Databasics CEO Alan Tyson and CTO Marcel Syriani examine what clients’ employees have been expensing during the pandemic and recommend a new focus on managing remote resources.
Some time back, to better identify market trends, we developed an expense reporting index. We thought we would share some of the more interesting things it shows us and draw a few conclusions.
First, a note about the index: It is derived from our customers’ U.S. expense reporting data. The company data selected for inclusion was balanced to avoid overweighting by region, size or industry classification. There is room for improvement, but we believe the index’s construction is basically sound.
We take the total spend of expense reports in the base month — in this case, January 2020 — and assign it a value of 100. Changes in spending during subsequent months adjust the value up or down. For example, if spend in February went down by 15 percent, the index value for February would be 85. We track total spend not only by report but by expense type. The expense type index values we maintain are air, hotel, taxi/rideshare, car rental, mileage, office supplies/home office, business meals, individual meals, internet and other expenses.
We know what the pandemic has done to business travel spend, particularly for air and hotels. While our index shows a substantial, if wobbly, recovery from the March and April lows, we all know air, hotel, business meals and ground transportation remain way below pre-Covid levels. If you take the square root symbol and make the downslope long and the upslope short, that is what the graph looks like.
However, employees are continuing to spend. Index scores are up in August compared with January for internet (386), office supplies/home office (125), individual meals (155) and other expenses (126). The increases in internet, home office and other costs reflect the cost of provisioning remote workers. The increase in individual meals is a little baffling. It might reflect cannibalization (sorry!) of business meals — employees who are traveling are eating by themselves instead of taking their customers out. In any event, there is now a clear shift towards non-travel expenses.
We all expect business travel to recover as the Covid threat recedes, but remote work may have established itself as an unassailable beachhead. If this is the case, employee expense management processes will need to adjust. The hands of procurement and human resources will be further strengthened vis-à-vis travel management. As well, a new player will emerge: IT.
IT is now supporting users in environments over which it has drastically less control. How do IT departments help users manage their Wi-Fi or get it operating in the first place? Is home Wi-Fi sufficiently secure? Should users be permitted to make their own choices about their equipment and software?
In short, employee expense management for remote workers will require close cooperation and coordination across multiple departments. That’s never easy under the best of circumstances. For most organizations, the remote worker was a “one-off.” Consistency and efficiency in dealing with remote workers were not critically important since there were not that many of them.
Things have changed and are not likely to revert to the old employer-provided workplace model. Getting remote work right is now essential. What to do?
Rather than hoping departments will play together nicely, a structural change may be in order: Creation of a new department of Remote Resources Management, headed by a C-level executive, that will bring together the organization’s capabilities, knowledge and resources to focus on the particular challenges of remote workers. This isn’t merely more bureaucracy. This organization would be faced with a tall order: Ensuring productivity, security, fairness, efficiency, cost-effectiveness, compliance, retention and more. A crisis can be the only outcome if this mission is left to monthly interdepartmental meetings.
There is one thing we can be sure of: “Business as usual” will not be returning to employee expense management.