Managing Travel and Entertainment (T&E) Expense Visibility

I found the Aberdeen Research article on Travel and Entertainment (T&E) Expense Visibility very intriguing to say the least. On one hand, businesses today are searching for new frontiers where they can drive out costs in their operations. When the recession hit a few years ago, businesses immediately focused on driving efficiencies in their value chains which permeated its way into how they sold to their clients/customers, how they manufactured their products / offerings (with many outsourcing their manufacturing operations), and how they managed inventory to not tie up so much cash in inventory on-hand while also increasing fill rates.

As businesses now recover from the downturn, you are seeing them invest wisely (and cautiously) into areas that will create growth, but at the same time they have not lost that lust to manage costs. As a result they are looking into unchartered waters for cost containment and Travel and Entertainment Expenses are on the short list.

It makes complete sense that visibility would be one of the top challenges in the T&E domain. I would go a step further however and state that I think businesses really want to understand where their T&E dollars are going and more importantly, are they getting a real return in the dollars they spend.

Take for instance the head of a sales organization–my “spider-sense” tells me that the sales function is probably the sole biggest user of T&E dollars as they try to develop and harvest prospect, client/customer relationships to grow top line revenue. A New York Times article by Harriet Edelson last year (2012) discussed the change that companies are now starting to send their employees back on the road to gain business. You can feel a change in how businesses are attacking their sales operations and starting to travel and entertain more and more.

That being said, do companies have a clear understanding on if they are getting the return they desire? I wonder if companies are even setting return objectives for their travel dollars and measuring the value of their investment? Edelson goes on to state that “about a fifth of business travelers operate under mandated travel programs” and that a third of most large businesses have no preferred travel vendors. This tells me that companies are struggling with even initiating travel programs let alone properly setting goals for their T&E investment and measuring performance.

Many companies have leveraged technology to avoid travel expenditures (such as video conferencing, phone conference calls, collaboration tools such as SAP’s Jam product). It is now time for companies to start leveraging technology (such as SAP’s Travel OnDemand) to drive out costs for times when they must or need to travel, and probably as important (if not more important), someone in the organization needs to start setting financial return targets for T&E expenses and measure the expenditure performance just like they measure capital investments.

Good luck driving those operational efficiencies and safe travels! Read the report for yourself at our SAP Travel On-Demand Center.

SAP Travel On-Demand Center