Single Expense Solution Still Elusive In Europe

<B> Single Expense Solution Still Elusive In Europe</B>

By Amon Cohen

Expense management systems are a hot property in Europe this year. Home-grown products are springing up in the continent's national markets, while U.S. third-party software providers are honing their products for the flight across the Atlantic.

In light of this frenetic activity, the major European travel agencies are figuring out their expense solution strategies while users of SAP financial software are waiting to see the fruits of the German giant's collaboration with Amadeus.

However, U.S. travel managers hoping for a one-solution-fits-all approach to their European markets can think again. Despite European Union harmonization, each member state has radically different accounting and taxation procedures, meaning any software provider has to launch market by market with considerable revisions to its product.

That's why Business Travel International has decided not to develop its own expense management system but to become involved in consultancy instead. It has a team of three experts based in Europe who will audit a client's expense management process and recommend which automated system they should adopt.

"We looked at bringing in third-party software but there isn't one that is appropriate for all our customers," said BTI information technology director David Young, based in Farnborough, U.K. "Several of them would also like to be our preferred suppliers but we would like not to be attached because we want to give impartial advice. Everything needs to evolve a bit but there are products on the market that answer needs in some countries."

According to Marc Hildebrand, BTI's head of product development, European corporations are paying an average of about $40-50 to process each expense report. One client that Hildebrand audited was paying $170 per report. As in the United States, most of the costs are incurred through the auditing of every expense report and the rekeying of information.

"Clients are starting to take more notice of these hidden costs, mainly through our efforts in these areas," said Hildebrand. "Many of them did not even know anything could be done about it or that there were automated solutions on the market. We think they can bring costs down to $8-12 per report."

Hildebrand is looking for three modules in an ideal system. The first should be a corporate card data downloading facility, allowing pre-population of the expense report. However, with less than 15 percent of all air tickets in the U.K.--one of the most mature markets in Europe--being bought with a physical card and another 35 percent with an agency lodge card, clients still need to mature to take advantage of this facility.

The next facility required is an approval process, ideally made online and with a built-in policy checker that flags exceptions. Most systems offer both this and a card data feed.

Where Hildebrand has seen only limited progress is with the final module: integration into the client's back-office system, including its general ledger. It is the difficulty of this integration, particularly with the extensive cross-border adjustments required, which has seen very few European clients successfully adopt an expense management solution. Hildebrand estimated that only 20-25 systems on the market are of even limited potential benefit to clients.

Despite these difficulties, Carlson Wagonlit Travel is planning to introduce an expense product as part of its ActOne suite in the European market in 1998. It is considering licensing software from existing expense solution providers in Europe. "We are looking at taking one or more," said director of global product management Russ Howell, who is based in Atlanta, Ga. "Different clients have different needs and they get very involved in the selection process."

In Europe, Howell said, "we are farthest along the road in establishing a relationship with a software provider in the German marketplace. There are a few such providers and we have our sights set on the one we regard as the strongest."

It would be ironic if Carlson Wagonlit were to strike first in Germany, notorious for having the most complicated expense accounting rules in the world. Germany has complex per diem allowances plus stringent laws concerning which expenses count as taxable personal benefits.

Still, automation "is a very popular subject with corporate clients in Germany, where there is plenty of energy going into looking for a solution," said Howell. "German companies have very regimented processes based around their spreadsheets. They need the sincere, analytical efforts of a software company to get to the bottom of solutions."

Among expense system providers looking for a German solution is Portable Software, whose Xpense Management Solution is one of the most successful products of its type in the States. Portable Software has been operating in the U.K. and Belgium for a year with a product adapted to European functionality, such as value added taxes, foreign exchange cash advances, company car reporting and consolidated currency reporting in anticipation of European monetary union.

Even with all these changes, Portable Software estimates XMS is only 80 percent ready for Germany, though European general manager Paul Phillips says a full German version will be available this year.

Portable Software is talking directly to clients, but also is forming alliances with travel industry players. XMS is the recommended automated solution for Company Barclaycard in the United Kingdom.

Phillips would like to make the same arrangement with travel agents but he is only interested in referrals to corporate clients, not in allowing agencies to resell the product themselves. He claims it is in the interests of agents to work with Portable Software, even under these circumstances, if they wish to provide a truly integrated solution to clients. An agency would find it difficult to develop an expense product of the same sophistication. "We have more than 140 personnel around the world working on just this one product," Phillips said.

Portable Software is by no means the only U.S. expense management product now available in Europe. BTI's Hildebrand estimated that 70-75 percent of the third-party solutions currently on the market come from across the Atlantic.

One domestic rival joining the fray is Empower 21, launched in November 1997, after five years of development, by Amersham, Buckinghamshire-based software company Travelcom. Marketing director Sean Roberts claims it can be used by clients in the U.K., France, Germany and Spain.

Empower 21 is billed as a comprehensive package, fusing its core expense management function with several components from other suppliers. These include trip planning and booking (based on a pioneering system called TicketWindow from U.K. travel agency Seaforths Travel), pre-trip approval, post-trip processing and a telecommunications package.

Named CommsManager, this latter element provides a range of online voice and data services via international toll-free lines. Travelcom claims this allows users to make cheap international calls and retrieve messages, faxes and e-mail wherever they are in the world. Travelers also are given a portable telephone number that allows them to be reached at whatever telephone they happen to be near.

Like American Express, Travelcom says it will introduce a mobile telephony expense category this year, tracking calls from any source, such as mobile telephones and calling cards. "We want to bring mobile phone charges back into the travel budget because that is where they belong," said managing director John Stephenson.