Former CFO, FAO metrics guru, and FAO provider Chris Gattenio has been an advisor for more than 1,000 CFOs. This month, she examines travel and expense outsourcing.

by Chris Gattenio

Q. How are leading-edge companies transforming their travel and expense (T&E) reporting processes through outsourcing?  

A: In a successful T&E outsourcing environment, effective process transformation can be realized in a variety of ways. Leading-edge companies that make use of an experienced outsourcing partner can bring unmatched consultative expertise to their organization that will drive both process and policy transformation as well as measurable reductions in expense management. Across the F&A industry, a number of outsourcing projects have been able to leverage T&E transformation to eliminate costly and inefficient processes.

Firstly, whether your organization is looking to just implement an automated tool for expense management processing or understand the full scope of outsourced back office and hosting services, it is important that your provider can articulate an end-to-end value proposition.

Second, evaluating technology and services is critical to understanding the reality of how the solutions you choose will impact your organization’s bottom-line savings.

Understanding the methodology and achievable results of outsourcing is critical to successful delivery of significant cost reductions while improving performance.

Today’s corporations face a number of business problems associated with the travel and entertainment expense management process, including:

• T&E is one of the largest corporate expenses behind employee benefits.
• The T&E process is timely and costly from the completion and processing of an expense report at the employee/manager level to back-office integration and employee/corporate card reimbursement with many manual and semi-manual completion methods.
• Multiple and inconsistent T&E processes lead to increased costs throughout the corporation.
• Lack of business and audit controls makes it difficult to track T&E policy compliance and overall corporate spend.
• Lack of uniform data causes difficulty in leveraging T&E information for vendor negotiation and policy modification.
• Manual keying of T&E data into accounts payable and general ledger systems causes inaccuracies and is time consuming.
• Every organization within a corporation is affected by the T&E process, and a lack of simple processes and procedures results in high costs and high end-user dissatisfaction.

Clarifying and quantifying your expense management objectives and measurements for success are a key component that will assist you in building your business case, understanding the return on investment, identifying opportunities for process and policy transformation, and garnering the right level of constituency and executive support for funding approval.

EFFECTIVE T&E SOLUTIONS
In the case studies highlighted in the sidebar, two BTO clients* experienced significant operational and processing cost savings, reductions in travel and auto expenses, cycle times and credit card losses, and increased process efficiencies and customer satisfaction.

As a very diverse corporation, IBM’s internal use of its own T&E solution worldwide has offered a solid test for the stability and acceptance of the solution. IBM uses the Global Expense Reporting Solution (GERS) application for the Java platform internally and has more than 600 customers in more than 59 countries on it as well.

With a $1.7 billion annual travel spend and 275,000 global travelers, IBM processes more than 1.5 million forms on an annual basis. The transformation process consolidated 45 credit card programs into one and 137 processing centers into three. A 30-day cycle time in the mid-1990s is now holding at a steady seven days, and the  average cost of expense reports fell from $20 per claim to approx. $2. IBM has processed up to 22,000 expense reports in a single day.

Currently, IBM’s solutions support more travelers worldwide than any other in the market. Its internal base supports an enterprise-level solution in which more than 80 percent of the traveling population utilizes the application.

1Data published with permission from IBM.