Less than 20 percent of Databasics' new business in 2015
represented companies that were trading in their spreadsheets and homegrown
systems for an automated tool, said vice president of sales Chris Harley. That's
a stark change from a decade ago, when 85 percent to 95 percent of Databasics'
new business came from companies looking to put manual processes behind them. "Today,
the high majority of our customers are companies that have solutions in place
and are looking to do second- or third-generation [implementations] of these applications,"
he said.
That's the same read on expense maturity reflected in BTN's
2016 Expense Manager Survey, which queried 184 travel buyers and expense
managers in February about their expense programs over the previous 12 months.
First-time expense-tool implementation declined from 33 percent last year to
just 11 percent in 2016. Only 9 percent of respondents were still tied to
homegrown systems or Excel spreadsheets or even did nothing to manage expenses.
With Phase 1 implementation firmly under their belts, large
and even midsize companies have leveraged expense tools across business units
and geographic borders, and they are looking to do even more to drive
transparency and intelligence.
Increased Maturity, Expanded Reach
Pearson Education, which has 40,000 employees in 70
countries, uses multiple expense tools, 56 enterprise resource planning systems
and multiple non-integrated processes and data sources to provide single-view
expense reporting. This year, the education company is moving to a single expense
tool and a single ERP system, according to global travel manager Mitchell
Stern.
Individual countries and units may have good visibility into
their own expenses, Stern said, but the broader enterprise lacks true
transparency with the overall business, "which is why we're undertaking
the big project with hundreds of people dedicated to this objective,"
Stern said. "I want holistic financial transparency and a reportable
relationship between revenue and expense on a global basis."
He's not alone. Despite the increasing maturity and expanded
scope of the expense management sector, the pain points that companies are
trying to solve remain the same, according to Gartner research director Chris
Pang. "Lots of customers I speak to still want to do the basics:
visibility, consolidated data and have one policy pushed to everybody," he
said, but they want to implement globally and integrate it all more deeply into
corporate systems outside of travel.
BTN's 2016 Expense Manager Survey showed an uptick in
such practices. The number of survey respondents who integrated expense
platforms to human resources/organization hierarchy systems rose from 57
percent a year ago to 64 percent. And
73 percent, roughly the same as last year, integrated to general ledgers/financial
systems while 54 percent integrated their expense tools to online booking
tools, up from 41 percent a year earlier.
Divergent Decision-Making
Even after Pearson transitions to single tools, it may not
be smooth sailing for travel management. Stern wasn't part of the
expense-tool-selection process. Had he been, Stern would've chosen one with
more online travel booking integrations. Pearson's travel management company
for its United Kingdom headquarters is BCD Travel. In North America and parts
of Asia, it's Carlson Wagonlit. In Mexico it's American Express Global Business
Travel, and various other agencies serve other locations.
While technology is making it easier to integrate travel and
expense tools, Pang said it's not clear cut whether companies want to buy
end-to-end T&E solutions. Putting the Pearson situation in perspective,
Pang said there are two types of buyers for expense management systems: the
travel manager and the finance person. A CFO's priority is spend visibility,
and he or she reasons that travel visibility can come from the TMC. "Reporting
may not be as good as if they were to get it from a T&E integrated tool,
but in some cases it's good enough," Pang said.
While Stern understands there is "much bigger spend at
stake" and that his company's consolidation to one ERP made sense both
from an ERP and HR perspective, the decision process highlighted the divergent
interests between the different departments. "You have the technology area
that owns the contracts, due diligence, data, security and privacy; finance,
which has its own reasoning; and then travel, which is about the user
experience and policy setting," he said. "That's where we—the
industry, the corporations—are at the crossroads because those views may be
more conflicting than they are in alignment."
Integrations Are Key
Most expense tools integrate with major ERP and HR systems,
but the answer to Stern's conundrum might be holistic financial models like
end-to-end T&E provider Concur. As part of SAP's Business Travel Network,
Concur is working toward native integration with SAP's enterprise-management
cloud platform S/4HANA, its vendor-management system Fieldglass and its
procurement-management system Ariba.
Concur posted its strongest revenue growth in 2015 and
boasted 32 million users for the year. Concur CEO and SAP global managing board
member Steve Singh previously said 75 percent of customer adoption came from
outside the SAP base. It's unsurprising that Concur also dominated BTN's
survey, as 52 percent of respondents used the expense tool and several more
were migrating to it.
Video game publisher Riot Games has used Concur for expense
since 2008 and began using Concur TripLink in October, but Sean Parham, the
company's "global travel wizard," is unsure how long his company will
stay with Concur. He said it's "lagging behind in technology" and is
lacking when it comes to customer service. Still, he can't deny Concur's lure. "Everything
is well thought out. They're still top dog because they have the greatest
integrations, and until someone comes along and topples that, they're going to
continue."
Fit to Scale
As more consolidation starts to brew in the industry,
Gartner's Pang said the ability to scale solutions is what will keep the last
expense providers standing. Providers need to have global sales and support and
systems that are localized for each different market, he explained. "The
problem is in terms of gathering the raw data for expense but also reporting on
that for tax purposes and compliance."
Concur, yet again, gets a major boost on this front as part
of SAP. "Even though Concur was the largest [expense company] ever
acquired, they weren't truly global," Pang said. "But with SAP behind
them, that gives them a leg up when it comes to the localization front."
SAP's globalization team of 1,500 people around the world
focuses on "figuring out the best requirements for each country,"
including local regulations and tax compliance, explained Concur general
manager of expense and invoice Phong Nguyen. Concur has also doubled Nguyen's
team, which deals with expense, invoice and pay.
"Pre-SAP, it was very difficult for us and we'd spend
hundreds of thousands of dollars a year with local law firms and different
consultants trying to understand those requirements," Nguyen said. "[Now]
we're able to tap into that 1,500-person organization to extract a lot of
insights and info, and we're automating some of the technology so we can put
that information into our solution to become best in class in those regions."
Even expense firms without such massive teams are forging
paths overseas. Databasics' Harley told BTN the company is looking to
expand into Europe as it continues to do deals overseas. Expensify opened a
U.K. office in February, and Chrome River has announced plans to expand into
Europe and Asia/Pacific.
And right they should. Although enterprise-size
companies are typically the global ones, Concur president Elena Donio said
during the annual conference of Concur users in March, "I haven't talked
to a single middle-market client that isn't either global today or planning to
be global in the near future."