Say "ERP system" and count how many people don't flinch. The problem is not that enterprise resource planning systems do not work. Some work well. The drawbacks first gained notoriety in 1995 when the Standish Group reported that 31.1 percent of these large software projects were being canceled before completion. The problem often was simple IT department-overload. Of those that were completed more than half ended up costing twice the original estimate.
Worse, those that had completed their projects were inevitably faced by changes, sometimes stemming from adoption of new internal processes but also caused by reorganizations, mergers and acquisitions, and regulatory requirements. Whatever the root cause, they required reworking certain parts of the enterprise system - plus the other areas that were affected by those changes.
Faster, Cheaper
The question then became, not whether the ERP system could support change, but at what cost and how quickly, observes CFO Research Services in its 2009 report "The High Cost of Change for ERP. The conclusion, based on survey responses from 157 senior finance executives, mostly from mid-sized companies across the US, was an average of $1.2 million annually. That wasn't just modifications and updates; it also includes maintenance. Usually, the finance executives told CFO researchers, the culprit was new or changed business processes. The survey respondents estimated that those costs were nearly twice the amount their companies were paying in annual maintenance and support fees.
But whatever the change that demanded modifications, the enterprise systems often had companies hamstrung; they simply weren't agile enough to adjust in time to compete in their evolving business environments.
One of the solutions proposed to the ERP conundrum comes from Agresso, which sponsored the CFO research and which has since changed its name to Unit4 Business Software. The solutions provided by Unit4 still include ERP - but it's no longer a mainframe solution, rather one that is based on SOA (service oriented architecture), which it describes as "integrated data/process/delivery architecture," and has trademarked VITA. This is a reverse-engineered architecture, the company explains, meaning that it pushes data out rather than pulling it in.
One of its big advantages is its post-implementation agility - it can adjust to changes in the business environment more quickly than earlier enterprise solutions. As an SOA, it works well with SaaS ("software as a service," delivered over the Internet) architecture, which a lot of travel management solutions have already adopted.
Thus, what has developed is a way to overcome the barriers between silos on a progressive basis, rather than through a comprehensive retooling of an organization's systems and infrastructure. Unit4's Business World software can be integrated with Sabre Central Command for use by travel agencies and travel management companies to operate more efficiently, including identifying unrecognized vendor commissions and automating service fees. They'll also be able to provide customers with detailed and accurate reporting that meets their specific needs. CODA, its accounting software, includes several processes that might touch travel, including procure-to-pay, expenses processing and compliance management.
The prevailing philosophy has focused on pushing data out instead of pulling it in. "Companies sometimes build their own expense management tools in order for people to file expense reports," explains Suzanne Neufang, chief marketing officer for GetThere. "Some use industry products. We have data integration products that will integrate with these expense tools, so there is continuity of information from what the employee booked at the beginning, flowing through to starting an expense report for them, before they even travel." When the travel is done, the booking and credit card information is combined, which then goes to reconciliation to make sure that what they booked is actually what was spent.
GetThere's new Collaboration Suite has taken that a step further by making social networking a part of the basic package, along with its more familiar travel and meeting management solutions. By facilitating the establishment of a corporate community with social networking, GetThere is encouraging knowledge-sharing among its clients' employees regardless of time and place.
And if they want, GetThere clients can add other services. Though subdivided differently than those offered by Unit4, GetThere's expanded product list within its Collaboration Suite often addresses the same processes and needs:
• expense management, packaging online expense reporting with automated cost-code and policy-validation; payment to card providers and employees; and analytics and reporting.
• control management - a set of compliance tools that includes reminding employees about pertinent points of travel policy during the booking process; pre-trip approval processes; and management of unused tickets, chiefly by pushing their use when travelers shop for new trips.
• consulting services, involving "recommendations and roadmaps" for new cost savings.
When Small Expenses Add Up
A famously different tack has been taken at Rearden Commerce, which went beyond the usual travel categories early in its development to include products and services that travelers had heretofore purchased and expensed individually. The inclusion of FedEx delivery services was an early revelation to many about how far this could go. Subsequent additions have included airport parking, dining reservations, tickets to entertainment and sporting events, and conferencing services.
