Savvy organizations are paying closer attention to travel and expense costs, and rightly so. Travel and entertainment (T&E) expenses are typically the second highest controllable cost within an organization, right behind payroll and benefits, and corporate travel expenses will continue to soar into 2007.
With an eye on cutting costs and simplifying the T&E business process, companies must take a hard look at the bottom-line savings their travel management technology facilitates.
SAP began offering expense report automation 15 years ago that has since been deployed by over 3,000 SAP customers in 90 countries. But SAP's travel management solution has evolved extensively in those 15 years, and customers unfamiliar with the newest functionality available with SAP Travel Management will find they can now tackle not only expense reporting, but travel planning and analytic reporting — all automated and covering the full travel life cycle from pre-trip approval through online booking to reimbursements. This automation is also the technical foundation for implementing travel management best practices and improving internal controls (see sidebar).
Travel applications can touch almost everyone in the organization. SAP's automated travel management technology yields benefits not only to enable the traveler, but also to help enterprises standardize their corporate travel processes and uncover substantial cost savings. If an organization uses SAP Travel Management to eliminate even 50% of its manual processes, savings in the million-dollar range can be realized.
How Manual Travel Processes Can Cost You Millions
Many companies are still tied up in manual travel-related processes, entering and reentering trip booking data, and filling out expense reports in Excel spreadsheets. SAP Travel Management functionality, which contains both SAP Travel Planning and SAP Travel and Expense components, facilitates automated processes where costs are reduced as a result of reusable, planned, and controlled methods.
With a look at the hard cost savings your organization can realize by automating your travel management processes, you'll think twice about picking up a phone to call a travel agent or submitting paper receipts for reimbursement.
To facilitate travel arrangements, travel agencies offer a variety of fulfillment options, typically following three basic models and cost structures:
- Full service: The traveler plans a trip with a travel agency via telephone; approximately $40 per transaction.
- Online booking — light touch: The traveler plans a trip via an online tool, but the travel agency can jump in for additional services or requests; approximately $20 per transaction.
- Online booking — no touch: The traveler plans a trip via an online tool, requiring no human intervention; approximately $10 per transaction.
It's unlikely that any organization can handle every booking without any human interaction. But the online trend is evolving, and the industry standard adoption rate for online booking is between 40% and 60% of total transactions. Most travelers tend to gather all of their travel preferences before calling a travel agency. Why not just let them go ahead and book their own trips?
Opportunities for significant savings with online booking abound. Consider a customer that generates 100,000 travel agency transactions per year, all of which are handled through a travel agent. That's 100,000 full-service transactions at $40 a piece, an annual cost of $4 million.
Now let's assume that the customer opts to process 50,000 transactions through the travel agent and 50,000 transactions through online booking, with a 50/50 split for light-touch and no-touch transactions.
- 50,000 full-service transactions x $40 per transaction = $2 million annual cost
- 25,000 light-touch transactions x $20 per transaction = $500,000 annual cost
- 25,000 no-touch transactions x $10 per transaction = $250,000 annual cost
This adds up to an annual cost of $2.75 million. When compared to the full-service scenario above, this online booking deployment example would realize an annual savings of $1.25 million.
SAP Travel Planning online booking functionality is highly competitive with best-of-breed point solutions as well as with many Internet travel sites. The difference? SAP is the only ERP provider that offers an online booking solution, enabling travel planning information to integrate with customers' backend systems and data.
Another key differentiator of SAP's travel management solution is how it fully integrates the end-to-end travel lifecycle process into mySAP ERP or other non-SAP applications. Human Capital Management (HCM) employee master data can be applied to areas such as organizational assignments for processing approvals, cost centers, corporate credit cards, travel policies, reimbursements, and more. HCM data also integrates with mySAP ERP Financials through standard functionality (based on application link enabling, or ALE, scenarios to SAP systems), simplifying and standardizing backend accounting, G/L, VAT recovery, reimbursement, audit, and so on. 1
With SAP Travel Management, all planned and booked data is consolidated globally with SAP standard reporting capabilities, as well as with SAP NetWeaver Business Intelligence InfoCubes specifically for SAP Travel Planning and SAP Travel and Expense. This data is critical to travel managers for negotiations with preferred suppliers and contract validations (see sidebar).
