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Reinventing the CFO

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A new breed of CFOs are here – and they are here to stay. It seems that more and more CFOs are now looking beyond just reporting on quarterly results. Today’s CFOs take part in product innovation, come up with breakthrough business ideas, challenge corporate customs and are more involved in front end growth of the company. A recent report titled ‘Managing Innovation’ put together by the AICPA (American Institute of CPAs) and CIMA (Chartered Institute of Management Accountants), corroborates this new trend while providing tips from the CFOs themselves. Here are five areas –

Early stage ideas need to be treated differently

Expense-Reporting-Ideas

Several CFOs noted that companies, even innovative, make a big mistake by treating early stage concepts and ideas within their R&D departments with traditional financial metrics and guidelines. This saps the innovative spirit while miring the innovative process in more paperwork and justifications. Nurturing success at this stage means applying different rules – right from the beginning. The study notes that ‘Distrust is exacerbated when early-stage ideas are prematurely tested against traditional financial metric, before they can evolve’. Because of this many finance executives call for relaxed P&Ls, reasonable growth metrics and don’t demand too much of new ventures, at least initially.

Creative use of capital

Shell allocates $1.5B every year to R&D, plus sends a further $4B for incubating innovative ideas and solutions across all of its business lines. A good part of it goes to – what it refers to as – ‘the game-changer budget’, a fund used by employees to apply for innovative research projects outside of their daily work. ‘A finance function needs to understand the business well enough to know what is a worthwhile activity’ says Royal Dutch Shell CFO Simon Henry.

How do you define risk?

Risk is inevitable for every business. And no risk means no reward. Common knowledge, correct? Not as common as you think. ‘The perception that risk management is there to apply the brakes is a misconception’, says Anita Menon, Chief Risk Office at Prudential BSN Takaful, a joint venture between Prudential and Bank Simpanan Nasional. ‘The risk function is there to encourage the business to understand that they need balanced strategies or actions in order to grow the company’

CFO is now CIO, as in Controlled Innovation Officer

Simon Henry, CFO of Shell says that the finance department’s visibility and role in monitoring the performance of various business units makes it uniquely positioned to counter risk with planned opportunity. Having that twin outlook brings guidance to gung-ho projects and ideas that are sure to change the world but without a qualified financial base, which is needed to build sustainable businesses. ‘We want to encourage innovation and not stifle it, but not in a totally uncontrolled way’, says Henry.

Inside the belly of the beast

To manage innovation better, many CFOs are inclined to place top lieutenants where the action is – inside new ventures and projects. Giving a top finance exec. this level of visibility and access, where innovation is ripe and unbridled, helps to not only build the business case for funding such projects but also get a more in-the -trenches experience that is uncommon for finance folks. This helps finance understand the process, chaotic as it may be, and that not everything can be qualified in Microsoft Excel. ‘The role of [finance embeds] is decision support, from idea right through to launch’, says Stephen Bolton, group controller at Diageo.

So, as a CFO, do you see yourself employing one or more of these recommendations? Let us know in the comments below or by sending an email to info@gorillaexpense.com

Company Policy Nearly Trumps Cost in Business Travel – Travel Leaders Group

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An interesting survey by the Travel Leaders Group has found that company policy has almost as much influence as cost in whether or not business travelers fly in first or business class.

In analyzing year-over-year business travel bookings, 80.3% of the surveyed indicated that their bookings are on par with, or better than, last year. In 2011, this figure was 83.5%. From these figures, it may appear that corporate travel bookings have slowed since last year. But they are still strong, considering that the number is still >80%.

The data is based on responses from 269 US based travel agency owners, managers and travel agents who indicated that 50% or more of their portfolio consists of business travelers.

Read the complete article here

Stress Triggers for Business Travelers

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More and more corporate travel managers are paying more attention to make life and travel easier for their corporate travelers. They understand that frequent business travel has an impact on travelers’ personal health, productivity and affects employee’s willingness to remain at the firm. Many travel managers indicated that they were dissatisfied with the way their companies address the impact of business travel on travelers. Concerns about traveler’s health and willingness to stay at the firm weighed heaviest, followed by safety and productivity. Carlson Wagonlit (CWT Solutions Group) put together a study that discussed key stress triggers for travelers.

Here is the synopsis –

“What emerged from this survey is that the 33 stress triggers studied can be grouped into 3 main categories (which are not mutually exclusive), based on the way they impact a traveler:

1. Lost time: situation in which work is difficult or impossible (e.g. Flying economy on long haul)
2. Surprises: when an unforeseen event occurs (e.g. Lost or delayed baggage)
3. Routine breakers: inability to maintain one’s habits (e.g. Unable to eat healthily at destination)

The main stress drivers reported by our respondents all have a “lost time” component and fall into at least one additional category (surprise and/or routine breaker):

Lost or delayed baggage [79/100]
Poor Internet connection at destination [77/100]
Flying economy on Medium/Long haul [73/100]
Delays [72/100]

Furthermore, we observed significant differences in the stress perceived by the different demographic groups we studied. For example: Women report on average four points of stress more than men (on the most stressful factors, defined as scores above 60/100).

