Business Travel - Journey into the future
Finance departments are discovering the benefits of travel software, says Nick Huber.
Finance departments are discovering the benefits of travel software, says Nick Huber.
Over the past 18 months business travel has become news. As companies look to update their spreadsheet and paper-based systems, specialist software vendors are offering expense management and travel booking packages. The software collects data from corporate credit cards, such as American Express, and integrates it with companies’ existing financial software.
The appeal of this type of software to finance and travel departments is threefold: it can cut costs quickly; it can reduce the number of false expense claims; and it enforces central controls.
The main technological factor behind the growth in expense management packages is the internet.
As access to the Web becomes more widespread, such software can be easily and cheaply integrated into a company’s intranet.
Travel and related expenses form a significant part of company budgets.
According to a global survey carried out last month by American Express, travel and related expenses account for 7% of the total operating costs of big national and multinational companies. The study also found that nearly 80% of companies surveyed used corporate credit cards.
The boom has attracted the attention of enterprise resource planning giants keen to move into new markets. Among them is SAP, which offers R/3 travel management, a module that enables managers to plan business trips and approve expenses. Captura, a US-based company which has its European headquarters in Middlesex, is one of the leading software companies specialising in expense management.
The company claims its software can deliver quick returns on investment, in contrast to more complex ERP software. Dan Vetras, chief executive of Captura, boasts: ‘We saved Merrill Lynch £5m last year. They were spending $75 just to produce one expense report.’
The Windows-based Captura software in the employee payables package integrates with all the major credit cards and can be accessed remotely via a browser. Whenever an employee submits an expense claim, the software checks that the claim is in line with company policy. If it is not, an automatic email alert is sent to the employee’s line manager.
One of the package’s new features is a business rules engine which allows companies to handle different national rules for VAT-related expenses.
Although Captura has yet to announce any UK clients, it is already talking to KPMG and Deloitte & Touche about software implementation and project-management partnerships.
For the Big Five consultancies, the configuration of a company’s expense system offers additional consulting revenue. David Hillman, a consultant for Deloittes in the US, says demand for expense management software is greatest in multinational companies which could save millions of dollars by scrapping their paper-based systems.
‘Multinationals have a number of expense reports to process, and because they are from different places, they are difficult to accomplish,’ he says.
Company intranets will help to promote business travel software and policies among companies of various sizes, according to Chris Evenden, executive consultant for KPMG, who specialises in implementing SAP’s business travel module. ‘If a company has an intranet, then they don’t need to buy new laptops or modems when developing an expense management system,’ he says. ‘A workflow engine can send an expense form via an email attachment for the manager’s approval.
They just have to click a button to approve it or not.’
Knocking down the cash mountain
Evenden stresses, however, that it is still early days for expense management packages. He recalls one large UK company which used to insist on paying all expenses in cash. ‘The company kept a huge amount of cash in a safe and had a cash office,’ says Evenden. ‘It was a completely manual authorisation process.’
But there is more to the business travel market than just controlling expenses. Phonelink, a travel booking software specialist and owner of Seaforths, the corporate travel centre, sells a client-server package called Ticket Window.
The product, originally developed by Seaforths and available free to customers, allows customers to make travel bookings online with a standard browser. Alternatively, companies can install the travel booking system on their own networks. This gives them access to a password-controlled network of more than 30,000 hotels worldwide and flight availability for more than 500 scheduled airlines. Business users can also have their own personal profile, specifying the travel class they need as well as seating and dietary preferences. Phonelink clients include networking giant Novell and Intercapital.
Booking software is targeted at companies which spend more than £100,000 a year on business travel. Ian Sinderson, head of strategic planning at Phonelink, believes the software has obvious attractions for finance directors because it means they can set limits on departmental or individual travel budgets.
‘If you have a significant travel spend, you can completely control your travel budget. You can set up an individual travel budget for each employee, see who is travelling where and when, and find out how much each ticket costs,’ says Sinderson.
This drill-down facility allows the finance department to carry out some intensive tracking of expenses.
By looking at the ticket restrictions when the employee booked the flight, the finance director can see if a sales manager really did, for example, need to fly first class because no economy class seats were available. The package includes an email alert system to notify line managers when employees exceed their travel budgets and it can integrate with other expense management software.