- Mandate online booking. With today's trend of high rates for contact with travel agents, eliminating human interaction and manual processes in travel management is a must — the cost savings of online, automated travel booking are staggering. See the section "Automate Trip Planning and Booking for Substantial Cost Savings" for an example of $2.25 million in cost savings that online booking can bring to a typical organization.
- Adjust your pre-trip approval process. Many companies have a pre-trip approval process in place, where employees fill out travel request forms and secure managerial permission. But that process can be streamlined if companies simply use online booking confirmations and SAP workflow to secure management approval.
- Establish a single, global travel policy — and enforce it! Especially in the wake of Sarbanes-Oxley, many companies are struggling with their travel policies. If you're a very large global enterprise, it's quite difficult to manage a slew of different travel policies within one organization, especially since T&E is your second highest cost. Companies must draft one global travel policy, and then only adjust small nuances — this will alleviate your consolidated reporting and internal controls challenges. For example, if you want all travel-related expenses to be purchased with the corporate credit card, you can use SAP Travel and Expense to identify who's not using the card.
- Monitor deals with preferred suppliers. Companies negotiate contracts with preferred airline, hotel, and car rental companies for large travel discounts. But if you can't deliver the volume that you've committed to those suppliers, you're going to lose your preferred status. With a single travel policy and at-hand reporting capabilities through SAP Travel Management, you can monitor these deals and meet their contract terms.
- Make the end-user experience as easy as possible. End-user acceptance is essential to the success of any application, and travel management is no exception. In fact, since travel is likely to touch a large majority of your employees, an intuitive, user-friendly travel management UI is even more essential.
SAP Travel Management provides the technical foundation to support
companies as they start implementing these best practices.
Customer experience and industry analysts affirm that organizations currently using a manual expense report process are missing an opportunity for substantial cost savings.2 And since no traveler wants to wade through piles of administrative work to complete an expense report, the automation of this process increases user productivity, reducing the time it takes to complete an expense report by 50%.
When SAP Travel Planning is deployed in conjunction with SAP Travel and Expense — both part of the SAP Travel Management offering — the expense report is pre-populated with the planned data to reduce redundant data entry and expedite the expense report completion process. With SAP Travel and Expense, business rules — such as meal spending limits — are enforced at the point of entry. This built-in enforcement drives travel policy compliance and proactively identifies violations when the traveler is either online or offline.
SAP Travel and Expense is highly conducive to out-of-office use. The offline user interface, for example, is exactly the same as the online UI, thus lowering the need for end-user training. For employees without access to PCs, laptops, mobile devices, or other hardware while on the road, SAP Travel and Expense capabilities are avail- able through SAP NetWeaver Voice Recognition technology, too. Employees can call in and provide the necessary expense report information, and voice interaction technology will enter and store this information in the system.3
Additional cost savings can be achieved by implementing credit card clearing to eliminate paper receipts — not to mention that taking control of all receipts electronically is a best practice for demonstrating internal controls in compliance with Sarbanes-Oxley and other corporate governance regulations. With SAP Travel and Expense, travelers can pull electronic receipts from their corporate credit card into their expense reports, further reducing the time spent on completing these reports (see Figure 1). Electronic receipts tighten up fraud prevention procedures, since these receipts cannot be changed or reproduced. Split reimbursement is possible to allow companies to reimburse credit card providers on behalf of their employees. This enables companies to negotiate tighter time-to-pay terms with credit card providers for enhanced rebates.
