If you as CFO find yourself constantly fielding calls from travel & expense management providers, blame Nick Evered. The Senior Vice President and General Manager for APAC at T&E company SAP Concur wants his sales people to talk to finance leaders more than to CIOs, travel managers, procurement people or HR.
“If we start the conversation with the CFO,” explains Evered, “our sales cycles are shorter, and our win rates are higher.” Finance chiefs are more likely to appreciate that a T&E solution can be an investment in generating revenue, rather than as simply a way to arrange, manage and control travel costs.
“Travel and expense as a line item in operating expense can be viewed as a necessary cost of doing business, or as an investment in how to actually produce revenue”
Evered spoke to CFO Innovation’s Cesar Bacani about the new trend of looking at T&E as a tool for revenue enhancement, its use for planning, budgeting and strategy, and other issues. Edited excerpts:
Tell us about the new trend of looking at travel & expense management as a way to generate revenues, rather than just to control expenditures.
Travel and expense as a line item in operating expense can be viewed as a necessary cost of doing business, or as an investment in how to actually produce revenue. There are a few companies that are starting to look at it from that second perspective.
They're starting to say: "How do I then measure that investment to ensure that I'm getting a return on it?" Instead of saying: “Let's just wait until somebody's done a business trip, and then we'll process their business claim."
These companies want to use T&E spending more strategically and tactically.
How do you do that, though?
There are multiple ways. At the very simplest level, Concur connects to CRM [customer relationship management] systems and project management systems. This enables the linking of expenses directly against projects, or in the case of something like Salesforce, against a customer or a sales opportunity.
You can actually see how much you have spent on a customer, whether that is an investment in pre-sale, or whether it is an expense that should be re-billed back to the customer.
Is it a requirement that the company must have CRM systems and project management systems to link to the T&E systems?
Yes and no. You can produce reports just within the Concur solution. You can answer questions about where and on whom the spend is currently being made. Who are my big spenders? Where are they going to? What customers are they meeting with? How much have they spent entertaining those particular customers?
More sophisticated companies would look at extending that further out. They say: “Because I do all of my customer relationship management in my CRM system, how do I create that linkage [with T&E] so that it's in fact a fully integrated system?"
I'm going to put you on the spot. Does SAP Concur drink its own champagne and link its T&E system to all other systems for revenue enhancement?
We do. There are actually multiple steps to this process. There is the very first step, which is when somebody puts in a request to travel. Somebody says, "I want to go to Malaysia, and I am to go and visit XYZ customer." At that point, I [as SAP Concur GM] actually get all of the requests that come through the system, and I can see where people are expecting to spend money.
We use Microsoft Outlook, so people put their appointments with their customers into their calendar, and will almost certainly put who they are actually meeting with at that customer. When the expense comes through, not only will it link from that credit-card transaction. It will also link to that time and date appointment that was in the calendar.
The system will extract all the people that our people were meeting with. In fact it will insist that the claimant puts in who was attending that lunch, who was attending that meeting, that dinner, and what company they belong to.
I can end up with a report that answers the questions: "How much has the company spent on XYZ corporation in Malaysia with respect to entertainment? Who did it spend the money on?" We're a sales and implementation organization, so I am very keen to track where I am spending my dollars with respect to travel on the investment side, and with respect to implementation.
“If I get into this discussion about expense management, it's all got to be proactive. It's got to be ahead of the curve”
How do you use this information? Do you as SAP Concur SVP and GM do this retrospectively or proactively?
If you're going to manage your business, you have to do it at the request stage. “This is what I have spent year-to-date, this is now what I've got committed – i.e., people that are out there traveling right at the moment – and this is what I've got in prospective travel requests that I have either approved or haven't approved as yet."
If you're not doing that, you end up in the circumstance of suddenly finding yourself overspent on travel and expense. You’d have no more money to spend on travel and expense, but you've still got to deliver on the budget. It's crazy.
That's why if I get into this discussion about expense management, it's all got to be proactive. It's got to be ahead of the curve.
Is it possible that if you're a CFO or the CEO, you would suggest to the sales person that maybe this trip is not necessary, or you may say that you perhaps should be going to this other person or this other company, based on the analysis of T&E and the outcomes in terms of revenue?