Phonelink also provides an online ‘portal’ site for personal travellers, called Travelclub Site. Portal sites, with their vast array of related information and services, look set to change the face of how business travel is sold.
Compuserve, the internet service provider, will launch an online travel service next month. Called Travel Agent, it allows business and independent travellers to book flights over the internet and find the latest information on 52,000 hotels.
Vendors best known for their financial software are also keen to cash in on the business travel market. QSP, the fast-growing financial software vendor, has recently launched a Web-based expense management system for the UK, in partnership with Extensity, a Californian vendor. The Extensity package automates travel and expenses management and can run on a company’s network or over the internet.
As well as handling individual and corporate credit card expense inquiries it also automates dealings with the company travel agent. It can also automatically download and itemise an individual’s expense transactions from the information held on the chargecard.
Extensity complements another QSP Web-based budgeting and forecasting product called Financial Collaborator. The deal between the two companies will see QSP implement Extensity, sharing the licence and the maintenance fees.
Cheap access to the internet
David Pinches, QSP product and marketing director, says the products form part of a Web-based strategy allowing it to provide new business processes and services.
‘Our new direction is based on software and services. It’s all about technology, which sits around the general ledger,’ says Pinches.
QSP is aiming the product, which takes about 60 days to implement, at its existing blue chip clients, as well as at new customers who use Oracle and SAP software in their other company operations. ‘It will see us going head to head with companies like Captura,’ adds Pinches.
Much of the consultation work will go towards designing an expense form to meet a company’s expenses requirements and then integrating it with existing software and hardware. But as many larger companies now have in-house teams of HTML programmers for Web design, Web-enabling an expense system is not a mammoth task.
But once a system is implemented it is important to test it, to ensure only selected staff can authorise often hefty expenses. ‘You need a proper system because it involves authorisation and security,’ says Evenden.
‘Otherwise, the auditors will shoot it down in flames.’
The business travel industry has even extended its reach into the telecom sector. Unitel, a Kent-based telecom specialist, provides a phonecard which, when slotted into a laptop, gives the business traveller cheap internet access.
After plugging the modem into a phoneline, the user slots the card into a laptop, dials a freephone number for the internet service provider and types in a pin number. The user is then free to submit expense forms back to the office and pick-up emails.
To control costs, the company finance department can issue pre-paid cards or ones with worth, for example £100 or £200.
‘The card saves money against hotel surcharges on phone bills,’ says Chris Tooley, Unitel’s sales and marketing manager. ‘There’s no such thing as an average charge.
You can use phones like Vodafone and Cellnet abroad but you pay a surcharge when you phone the UK.’
Despite widespread – and largely unfounded – fears over the security of electronic signatures, Evenden believes most finance directors will gradually come round to see the benefits of an automated expense management system.
‘It’s an education process. Finance directors see the intranet as a tool which can be rolled out all over the place,’ he says.
AUTOMATION: THE SEAGRAM EXPERIENCE
Back in 1995, the beverages and entertainment multinational The Seagram Company decided it needed a new expenses system.
Its old one was a paper-based system and the company was introducing a new American Express corporate credit card across Europe, to be issued to about 1,500 holders.
Jonathan Stobart, director of finance for procurement and purchasing at The Seagram Company, chose an expense management package from an Irish-based vendor called Beratech. The client-server system emails the latest expenses details – which are stored in the back office system – to an employee’s desktop.
‘It’s more flexible for the back office and it gives much better management reporting,’ says Stobart. ‘With the old system, you didn’t know what hotel an employee was using. With the Beratech package, you can drill down to see which hotel they’re staying at.’
Another useful feature is the ability to view expenses by exception.
This instructs the software to highlight instances of staff spending more than a certain amount, for example, on subsistence.
Stobart adds that sales staff can also access the expense system remotely through a laptop computer.
‘A drop-down menu appears on the windows screen,’ he explains. ‘They can then add in more detail to the form, like the name of a client they entertained, before it is emailed.’
Last year, The Seagram Company acquired Polygram, the record company giant, and Stobart believes the number of corporate credit card holders will double following the acquisition. ‘It’s a big implementation and we have pilots running in Germany, France and Iberia using the software,’ he says.