Travelers can pull credit card receipts directly into their expense reports
For any remaining paper receipts, organizations can consider imaging these documents and electronically attaching them to the expense report. For example, an SAP imaging partner uses SAP Archive Link technology to match a bar-coded cover sheet and the subsequent receipts to the expense report.4
Ensure End-User Acceptance with a New UI
Enjoying the cost savings and efficiency that SAP Travel Management facilitates is impossible, though, if end users don't buy in to — and use — the technology. That's why SAP Travel Management has donned a brand-new look, with an intuitive UI that has made leaps and bounds in its user-friendliness (see Figure 2), and in turn, its user acceptance rate.
The new, easy-to-use, Web-based UI of SAP Travel Management
Beginning with the mySAP ERP releases, SAP Travel Management's new UI is based on design prototypes and the validation of over 40 customers worldwide. Targeting simplified navigation, consistent terminology, more appealing graphics, and enhanced content, UI improvements include:
- A consistent, step-by-step roadmap at the top of each page
- Simple navigation tools and buttons along the bottom of every screen
- Integrated third-party content for security, visa, and health information
- Visualizations like maps (see Figure 3), interactive calendar displays, and customized naming conventions for global use (like kilometers vs. miles)
SAP Travel Management's new UI features highly visual displays, including maps and interactive calendars
These Web-based, intuitive features make SAP Travel Management as simple to use as any commercial travel site, essentially eliminating the need for costly end-user training and increasing user acceptance.
Deploy SAP Travel Management Where and When You Want To
SAP Travel Management is unique in that it is available in mySAP ERP via Human Capital Management and/or Financials. Thus, a customer can run Travel Management:
- In a single instance of mySAP ERP
- In a single instance of mySAP ERP HCM with non-SAP financials
- In a single instance of mySAP ERP Financials with non-SAP HCM
- As a standalone instance with integration to lower SAP release instances, such as SAP R/3 4.6C or SAP R/3 Enterprise
For example, consider a customer running SAP R/3 4.6C who would like to take advantage of the newer functionality and usability of SAP Travel Management now, instead of waiting on a full ERP upgrade. This customer can deploy a single instance of SAP Travel Management with application link enabling to integrate other SAP instances, or employ enterprise services based on the enterprise SOA model to interface to non-SAP systems.5
SAP Travel Management functionality is licensed under Employee Self-Service (ESS); therefore, if an organization's employee has an ESS license or any other mySAP user license, then she already owns the ability to use SAP Travel Management. This license includes pre-trip approval, online booking, and online/offline expense reporting.
The only pricing caveat is for online booking, as SAP customers must negotiate an agreement with a global distribution system (GDS) provider. The GDS is the "engine" that provides the connection to real-time supplier inventory, as well as the connectivity to your preferred travel agency — you can think of a GDS as an electronic travel supermarket linking buyers to sellers and enabling quick, easy reservations. SAP collaborates with GDS partners Amadeus, Galileo/Apollo, and the US-based Sabre. The GDS transaction fees can range from $3 to $6 per transaction; however, SAP does not have an additional fee for online booking.
With such a substantial portion of corporate expenses attributed to T&E, companies must evaluate their travel management applications and see what value these solutions bring to the bottom line. SAP Travel Management is a suite of functionality that supports customers who want to deploy a single corporate travel management solution that maximizes their worldwide investment in SAP solutions. With a brand-new UI and automated online booking functionality connecting travel management to a company's ERP system, SAP Travel Management merits a closer look, especially for SAP customers at the end of their SAP R/3 4.6C maintenance contracts that are evaluating their travel management needs.
SAP continues to invest in research and development for corporate travel services. Stay tuned for the next release of Duet by Microsoft and SAP, which folds pre-trip approval and online booking into the Outlook process, all laid on top of the mySAP ERP 2005 back end.
For more information on SAP Travel Management, please visit www.sap.com/travelmanagement. See also the SAP Travel Management CD-Rom included with this issue of SAP Insider (www.SAPinsider.com), or available for order at www.sap.com > Our Company > SAP Shop > SAP Knowledge Shop. Customers ordering a free copy online can enter material number 50079618 to search for the CD.