CIO Case Study: How Much Are We Spending On Travel?

by drjim on April 6, 2011

CIOs Have A Critical Role To Play In Containing Travel Expenses

CIOs Have A Critical Role To Play In Containing Travel Expenses

For CIOs, it’s all too easy for us to get caught up in, what else, the world of IT. We like to focus on things like servers, virtualization, networking, and making decisions about IP4 vs. IP6. It turns out that the rest of the company really doesn’t care about any of these things. They care about much more important things. Like, say, travel expenses.

The Problem With Travel Expense Reporting

It turns out that most companies have a problem with how they track and manage travel expenses. This isn’t just a problem, it turns out that it’s a big problem: a typical company spends 1-2% of their revenue on Travel & Entertainment (T&E). This can easily become a big expense.

Companies would like to have a better understanding of just how much they are spending (and what they are spending it on) so that they could do a better job of keeping a lid on costs. If they had this information, then they could use it to get volume based discounts from companies who supply travel and they could also crack the whip internally and steer employees to use these travel service providing companies.

What most companies are missing is an easy to use single view that shows a comparison between what employees booked for travel and what was expensed. A simple fact of life is that it is very difficult to track what a company’s employees do after they have left on a trip

How IT Can Solve The Travel Expense Problem

IT can play a major role in solving the problem of runaway T&E expenses. It turns out that by integrating travel systems, IT can provide the rest of the company with a very rich set of travel data to analyze. This can allow them to determine patterns, maximize the discounts that they get from their vendors, and ensure that employees are making the most of their travel discounts.

So with all of the other things that IT could be working on, why does it make sense for IT to spend time on something that seems to be as routine as tracking the company’s travel expenses? In a nutshell, this is a fantastic opportunity for IT to use their talents to help the company save money.

How much money can be saved you ask? Some firms have reported that they’ve been able to pare 3% off of their travel expenses simply by integrating their travel booking and travel accounting systems. Depending on how IT implements the solution, additional savings can be found.

Often when a combined solution is implemented, IT can add new functionality that wasn’t there before. This can include such things as having a traveler’s expense report automatically generated while they are still on the trip. This can be taken one step further and have the expense report audited for company policy compliance even while it is being created. Both of these activities can be augmented by mobile applications that allow the traveler to provide the applications with the data that they need from the road.

Travel reservation systems and expense reporting systems were originally developed by separate teams for different purposes. The time has come for IT to step in and bring these two separate worlds back together again.

What All Of This Means For You

The recent global recession has caused all companies to look for new ways to cut costs. Travel is an important part of conducting business; however, unfortunately it generates a great deal of expense. This is where IT can step in and show its value to the rest of the company.

In order to reduce the cost of travel expenses for a company, IT needs to integrate both the travel booking and the travel accounting IT systems. IT needs to go farther than just getting two existing IT application silos to work together, new functionality needs to be added. This can include support for mobile access and travel receipt filing as well as automated expense report creation.

IT exists to help the rest of the company run more smoothly. Identifying places where the company is spending money, such as on travel expense reporting, in a way that doesn’t help the company do a better job competing with other firms is critical. Once you as the CIO has identified this type of situation, you need to take action to correct it – and show the rest of the company what the true value of the IT department is.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: Do you think that additional functionality can be incorporated into a combined booking / reporting travel tool?

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What We’ll Be Talking About Next Time

CIOs are currently being faced with making a decision that will impact their IT departments for years to come: should they move their IT operations into the cloud and if so, should it be a public cloud or a private cloud? There are a number of technical issues that can help drive this decision; however, the one factor that too many CIOs overlook is cost…

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