Cisco Takes Expense Reporting Into Its Own Hands
<B> Cisco Takes Expense Reporting Into Its Own Hands</B>
By Mary Ann McNulty
<I>San Jose</I> - The concept of building an expense reporting or end-to-end travel solution is too complex for many travel buyers to fathom. For Cisco Systems, a leading software and high-tech hardware maker, however, build-it-yourself appeared to be the only way to get the product it needed.
When Cicso's Jennifer Loftin, manager of travel and expense automation, began looking at end-to-end travel solutions in 1996, she found none that were actually deployed. By early 1997, when she began zeroing in on expense reporting software, there were no Web-enabled options. Since then several vendors have debuted Web-enabled versions, with more on the way by year-end.
So, Loftin assembled a team of 15 Cisco employees--including eight from the IT department--that ended up spending three months writing the requirements of an automated expense system and another eight actually developing the product.
Loftin then took the prototype to the consulting firm of Arthur Andersen, asking them to analyze it and ensure that the team didn't overlook some glaring conflict or problem. In the high-tech world, asking an accounting/consulting firm to review software prior to its release release is a common practice, she said.
What the team built is an easy-to-use interface in which travelers can enter all expenses, as well as an administrative module that checks the report for compliance with travel policy, mathematical errors and trend information. All Cisco travel policies, including those for operations in Canada and Australia, are loaded into the software.
The system takes daily feeds of charge data from its card vendor, American Express, which it moves into preliminary expense reports that travelers must complete and submit. It also interfaces with the company's treasury department to secure exchange rates, and payroll to find employee bank account numbers for electronic reimbursement transfers.
Called Management Expense Travel Reports Online, or Metro for short, the system went live in April 1997 with a goal of hitting 75 percent utilization by year-end. By then, actual usage was at 86 percent, she added.
The cost to develop the software was $1.2 million, Loftin said, with the return on that investment projected within one year. Instead of having nine auditors for the volume of expense reports it processes annually, Cisco only has 1.5; the others now are used for application support. Processing time and costs also have been cut dramatically. Cisco has about 7,500 travelers and an annual air volume of $46 million.
Cisco also is getting much better spending data--and its travelers are happy. The product has helped encourage use of the corporate intranet. "Our story is used by our CIO to emphasize why companies need an intranet. It helps us sell our product," Loftin said.
Although the product isn't for sale--even though Cisco is a major software developer--the company did agree to sell the software to one of its largest distributors in Japan, who couldn't find another product.
"My ROI is looking really good this year," Loftin noted.
Now in use in the United States, Canada and Australia, the system next will be implemented in Europe in the company's third quarter, which starts in January. Loftin has budgeted $225,000 for implementation expenses.
As with any other software deployment, Cisco developed an implementation schedule and budget for Metro.
In the United States, rollout was phased. Employees were told of the software via e-mail broadcasts, and Loftin developed a "presentation template" for the sales staff that detailed how to complete an expense report using the new system.
Training proved simple, "the travelers just got it," she said, and implementation has gone without a hitch.
By the end of this month, Loftin hopes to choose an automated booking system for deployment throughout the company. She's been piloting Internet Travel Network for the past month. Cisco also has been searching for a management reporting product to plug into its vision of an end-to-end solution. "Currently our plan is to develop our own," she added.
"Back in 1996, I thought everything would be done within 12 months," Loftin said of her vision of an end-to-end travel solution. "It's much more intricate than anticipated. Now, I think it's pretty aggressive to have our end-to-end up in one year."
To speed up the automated process, Loftin had to convince company officials that managers' approvals of every form was a step that could be eliminated. To make that case, she audited expense reports submitted by 100 travelers in the manual process. "We had fewer errors on the reports that didn't have management approval," she said.
Today, managers receive an e-mail notification when one of their travelers submits an expense report. The message details any policy violations and the total cost of the trip. If the manager wants to review the report, he or she contacts the accounting department within 24 hours.
Part of the administrative module includes a random auditing feature that audits one of every 10 problem-free expense reports. A tracking system also monitors when receipts are received for each report. If a traveler forgets to submit receipts, the software automatically sends an e-mail reminder. "If the traveler doesn't ever send the receipts, their expense reports will be sent to audit every time," Loftin said.
One of the best features of the software is that travelers can view where the report is at any time in the process. It details when reports have been sent to an automatic audit or random audit.
To encourage use of the new software, Cisco requires employees to submit expense reports in this manner, unless their particular business unit does not have access to the company intranet. Dealing with rapid acquisition and expansion, Cisco is challenged to get everyone on the intranet rapidly, Loftin said, but usage of the expense system has not been a problem.
"Employees saw turnaround time reduced from 21 days to three," she said.