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The power of spend optimization

A new era of work has forced companies to embrace  the challenges and opportunities in more decentralized operations—uprooting long-standing beliefs in the process. Yet charting a path forward can leave too many unknowns without a cohesive framework to manage all types of spend.

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Season 2 Episode 5

Grant Johnson, CMO at Emburse: [00:00:09] Hi, I'm Grant Johnson, chief marketing officer at Emburse. Welcome to Emburse on the Mic, a podcast series where we dig into the topics that impact our business and lives managing expenses, processing invoices, making payments and discovering ways to eliminate those time-consuming error-prone manual tasks to help make our lives easier. Our website is Emburse dot com. And if you'd like to share your thoughts on this episode, you can reach us at hi at Emburse dot com. That's hi@Emburse.com. Our last episode was about digitally transforming spend management. Today, we'll talk about our latest innovation, the Emburse Spend Optimization Model, and how you can apply it to your work. With me today is Kathryn Edenbach, chief accounting officer at Emburse. Katherine oversees the organization's accounting operations to ensure our financial processes and reporting are accurate, timely, and optimized. I'm also joined by Barbara Doane, vice president of product marketing at Emburse. Barbara leads go to market and portfolio strategy across all Emburse products and leads the design of the Emburse Spend Optimization Model to help organizations chart their course forward. Katherine and Barbara, welcome, and thanks for joining us today.

Katherine Edenbach, CAO, Emburse: [00:01:21] Thanks. It's nice to be here.

Barbara Doane, VP, Product Marketing, Emburse: [00:01:22] Thank you. It's nice to be with you.

Grant Johnson, CMO, Emburse: [00:01:24] Great. Well, let's get started, Barbara. Maybe you can kick it off and talk about this Emburse Spend Optimization Model. I'm sure our listeners are wondering what is it? Why is it needed and why on earth didn't this thing exist before?

Barbara Doane, VP, Product Marketing, Emburse: [00:01:38] Mm hmm. Sure. Grant, I'm happy to get us started. So, you know, we're living in really interesting times right now, and what the global pandemic has done for us is really create a realization that organizations really need to focus on all the ways that they manage spend. So when you can no longer go into the office and open the mail, for example, you know, we have to think about doing things differently. And so it's often hard to know where to start. So that's why we created the Emburse Spend Optimization Model, and it's really just a tool to help guide organizations on their spend management journey. So let me walk you through kind of what the model is all about, and you kind of think of it as a maturity model. And there are four different stages or phases of the Emburse Spend Optimization Model. So the first one is called ad hoc, and that's where organizations are. You know, they're really reactive. They're primarily manual, they're very paper-heavy in their business processes. It's it takes a long time to really get the work done. The next phase is a managed phase, and that's where we start to see some level of automation. So maybe you're using spreadsheets, maybe you're using a module in your ERP. Maybe you've even dipped your toe into spending management automation, but you're just getting started. But even though you're just getting started on your journey, you're still starting to see that you're bringing down some of your operational costs and you are increasing control so you're on the right track. The next phase is an accelerated stage, and that's where we see organizations really have better insight and control over spend their more agile as an organization, and they can make better strategic decisions.

Barbara Doane, VP, Product Marketing, Emburse: [00:03:15] And that last phase, that's the optimized phase, and that's where we really want to coach, you know, all of our customers to really be able to optimize spend. And an optimized organization really leverages technology combined with the humans to really help move the ball forward with the organization. So it's really that that combination of technology and people that come together to create the solution. So to your question of why, why didn't this exist before? Why are we doing it now? We actually think that now's a really good time to introduce this into the market because we did a recent survey and it showed that 80 percent of companies aren't technologically enabled to take advantage of all the cost-saving opportunities that are available to them. And so what we did to help with this problem is we created an assessment that goes along with the spend optimization model and what the assessment does it. It really allows you to peel back the layers of the onion on all the different types of spend workflows that exist in your organization. And we are able to help with our deep industry experience and ask really good questions to help an organization decide where and when to optimize and really look at their entire spend spectrum. And that can be everything from, you know, travel and expense management to AP automation or to that tricky bucket of unmanaged spend that we can help with today.

Grant Johnson, CMO, Emburse: [00:04:43] That's great, and it seems like now is the ideal time for companies to really assess how they manage, spend and take advantage of an assessment that provides that insight. Katherine, I wanted to ask you with this nature of spend changing through this enduring pandemic, it seems like, a lot of things as a finance leader are new challenges you face, so how do you see the Emburse Spend Optimization Model supporting a more agile and strategic finance team?

