HBO: An expense management success story

Extensity automates paper-based processes for expense planning, reporting, review, and payout. In choosing Extensity, HBO hoped to improve the efficiency, control, and effectiveness of its paper-based expense report process, and to gain new insights into vendor expenses through analytics, according to Michael Gabriel, CIO of HBO.

HBO has realized expected time savings and efficiencies. It also learned that integrating a new system isn't necessarily a smooth and easy venture. HBO embarked on its automation effort and chose its product in 1999, but it wasn't until late this summer that the application deployment was completed.

Choosing the right solution
HBO selected Extensity over competitors Concur and Captura, which Concur acquired in July. HBO also examined IBM Expense Reporting Solution (ERS), now sold through American Express.

In making the tool decision, HBO looked for ease of use, Mac and PC support, robust system administration tools, and the capability to modify and customize business rules, said Gabriel.

While Gabriel declined to state costs, Extensity runs approximately $300,000 for a large enterprise customer, according to the vendor.

The product is sold as a standalone software license running on a server-class NT, Windows 2000, or Solaris machine. In addition, customers need a database server running Oracle, MS-SQL, or IBM's DB2. Extensity is also available as a hosted solution. The product supports global deployment with support in local languages (English, German, French, Italian, and Spanish) and currency support.

"The nature of expense reporting is that policies change," said Gabriel. "It was important to us to be able to modify business rules ourselves rather than pay a consultant every time the IRS changed the mileage reimbursement rate or we wanted to change a business policy."

How automation saves money
The shift from paper to automated expense reporting is an appealing move for companies; it helps streamline processes and cut costs. In using the product, HBO cut expense-cycle time and data entry, is now able to monitor expense policy violations, and can easily access reports on how much employees are spending at various vendors.

The vendor spend data is significant because it also gives HBO "more robust spend data for trend analysis and vendor negotiations," explained Gabriel.

While HBO doesn't yet have metrics to evaluate the ROI on the Extensity installation, analysts report that better management of indirect expenses, such as employee travel, can save companies big bucks.

An Aberdeen study last spring of 50 companies using EMA products revealed that a paper system costs companies an average of $48 per report. The figure drops to $18 dollars per report under automation. With automation, soft costs such as staff time spent filing and reviewing reports also drops. According to Aberdeen's study, paper-based reports took an average of 35 minutes to file and 22 minutes to review. Under EMA, those figures drop to 18 minutes to file reports online and five minutes to review them.

Installing EMA also keeps employees happier because they get quicker reimbursement. "They can file expense reports in a timelier manner, so you don't have outlaying expenses for 30 to 60 days," said Christa M. Degnan, an Aberdeen senior analyst.A bumpy installation
For the installation, HBO enlisted an implementation manager from Extensity, along with consultants on an as-needed basis. HBO also committed four tech staffers to the project: an expense reports manager, an expense report analyst, a senior software engineer, and a project manager. HBO also pulled in resources from office systems and database administrators when needed.

While Extensity said companies can install the product in 90 days, HBO planned for a year-long rollout, in part due to a complex integration with other systems, including a daily data feed from HBO's credit card provider, a chart of accounts from the general ledger system, and an HBO organizational chart with the reporting hierarchy and employee cost center information from the HR system.

Unfortunately, the installation itself was anything but smooth. Following the initial pilot and test phases, which hit schedule, HBO encountered three major snags that delayed the implementation schedule for another two years.

Extensity claimed the product ran on both Windows and Macintosh machines, but it didn't for HBO. Gabriel said the Mac performance was unacceptable, and Extensity wouldn't run on pre-OS X Macs because of the way Mac's OS handles Java 1 applications.

The Mac issue was later resolved in two ways: HBO installed Apple's OS X platform where possible, which provided better support for Java applications, and Extensity released Extensity 6, which uses Java 2 for increased performance on all platforms.

HBO also discovered that once users got a taste of Extensity's features, they wanted more ways to view the information. Extensity's reports are based on business objects--allowing companies to customize to meet specific reporting needs such as adding new data fields. These "views" are supposed to be easily customizable with no tech help, according to Extensity.

But HBO found the opposite. "People having to use the software to approve expenses wanted a variety of ways to view the data," explained Gabriel. "For instance, it was difficult for people using the system to approve expenses to view expenses associated with business travel or specific projects." The issue was addressed in subsequent Extensity rollouts.

The third hurdle that thwarted timely project installation was consistent turnover in Extensity consultants, according to HBO.

Once the initial installation was completed, HBO also tied Extensity into its accounts payable system to allow for the direct deposit of expense checks into employee accounts and direct payment to the corporate card provider.

Training key to adoption success
To drive product adoption once Extensity finally went live, Gabriel instituted a strong internal communication plan and end-user training, both of which HBO developed internally.

"We felt that by conducting the training ourselves, we were better positioned to address any policy-related questions that came up," he explained.

The communication plan clearly outlined the benefits of moving from a paper-based expense reporting system to an automated system so users could understand the need for the new system. The company also developed a detailed training manual and quick-start guide. Troubleshooting tips and FAQs appear as Web links within the application.

HBO's expense reporting manager conducted both classroom style and stand-up training with users. To reinforce the training, HBO created a separate environment--or "sand box"--where end users could play with the program.

Lastly, HBO implemented a call tracking system to monitor the volume and nature of problems as well as the timeliness of problem resolutions.

The extensive end-user training has proven to be a key element to both end-user buy-in and benefits from the software application, according to Gabriel; HBO has seen a 90 percent adoption rate.

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