Buyers Talk Of Tighter Expense Policies, New Tactics, More Technology

Travel buyers from five companies shared insight on payment and expense policies, technology and practices at a roundtable discussion in May just prior to Business Travel Media Group's Tech Talk event in Chicago. Harman International global corporate travel director Sally Abella, BDO USA LLP national director of procurement and travel Cynthia Gillen, Citigroup managing director Mick Lee, Liz Claiborne Inc. global mobility, T&E and meetings director Rafael Rosario and former Tellabs indirect strategic sourcing global travel administrator Patty Little met with BTN's Mary Ann McNulty. An edited transcript of the discussion follows.

BTN: End-to-end automation has been a hot topic for 20 years. Where are you in deploying booking-through-expense technology?

Patty Little: Tellabs transformed its entire travel program from multiple small agencies to one global. They wanted a credit card system, wanted an automated expense system, but didn't realize that they would need the credit card first. They really had no data to work with due to the manual systems in place. They wanted to integrate booking through expense, collect all data on the back end and at some point compare booked to actual, because that's where the value is.

Cynthia Gillen: We've not pursed an end-to-end scenario. Our current expense integration enterprise resource planning program would not be supportive of that.

Mick Lee: We're not fully end-to-end. We're in over 100 countries, and the majority of those countries have Concur. We have 60,000 frequent travelers. Those travelers are profiled through the Concur system, and we're using Cliqbook as our pre-trip tool. We've just launched—and in next couple months to a year expect to have fully—one single data consolidator. Our next step is to compare booked to actual data and pull those two pieces together. That's our goal certainly for year-end, but for us the majority of the work was getting as many countries as we could on Concur. Right now, more than 84 percent of our expenses are through Concur and 70 percent of our travel is through an online product.

BTN: Expense data is the purest and what you needed to drive your program?

Lee: Yes. There is such a disconnect between booked and actual data. Actual obviously is going to give you a truer picture.

Gillen: Actual [expense data] is going to pick up the ancillaries, taxes, surcharges and just the costs of doing business, so the expense data is the most important. We're on Oracle for our expense, Cliqbook for booking.

Lee: One of the things we worked on was partial reimbursement for anyone who doesn't book through the designated travel agency to help us to get closer on the disconnect between booked and actual data. My popularity of course tanked as soon as that [policy change] took effect.

If you don't book through the DTA, you're only reimbursed for 80 percent of what you spend. The only people who can grant exception authority on that are the CEOs. There are only a handful of CEOs that our 60,000 travelers report to who can approve exceptions.

The people who actually get exception approval have true exceptions. For example, if you're running to the airport to jump on a plane, that was something that was applicable. You wouldn't mind granting the exception there. We tied it into our security program. Obviously when a plane goes down or something happens, the way to find out where employees are is through our DTA, pre-trip reporting, etc. By forcing the issue, it's not about expenses, it's safety and knowing where our travelers are.

BTN: How is compliance?

Lee: We implemented in October. It was a painful 90 days, as you can imagine. But the exception levels and numbers have gone down considerably. There were very few for the month of March—we're talking 20 exceptions in comparison to hundreds in October. A lot of it was education. It wasn't that people were trying to do the wrong thing, they just didn't know the policy.

Gillen: What was the focus of your education message to end users?

Lee: We had a 90-day communication plan prior to Oct. 1. We held traveler and travel arranger seminars. We ran it on television monitors throughout buildings. All the profiled travelers got information about it.

And we used recent successes in getting our people out of Egypt. In January, we reemphasized the importance of knowing where our travelers are. Safety and security is paramount—that's our most important thing. The way we know where you are and can take care of you when you're on the road is when you book through the DTA. By the way, there are some financial benefits to it too, but that's secondary to taking care of you and knowing where you are.

Sally Abella: It seems like after a disaster, such as what happened in Japan or in Egypt, all of a sudden you get this influx of people saying, "Now I get it," especially when you're reaching out to them at midnight, talking to them—"I know you're in Japan, we have you secured on a flight, we're talking to your family"—and they're like, "This is great." It wakes them up a little bit.

END-TO-END BENEFITS

BTN: Sally, what are the benefits of your integrated booking and expense systems?