Katherine Edenbach, CAO, Emburse: [00:05:11] Thanks, Grant. So finance teams are now operating primarily in remote and or hybrid situations. Here at Emburse, the majority of our finance team worked remotely during the pandemic, and our employees are just starting to come back into the office a few days a week. So when you don't have the whole team in the office, it does drive a need for more control and visibility around spending. What dollars are coming in and what dollars are going out. And automating and digitizing your spend solutions really helps finance teams to be proactive instead of reactive. So if we're talking about employee expenses, you know you want to ensure that those employee expenses are within policy and captured in a timely manner. And we've seen this become more and more important as employee expenses are moving from traditional T&E, to a number of different expenses that are hitting personal and or corporate cards. And so this may be because your decentralized and people need a way to quickly pay something, or there's a lot of vendors out there that are requiring payments on cards.

Katherine Edenbach, CAO, Emburse: [00:06:20] So you could have recurring software charges hosting I.T charges or Home-office related purchases that are running through employees expenses. You want to make sure that all those are captured, that they're within policy and that you know about them in a timely manner. If we're talking more on the AP side, automating processes also help ensure invoices are routed for approval efficiently that the associated costs are within budget at the time of the approval, and that documentation is maintained for audit purposes. All very important, especially when you're operating in a decentralized environment. We're also seeing finance teams shifting payments from paper-based checks because people aren't in the office to print those checks, mail them to electronic or digital methodologies. It's much better in a remote situation, but it also drives cost savings because you're not paying for check stock, you're not paying for postage. And optimizing spend also gives companies better insight into overall spending patterns. You know, vendor usage, you know, do you have the ability to consolidate and obtain discounts? And it gives visibility into data that can be utilized in a strategic and predictive manner rather than just reporting out the results.

Grant Johnson, CMO, Emburse: [00:07:38] Katherine, that's really good insight. I want to do a follow-up on one of the areas that you were covering. As far as these new types of expenses that have become more prevalent during the pandemic, I heard another CFO say something like, you know, unmanaged spend is one of the hardest things to control because we don't often know that spend has happened until afterwards, right? So tell me a little bit about how an automated system can help capture this spend and provide the visibility.

Katherine Edenbach, CAO, Emburse: [00:08:04] So obviously, when you're operating in a manual environment, you have these charges that are typically just running through on people's cards and you don't have a lot of visibility into that level of spend. So when you're automating it, you have the ability to run reports and to see the types of spend by vendor. So you can look at do we have the ability to consolidate this type of spend under one vendor? Do we do we truly know what we're spending in certain areas because this spend historically has been, you know, has been unmanaged, the systems give us much more ability to track and monitor that usage and know what's coming in, what's been budgeted for that what's approved and really be able to run reporting around all of these different spend areas that in the past were just we're just sort of being captured as a sort of a miscellaneous spend bucket.

Grant Johnson, CMO, Emburse: [00:09:08] That's great. I think in business, as in life, we all like avoiding surprises. So it sounds like this is one way to make that happen. Here's another question for both of you. A common theme that we've heard from many of our customers is the need to take a holistic approach to managing spend across the organization. Especially with all the increase in this decentralized pandemic, you know, induced spending. So why the sudden pressure? And do you think it will continue and will we ever get back to normal?

Barbara Doane, VP, Product Marketing, Emburse: [00:09:38] Sure, I'll start us off. Honestly, Grant, I'm hoping that things don't go back to normal. And the reason I say that is that that this is an opportunity to create a new and better reality for organizations to really manage spend. So why would we want to go back to the days of paper-heavy processes instead? Let's use this as an opportunity to invest in technology to remove frustrations and time spent on tasks that really can be automated. And so if we can free up that time to work on meaningful work that will help organizations really move their mission forward, and that really ties directly into what we do at Emburse. You know, our mission is to humanize work, and I really think that now more than ever, we need a human approach.

Katherine Edenbach, CAO, Emburse: [00:10:18] I agree with Barbara. I think we're really living in the new normal today. I doubt we will see most positions go back into the office five days a week. People really enjoy having a new level of flexibility in their roles. And many employers have also shifted to hiring remote employees away from local office locations, so those employees don't even have the ability to go into an office. So I think we're going to continue to see remote and hybrid options for many roles at most employers, and this is going to continue to drive a need to invest in solutions that enable companies to better manage and control spend in a very decentralized environment.

