Revamping Expense Reporting

<I>Tempe, Ariz. </I>- AlliedSignal has developed several of its own applications for management reporting and expense processing through a retooling of the way it handles travel and entertainment expenditures.

The new standardized system for expense reporting now enables two-thirds of the company's travelers to enter their reports directly into the company mainframe. Jim Peterson, manager of travel and expense for AlliedSignal Business Services, expects to have the remaining third of the employees using the system by the first quarter of 1997.

The effort amounts to a "re-reengineering" following an overhaul of travel and expense processes Peterson led three years ago-an effort that yielded about $2 million in annual savings by consolidating procedures within the company's three divisions: aerospace, automotive and engineered materials.

"We wanted to enhance our control opportunity and focus on the traveler, which is something we didn't fully do the first time around," Peterson said. "We recognized that input into the mainframe system was cumbersome to do if you're not a mainframe person and you didn't grow up in that era."

The rapid changes in industry technology pushed Peterson's staff to search for other solutions, but initially they came up empty. "We recognized that there were some opportunities with developing a Windows-based package, but there wasn't anything on the market at that time that satisfied our needs," he said.

Undaunted, the team turned to its internal capabilities and developed a proprietary software package called T&E for Windows, designed to improve the firm's remote expense-entry ratio. After beta testing it with 500 users across its client base, it rolled the product out at the end of 1994. It was upgraded and rereleased with new functions, including currency conversion, at year-end 1995, and it is set for further enhancements at the beginning of next year.

The current version of the package can be put on laptop, LAN or stand-alone desktop, and connects directly into the Allied host in the Tempe, Ariz., headquarters.

Although 20 percent of AlliedSignal's expense reports remain in a paper environment, the remote-entry ratio has gone from 40 percent to 80 percent as a result of the retooling.

In 1997, the company expects to introduce an internally developed intranet, and Peterson said his team will be delivering the T&E Windows product to that system.

"We'll be able to do real-time updates and changes so we won't have to wait for an annual release of the package," he said. "We have a great effort to improve the automation and information-systems technology usages within AlliedSignal."

The corporate culture is the driver behind such efforts, particularly when it comes to process reengineering, Peterson said. CEO Larry Bossidy maps out aggressive year-over-year productivity goals, "and with those kinds of requirements laid on you, you start to see some equally aggressive views on how to retool a process to pull the waste out and make things more efficient," Peterson said.

To do the daily waste watching, Peterson assigned a team of five auditors who manage the division's new Travel & Expense Audit System (TEXAS), which allows for statistically based audit samples of expense reports. The team audits user activity and system output to make sure it's in control and that tolerances are met.

For example, the system segregates each line on the expense report and applies a different set of tests to determine if travelers are complying with travel policy. A series of other steps highlights any categories in which there are policy violations.

There's not a great degree of tolerance for chronic or flagrant violators, according to Peterson. Every effort is made to understand why a particular expense piece might not be in compliance; it goes up through leadership ranks until the department gets the kind of response it needs.

"We will not back down," Peterson said. "It's very important that the T&E audit team has the strength and the backing to make sure that all the accounting is done correctly. TEXAS makes sure that each person who submits expense reports is audited once a year. And it's a very invasive, very aggressive audit. These people are tough, but that's what we want them to be."

While the travel policy is not mandated, "we're driving that way very strongly," Peterson said. "We want to make it the easiest thing for people to follow policy, and the hardest thing to go outside of policy."

Peterson said he has realized cost efficiencies and significant productivity improvement from implementing the system and that without it, he would need at least four times the amount of audit staff to do the same level of risk assessment.

Another key piece of the travel-process overhaul deals with management reports, which are delivered monthly via e-mail. The company developed a software package that takes all the data from the travel master system and drops it into a suite of five Excel report formats. The reports are configured to have varying degrees of "drill down," which can range from an overview of activity to what a traveler spent for dinner on a specific date in a specific city.

Allied's bulldog approach to cost containment is not without its consideration for travelers, however: The travel department has set a goal of increasing traveler satisfaction by 20 percent. "We take our commitment to the customer very seriously," Peterson said.

There are two customer groups: the bill payers and the travelers. The auditors serve the bill payers; "they don't want expenses and they want everybody to comply with policy," Peterson said. "For travelers, we're making sure they are being supported and their questions are being answered."

In addition to working with travel agency American Express to resolve any issues, the travel department has set up a 24-hour, seven-day automated voice-response system. Travelers can check on their expense report status, and between 5 a.m. and 5 p.m. can opt out of the system for assistance from an AlliedSignal staff member. Peterson said his team stresses getting traveler problems resolved within eight business hours.

Last year, the diversified manufacturing giant-one of the 30 largest U.S. buyers of business travel, with an annual U.S. booked air volume of $65 million and a global T&E spend of some $220 million-completed the consolidation of agency services under Amex in the United States, Canada and Mexico. This year, Allied Signal has its sights set on consolidating agency services in Europe and on consolidating its corporate meetings spending.

For the future, Peterson sees much of the travel information being delivered over the Internet and expects to see further consolidation of agency, T&E and card spend data as processes continue to be reengineered. "We're very much interested in finding the leading edge and staying out there," said Peterson. "I think if anybody says they're done, they've just fallen asleep at the wheel.