Current procurement methods do not support mini budget’s austere measures

Many of the key items subject to austere measures under Finance Minister Pravin Gordhan’s mini budget fall under the Travel and Expense (T&E) portfolio.

While these cost-cutting measures are a step in the right direction to curb excessive spending, Tracey Shaw, of travel technology company TraveluXion, wonders how they will be implemented in practice if procurement methodologies are still outdated and dependent upon fragmented processes across various suppliers, without any supporting technology?

“I suspect many tax-burdened South Africans welcome Minister Gordhan’s declaration of war upon wasteful expenditure on luxury hotels, extravagant car hire, first-class air travel, entertainment allowances, conference costs and government credit cards.”

Importantly, these billion-Rand savings will be achieved through implementing greater restriction and tighter controls on luxury perks, or eliminating them altogether.

This action is commendable, but is only one piece of the “managed travel” puzzle, which also comprises business intelligence, on-line booking technology, pre-trip approval aligned with budget allowances, duty of care obligations, expense claim submissions, credit reporting, supplier payments and conferences and events.

The multitude of data that this puzzle creates is where the savings opportunities lie. However, the data is rendered almost meaningless if the components of travel are fragmented, the reporting dependent upon many suppliers and the data consolidated only weeks after the travel has occurred, says Shaw.

Unfortunately, typical South African managed travel means “managed post-trip”: travel managers sift through reports of post-trip travel data.

While management information systems (MIS) are helpful when analysing travel costs after the fact, MIS does not assist in controlling and managing spend before the cost is incurred, “which will be key if government wishes to extract billion-Rand savings through compliance and budget adherence.”

MIS reports certainly do not give any insight into immediate budget compliance or adherence, nor do they assist the organisation to manage spend or include expense claims,” explains Shaw.

PhoCusWright’s recent report on travel technology trends in Europe noted that many procurement professionals still lack the knowledge and travel expertise to be as effective as their organisations demand in respect of this unique spend item.

Without immediate visibility into the travel budget and the many costs that hit the cost centre and budget at all times of the month for a multitude of travellers, it is harder for executives to stay on top travel budgets.

However, with the right technology tools that assist to better manage compliance, visibility and risk, expertise can be fast-tracked, driving better returns into the organisation. The real-time business intelligence analytics incorporated into end-to-end T&E applications (such as TraveluXion) enables procurement professionals and executives to examine trip costs in relation to budgets and trip profiling and benchmarking.

Progressive organisations and government departments realise that true savings will be derived from tighter controls and better visibility into how these costs impact the budget. Google and Intel have adopted “open booking” policies and replaced traditional preferred suppliers with end-to-end T&E applications, which allows their good corporate citizens the opportunity to book their travel, with their preferred supplier, rather than the company’s, via the traveller’s preferred channel, where and when it suits the traveller.

“This seems risky, but these two organisations have identified that, provided the trip is in budget, compliant and all components of the trip are captured through the T&E application, it satisfies their employees as they are more empowered and trusted and in return this valuable resource is retained in the business. It is a bold approach, but one that we will be watching with great interest to see the uptake in this concept both globally and within South Africa,” says Shaw.

So while we in South Africa may still be a few years behind Google and Intel in their very mature approach to travel management, systems such as TraveluXion’s independent application enables organisations that have a culture of good corporate citizenship to implement such progressive policies and organisations that want to transact in the more traditional methods will also benefit from this technology. TraveluXion was purpose built for all organisations that want to retain more cost control and compliance to policy by implementing an end-to-end T&E application, thus making the procurement of travel more accountable and professional.

Please contact Tracey Shaw to continue this thread.