It’s Time for a “Smartphone” Approach to Spend Management
Spend Matters welcomes a guest post from Tony Darugar of Coupa.
Last month Pierre Mitchell asked in a blog post: “Is it time to blow up T&E once and for all?” His main point is that we need to better identify the goals of our T&E policies and the best ways of ensuring that they are met. According to Pierre, the way we think about expense management now—as a bunch of different categories lumped together under the T&E umbrella—is neither cohesive nor strategic. I wholeheartedly agree.
I’ve been as guilty of this kind of myopia as the next person. When I founded Xpenser, I was just looking for an automated solution to one problem: dealing with my own expense reports. I took me a while to see the bigger picture.
Pierre doesn’t come right out and say how we should view expense management, but I think where he’s going with it is that all these expense categories should fall under the umbrella of one holistic spend optimization solution. That’s the only thing that makes sense to me now.
For expense management to become strategic, it has to be looked at as one of the three pillars of spend, along with procurement and invoicing. But ultimately, to be really strategic, we need to go further. Our three pillars need to be consolidated into one function governing all of the ways a company spends money, much in the way we’ve consolidated our various forms of communication with one tool: the smartphone.
Up until now, our thinking about spend management, and expense management as a subset of that, has been informed by the tools that we’ve had at our disposal, just like our thinking about communication was informed by the tools we had before smartphones.
It used to be that we just thought of the phone as a way to talk to people who were not with us physically. If you wanted to text them, you could do that with a pager; if you wanted to email them, you could do that with your computer. If you wanted to share a photo, you’d use a third-party host, or before the Internet, put a print in the mail.
There’s no particular reason all these ways to communicate had to be handled separately, except that’s how innovation occurred. It took a while of living with these separations for someone to say, “I want a unified communication platform that can handle voice calls, text updates, emails, photos and even videos,” and a while longer to put all that core functionality into one device.
Now that we have that tool, we communicate differently. Moreover, we think about communication differently. It’s easier and more fluid. It’s driven by the content and situation and not by the tool. That’s where we’re going with spend management.
The distinctions within expense management that Pierre refers to are artificial, as are the distinctions between expense management, procurement, and invoicing. They’re all just ways to buy something.
If you’re inside a company and you’re going to buy a laptop, you can procure it. You order through the procurement system and it shows up for you some time later. Or, you run down to Best Buy, pick one up, pay for it, and then put it on your expense report. Or you could even order it and have an invoice sent to your company. Ultimately you’re buying the same item on the company’s dime. But the systems you can use to complete your order and pay for it differ, with each system yielding a different result and a different data set.
The only reason these things are separate is that parts of these business processes have been automated at different points in time, and separately, with different vendors tackling different areas. These automated systems have become entrenched. Anyone wishing to reform the system can expect to hear the dreaded words, “This is the way we’ve always done it.”
I don’t want to take anything away from previous advances in automation that have solved many big problems in managing spend. But now we see a different problem: all these different systems don’t talk to each other or address the bigger picture.
As a company, if you manage your invoices, your procurement, and expense reports with separate tools, a task as simple as figuring out how many laptops you’re buying using one method versus another one becomes a big exercise. You’ve got to gather data across three different systems, you’ve got to put them all in the same format, and you’ve got to put together an analytical tool that shows you this overlap on spending in laptops (i.e., this much in expense reports and this much in procurement). It requires a significant commitment of resources.
Based on what we see from our customers at Coupa, very few companies have a holistic approach to spend management or even support for something as simple as visibility across these silos.
I had never thought about these issues before Coupa’s CEO, Rob Bernshteyn, talked me through his vision for a unified spend management solution. Up until then I was knee-deep in unreimbursed expenses and applying my technical skills to a better way to process. I wasn’t really thinking about where my expense report fits into the big picture of how money is spent and accounted for.
I see it now, and we are now at a point where we can address that bigger picture. There is no reason to do it piecemeal. Yes, there are still big problems in automated processing. Separately automating procurement, invoicing, and expenses is often more feasible and manageable, but that doesn’t mean it should be the end game. We now have the tools to break down these artificial distinctions between different areas of spend and be truly strategic. Now we just need to change our thinking.
Tony Darugar is General Manager for Coupa Expenses and the founder of Expensr.