Abella: You're finding out as you implement these things that there's so much more. For instance, we just integrated our online booking tool and offline reservations into our expense system with IBM. They have a trip manager linked to an expense report. When they process their expense reports, they attach the itinerary. Now, it's interesting to see what's happening to the employee once they leave. What's happening at check-in? Are they upgrading themselves to club level? Did they buy premier seating to get a better seat on the airplane? Why is there such a big discrepancy between what they booked to what they expensed?

It's also interesting to see how you can start capturing ancilliary fees to find out what travelers are really buying. Are they buying Wi-Fi in the hotel? It was interesting for me to see a hotel where we were doing 2,000 room nights a year and how much we're spending on Wi-Fi there. You go back the next year and negotiate Wi-Fi into the room rate. There's all this information coming at you. It's great. It's also really great to report on actuals, to see what you really spent—not what you booked, but what we really spent.

BTN: Is that variance as much as 20 percent or more?

Abella: Yes, it is, but you're also looking at other costs. You never really looked at what the real trip cost was until you could actually capture everything—ground transportation, meals, all the other stuff that goes with that trip. Now you can see what would a trip from Los Angeles to New York or four days in Europe would actually cost us It's really going to be interesting to see how these expense systems evolve, because I think they are all really new.

Little: Even mileage reimbursement is clearer. We found many who had a car allowance were also submitting for mileage. When everything is manual, you don't see that.

Abella: You can run a report to find those buying fuel who didn't rent a car. What's that all about?

Rafael Rosario: Also on the mileage side, Concur came up with a solution with Google Maps, so when you click on mileage, the map shows where you are, where you went and they calculate the mileage for you. It doesn't allow the travelers to estimate.

Little: We discovered a lot of employees were putting in for mileage, and when you looked at their entire mileage for given period, it was like, how did they have time to work? They were on the road driving all the time to travel that many miles.

BTN: Rafael, now that you've integrated booking through expense, what have you been able to identify that you couldn't before?

Rosario: The way I implemented our process is that you need to book through the online booking tool or the agency, but that record is audited before it's booked. If you're not in compliance, the record isn't processed. In 2010, compliance was at 87 percent. The 13 percent not in compliance was because people booked conference hotels or hotels outside of our preferreds to meet with a vendor or customer.

Being that I manage booking, expense and the corporate card program, I can see what people are doing. I can see the upgrades at the front desk and the overcharges by a ground transportation provider. We run exception analysis reports and cost opportunity analysis to show the opportunities if we would just change this or that. Before, no one did anything with all this information.

Little: I think that's part of where we get into rubber-stamping of expense reports. Managers don't know that the rate should be.

Abella: When we first launched automated expense reporting in my company in 1999 and I first started going to all these customer summits, it was all finance people. Finance has no idea what the policy is.

Rosario: You can also create policies based on the expenses. We reduced one cost category from more than $4 million three years ago to less than $800,000 as a result of policy changes on samples.

Lee: It goes back to the fact that the role of the travel manager has completely evolved. We don't care what your seat assignment is—that's what the travel agent is for. It's all about strategic management, expense leadership, bringing together technology and looking at the end-to-end solution, whether automated or not. Anyone I talk to in benchmarking groups, we've all evolved.

Rosario: It also allows us to advance ourselves within our organizations.

Abella: Our T&E auditing now falls under the travel department. They don't report to me, but there's a dotted line to me. This tool gives you information for your internal auditors.

TOO MANY COMPETITORS?

BTN: Sally, you mentioned that some of the expense systems are still so new, but I'm struck by the number of systems—more than 40 currently on the market. That includes some that are only web-based or made for the iPhone or Android, but there are still 20 to 30 marketed as enterprise systems. Is that of any concern to you or your travelers?

Abella: No. If you have a managed expense system in your program, you're going to have the whole integration and the card upload that makes it easier for your travelers. The traveler really doesn't want to go outside the system if you do it right.

Rosario: The only way you get reimbursed at Liz Claiborne is if you use our expense system. Otherwise, you don't get money.

BTN: Do travelers complain that your system doesn't have all the features of the more consumer-based options?