Grant Johnson, CMO, Emburse: [00:10:59] Yeah, that makes complete sense. You know, Katherine, you've overseen the growth of Emburse over multiple acquisitions the past few years. Can you tell us more about what's the process of unifying processes across the organization? You're bringing together disparate entities and how did you go about creating an optimization plan, if you will? You know how the Emburse Spend Optimization Model fits with that approach?

Katherine Edenbach, CAO, Emburse: [00:11:26] Sure. So finance and accounting at Emburse is a shared service, and we utilize a number of our software solutions in our day-to-day activities. So we're using the spend optimization assessment to really look across our consolidated company and determine what are the best solutions for a company of our size and complexity. As we've moved toward becoming one Emburse, we've consolidated a number of activities and are revisiting which solutions will work best for us now and in the future as we continue to grow and digitize our finance organization. The solutions that supported some of our acquisitions in the startup phase may not be the most effective in a company that requires complex approval workflows. So we're really looking at our internal processes to determine how to better automate and streamline certain activities to reduce manual efforts for both our accounting and finance team, as well as other users and approvers as we try to live our goal to humanize work.

Grant Johnson, CMO, Emburse: [00:12:26] Yeah, that makes a lot of sense. You know, the term digital transformation has gone from buzzword to generally accepted mandate for all companies. But like many organizations, you know, figuring out what to prioritize and where you invest often comes down to a budget or timeline and urgency. How do you decide that it's time to make a change in the finance operations? And what's your assessment process like?

Katherine Edenbach, CAO, Emburse: [00:12:51] So there are so many reasons to make investments in your finance team and finance systems. Hands-on manual processes will not scale with a growing organization and will eventually cost companies more. Because every time you add more transactions or more customers, you have to add more bodies in order to support those manual processes. So automation allows finance teams to better scale as the company grows. And without proper finance infrastructure and controls in place, you could also run into compliance risks, and we all know how expensive those can be. So our Spend Optimization Survey showed that 60 percent of companies really had minimal visibility into expense and invoice spending. So if you're at a point where you're beginning to outgrow your manual processes, you need more control and visibility over spending. Those are the times where you really want to start looking at making a change and you want to focus first on areas with high dollar spend or a high volume of transactions. So, for example, if you have a high number of transactions hitting your employee credit cards or a real lot of money running through your employee credit cards, that might be an area you want to focus on first.

Grant Johnson, CMO, Emburse: [00:14:03] Katherine, that's a really helpful tip. A lot of our customers, like other organizations, can't do everything once. So getting a way to prioritize what to take a look at first that could have the most impact or savings for the organization makes a lot of sense. Barbara, I know it's still new, but what are the conversations with customers been like when sharing the Emburse Spend Optimization Model? And how do they compare to previous conversations that we've had?

Barbara Doane, VP, Product Marketing, Emburse: [00:14:30] Yeah, great question, Grant. It's been really interesting as we've started to roll out our assessment conversations with our customers and our prospects, and what we've seen surface is actually some disagreement. Perhaps so you if you can imagine that, let's say there's a controller in the room and they're looking at the AP operations, for example, and maybe they're not hearing that anything is broken. And so they might think that they're at an accelerated level. But then you might also have the director of Accounts Payable in the room, who knows what their team has to go through in order to pay all the invoices on time and recognizes that they're actually really sitting at more of an ad hoc or a managed phase. And so what the spend optimization discussion has been able to do is really surface all of the different places around in organizations where you really do need to optimize spend and then create agreement within that organization. So, you know, I like to think of it as you know, you watch a duck swimming across a pond, for example, and it may look smooth and easy, but you don't always know how fast those feet are moving under the water. And so what this does is it allows us to kind of bring that to the surface and have really good dialog within an organization about what's working and what's not.

Grant Johnson, CMO, Emburse: [00:15:46] Yeah, I love that idea of helping organizations come to an agreement on what, what to focus on with an objective view of the facts or the data. So it sounds like the spend optimization assessment and models is a way to do that. There was a study by the Boston Consulting Group a couple of years back that said organizations that are digitally processing the unmanaged spend can cut their annual expenditures by five to 10 percent. And, you know, for companies of size 100 million to a billion and beyond, those savings can be massive. So how can the ESM be used to pinpoint and enable these types of savings?

Barbara Doane, VP, Product Marketing, Emburse: [00:16:26] Yeah. So, you know, it's just not enough to say that you have a card program anymore. You really have to dig into the details. And you know, how is it working? How easy is it to reconcile? Do you ever have late, fraudulent or duplicate charges? You know, you really have to kind of dig deep in order to really understand how effective that program is, because chances are it may not be efficient and you may not have the right controls in place. And worse yet, you could be creating a headache for your employees so what spend optimization does is it really allows you to look objectively at the whole business process flow and look at ways that you can improve to create those cost savings.