There is a cumulative effect of stress with increased travel frequency. A difference of four stress points is measured between  frequent (over 30 trips per year) travelers and occasional travelers.  Frequent travelers are more skilled at tackling surprises, but  more distressed by “lost time” events.  There is a high correlation among the demographic groups segmented by job seniority, age and trip frequency, creating similar patterns of perceived stress.  For respondents living with a partner, traveling during weekends and long stays (over 3 days) generate an additional 8 points and 4 points of stress respectively compared to those living alone. The same effect is observed when comparing respondents with and without children.  This research lays the groundwork that will enable us to build an overall measure of stress and to assess the corresponding productivity impact on an organization. Our ultimate objective is to provide recommendations to tackle the hidden costs of  business travel.”

The full report is available here

Gorilla Expense showcases T&E innovation at the prestigious DEMO Conference

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We had a very successful exhibition of our T&E expense reporting solution at DEMO last week. DEMO is one of the biggest technology launchpad conferences in the US that provides a stage for young companies with disruptive and game-changing solutions. The event has been in existence since the 1980s. Some of the name brands that have emerged from DEMO include Salesforce.com, Tivo, VMWare and WebEx among others.

Microsoft selected us from several global companies and sponsored us to attend and present at this show (thanks again Microsoft!). It was great to receive kudos and recognition from someone like Microsoft. Our solid integration with Dynamics GP, NAV, AX and SL caught their attention and they wanted us to discuss the innovations we were making in T&E expense reporting – an old pain point that hasn’t been solved yet!

It was very exciting to fly out to SFO and showcase our solution in the heart of the Silicon Valley. We were also 1 of the 2 companies from Georgia. This is great news for the Southeast hi-tech scene. It puts Georgia on the map for hi-tech innovation compared to the bigger players like Boston, New York and of course the Silicon Valley.

We look forward to being part of the DEMO alumni and continue taking the pain out of expense reporting for companies and employees!

Contact us at info@gorillaexpense.com for more information. We love to hear from you!

Travel Policy Benchmarking – by the GBTA

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The GBTA Foundation published a study on Travel Policy Benchmarking which was sponsored by Egencia, and Expedia Inc. Company. Here is a teaser of the report –

“Travel policy is the foundation of effective travel management. Organizations that implement and enforce travel policies can direct travelers and gain optimal value for each trip, and maximize returns from investments in travel. Organizations without effective travel policies lack the controls and information needed to optimize the value of their investment in business travel.

This report updates and expands the study of corporate travel policies and management conducted by the GBTA Foundation and sponsored by Egencia in 2010. The 2010 study clearly established the effectiveness of travel policy to help organizations minimize corporate travel costs. The 2011 study covers many of the same topics as last year’s survey, in order to track changes in travel policies and practices year-over-year. It also explores the way in which commercial travel buyers are grappling with the challenge of newly introduced ancillary fees and services. The objective of the two studies is to answer questions that many organizations have about travel policy, specifically:

• How their policies compare to the industry?
• Whether their travel policies are too short or too long, and whether they cover the right topics?
• If their travel policy strikes the right balance between the comfort and convenience desired by travelers, and
the cost control every organization needs?
• How are buyers changing policies in response to changing economic conditions?
• How are organizations responding to the fees for ancillary services that seem to comprise an increasing
share of airfares and hotel bills? ………………”

The full report can be found here

Air Travel Spend Management

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This paper (Air Spend Management 101 by NBTA) published by the NBTA discusses various areas to look at and specific steps to take for better management of air travel expenses. The results of this research include lowering costs, improving compliance, setting and managing air travel policies and long-term initiatives for better management of air travel for the company.

Hope you find the results to be useful!

Analysis of ‘The State of T&E Expense Management’ by Aberdeen Group

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Corporations generally consider business travel related T&E expenses to be unavoidable. CFOs have often given these expenses the unfortunate moniker of “sunk cost”.

However, in this stringent economy and tight financial conditions, corporations are beginning to view their expense management systems and processes in more detail, according to Aberdeen Group’s (NYSE: HHS) latest findings that were released earlier this year.

“The State of Travel and Entertainment” report, closely analyzed, assessed and reported on the systems, processes, and performance of almost 175 enterprises. The report found that organizations perceive expense management to be a strategic function that drives solid value to the overall enterprise. This is a fresh and a highly welcome line of thinking, which will continue to be a departure from decades of viewing expense management as an an unavoidable cost of conducting business.

Here are some excerpts from the report:

“T&E expenses account for nearly $24 million a year for the average enterprise,” said Christopher Dwyer, research analyst, Aberdeen. “With enterprises reinstating travel budgets and conducting business on a global scale, there is heightened organizational awareness to the benefits of controlling spending on this category and managing the complexities of T&E expenses in a strategic manner.”

The study found that over 53% of organizations currently place a high priority on expense management in current economic conditions. The report also highlighted the strategies employed by the best-in-class corporations, that have achieved a policy compliance rate of greater than 31% compared to the laggards and have also generated more than 80% reduction in expense processing costs.

Some of the big take-aways from the report are:

  • More than 50% of corporations are likely to hold instantaneous visibility into Travel and Entertainment (T&E) spending against budget
  • More than 43% are likely to audit expense reports regularly
  • More than 20% are likely to sign up for a formal sourcing program

The entire report can be obtained from

http://www.aberdeen.com/Aberdeen-Library/6039/RA-travel-entertainment-expense.aspx

This article reinforces our solution and corroborates how it can help corporations save cost and improve efficiency by adopting an automated approach to expense management that ties in to a back-end finance/accounting/ERP system.

As always, please send us your comments to info AT gorillaexpense.com. We like to hear from you!