You can do that. I think the latter is less likely at the management level, because it is normally a circumstance where you might turn round and say: "If you need to go and see this customer in Kuala Lumpur, you should be spending more time there visiting other prospects, because you're not going to be able to travel up to Kuala Lumpur again in the next three months."
You can certainly have a far more proactive discussion about your investment in travel and expense rather than a reactive discussion after the event. Realistically, my experience is that it is very seldom that managers don't approve their employees’ expenses after the fact. So if you don't make that decision [about who and how many to see in one trip] up front, the decision never gets made.
Is it fair to say that the better value you can get out of this is in planning next year's or next quarter’s budget and strategy, because it gives you indications as to which markets and companies have better growth prospects?
Of course, and that’s why we've been spending a lot of time investing on basically a component that's called Budget Insights, which loads up the budgets with respect to travel ahead of time, then marries into that the actual travel request process.
Budget Insights works out effectively what is going to be your forward costs associated with this, and then gets on the case of those managers and manages it appropriately.
Is Budget Insights part of the reports within the SAP Concur solution or is that an additional module that I have to buy?
It’s a separate module that sits there across the whole thing as to how we actually manage budgets. . . You can still write cool reports if you want to, but this is basically saying: "Let's get ahead of the curve and in fact have a module that has got a whole bunch of pre-defined stuff."
“You really must get to the CFO and say: ‘If you want to proactively manage your T&E expense so that you can optimize your spend, you need to build a portfolio solution’”
There are other multiple bits. There's Travel Request, that's just right out the front. Of course, there's Travel Booking. There’s also a module that's called Reconciliation.
This is where, in Asia especially, people go and use travel management companies and just get a bill every month for all travel. They then need to reconcile it against all pre-approved travel before they pay the bill. We built some automation into that to help with the reconciliation process.
There's Duty of Care, which sits from a perspective that says where people are right at the moment, and how to look after them if there is a challenge. Then there is the piece on getting transparency through the interconnections with the ecosystem. We've got to get people to use this, so having credit cards and new payment systems linked is going to be very important.
Do companies use 100% of these functionalities, or do people complain that they use just 10% of it, yet are charged for all of the modules?
This is why we try very hard to get in to the CFO. If you're talking to a procurement officer, then you tend to be just expense-based. If you're talking to HR, it tends to be expense, too. If you're talking to the head of travel, you tend to come at this from a travel perspective.
You really must get to the CFO and say: "If you want to proactively manage your T&E expense so that you can optimize your spend, you need to build a portfolio solution."
My experience in most countries in Asia is that, after we've got a customer go-live, normally within about 18 months they're starting to look at other modules to automate the process as much as possible.
The end journey is total automation?
And that's pretty challenging. If you go in and have that conversation with a travel manager that says, "Hey, I want to give you more transparency, I want to lower your costs, and I want to totally automate your system," the guy normally is not very receptive to you.
That's why you’ve got to get to the CFO.
Our results have absolutely told us that if we can manage to get to talk to the CFO, and have the very simple conversation that says, "If I can save you 10% on your T&E expense out of office, will you buy from me?" Ninety percent of the time, you get the answer: "Yes, of course, prove it to me."
If we go in at the CIO level and try and sell our solution, we nearly always end up with a conversation that goes this way. "Mr. CIO, are you interested in a very good travel and expense product?" "Oh, yes, I'm interested, but it's not in this year's budget, so I can't talk to you right now."
“At senior levels in many companies, people want to drive transparency and compliance. But some that sit in the middle don't want them”
While it makes financial sense to CFOs, are there other issues? For example, too much transparency, turf wars and so on?
Of course, because you're dealing with intercompany politics with respect to what's happening in the board room and the hierarchy. You've got companies where CFOs are hugely powerful. But you also have companies where the CIO is the real power broker, and the CFO can't manage to move forward.
At senior levels in many companies, people want to drive transparency and compliance. But some that sit in the middle don't want them. We could start a sales campaign with the CFO, and then as the CFO starts to involve people lower down, we run into a whole swamp of challenges. “Oh, this is too difficult. This is too different. Our people won't like it.”