senior business advisor at Hackett Group.

The impact that procurement can make, however, may be undermined by what DeGraw refers to as human behavior. Procurement's contribution is to establish a select set of providers to which all business travelers are directed.

Yet, business travelers often have their own preferred airlines and hotels, ones that are not part of procurement's approved suppliers, so they will somehow skirt the rules. Often, they think that they are getting the company an even better deal, but they likely are not aware of the deal procurement already has cut.

At this point, "it comes down to a question of how much you want to mandate. Education of the workforce as to why it is best not to go off policy may be the best strategy," adds Hackett's Gelbert.

General T&E Satisfaction

Despite the less than full adoption of expense management systems and their limited integration, which is necessary to achieve end-to-end management visibility, the Infor study suggests that companies are generally satisfied with their expense management strategies. Nearly three-quarters of the respondents are completely satisfied or somewhat satisfied with their efforts in this area. Yet, just over one-quarter reported that they were completely or somewhat dissatisfied and looking for alternatives.

One place to begin improving T&E expense management is with the adoption and enforcement of consistent T&E policies through automation. Almost half the respondents had consistent policies, but they were manually imposed. As a result, managers could not really tell whether policies were being followed consistently. Others let each business unit or region manage T&E themselves. Some tried to apply consistent T&E policies but only to air, hotel, and car rental. Even among the largest businesses, those with $1 billion or more in revenue, just over half reported the ability to apply consistent policies through an automated, fully integrated approach. Yet, in the end, that is what it takes.

"T&E is one of the last areas of management automation," says Radojevic. Maybe it is the independent nature of business travelers or their very mobility that makes T&E difficult to automate. Whatever the reason, the economic pain of the past 18 months may finally be forcing a change in company attitude toward T&E automation, given the number of respondents reporting a willingness to consider other T&E management options.

Future Directions

The next frontier for expense management is mobile computing. Here, both travelers and managers can use mobile devices such as smartphones to make and change travel arrangements, file or process expense reports, and review and analyze T&E spending.

"Mobility is very new today," says Aberdeen's Bartelini. Looking ahead, however, he expects mobility to take on much greater importance. "People will want to know what they can do by way of T&E management and automation from their iPhone or Blackberry," he says. The Infor/Business Finance study looked at mobile and found only 11 percent of respondents citing the need to enable mobile devices for entering and approving expenses.

If survey respondents and their companies are not quite ready to jump on the mobile bandwagon, they are considering teleconferencing as a lower-cost alternative to travel. "Teleconference more; do less overnight travel," one respondent reports.

Another's management laid down this dictum: "Use alternatives such as Web meetings and teleconferences, or use someone more geographically located." At companies like these, it has come down to doing almost anything to avoid travel.
Yet, realistically, organizations cannot significantly curtail travel without risking lost sales and degraded customer service, both of which can hurt the bottom line. "Do companies really want less face time with customers?" asks Radojevic.

A far better strategy is to closely manage T&E expenses as part of a comprehensive integrated expense management approach that improves management visibility and control.