Buyers Expound On Expense Tools

To compare use of various expense reporting tools, BTN editors recently met with: Jeff Crull, Procter & Gamble global travel services manager, who uses an offshore call center solution; Phil Dunphy, Pfizer senior manager of global travel, who uses Concur; Terry Jaworowski, Reader's Digest payroll manager, who uses Gelco; Helen Kuhn, Xerox manager of customer service and satisfaction, who uses an IBM expense reporting tool; and Maggie Lagana, Thomson director of U.S. cash management, who uses Extensity.

BTN: According to our recent survey, 11 percent of companies that have automated booking and expense reporting tools make them work together. Have you all considered or looked at that opportunity?

Helen Kuhn: Certainly from our perspective, we came from a culture that was forgiveness versus permission. Now, everyone has to have pre-trip approval before booking, and we integrated our online expense reporting and booking tools. After our employees get permission, they book their reservation and that information is passed to the expense reporting system. When they submit their expenses, we compare what they booked versus what they did, and if it's out of line, they have to get management approval. If it isn't, it flows right through. Additionally, we've incorporated all the business rules, so we are auditing 100 percent of our expense reports, but forgiveness these days comes in the form of corporate officer approval. If you violate a policy, that's where it goes. There are no longer auditors who police the business traveler. The system tells you upfront if you did something out of policy.

Terry Jaworowski: With Gelco, we have one person in the payroll department who administers the program. The hard copy of the receipts and a report go to her, but she's not auditing receipts, only looking for violations of policy. We don't have the policies online and we're in the process of rewriting the policy, so we're walking a fine line. After she enters all the confirmation numbers into a spreadsheet, she sends everything to Gelco. They will audit for receipts and scan and burn everything for us onto a CD. Right now, we have the hard copies coming back to us, but in a year or two we're going to do away with that and just keep the CDs. It is reducing paper, and it did reduce a head in accounts payable, because the person moved over to the payroll department. It's been pretty good, and it's the same thing: less paper, quicker turnaround for approval. It was a little hard for our managers to accept not seeing the receipts. That took a bit to get over. Some of them still wanted to see the receipts and the hard copy.

Maggie Lagana: That's really our goal, because we want managers to maintain their fiduciary responsibilities. We want the approval process to be electronic, but we want managers to have the opportunity to see what the employee is submitting—that's really our challenge. We do not use travel booking yet. We used American Express Online for travel booking, but weren't very successful with that because of the policies our travel people put in the system—there was no room to deviate from the policy. We had people that wherever they were going they couldn't fly there on a preferred vendor, so they had to deviate from those policies. We had more success just calling American Express and booking the flights. We don't have pre-trip approval. We don't have any situations yet where it would warrant us to do that. As far as the imaging goes, the next version of Extensity, version 6.0, does offer an imaging product that we are looking at.

BTN: How are you processing expense reports for travelers outside of the United States?

Lagana: Currently, they are processed in-country. There will be a local accounting division. Next year, we're looking to start a project to incorporate them into the Extensity system, because we need their spend data to negotiate with health providers. That data is critical. In various countries, the governing authorities require different types of documentation and processing, and you have value-added tax and Canadian tax. It's a tremendous project, and I'm sure it will take us a couple of years to complete. We're in Asia and Australia, so we're starting at the tip of the iceberg with the United Kingdom.

Kuhn: We're actually starting ours in Canada. There's a lot more to the electronic system than language and currency conversion. That's the easy stuff. It's really getting inside each country's taxing laws and what you can and cannot do, and the benefit of having somebody who has really forged the way there is just unbelievable. We know IBM has done that with one of its clients. They have taken one client and worked hand in glove with them to get it implemented globally. Our goal is to follow that model, to implement a global solution that sits on the server somewhere in the world, but there is not an issue with response time, access to the system nor imaging of the receipts, and the auditors can be anywhere. Then we would have global spend information.

We're going to do Canada right away, and hope to start next year with Ireland and the United Kingdom. Those are the easy ones, because they already have a lot of the infrastructure in place, but we're really following this other company's rollout. They are in 18 countries already—in Asia, Australia, Europe and South America—so they're leading the way, and we're going to follow that lead.

BTN: Will it be a long process before you get to that global system?

Kuhn: Sure, and some of that has to do with how ready the country is. It depends on what their enterprise system is. We have various versions of SAP installed in Europe, so do we wait for them to upgrade SAP in all of those countries or do it once, once they get to that point, and then go in behind and do it very quickly? Otherwise, you're building a different interface for each country. It's difficult enough to get that country's rules correct without then having to worry about infrastructure on either end.

BTN: Jeff, how is P&G processing expense reports globally?

Jeff Crull: We process 750,000 expense reports per year for 45 countries in 18 languages. From an automation standpoint, we have selected not to automate at this time. Our strategy with the global shared services organization was to consolidate work into shared service centers. Eighty percent of the gain we would have gotten from automation occurred with the consolidation into our low-cost service centers in San Jose, Costa Rica, and Manila in the Philippines, and Newcastle, England.

BTN: So what are you doing in the States currently?

Crull: It's a very manual process. It's an Excel spreadsheet that's printed out and sent to San Jose, but even with a manual process like that, our expense reporting costs, from a back-office standpoint not including the productivity of the traveler, is between $3 and $4 per expense report because of the consolidated service center in San Jose and the wage rate variation versus U.S. labor rates.

