Tough economic times mean tighter budgets. and one area that’s taking a hit these days is employee spending. But as Enbridge Inc. discovered, expense reports are a significant cost in themselves.
In the fall of 2000, the Calgary-based energy transportation and distribution company did a complete
review of its travel management processes, which led to the discovery of a significant, hidden cost.
“”We had consolidated travel to the point where we moved to one travel booking system, and moved most of the company to a corporate travel and entertainment card,”” says Debbie Cook, supervisor of corporate administration with Enbridge. The review identified the types of expense reports Enbridge was processing, how many it was processing and the cost of processing a report —from the initial filing by an employee to the approval and reimbursement.
“”It identified a cost of $75 per expense report,”” says Cook. “”We were processing somewhere in the range of 9,000 expense reports a year.””
For those who don’t want to pull out a calculator, that’s more than a half a million dollars annually.
Enbridge was also looking to implement a new financial system across the organization. It ultimately chose Oracle, but found it was lacking in one particular area — its expense management component was missing several of Enbridge’s key requirements, Cook says.
For one thing, it did not address the idiosyncrasies of Canadian tax laws. Neither could it handle two data feeds — two separate credit cards in this case, one for travel and entertainment and one for purchasing. Enbridge also wanted to be able to split specific line items up where needed, says Cook. “”A lot of people travel or purchase materials that are split between projects and normal operating costs.””
An RFP led Enbridge to select Toronto-based Necho Systems Corp.’s expense automation software, Necho Expense 6.0, a product Cook says was as off-the-shelf as possible. Enbridge proceeded with a phased rollout of Necho, beginning with its corporate offices and pipeline division last spring.
Necho interfaces with Oracle to tap relevant financial data, as well as Bank of Montreal for the purchasing credit card data and American Express for the travel and entertainment credit card data.
Using Necho, Enbridge has completely automated its expense management from what was a paper, Excel spreadsheet-based process where everyone, from employee to accounts payable, had to input their data manually. Once the expense report is approved, the details are fed to Oracle.
Cook says it now costs $42 to process each expense report, and Enbridge aims to get that cost even lower — $13 per report.
Necho has released version 7.0 of its software, which Cook says Enbridge might look at in 2004. For now it’s looking at an incremental upgrade to Necho 6.6.
Christa Degnan, supply chain research director for Boston’s Aberdeen Group, says Necho has found a niche major ERP vendors aren’t addressing, and by streamlining the expense process, customers are finding other benefits.
“”They have all this information they can use to do more strategic sourcing,”” she says. “”It becomes so visible and so obvious when employees spend their money on the wrong things.””