The Covid-19 pandemic continues to affect businesses around the world with uncertainty as to the depth and longevity of its impact. The International Monetary Fund (IMF) predicted recently that the global economy would contract by around 4.4 percent in 2020, and recovery will be long and uncertain.
In response to this recession, businesses have been forced to look inward. In many cases, reduced demand has forced them to make efficiencies while at the same attempting to maintain service levels to their existing customers.
One thing we do know for certain is that the Covid-19 situation has further sped up the pace of the digitization of business, and our economy more broadly. Consumers are streaming even more digital content, for example. E-commerce has also boomed – consumers are now three times more likely to say that at least 80 percent of their customer interactions are digital.
This has also been true for enterprises where anticipated moves towards digital transformation have been supercharged. Recent McKinsey research asked executives about the time it took to implement technology changes following Covid-19, versus the time it was expected to take before the pandemic. On average, remote working changes happened 43 times quicker than previously anticipated. Implementing advanced technologies in operations happened 25 times quicker, while the migration of assets to the cloud happened 24 times quicker.
The pressing need to rethink travel and expense systems
However, one area of business that has traditionally lagged when it comes to digital transformation is travel and expense management (T&E). When asked in recent Forrester research, almost three in ten executives with responsibility for T&E at large firms with decentralized decision-making functions said they still relied, in part or fully, on manual input of travel and expense across their firms. For many, basic software is used to manage this often complex and data-heavy function, as 22 percent of companies with centralized decision-making and 31 percent of those with decentralized structures reported using spreadsheets to track expenses.
This reliance on legacy systems, with limited or no automation, has serious impacts on business performance. The same research found that it takes an average 13.6 hours per trip for travelers, approvers, auditors and accountants combined to process travel and associated expenses from booking through to reimbursement. Firms that do not use integrated T&E tools also reported a 29 percent increase in delays in reimbursing expenses and a 40 percent decrease in employee productivity.
All of this even though, for many companies, T&E is their second largest indirect spend category.
The good news is that nearly three quarters (74 percent) of respondents agreed that the improvement of T&E management processes and tools is critical to reducing costs, increasing efficiency, improving employee engagement, and forms part of their digital transformation.
Integration, automation and data
The research study has shown that the legacy systems which still exist can add a significant workload burden to employees, managers, and account processing teams. By updating these systems, there are manpower savings as well as cost savings to be made which are crucially important given the wider economic context.
While business travel has significantly declined because of the impact of Covid-19, this enforced pause has also given businesses the perfect opportunity to rethink their T&E systems and drive the desired improvement.
Having the right systems in place will help redefine T&E processes for everyone. This means giving travel managers, finance teams and employees the right tech to find better hotels and appropriate transport, to quickly and easily making expenses claims post-trip that are dealt with promptly.
The answer lies in digital transformation and, in particular, integrated business apps, more automation, and better data.
Consensus exists; benefits are clear
The research showed that this drive for digital transformation is a clear priority for IT leaders with responsibility for T&E systems. Three quarters (74 percent) of IT leaders are focused on improving the end-to-end experience of T&E processes, and 73 percent are committed to improving integration between T&E tools and other systems (73 percent).
Meanwhile three quarters (74 percent) of travel management leaders want to increase automation to reduce their reliance on manual processes. However, one in five (20 percent) organizations do not feel they are getting the analytical and reporting capabilities they need, despite data being a core priority.
For those organizations that have already implemented these changes, the results are clear. For example, according to the research, those organizations that use an integrated T&E tool are much less likely to receive complaints from their traveling staff. More than a quarter (27 percent) of companies that use an integrated T&E solution reported zero complaints from employees, nearly three times the number reported by those who do not currently use an integrated tool.
On the other hand, firms that do not have integrated T&E solutions report a 29 percent increase in delays in reimbursing expenses. Almost all (96 percent) of organizations interviewed that use integrated tools are satisfied with their T&E processes. Nearly three quarters (73 percent) of them even plan to expand or upgrade further.
Golden opportunity for transformation
Covid-19 has caused an unprecedented level of global disruption. However, this has also given us the opportunity to pause and reflect on what we can do better. As part of that, the need for digital transformation, and the cost reduction and efficiencies that come with it, have become much more apparent. Nowhere is this truer than it when it comes to T&E tools and processes.
Once travel picks up again, employees across the world will resume business trips. However, there will also be pressure to make every trip count more for the company. What’s clear from the research is that employees from finance and HR staff, travel managers and IT managers to the travelers themselves want better T&E tools – and we shouldn’t waste the opportunity to meet this demand.
Rudy Daniello, EVP Corporations, Amadeus