Katherine Edenbach, CAO, Emburse: [00:17:04] And just to add to Barbara's comments, part of spend optimization would also be looking at what other types of spend you might have running through cards. For example, do you have multiple employees putting through subscriptions for the same product? Could there be savings there? Are we taking advantage of volume discounts with vendors? Are we using multiple vendors for similar surfaces where we could consolidate and save? And it's very hard to identify these types of savings if all of your processes are manual and you're not able to pull that data together and look at it holistically.

Grant Johnson, CMO, Emburse: [00:17:39] Yeah, I love all the tips we're shared. I know we have a spend optimization title, but we could also have a subtitle of many ways to save money for your company. So, you know, that sounds really good. So how what was it like? Katherine, you were mapping out the long-term plan for finance and accounting. Were there certain challenges you wanted to tackle first and how did you make those decisions?

Katherine Edenbach, CAO, Emburse: [00:18:02] So the first step really was to pull the disparate accounting functions together to really operate as a shared service team across the company. You know, one primary AP function, one billing team, one accounting team, a cloud-based ERP system that everyone could access no matter where they were located. Because that's not to say that all these teams are centrally located, but their functions go across the company. So now that we've really accomplished that, we're looking at our other systems. We're going to be consolidating to one expense tool, implementing a new AP system that can route complex approval workflows across the company. We're going to be adding some of our payments solutions, and we're also going to start using our integrated cards more efficiently across the company.

Grant Johnson, CMO, Emburse: [00:18:50] Well, that's great to hear. A question for both of you. How would an organization know it's ready to begin its journey towards optimization? Are there certain signs or signals that they should be looking for? And if so, what would be a logical or a good first step?

Barbara Doane, VP, Product Marketing, Emburse: [00:19:05] So I think every organization can benefit from spend optimization. You know, all of us, whether we're working in business or even in our daily lives, have you no opportunity to improve, right? So I think the first step is to start with an assessment. And oftentimes just sitting down with an independent third party who has deep, you know, industry knowledge and can ask really thoughtful, specific questions allows you to think about your business a little bit differently. And it's often hard when you know when you're stuck in the day-to-day to really pick your head up and look strategically. And so this would be an opportunity to do that. And of course, this is a free service that we're offering at Emburse. And so it's a quick win and it's a way to just get started and then create a plan towards optimizing your spend.

Katherine Edenbach, CAO, Emburse: [00:19:51] Yeah. And just to tag along with what Barbara had said, you know, if you're finding your manual processes are really starting to slow you down. To bog down your accounting and finance team when you find it's difficult if people are asking questions about spend and it really takes a long time to pull all that data together because you've got to get it from a number of different sources. You know, that's a great time to really to take a look at your overall company and to use this assessment and say, Hey, where are we and where do we want to be and how are we going to get there?

Grant Johnson, CMO, Emburse: [00:20:26] Yeah, that makes a lot of sense. You know, often companies have competing projects and priorities. And I think Kathryn, you had outlined earlier in our discussion that you could look for high ticket items or where you're manually cutting versus, you know, using electronic means to make payments. But I suppose, you know, you could look for areas of optimization with your expense policy, with your invoice or AP automation policy, with your card usage to kind of rein in some of those rogue users or shared cars where you don't have visibility. So is there, you know, I guess for either of you, is there any one best place to start or just really kind of get an assessment where you are and then map the way forward?

Katherine Edenbach, CAO, Emburse: [00:21:04] Yeah, I think that makes the most sense really to start with the assessment, which gives you the ability to really look at those different areas, identify where your biggest pain points are focusing on those and map your map how you want to move forward.

Barbara Doane, VP, Product Marketing, Emburse: [00:21:19] Right? The best place to start is just to start.

Grant Johnson, CMO, Emburse: [00:21:22] Take that, take that first step. Well, Katherine and Barbara, I really appreciate you taking the time and sharing your insights with us and with our listeners. Gosh, we're approaching the holiday season, so I do want to say please stay tuned for the next season of Emburse on the mic. So in 2022, we're going to explore more ways to help organizations improve their business processes and enhance the employee experience. If you'd like to learn more about Emburse, please visit Emburse.com or send us a note to hi@Emburse.com. That's hi@Emburse.com