This article was first published in the September 2016 UK edition of Accounting and Business magazine.

In less than a decade, a communications revolution has taken place – the smartphone, tablet, Skype, online conferencing and remote working practices are all now embedded in our culture. Yet still we travel. In fact, this year executives are expected to travel more than ever, confirming that communications tools, no matter how impressive, can’t match face-to-face interaction and a firm handshake.

Industry body the Global Business Travel Association predicts an increase of 2.5% in business travel worldwide in 2016, estimating last year’s spend at a staggering US$1.25 trillion (£1 trillion). But while business travel shows no sign of decreasing, there is no reason why the attendant costs should rise.

Technology, in the form of dedicated travel management software (TMS), can drive this major cost down by giving businesses a clearer picture of what is being spent and how much return on investment (RoI) is being generated. Paul Richer, senior partner at consultancy Genesys Digital Transformation, says the latest generation of cloud-based software can provide key data. ‘It’s all about reporting and control. By keeping expenses visible, you can see anything exceptional happening. It’s software as a service (SaaS), so there’s no installation other than setting your company up on the system.’

Keeping track

The nature of the software has changed as well. Mark Nittler, vice president of enterprise strategy at Workday, which offers travel expense software, contrasts today’s cloud-based offerings with previous generations of TMS. ‘Those tools were set up for the back office to track costs, not for the end user. Now we can take pictures of receipts and don’t have to write everything down or suffer the laborious task of scanning files and then emailing them to ourselves. This gives visibility to the user so they have an insight into the process, such as when they’ll get approval or can expect payment.’

Making life easier for those doing the travel and highlighting travel costs should satisfy both employee and business. ‘Our philosophy is simple,’ explains Kate Roe, vice president of marketing at KDS Software & Consulting. ‘We’ve developed software that benefits the business traveller but doesn’t compromise on the benefits to the company, such as delivering RoI.’ She points out that after introducing its Neo software, KDS customers saw a speedy RoI by identifying business trips that were less productive.

One such customer is Jean-Paul Magnier, facilities manager responsible for France at German cable manufacturer Leoni, which has 60,000 employees in 33 countries. Until three years ago, Leoni was using Lotus Notes to keep track of travel costs, but since introducing KDS’s Neo, company spend has reduced by 30%. This was achieved by giving managers using the software the ability to approve travel plans or insist on changes.

A key part of the process has been termed ‘visible guilt’, as Magnier explains. ‘You can make the traveller feel guilty by comparing the travel costs across the business. If the cost is not within the company’s target, an email is sent to the employee pointing out they’re, say, 20% over target and asking if there is perhaps an alternative. If the cost is 10% below the target, a congratulatory email is sent.’ By letting travellers see the impact of their choices – in other words, the visible guilt – Leoni has seen a 25% decrease in air spend.

Most business travellers are not out to live the high life at the company’s expense. A study in 2015 by software vendor Certify found that US business travellers’ five most expensed eateries were Starbucks, McDonald’s, Subway, Panera Bread and Dunkin’ Donuts. Not the healthiest choices, perhaps, but certainly not extravagant. ‘Staff want to do the right thing, not spend a fortune on fancy hotels,’ says Nittler, ‘but sometimes they don’t know what the rules are. By putting information in place where it’s easily accessible, it allows employees to act more on behalf of the company.’

Management costs

An effective travel policy is vital. Using tools to induce guilt may seem great for reducing costs, but if it is poorly managed it could also foster resentment. Travel management companies (TMCs) can help with policy development, and with their connections and expertise, they can put cost reduction at the heart of their offering. Many have their own software platforms, too, such as Analytics, developed by Carlson Wagonlit Travel (CWT). It might be tempting for businesses to put every aspect of travel in the hands of a TMC and let it do all the bookings, make policy and give cost analysis; however, it would be unwise to view TMCs as a one-stop shop. ‘For TMCs, it’s about travel and then expense, but for software systems it’s expense, then travel,’ explains Richer.

Magnier still sees Leoni’s relationship with CWT as important, with the two businesses complementing each other. ‘The software gives us a tool; CWT is giving us a service.’ If itineraries need to be changed suddenly, or external events have an impact, such as industrial action, power failures or terrorism, a TMC can step in and look after the employee while getting the trip back on track.

But the choice between a TMC and software is not binary; rather, it’s a case of finding a marriage between the two that delivers for a business, helping managers make wider strategic decisions and illuminating where travel is and is not making sense. Travel expense software is now much better at connecting the depth of expense data captured and providing a primary place for financial analysis.

‘Capturing data can be complex, as it needs to serve several purposes at once,’ says Chris Baker, MD of UK enterprise at software provider Concur. ‘To work best, the data needs to be consolidated, accurate and current: consolidated to give you a combined, single view of all spend; accurate so it’s helping you effectively control your budget; and current because you need today’s numbers, not the “latest” numbers from the last quarter.

‘The solution must also be capable of analysing large amounts of this data to uncover the trends and issues that can help an expert TMC make important choices about travel policy.’

Baker also points out that the software needs to stand up to internal and regulatory scrutiny – from complying with the Bribery Act to providing an efficient and accurate audit trail for when HMRC comes knocking. ‘A powerful solution is one that can incorporate multiple data sets, allowing you to build an overall picture of spend and cost drivers within travel and take full control of your organisation’s financial health,’ says Baker. ‘The software you use must also take advantage of third-party apps to enhance overall visibility. The data from such apps is vital, as it ensures you can incorporate information ranging from travel expenses and invoices through to HR.’

Choosing an SaaS vendor might be a once-in-a-decade decision, so seeking external help makes sense. Richer sees common mistakes in his work as a consultant, which usually stem from management not fully understanding their own needs or what the software can provide. ‘You need to document your requirements, interview staff, hold workshops. Then get the results sent in an unambiguous way to the software company so it can understand and respond.’

By tying the data produced by the software into an effective travel policy, while still looking after employees through a strong relationship with a TMC, costs can be reduced substantially. But even the best travel software can’t function in a vacuum, so maybe it’s time to polish up the travel strategy.

Matt Warner, journalist