What's more important, points out Tony D'Astolfo, Rearden's vice president of worldwide sales, "We allow clients to configure their site considerate of the silos in the organization," he states. "As a result, the aggregate data is captured, but the client can also get a view into every individual piece of data from any organization that is using the application. This eliminates some of the silo issues."
One satisfied customer of Rearden Commerce technology is Steven Mandelbaum, managing director, information services, for the Advisory Board Company. He is also responsible for travel management. "Rearden has really helped us centralize our travel buying function," he states. "In the past, before using Rearden, we had leakage in the program, where users would buy cheaper fares outside the system, which reduced trust in the system, and made it tough to manage the program." These days, according to Mandelbaum, Rearden almost always delivers lowest fare. It has also developed some work efficiency components, which provide an incentive to use the system. While expense submission is a chore, Rearden makes it less of a chore with ExpenseWire. "We can now take data from that and do a lot of analysis, and compare it with our travel data," he states.
Mandelbaum looks at spend patterns, using data combined from ExpenseWire and from the credit card feed. "This also helps us identify ancillary fees," he states. (See sidebar "What's In Your Silo?" below)
Distributing Travel Data
The more people who use travel data, the more value it has to the company as a whole. That's another reason for integrating systems that will get the data past the confines of travel department's silo. CyberShift's roots are not in travel management but in workforce management - employee scheduling, time-and-attendance, contingent labor management, absence management and so on.
CyberShift has seen an evolution of expense management automation. According to Craig Fearon, senior product director for expense applications, companies are starting to look at their expenses more closely, so they can get a better categorization and make better business decisions based on this information. "We have been involved in expense management automation about 14 years," says Fearon. "We focus on mid- to large companies, those processing several hundred expense reports up to many thousands of expense reports per month." In late 2005, the company acquired Necho expense management systems, turning its attention more-firmly towards managed business travel. In recent months, it has increased that focus by partnering with NuTravel, Bank of Montreal (BMO) Spend & Payment Solutions, MasterCard, Rearden Commerce and TRX (specifically RESX, its corporate travel booking application). Each partnership chips away from the silo wall.
Like other companies helping cut clients' IT implementation and maintenance costs, CyberShift offers SaaS delivery of its solutions. (It also still offers licensed delivery models.) The product is also configurable, so if a client wants to track a specific category of expenses or specific types of information, they have limitless ability to do so.
"You can track from the time an employee creates an expense report through the posting in the general ledger," explains Fearon.
Concur Intelligence technology helps to manage a company's travel information, using an employee spend management platform, a travel spend platform, an integration of the two, and also Concur Invoice. "We can cover everything from when people begin to plan a trip until the data is matched up through the approval and payment process," explains Ellen Trotochaud, senior director for analytics and travel vendor relationships for Concur. All of the information is captured and archived daily. "We offer standard reports to clients, but these reports can also be modified."
Clients can use the combined data to look at compliance (spend taking place inside and outside of the managed program), as well as cost trending. An example of the value of trending information: Are you spending in areas where you may not have planned? Have you negotiated rate for hotels in some cities, but find a lot of travel to new cities, so you need to negotiate rates there? The combined data also allows clients to assess vendor management. For example: What should be covered during negotiations? Are you doing what you committed to preferred vendors?
"In addition, on the road, travelers are making decisions that don't offer the same visibility as pre-planning, such as staying in a different hotel, buying car rental insurance, etc.," continues Trotochaud. "With Concur, the travel manager can compare what was booked with what is coming into the expense process, as well as what is coming in from the corporate card. It can also match everything with vendor e-receipts."
Data Coordination in Action
One travel management executive who has a strong commitment to being sure she can gather, coordinate, and use travel-related information is Ellen Moens, CTE, travel analyst and procurement for Atlanta-based CARE. CARE, a leading humanitarian organization, helps people in poor communities expand the control they have over their lives, to advance positive and enduring social change.
"I rely a lot on the automated tools of my travel management company," she states. "For example, they have a new dashboard system, and they also have very robust on-line reporting system." CARE has centralized all of its travel, so everything goes through the travel management company, not only for safety and security reasons, but so that Moens can easily conduct travel spend analysis. (It is mandatory that travelers book through the TMC for the US. However, it is optional for CARE's offices in other countries.) "The technology also gives me great information where we may not have a high concentration of travelers to one city one year, but we do the next, and I see opportunities to negotiate discounts in that city."
