why-expense-management-is-overrated

Having A Closer Look: Why Expense Management Is Overrated

About four months ago SAP announced its agreement to buy Concur for 8.3 Billion Dollars. Many industry professionals –including myself- were intensely debating about the reasons and consequences of this acquisition.

Since SAP already had its own expense management tool and Concur hasn’t made profit in years, the question we all had in mind was obvious: What were they thinking?! And while everyone was still discussing about it, an interview with SAP CEO Bill McDermott incurred the wrath of many travel managers worldwide.

“Every company has a corporate travel department, but no one wants to work with it. You can use your phone and go out on the Internet and as long as you stay within your budget you can travel any way you want, stay where you want, eat where you want, and Concur lets you do that. Why should the corporate travel department tell you where you’re going to sit on the plane or where you’re going to stay if you can maybe get a better rate?”, Mc Dermott explained his point of view.

In my observations, Concur always focused on the expense part and the booking part was just an add-on. Alright I told myself, maybe with travel management after the fact (what expense management actually is), one can improve policies so much that the one or other wasted trip actually pays off. However, now with Bill McDermott’s comment, I feel like companies have no control anymore, corporate contracts become useless and even if it was the best way for travel management, the knowledge the one individual gains is not captured and thus wasted since nobody else will benefit. If everybody books in accordance with the guidelines, isn’t then expense management reduced to the use of data to manage your corporate contracts and improve the guidelines?

Understanding Expense Management

Every employee who has ever been on a corporate trip knows that expense reports are an inherent part of it. According to Concur, 26% of organizations use any form of automation, while 41% prefer completing their reports manually, for example with Excel Spreadsheets. I wrote this blog because I’m not an expert on expense management and always wanted to understand the hype around it. A recent survey of one of my colleagues revealed that most users want expense management as part of a mobile app – meaning away from paper based processing to taking a picture of the receipt, parse the details and add it to the expense report. Interestingly enough paper based processing is still prevalent. What travelers want is simple: A corporate booking tool that minimizes their effort and allows them to do the expense reporting whenever they have a minute of spare time. However, this mobile app is just one slice of a supposedly big tool which in Concur’s case cost billions to develop. So what are the other slices? For your convenience I have provided an overview of what the different expense management tools offer further down.

To understand what expense management primarily is about, let us have a short look at the definition:

“Expense management refers to the systems deployed by a business to process, pay, and audit employee-initiated expenses. These costs include, but are not limited to, expenses incurred for travel and entertainment. (…) Software to manage the expense claim, authorization, audit and repayment processes can be obtained from organizations that provide a licensed software, implementation and support service, or alternatively, from Software as a service (SAAS) providers.” (via Wikipedia)

Hence, the three main tasks are basically processing, paying and auditing employee-initiated expenses, besides obviously compliance with the law. Like I mentioned before, about 26% of organizations are using automated processes for this step and are paying for software to manage those expenses. Many of them argue that expense management software saves them time and costs and I understand where they are coming from. But what some people seem to forget is that expense software is connected to a range of different fees, starting with the implementation. The company will have to pay a certain amount of money per user and per month, expense reports per user and per month, per transaction fees and other extras. And don’t forget about updates and system errors which require time and in some cases more money to get the issue fixed. The more you want, the more you have to pay. Can this really be cheaper than letting employees complete their expense reports via Excel or a simple mobile app? So why engage the services of expensive expense management software providers when there is in fact a cheaper way that even starts before the booking process?

Valuing the Booking Process

During the intense discussions on LinkedIn, I was pleased to learn that the majority of travel managers and corporate travelers as well seem to agree that good policies paired with a good corporate booking tool may not always find the cheapest option but bottom line is the best option for the company and most efficient option for the traveler, who will not waste any time with bargain hunting. I’d rather have a machine do the calculations, run countless numbers of rules and policies and provide me with a couple of options which will suit me and the company. Even though some companies might think that expense management software is a necessity, I still think the focus should be on booking and good policies, collecting data and use it to improve the process – besides of course the focus on security and keeping your travelers safe in today’s world of terror and health issues. Pre-trip, on-trip and post-trip should be a healthy mix. The businesses and travel patterns of companies are so different from one company to the other that I actually cannot see a one-size fits all approach, but think that travel managers need to surround themselves with a few in-house agents to improve the process and find the right technology which will fit their needs. So, I guess, as long as travel managers stay in business there is hope. However, maybe travel managers need to strengthen their position a little bit. They are focused on the individual need of their company – but that doesn’t correlate with a mass product. Maybe that’s why McDermott just wants to ply them out of the way?

