Plagued with an "inefficient and frustrating" travel booking and expense-reporting process that discouraged rapid traveler expense filing, hampered policy-enforcement efforts and stood in opposition to the company's global ambitions, fast-growing IT services and solutions company UST Global turned to the cloud for a new system that served as a tentpole for a new travel management philosophy. Decreasing travel never has been on the agenda for UST, but the Alisa Viejo, Calif.-based firm nevertheless significantly reduced its travel spending through use of the new platform and the tighter policy enforcement it helped spark, according to UST Global practice director Corby Brendle.
"We were able to decrease the total cost of travel not by changing or reducing our travel activity, but by handling and managing our travel expenses, policies and negotiations with travel companies," Brendle said.
Laborious Processes
Among its 15,000 employees, UST Global has about 7,000 global business travelers, who account for the company's annual $13 million travel spending. UST Global has offices in China, India, Malaysia, Mexico and the Philippines, and in 2013 opened new offices in Spain.
Prior to 2012, UST had a "partially homegrown system," which allowed travelers to request pre-trip approvals, then routed them to the appropriate approving manager. UST's in-house travel agents, based in India, then would book the trip. If the trip cost more than a specific amount, the request would be routed to a second manager for approval.
"That process was very tedious, time-consuming, inefficient and frustrating," Brendle explained. "It was very manual, and there were a lot of emails flowing back and forth."
Consequently, the company missed out on potential air travel and lodging savings because the booking process was so long and tedious, as travelers wouldn't book trips early enough to secure the lowest fares and rates, Brendle said. The process also caused friction between departments due to the constant stream of emails, he noted.
To report expenses, travelers upon their return had to use Oracle's PeopleSoft Travel and Expense module, a process that Brendle, himself a frequent traveler, said would take him up to an hour to complete. Company policy dictates every expense must have a receipt, regardless of the amount.
"I had to tape receipts on paper, fill out the details needed, try to balance it, make sure receipts were itemized and documented, and then fax it off," Brendle explained. "Then the audit department would have to validate [the report], which would take a significant amount of time."
Brendle said the long expense-reporting process discouraged him from filing expenses, and he admits to letting several thousand dollars worth of expenses pile up, sometimes for as long as three months, before finally completing the process. The late reporting would cause the company's financial statements to be even more "out of sync," and "finance was never happy," Brendle said.
"It was not only frustrating for me, I was also inefficient with my time because I wasn't out billing clients and getting revenue for the company."
Moreover, because expenses weren't filed on time, UST found it difficult to reconcile the true cost of a trip. Whereas the company paid for airfare up front, payment of any additional expenses was the traveler's responsibility.
"As a professional services organization, many of our travel costs are billable back to our customers," Brendle explained. "As those weren't documented effectively, we ended up with more than $5,000 of unreconciled expenses that we weren't charging customers. We just completely lost money."
Employees tended to book air travel and car rentals based on their membership in supplier reward programs instead of using policy-designated preferred suppliers, according to Brendle. As any company travel audit would take place after employees filed expenses, UST wasn't able to enforce the policy during the process.
"We weren't able to maintain the policy, and people were breaking policy," Brendle said. "We needed visibility."
Visibility Brings Savings
UST needed not only an expense management system and booking tool, but also a new solution to integrate with its other existing systems, which primarily ran on PeopleSoft.
"We needed a solution with an end-to-end approach," said Brendle. "Quickly it was clear that there were only two options: Concur and SAP."
UST spent about a year looking for a solution. During that time, it delved deeper into PeopleSoft and analyzed data to assess spending specifics and determine the time travelers typically took to book a trip. "We did a lot of metrics up front to make sure we had a solid business case to present to our executive teams and get approval for making changes and disrupting existing commitments with other ERP solutions," Brendle said.
UST chose SAP Cloud for Travel and Expense for two reasons, Brendle said: its multinational capabilities and the availability of its application programming interfaces. While UST already used some SAP software, PeopleSoft powers its back office, Brendle explained, and "we needed solutions that made their APIs available for public consumption so we could build through web service integration into our back-end solution."
Considering UST's worldwide ambitions, it found useful SAP's 21 custom country versions, which help companies maintain compliance to per diem, tax reimbursement and mileage policies. Training a UST auditor to monitor per diem and tax compliance for 10 countries takes time and resources, but SAP handles that automatically within the system, Brendle explained. Concur only would offer that option if UST built and maintained such functionality, claimed Brendle. "SAP said, 'We'll provide and maintain that,'… and if the system doesn't do it, SAP said it'd be responsible for it," he said.
With more visibility, the company now can see the difference between booked and actual spending, Brendle said. "By having better control of information, knowing where people are going, knowing what carriers we're using, sustaining policy up front and using a tool that stops it up front, we're able to recognize that benefit," he said. "We're getting people to take the airline that makes the most sense from the cost perspective to drive company compliance."
The cloud solution also boosted UST travelers' productivity, including the introduction of mobile solutions. Travelers on their mobile devices now can create expense reports using photos of paper receipts. Likewise, approving managers can approve reports on the go. Brendle said he's reduced the time it takes him to complete an expense report to between four and seven minutes.
"I used to be that paper monster riding the conveyor belt, taking receipts and stuffing them everywhere," Brendle recalled. "Now, while I'm sitting at dinner, I'll take a picture of my receipt and throw it away. I don't just capture it, I put it toward my expense report.
"We also find time savings in the auditing and booking process; as we're able to book faster, we're getting better fares," Brendle added. "The time savings is significant."
Room For Improvement
More improvements still are to come. Brendle said he'd like more analytics that would allow price comparisons, as well as the ability to add thresholds; for example, a 20 percent cap on an exchange rate within the SAP expense solution. Brendle would like to build into the system additional "warnings and complexities. We're working with the SAP team on new ideas."
UST also is seeking a better process for reclaiming value-added tax, and is in discussions with Meridian to find a solution. "Some countries don't have to have paper receipts [to claim VAT], but some do, like India and the Philippines, where you also have to document the tax ID number of the merchant that claims tax where you spent it," explained Brendle. "It's overwhelming at times.
"We're paying taxes and we're not able to reclaim it, so we're losing money," he said. "As we become more global, that number gets bigger."
This report originally appeared in the May 2014 edition of Travel Procurement.