H-P Cuts Costs With Expense Software

<H1> H-P Cuts Costs With Expense Software</H1>By Mary Ann McNulty

<I>Brussels </I>- Leveraging in-house software development across Europe, Hewlett-Packard is deploying an automated expense reporting product that is producing immediate savings in processing costs.

Developed as a team effort to tackle the global problem of expense processing costs (<I>BTN</I>, Feb. 26; <I>BTN Europe</I>, Oct. 23, 1995), the product, called TRAMS (Travel Management System), is proving that H-P can develop standards and still have the flexibility to meet local needs, provided the savings are substantial enough. In this instance, H-P is projecting at least $450,000 in annual savings.

The product, which was developed in Geneva, cost $600,000 to create, with an additional $300,000 in annual production, support, training and development costs, said Henrik Kjaergaard, travel process implementation manager in Brussels. "Our return on investment will be very quick," he added. "We have justified that we can have a lot of savings by implementing this."

Since H-P rolled out an early version of the software 18 months ago, it has seen its overall European expense report costs drop to $11 in 1995, from $15 in 1993. The number of reports processed rose to 195,000 in 1995 from 154,000 in 1993, making the savings even more substantial than they would have been otherwise. Officials expect that by the end of 1996, costs will drop even more to between $5 and $7, according to Jeff Kurn, H-P corporate travel process manager and coordinator of the worldwide Travel Process Owners Group (TPOG). Some of the savings are coming from reduced accounting headcounts, which are expected to be cut in half-from eight to four by year-end, Kjaergaard said.

The updated version of TRAMS is expected to be implemented throughout Europe by the end of the year. The product also has been demonstrated to financial executives in the United States, Latin America and Canada, although no decisions on its use have been made yet. In fact, H-P officials in the United States have just begun another project to identify the requirements of an online expense reporting system, Kurn said.

The software is the first major accomplishment of TPOG since it was created 18 months ago. Formed as a successor to another group composed of European accounting department representatives, TPOG was established to standardize the accounting process.

"H-P has been looking on a worldwide basis at its T&E systems," Kurn said. "We've been trying to do two things: reduce the cost of processing expense reports and reduce the time it takes to be reimbursed."

In some instances, H-P found it took 45 days from the time a traveler returned from a trip until he or she was reimbursed. In H-P's decentralized organization, many managers and employees work in separate locations, and reports often languished while awaiting managers' approval. After finding no off-the-shelf solutions to solve the problems, H-P decided to build its own product.

Regional Customization

Meeting both in person and via computer, using Lotus Notes, TPOG members hashed out standards for an expense reporting system. There are a few differences from country to country-for instance, the screens look different in some countries, and some locations have pre-trip approval built into the system. But the back end is the same for all countries except Germany, with the data deposited into a central database in Brussels. The percentage of expense reports that get audited also is standard throughout Europe.

Although larger countries, including France, Germany and the United Kingdom, have opted to run their own training on the system, Kjaergaard is responsible for training and implementation elsewhere. H-P employees in the Czech Republic, Poland and Russia are currently being trained on the system. "They're better equipped than the rest of us," Kjaergaard said of equipment standards in Eastern Europe offices. In early September, France and the United Kingdom began a two- to three-month implementation plan. However, the U.K. operation has opted to implement one site and then develop a plan for the other four based on the experience.

In Germany, executives decided to use TRAMS last October and began testing the system in December and January, according to Marion Genkinger, supervisor of petty cash and travel expenses at H-P's Boeblingen operations, outside Stuttgart. Almost half of H-P's Germany employees are using TRAMS, although only 40 percent have received training.

Customizing the software to meet its requirements, Germany is using e-mail and a passive approval system to notify managers of employee expenses. H-P locations in other countries still require managers to approve expense reports before reimbursement, although Kjaergaard is hoping to "sell the idea of a passive expense report approval" to other locations as a means to lower costs.

After completing an expense report, travelers store it on a file server and mail receipts to a local accounting center in each country. After securing management approval, each accounting center reimburses employees and stores the data in the Brussels database. In Germany, travelers forward the report to accounting, which notifies managers via e-mail that a report has been filed for their review. Unless a manager objects, reimbursement is made.

TRAMS is receiving mixed reviews from employees. "About two-thirds like it, and the other third doesn't due to a prejudice against new systems," Genkinger said. Overall, though, she views the rollout as a success.

Using TRAMS to gain further efficiencies, H-P developers have added a travel request area to the software. Using this feature, travelers can document their travel needs and e-mail them to the agency, or in some instances, retrieve flight schedule options from OAG Electronic Edition, Kurn said. H-P purchased worldwide licensing rights to this software earlier this year in an attempt to reduce the number of information-only calls to agencies. H-P estimates that one-third of the calls to agencies are for flight schedules, Kurn said.

Although a number of other companies in Europe have asked H-P about the possibility of selling the software, Kjaergaard said the company has nixed such requests, citing the lack of people to train others and support the product.