Thoughts?

There Is No Need For Expensive Software

So, booking tool providers are not interested in travel managers and their individual customer needs (as this means work), but what about the other players in the value chain? TMCs in most cases resell booking and expense management tools – sometimes with a huge cross-interlocking where one hand washes the other (see The BEAT AMEX “Amex Reinvests $719 Million Gain From Concur Sale”). They want to benefit – they do for touched bookings – but that means an agent has to really touch it and that means work, so their goal is to benefit from online bookings as well.

So will you get a fair offer from them? What about expense management companies? What are the three major values expense management firms bring to the table? Settlement of expenses – which includes audit trail, credit card integration, receipts, currency, spending control and reimbursement? Collecting data to improve the process and policies? Reduce the time employees spend on their expense report?

The way I see it, time and cost savings can already be achieved through optimized processes within the company’s travel management, without the need of implementing pricey expense software.

360 VICTOR PASS

 

A Quick Overview

Like I mentioned in the beginning, I created a list of some expense management providers and their special features to understand what the hype is about. If you want to read more about expense software this list can be a reference point for you. However, it is not complete, so feel free to tell me about other providers in the comment section and I will add them to the list.

Audit
Trail
Credit Card
Integration
eReceipt
Import
Multi-
Currency
Receipt
Management
Reimbursement
Management
Spend
Control
TMC
Integration
Workflow
Management
Certify
x
x
x
x
x
x
x
x
x
Suti
Expense
x
x
x
x
x
x
x
x
x
eRequester
x
x
x
x
x
x
x
Coupa
Expenses
x
x
x
x
x
x
x
x
Xpenditure
x
x
x
x
x
x
x
Unanet
x
x
x
x
x
x
Web Expense
Replicon
x
x
x
x
x
Abacus
x
x
x
x
x
x
x
ExpensePath
x
x
x
x
x
x
x
x
ExpenseVisor
x
x
x
x
x
x
x
WorkPlace
Expense
x
x
x
x
x
x
x
x
Ariett Xpense
x
x
x
x
x
x
x
x
x
ExpensePoint
x
x
x
x
x
x
x
x
x
Incharge
x
x
x
x
x
x
x
x
x
NeatReceipts
x
Tenrox
x
x
x
x
x
x
x
x
x
Concur
x
x
x
x
x
x
x
x
x
Avaza
x
x
x
Keepek
x
x
x
x
x
SpringAhead
x
x
x
x
x
x
x
x
Expense
Anywhere
x
x
x
x
x
x
ABUKAI
Expenses
x
x
x
x
x
Advataxes
x
x
x
x
x
x
x
Aestiva
x
x
x
x
x
x
x
x
x
Chrome River
x
x
x
x
x
x
x
x
x
DATABASICS
x
x
x
x
x
x
x
x
x
Easy Trace
x
x
x
x
Viatos
x
x
x
x
x
x
x
x
Exp2Sap
x
x
x
x
x
x
ExpensAble
Corporate
x
x
x
x
x
x
x
x
x
Expense@
work
x
x
x
x
x
x
x
ExpenseNet
x
x
x
x
x
x
x
x
ExpenseWatch
x
x
x
x
x
x
x
x
Expensify
x
x
x
x
x
x
Nexonia
x
x
x
x
x
x
x
x
Spendvision
x
x
x
x
x
x
x
x
x
TrackStar
x
x
x
x
x
TriNet
Expense
x
x
x
x
x
x
x
x
x
Trippeo
x
x
x
x
x
x
x
x

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