Gillen: You bring up a good point. I don't worry about those systems, but I'm very aware of them and I want to know what features they're offering. If they are features that make sense for our business environment—and many of them will—I'd like to introduce them before employees bring it to us. Once they've found it, it's very hard to take something away. You want to give it to them before they've found it.

In the growing Android, BlackBerry and iPhone markets, there are a tremendous number of features and tools—something like 30,000 travel apps. They all do one or two things extremely well, some better than our mass tool, which does everything. The question is, how do you look at your mass tool versus some of these? We look to have a position and strategy in place before the questions occur and make the appropriate choices early in the game.

Abella: You really need to do your homework before you select your tool. If, like at Citi, you're launched in 100 countries, that is a lot of work. You've spent a lot of time, energy and company money to get this thing launched. Last thing you want to do is say, "I just spent this money, but now we're going to change." You really want to make sure the partner you select has that vision like yours—if you're going to bring things to the table, they take it seriously and work with you to get it onto your program.

Lee: Competition is good. We continue to look at what everyone is doing, then we just bring it back to our provider and say, "Here's the list of things you need to be working on. Give us timelines."

We've done as much as we can to embrace all the social media, because we know that's what people are looking for and what they want. We have essentially an internal Citi Facebook, where we have blogs on travel and have people voice their opinions, and that's managed. It's a great way to get the word out to 60,000 people all at the same time.

It's a combination of benefits, safety and security and information we need them to have real-time. We're working on several apps to deliver messages real-time, everything from your flight is delayed by 30 minutes to your expense report has been processed and paid. We're trying to embrace everything that's out there because it's not going to go away. That competition helps because it keeps the existing vendor on their toes.

DEMAND FOR MOBILE EXPENSE?

BTN: Mobile has been a big part of what vendors talk about. Is mobile something you and your travelers want?

Abella: I'm very interested. There's nothing I hate more than to get an email that you have an expense report to review and approve, but I'm sitting on an airplane. If only I could process it on a mobile app. I know they're working on it, and I'm looking forward to having that feature, but they need to get it out there.

Rosario: I agree 100 percent, but when it comes to approving expense reports on an Android or iPhone, there's not much you can do. You have to run audits. Besides the manager, we have someone who audits and sends back reports that are noncompliant.

Abella: That's your safety net. We're 100 percent audit. We know our approvers are rubber-stamping.

Lee: Isn't the average length of time expense reports are open by approvers like 2.3 seconds, which illustrates the point?

Little: It will be really interesting to see that rate after it goes mobile—it will be even faster.

Abella: At Harmon, we knew we had some rubber-stampers out there, so we talked to HR and had some people take a mandated, escalated approver training to show what to look for on expense reports.

ALL ABOUT RECEIPTS

BTN: Another feature some expense vendors have announced is using smartphones to capture receipt images. Is that something you use?

Rosario: Great feature, but not everybody knows how to take a picture. We have it enabled and have had a lot of communication and training. But in reality, not everybody does it right.

Gillen: It's good for audit control, but it's not going to help for expense management. My concern is those visuals captured make people think we have the corporate data. Unless the information is added in manipulatable columns, it doesn't do us any good.

Abella: One feature I'm really looking forward to is the ability to be in a cab, pay a fare and quickly type in "$42, airport to hotel, Chicago." Then when you log into your expense tool, you have the cash charges you sent to your profile. That is going to be slick, and I think our employees will really like to have it.

BTN: How soon do you expect that?

Abella: I don't know, but I'm at the front of the line waiting for it. This is for the cash stuff, when you buy a cup of coffee. Many don't keep track of the receipts. We're 100 percent receipt. We moved to that in 2008.

Lee: What do you do if there is no receipt?

Abella: There are exceptions, people have to explain. Then we run reports on who is losing receipts all the time. The move to 100 percent receipts was a tough one.

BTN: Do you allow employees to take pictures of receipts and submit those?

Abella: We accept the scanned receipts for payment, but the employee is still responsible to turn it original receipts. We warehouse all receipts. The employees manage their receipts, file their expense reports and every month or quarter send all receipts via interoffice mail to accounting.

