"In 2008, global companies entrusted employees with an average of $500 million to $1.2 billion in annual T&E spend," according to a new American Express-commissioned report by Accenture. "Indirect spend is often viewed as one of a company's most controllable expenses. With scrutiny on cost reduction, expense management professionals are in a prime position to drive transformational changes that result in both immediate savings as well as sustainable, long-term value."
Global companies risk hindering business operations if they cut such spending categories as "air, hotel, and telecommunications," according to the authors. Considering the pressures of "top-down mandates to reduce costs," they wrote, the opportunistic T&E expense manager should focus on three main areas: employee accountability, enhanced data analysis and long-term structural and process planning.
"While many indirect commodities are being targeted for reduction, there is an opportunity to build a business case for changes that can offer future, suitable operating expenditure reductions, do not require enormous investments, provide a swift payback and drive cost savings," according to the report. "Some organizations have recognized several significant changes over the past few months: Expense management professionals have the support of senior leaders for cost-cutting measures. Cultural shifts are occurring at a number of companies due to increased profit pressures. Employees are more open to transformational changes during difficult times."
Workers also are more open to the importance of expense management and "the financial impacts of their decisions," the piece argues. Now is the time, Accenture found, to improve communications about policy and better enforce adherence to it through simplified Web pages or email reminders and newsletters.
Firms also could require employees to "sign a document acknowledging their awareness and understanding of company policies" or subject them to new job performance metrics related to travel policy compliance or speed of expense report submissions.
On data analysis, Accenture noted, "several" of the seven senior expense management professionals from "leading" global firms who were interviewed for the report "looked only at one source of data at a time." Still, the authors maintained that companies "with leading practices" consolidate multiple data sources "at the global, regional, and local levels to gain a holistic view of indirect spend." Such sources might include "corporate card, meeting card, procurement card and travel agency and enterprise resource planning data."
"Leading companies are using the current economic climate to justify structural changes that simplify their organization," according to the report's section on long-term planning. "Operating efficiencies become more crucial during an economic downturn. Standardizing processes, streamlining systems and reducing redundancies can result in significant cost savings. By moving to a centralized, shared services or outsourced model, companies can reduce operating costs and complexities."
Related resource:
Expense Management Strategies for an Economic Downturn, prepared by Accenture in collaboration with American Expressand based on "in-depth" interviews during the fall of 2008 with "senior level expense management professionals" at seven of American Express' top commercial card clients, representing seven industries