Using the technology, Moens is also able to provide executive management with monthly travel reports, which gives them a clear overview of travel taking place in their individual departments. She also provides information on whether the organization is on track to meet its contractual obligations, as well as average ticket prices.
Moens also relies on the organization's centralized financial system, where she can look at some of the other T&E spend taking place in other parts of the organization, such as offices in other countries. "I can pull this up by region," she explains.
CARE's TMC also provides her with data from all of the organization's direct bill providers. "I use our financial system to get the rest of the information," she adds. "We also have a business travel card. I manage this account, and I reconcile it every month."
SIDEBAR: What's In Your Silo?
Even as companies work to find ways to connect their data caches, new streams are popping up. Managed travel's no different. The addition of data about ancillary airline fees appears to be imminent.
The incoming conduit and receiver silo seems pretty certain: credit card feeds and, ultimately, expense reporting systems. For the corporations on the receiving end, the challenge then becomes - as usual - where the data needs to be channeled next.
Gathering ancillary fee information is an emerging technology for everyone in the industry, including vendors and credit card companies, confirms Ellen Trotochaud, senior director of analytics and travel vendor relationships for Concur.
A few managed travel professionals, like Ellen Moens, travel analyst and procurement for Atlanta-based CARE, are able to begin collecting information at the source. "I try to get this information during the negotiation process, so I don't end up with any surprises," she states. "In other words, during contract negotiation, I try to get a detailed breakdown of what costs we will be incurring. I also have very open lines of communications with vendor representatives, who keep me apprised of any new ancillary fees that may come up later on."
That doesn't negate the need to collect actual spend data. And there are differences, vendor to vendor, in how it's being done. But it's a pretty good bet that your T&E expense reporting provider will be involved. "Travel management companies and travel booking systems are trying to update their systems to be able to handle these," says Craig Fearon, senior product director, expense applications, for CyberShift. "However, the problem is that the majority of these transactions occur at the point of sale or point of consumption, after the airfare has been purchased. The only way to get accurate data on this is from your expense reporting system."
For almost two years, ever since airlines first came out with baggage fees, CyberShift has recommended that clients set up multiple expense categories for their airfare transactions, such as baggage fees, fees for seat selection upgrades, etc. - whatever services their users might be purchasing. "As such, whether these expenses are incurred via the corporate card or by cash, all of them go directly onto the expense report," he states.
Once it is on the expense report, it goes directly into CyberShift's system, and from there, these individual transactions flow onward to multiple destinations - reporting, analytics, general ledger, etc. - where it is put to many good uses. "Clients can see exactly how much a year they are spending on baggage fees, etc.," states Fearon. "For example, if they spend $5 million with an airline, and $300,000 is in baggage fees, then, when it comes time to negotiate rates and discounts, they can decide if it makes more sense to negotiate a 5 percent discount on airline tickets, or if it makes more sense to ask for free baggage." Continuing to get the information also ensures that the vendors are complying with rates and discounts. The technology also shows which travelers are engaging in "maverick" spend. "The expense report shows everything, and this shows an 'orphan' - an expense report with no matching travel booking," he continues. "The travel manager can then work with department heads and even end users to enforce the tools in place."
The process is a little different at Concur, says Trotochaud. "Through Concur, when an expense report is being created, we can identify that a credit card transaction is coming in from an airline, and we can program the system so that, under a certain dollar amount that the company decides, such as $100, the transaction can come in as 'Other Airline Fee,'" she notes. Similar to CyberShift, there is a prompt for the employee to designate what type of fee: baggage, seat assignment, upgrade, etc.
"As these fees evolve and can be better identified, we will fill out these categories for the users, so they don't have to fill them out themselves," she promises.
As the evolution in identifying fees moves forward, vendors are keeping their eyes on other industry developments that may affect collection of the data. "We are discussing some things with suppliers and some of the aggregators, so we can get this information," says Tony D'Astolfo, vice president of worldwide sales for Rearden Commerce. "We may eventually get ancillary fee information via some mobile technology that travelers can use at the airport."