Rosario: We also warehouse receipts. We use all the original receipts for value-added tax recovery. That's the reason why companies still require original receipts.

BTN: Have you made any other changes to expense policies of late?

Abella: I hate to tell you this, but we are not reimbursing for tips any longer, except when associated with a meal. We don't have a limit on meal tips—we encourage 15 percent. But we're not reimbursing for bellmen, cab or shuttle drivers. I still tip, but it's out of the goodness of my heart.

BTN:What was the rationale?

Abella: We had a lot of employees who reported $20 in tips. I don't know what for, but I know I had them. We just found there was some abuse with tipping. When we changed to 100 percent receipts, we eliminated tips. It was difficult at the beginning. When you're traveling, you feel like you represent your company. Hopefully our employees are doing a good job out of the kindness of their heart. But it's saved us quite a bit of money.

Rosario: You're right about that, there's abuse of tips.

Abella: I think we've all gotten really tighter on what we're allowing, whether because of Sarbanes-Oxley or other reasons.

Gillen: It's the visibility of good business practices.

BTN:How do you learn what others do on expense and receipt policies?

Lee: There's a Wall Street benchmarking group that gets together every other month or so. We'll never talk pricing, but policy issues like we're discussing here. More and more in recent years, it is the first question that executives ask: "What are other banks doing?" We want to make sure we're balanced both from attracting-talent and shareholder perspectives. Whenever I propose a policy change, I automatically come in with who is doing what.

Rosario: I belong to a retail-wholesale benchmarking group that talks every quarter and meets once a year. We share a lot of policies and talk about issues in our program that could benefit each other.

Gillen: There are just so many more communication channels for information on this. Questions I ask every supplier are, "What are you hearing from other customers? What are they looking at right now?" Hearing this perspective is interesting because it's often what's coming down the pike. Whether we're buyers or suppliers, we all have the same goal: profitability for our companies. They're developing products to meet my needs, they want to meet my needs, so they need to hear what I and other customers want.

PIN-AND-CHIP VS. SWIPE

BTN: Buyers recently have noted that their globe-trotting travelers complained that their corporate cards don't work in automated kiosks in Europe and Canada, where pin-and-chip has been adopted as the security standard instead of the magnetic stripe used in the United States. Is this an issue?

Gillen: Every vendor is required to take the card if it has an agreement with a card provider. But a traveler who needs to buy a train ticket, instead of going to one of 30 kiosks, needs to go to the terminal window in a building next door because there they can run the [mag stripe] card. That seems to be the option presented to us at this time. We've asked if there is a solution that can be offered. We're told not at this time, but the question is being brought up repeatedly by corporate customers. We're not talking just kiosks, but convenience stores or other places where you might be utilizing the card—the merchants are just not able to accept it. Many of our travelers overseas now have to carry more cash or look at other payment systems and direct-payment scenarios.

BTN: Are you looking at secondary cards for those overseas travelers?

Gillen: Travelers all have U.S.-based addresses, so they're subject to U.S. credit law. There are no U.S.-based credit card companies that will issue pin-and-chip that we've been able to find. Another issue is, do we want to support dual payment systems into all our systems? It's a pain point; it's not a decision-breaker now. A lot of our approach in travel and expense management is to try to think of the problems down the path. This is going to be a big issue in 12 months. Right now it's just a little bit of a gnat.

Rosario: Let's say a traveler is in London in a particular area with a high level of fraud. We've found that the mag stripe credit card is declined because of that [higher fraud], not because of a lack of funds. That's been a trend in the last year.

 BTN: Is there a resolution for your travelers?

Rosario: No, [our card vendor] said there was nothing we could do. Our travelers sometimes put expenses on their own personal cards, which has other problems.

Abella: This surprises me because I've not heard one word about people having trouble using their card. We really do encourage our employees to withdraw cash when they arrive at the airport, withdraw a couple hundred dollars from an airport ATM and have that with them. I've just not heard that, so I'll look into it.

 BTN: We're also hearing more about card fees and surcharges. Have you addressed this?

Gillen: We address it as a contractual issue. We will not sign any contract with a supplier that has surcharge for credit card payment. We also write in the contract that we have the option to pay with a credit card if we choose to.