"Budgeting is a joke."
Let's take a quote from a Harvard Business School professor
who stated 10 years ago that corporate budgeting is a joke and everyone knows
it. Budgeting and controlling travel and entertainment expenses certainly is a
main culprit for that statement. This statement is probably still true, and if
one believes the proliferation of mobile devices and associated apps, it is
becoming truer again, flying into the face of all the years spent getting
T&E under control. A recent Business
Travel News article established that travelers are booking very late and
not utilizing corporate rates and/or taking advantage of customized or "componentized"
pricing by hotels, airlines and rental car companies.
Why This Is Important
The speed of business over the last few years accelerated
even further with sometimes huge and fast impact on corporate travel (just look
at travel to and from Japan). The abbreviated reaction time disallows long-term
planning and increases costs. Travelers also are demanding more information,
which is an automatic extension of the information expectations they have
related to their everyday job decisions. One great example is a traveler's
demand to understand the comparative flight costs of leaving from multiple
nearby airports and flying into alternative airports, something that many
airline websites still don't deliver.
The increasing demand is more than met by an explosion of
available information. On one side, the information supply is constantly
expanding and changing while the sources and the quality of the information has
become more and more difficult to assess. Therefore, a curatorial function is
needed and very much appreciated. The case in point is the value associated with
services like Kayak, which provides comparable plane fare information
(unfortunately the availability of information is changing there too),
TripAdvisor and Yelp (obviously very subjective, but openly so).
Lastly, and maybe most interestingly, there are very few
support mechanisms in place that evaluate whether a particular trip is
necessary now or could be postponed or whether comparative alternative means of
achieving the objective exist. For example, I have always wondered why a vital
business meeting could easily be postponed or canceled in the face of a
blizzard or a sudden personal issue without seemingly impacting the business.
At the same time, how often has business been impacted by meetings that did not
take place because travel would involve undesired locations or be inconvenient?
What To Know
In light of the above discussion about importance, what can
be done by line managers and by the teams responsible for corporate travel? And
how can the benefits be demonstrated and communicated to the organization? As
expected, it starts with knowing and it ends with advising or counseling. But
most importantly, it's about attitude.
Today's mobile tools allow for many different ways to plan
travel, make reservations and ultimately pay. Each of these tools, as well as
the expense management and financial accounting systems backed up by
transactions supplied by financial institutions, generate a large amount of
electronic data, albeit in different formats. Once integrated, which is by no
means a trivial undertaking, the available data can be used for a variety of
purposes. The traditional way is to control adherence to company policy, track
budget versus actual performance and assign expenses in a timely fashion to the
correct accounts, projects, clients and customers.
However, the data also offers opportunities for project,
team, division, regional or companywide comparisons and possibly allows for the
detection of meaningful patterns. A travel management team could interpret the
data and provide advice and counsel to individual line managers. For example,
there may be correlations between successful sales teams and their travel
expenses. Or there may be interesting historic trends that could help line
managers build better travel budgets in general and make better individual
travel decisions in particular. Just imagine that a line manager receives
counsel to increase his or her travel budget. Such counsel will firmly
establish the travel management team as an asset to the individual line manager
and completely change the attitude on both sides.
To take this counsel even a step further, the travel
management team has the ability to look at company wide data as well as
historic data. Since T&E expenses are a sizeable and controllable part of
many cost centers budgets, some basic business model advice may be helpful as
well—as in, "a comparable group in our company has spent 6.5 percent of
their budget on T&E during one of their most successful years," or,
even better, your competitor seems to be spending 4.5 percent of their budget
on T&E. While that information may be difficult to come by, your team is
better equipped to provide some guidance than an individual line manager.
Lastly, suggesting a spend increase or identifying savings
opportunities based on your knowledge motivates line management to listen to
your advice on an ongoing basis. The intelligence exists in your team and in
your data—it just needs to be extracted.
Mobile Expense
Management Promises
One often-overlooked way of improving the accuracy and timeliness
of the data is to get actual expenses processed faster. Many existing web-based
expense management systems seem a step forward because they are seemingly
automated and user-driven. The reality is different, however. Data input
remains manual, difficult and inefficient. That's because a web-based data
entry form is fundamentally the same as a data entry into a traditional
spreadsheet. Having credit card transactions available electronically is often
helpful, but the abbreviated information in an individual record still requires
interpretation, the transaction amount charged has to be checked against the
actual amount, and the appropriate account, category or project has to be
assigned.
As a result, improving the timeliness and accuracy of
expense processing requires the active participation of the traveling
individual. A traveler will support corporate goals willingly, rather than
because of necessity, if he or she receives direct benefits. Providing
travelers with a mobile app that allows them to take a photo of a receipt and
have technology extract the data from the receipt, rather than requiring manual
typing, is a huge time-saver. Such pre-processing can generate one to two hours
of savings for each expense report, potentially generating annual savings for
each traveler of almost 100 hours. The technology-based data generation can
then be fed into the traditional expense management or financial accounting
systems for further processing, approval, and eventually payment. [Disclosure:
Abukai offers a smartphone-based solution that pre-processes expense reports
using sophisticated back-end technology.]
Action Plan
In closing, travel management and operations teams can take
several steps to go beyond setting and enforcing travel policy toward providing
counsel and advice to the rest of the organization:
1. Explain
the impact travel expenses have toward the overall performance of the company.
2. Provide
and communicate your insights into historic, intra-company or competitive
company comparisons of travel expenses.
3. Move
beyond reporting of actual versus budgeted expenses and enforcement of company
policy.
4. Improve
your interaction with the departments that do a lot of traveling or create a
large amount of the travel or event related expenses by providing guidance and
advice throughout the year.
5. Establish
and communicate risks and savings opportunities as perceived by your team.
6. Establish
and communicate your own team's plans and objectives, including any updates to
your service offering to the rest of the organization.
7. Recognize
that technology and user behaviors change and maybe get ahead of the curve by
actively suggesting new apps, behaviors for trial and evaluation.
8. Maybe
most powerfully and ultimately most rewarding, embrace creativity in
communicating to the organization.
Originally published in the Sept. 12, 2011, issue of Business
Travel News.