Kuhn: We're just a little higher in terms of transaction costs. We're about $5 and our goal is around $4. But our volume decreased significantly so we have a fixed cost that we have to cover and if we were at the previous levels we would be below $4 a transaction.

Phil Dunphy: At Pfizer, everyone in the U.S. is rolled out and the U.K. is just about entirely rolled out. We are looking at Canada, where the issue is the French version, which, by law, you must have available for the employees, so we've held off on that. We were waiting for the 7x version, but Canada is ready to go. We are rolling out in Australia and Korea. Japan is going to be a tough one to crack because of the Kenji version. With all the different regulations in the world, it is very difficult to develop an automated expense reporting system.

BTN: What is taking so long with e-folio reporting?

Kuhn: There's no requirement yet to standardize. Once there is, and there's a standard format, the hotels will be forced to use it. There are a number of them doing it, not all the big ones, but if you have a company that has a lot of nights with the hotel, they can pretty much push it. It depends on how much the individual companies are pushing it. I would like to see American Express push it, because they're the ones that have the leverage.

BTN: IBM has done some pushing. Have you benefited at all?

Kuhn: They're doing it for themselves, and they're helping us negotiate with American Express. Two vendors I can't mention also are providing that information, but we haven't seen a benefit from it yet.

Lagana: From some of the benchmarking I've done, we really should be focusing on other things, because it doesn't look like this is going to be a short-term fix for us.

BTN: But it's something you want.

Lagana: All of our travelers want it. We've reduced our receipt packages by 45 percent, but of the packages that we're getting, the only thing that's in them is the hotel receipt, because it's the only required receipt.

BTN: You all have different systems, what do you like and dislike about them, what is your favorite feature or the one that you wish you had?

Dunphy: The one thing with Concur, when they moved from the old client-server process I could get a historical report, so I could say, "Give me all of my air." There's no linkage now. Though I have historical elements where I can look back at expense reports, I can't run a report that links all of the expense reports together, so it can show me all of my air, all of my restaurants and combine all of the data from my expense reports. We have spoken to them about it. We have more sophisticated systems that can run reports for the entire division, because with data warehousing that information is being fed, so there might be a different way to get it out. Just from five years ago to today, that was a little thing that I personally had, as a user, that is lacking today with the Web-based product. As far as what I do like, just that it's Web-based. This was the first broad-based application that Pfizer deployed that was Web-based. We were successful in selling it to senior management based on the fact that this was the future of technology, not just an expense reporting system.

Crull: In the future, the key is receipt management. That's the functionality we really need to make a breakthrough, otherwise how do you truly automate this process end to end? Putting that one to bed would be very helpful from a functionality standpoint. As far as what we value, the employee productivity improvement is really significant. From a customer satisfaction rating, automating this process is the most urgent need for traveler services to be improved.

Lagana: Receipts are a big issue, and learning to manage those receipts more efficiently is going to be a project. One other thing I have on my wish list would be in the reporting functions. Currently, the system allows so many reporting licenses, where you have individuals that are allowed to run reports. Employees would like to police themselves and run reports on just their own data. The system doesn't have that functionality yet.

Jaworowski: I agree. We have the same thing with Gelco. I would like to see a better reporting tool than what they currently have, so we can have thresholds for managers as to what they can approve. Right now, if I exceed my manager's approval in Gelco, it should go to the next level for approval, but you can't do that in the current version. It would have to be actually a hard copy printed out and then signed by the next level of management. The one feature that doesn't work well for some of our salesforce is inputting their monthly car miles. They all have a particular mileage rate that they use, which varies by employee and there's nothing in the current version of Gelco that gives them an automated calculation, so they can put in the number of miles they've driven that week and have a calculation done. It does it for the federal rate, but not for the individual rates, so that's been high on the wish list, to have some type of a calculator for the field.

Kuhn: IBM built a module that I actually designed, and they built it for me. It is called auto-equity, and it does all that and it's so simple for the employees. It's been our single highest level of satisfaction in our whole rollout.

BTN: When did you do that?

Kuhn: It was the first thing we rolled out with ERS, because we reengineered the business process with the rollout. We were on a fixed and variable rate system, and if you exceed the IRS safe harbor rate, the difference above that was taxable to the employee, which to me didn't make sense. I went into the IRS publications and found a 10-page document on fixed and variable rates and came up with a program that is totally nontaxable to the employee. They cannot exceed the IRS rate unless they meet all the requirements, and if they don't meet the requirements, it defaults to what we call a type of bribery. If they comply, they could get much more. It's completely behind the scenes, so all employees need to do on a monthly basis is put in their miles. Everything else is done for them. I guess the proof is in the purchasing—if you would buy your system again, and I certainly would. Still, there are a couple of things. Receipt management truly is one of them, but the nut we have to crack is the hotel folio. The imaging of receipts for future retrieval and one of my personal hot buttons is level three data from the card companies for T&E. If they can do it for P-cards, they should be able to do it for T&E cards. Rather than give employees two cards, we want our employees to have one card, and we want them to be able to give us the level three data on that card so we can do all the reporting we need to do. Give me the hotel folio, the level three data and let me have an image of it so I can archive it. Then, I'll be very happy.