Nearly every
industry undergoes major evolutions as technology evolves. Television shifted
from scheduled viewing to time delays, then on-demand. Automobiles have changed
from internal combustion to hybrid and are now facing their most dramatic
paradigm shift with driverless technology. Employee expense management has seen
similar evolution: The first era of expense management was receipts stapled to
forms. These were a pain for business travelers to create and equally
cumbersome for approvers. The second era introduced expense report software,
which “automated” the paper process. It was easier for everyone to use and
enabled workflows, but productivity gains were questionable. The third, and
current, era focuses on simplifying the expense management process with mobile
apps, receipt scanning with optical character recognition data extraction and
expense item creation. Integration with credit card and travel providers
provides real productivity gains. Automated enforcement of expense policies and
business rules provides risk and cost reduction. ACH payments to employees and
card providers streamline business processes.
Each
iteration of expense management technology has focused on cost control and
compliance, and each has succeeded. With the help of automation, many
organizations have minimized process costs, maximized expense policy compliance
and reduced fraud to the point where continued efforts to improve further will
produce diminishing returns.
Enter the
Next Era
The next era
for expense management will focus on actionable spend intelligence; the
emphasis will be less on reducing spend and more on making it impactful. This
doesn’t just mean leveraging spend data to negotiate vendor discounts; it is
about obtaining information on the outcome of T&E spend to optimize future
spend.
Cloud-based
customer relationship management solutions, integration between applications
via application programming interfaces, mobile capture of spend information and
geographic encoding of spend data are some of the underlying technology and
environment changes that make this new era possible.
Sales and
account management teams are typically responsible the majority of T&E
spend in an organization. In their CRM solution, these teams log every prospect
and customer interaction like meetings and meals. The CRM system also contains
data on the outcome of these interactions, whether an opportunity was won or
lost and how much revenue was generated. An expense system contains details of
spend incurred by the sales and account teams. Unfortunately, these are two
application silos, often owned by different parts of the organization. The
disconnect makes it difficult to provide context on the outcome of T&E
spend and impossible to analyze how sales teams’ T&E spend impacts revenue
generation.
Answering
Tough Questions & Allocating Budgets
As we move
into 2018 and beyond, expense solutions that integrate CRM sales data with
spend data to deliver actionable intelligence will usher in the next era of
expense management. This will have a major impact on how organizations create
and distribute T&E budgets. By allocating each spend item to a specific
sales opportunity or account within the expense solution and combining this
with revenue data, sales and finance leaders can obtain granular detail on
specific opportunities and activities. Organizations will be armed with answers
to questions like: What is an optimum amount of T&E spend to deliver a
dollar of revenue? Which activities are more or less likely to deliver
successful sales outcomes? What spend is least efficient in generating new
revenue?
As
organizations adopt expense management solutions less as spend reduction
solutions and more as spend optimization solutions, we’ll witness a real impact
in the way finance teams view T&E budgets.