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Cutting-Edge Expense Tech? Not Yet

By on September 17, 2013 in Expense, Industry News with 0 Comments

This is very interesting. How many of you still use spreadsheets, instead of technology to keep track of your business expenses? Is there something that is preventing you from changing over? Please comment to let me know what you think.

By JoAnn DeLuna

Study: Nearly 30 Percent Of Companies Use Excel Spreadsheets To Manage Expenses

While the travel and expense industry has made strides in easing the management and reporting of expenses while collecting valuable data, many corporations still are not taking full advantage of technological advances.

About 29 percent of 216 “decision-makers around the world with responsibility for expense management” surveyed between January and March by Forrester Research use Excel spreadsheets to manage expenses, according to a report commissioned by American Express and released in June. Only the use of an expense module of enterprise resource planning software (32 percent) was a more popular expense management option among the survey’s respondents.

“These statistics suggest that many firms are expending significant internal resources to maintain their current expense management systems, in terms of business and IT personnel, as well as software and infrastructure support,” according to the American Express report.

The survey included executives from North America, Europe and the Asia/Pacific region from “enterprises” with at least 1,000 employees and “midmarket firms” with 100 to 999 employees.

Specifically, 34 percent of midmarket respondents indicated that they used Excel spreadsheets, as did 24 percent of enterprise respondents.

“We run into that quite frequently, that our clients are still using manual reimbursement systems,” TCG Consulting director of commercial payments and expense management Jim Coufal told Travel Procurement. “I think the [survey] number is low. It’s probably closer to 45 percent.”

Cloud-based expense systems, in which neither hardware nor software is housed by the client and which are accessible from multiple touchpoints, often are heralded as the future of expense reporting. Yet, just 8 percent of enterprise respondents and 3 percent of mid- market respondents indicated that they use a third-party cloud expense management tool.

Coufal said many companies are slow to adopt an expense management tool because doing so entails a “process investment.” Changing systems often requires participation from a cross-section of internal departments, including human resources, payroll, accounting, audit, legal, travel and IT. Additionally, business rules affecting policies have to be reworked when a new system is introduced. For example, a company might have a policy that mandates employees attach receipts for all purchases, but then implements an expense tool that doesn’t require employees to submit a receipt for purchases under $25. New policy language has to be created, but the managers creating the new rules don’t necessarily have the authority to make the changes, Coufal explained.

Often, persuading senior management to embrace the “pain” of switching to a new system is challenging, especially if executives don’t see a quantifiable return on investment.

“It’s difficult to herd the cats into a focused approach to make the change,” Coufal said. “It takes time. It’s an investment, and there is ROI, but it’s a three- to five-year ROI.”

Similarly, expense management supplier Databasics’ director of sales, Chris Harley, said if the executives responsible for approving the cost of switching systems don’t experience any “personal pain” in filling or approving expense reports, then they’re not likely to approve the switch. Harley said those executives tend to think, ” ‘We have other priorities and other projects we’re focusing on, and the expense reporting is still getting done—it may not be optimal, but it’s still getting done.’ ”

While the price point and pain threshold is different for each organization, Harley suggested that if a company processes at least 30 reports per month, it makes sense to switch to an expense management tool.

Implementing a new expense management system will take more than simply switching processes, it will take a “cultural shift,” said Louis Berard, Aberdeen Research senior research analyst for global supply management.

“We’re seeing a clear separation between the organizations that are the best in class and are moving toward integrated systems and the whole idea of mobility within those systems, versus the organizations that go back to grassroots, open Excel documents to try to track [expenses] that way,” Berard said. “It becomes very cumbersome, and unfortunately it really slows down their ability to perform.”

This report originally appeared in the August 2013 edition of Travel Procurement.

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