Michael Sheehan

MP's Need Clear Expense Policies

As I predicted this morning, Westminster MP's are up in arms over the prospect of having to repay previously approved expenses.

Its an unfortunate consequence of the current political climate that sympathising with MP's is a lonely endeavour. However in this case I find myself crossing to their side of the proverbial house.

It is manifestly unfair to demand repayment of Expenses which were within published guidelines and properly submitted.

Clear and publicly available guidelines are needed so that it can never again be left to the media and the enemies of the Democratic process to decide what is and what is not acceptable.

Most importantly, these guidelines then need to be backed up and enforced with a Software Based Expense Management System.

The Importance of Expense Policies

If ever we needed to understand how important it is for Organisation's to have clearly defined Expenses Policies, today's news on Sir Tomas Legg's Report into MP's Expenses is proof positive.

With most MP's being likened to Monty Python's Mr Creosote, most casual observers will feel it entirely justified that Sir Tomas has come knocking for some payback.

That however is to entirely miss the point of this shameful episode in British Politics (no different I might add than similar recent episodes in other countries, Ireland to name just one).

To understand what has gone wrong with the system you only need to look at what will be happening today when MP's (including the Prime Minister and Leader of the Opposition) receive letters from Sir Tomas.

"Whitehall sources have indicated "the majority" of MPs will have to justify their claims or pay money back"

Could someone explain why they did not have to justify their expenses in the first place?

The BBC is reporting that Sir Thomas has set retrospective limits for some items.

This is manifestly unfair and I suspect can and will be challenged in the courts (most likely by an MP who is not planning to run in 2010!).

When working with clients who are implementing our Expense Management Solution expense@work we always recommend that a Clear and Comprehensive Expense Policy is documented and communicated as part of the process. Additionally we incorporate these policies into the system so that employees are unable to claim for prohibited items and are also unable to claim above predefined limits for allowable expenditure.

When a system fails and we start to perceive our otherwise good (for the most part!) representatives as greedy self interested thieves, its time to change the system, not the people.

The New City Madness

As with all examples of human excess, the resulting pendulum swing tends to over compensate.

Years of City led irrational exuberance have been replaced by a type of collective madness (fueled by a dying print media trying to sell papers and a dying Government trying to save itself).

The new culture seems no longer to celebrate success and aspire to it but is instead obsessed with the Salaries and Bonuses of others, primarily City Executives.

Don't get me wrong, I am appalled at the idiotic behaviour of some of those who managed our money, but lets be honest, we all have to share some responsibility. Our mortgages, credit card debt and cheap finance are what fueled the crisis and rather like a bad hangover we can't blame it all on the Barman!

If the Banks and Financial Institutions have any sense (questionable) then they will understand the mood of the people (their customers and in many cases their shareholders) and moderate their behaviour and compensation. But its their call to make and that's the important point.

The decision by the FSA not to regulate to excess has been of course greeted with predictable misplaced uproar most notably by the largest shareholder in some of these institutions (the Government) who is of course reacting to the Media frenzy and making the mistake of not thinking as a company owner.

Nobody could argue that commercially focused Companies must have a free hand to negotiate Executive pay in way which works for the needs of their organisation and allows them to attract and reward the best talent.

If Shareholders are not happy with the remuneration of executives they should veto or vote against the Board that approved it. If the Government is a Shareholder then it should use its vote as a Shareholder and not through legislation.

Customers, including private individuals, Corporations and other Financial Institutions can also put pressure on companies by voting with their feet and if necessary moving their business. Linked to this is perhaps the biggest unanswered question of all. The market inefficiencies which must exist to enable the banks to generate the profits or margins to fund such stratospheric pay levels.

For me that's the box nobody opened during the recent financial crisis. 

MPs Expenses

The continuing controversial revelations regarding MPs expense claims underlines some fundamental problems with the current system:

1. MPs should be subject to the same taxation model as the rest of the population, ie allowable Expenses should be wholly and necessairly incurred as a result of official duties.

2. The penalties for breach of guidelines should be as punatuive as would be the case in the private sector. I'd suggest loss of office.

3. MPs salaries should be significantly increased to bring them into line with the private sector and the allowances system should be radically scaled back or preferably abolished.

Utilisation

I regularly meet with Prospective Clients who are considering implementing our Time Recording and Professional Services Management solution time@work.

One of the most interesting discussion topics that emerges during these meetings concerns the measurement of Utilisation and Realisation with companies seeming to have different yardsticks for tracking these depending (partly at least) on the culture and commercial status of the organisation.

Our Chairman Adam Bager's new Book Eight Measures for Successful Professional Services Management is being serialised on our website and this weeks article contains some excellent thoughts on the subject of Utilisation and its measurement.

You can read the specific article here and in addition can subscribe to all our blog feeds at http://www.systemsatwork.co.uk/blog or on our Twitter feed at http://twitter.com/systemsatwork

New Blog from Adam Bager - Chairman of systems@work

Our Chairman Adam Bager will be posting extracts from his new Book, Eight Measures For Successful Professional Services Management on his new Blog which you will find here (http://systemsatwork.typepad.com/adambager/)

Additionally, updates will automatically post to our Twitter Feed at http://twitter.com/systemsatwork

The Problem With MP Expenses

The recent controversies regarding the Expense Claims of UK Members of Parliament is typical of the problems we come across with clients when implementing our Expense Management solution expense@work.

With the extravagances now very much in the Public Domain, 2 schools of thought are emerging as a solution... The Prime Minister wishes to introduce an allowance system (very common in the Public Sector) whereas Mr Cameron prefers the "justify and receipt it" approach (a typically Private Sector system).

The correct approach would be to pay our MP's a "decent" salary, (which I accept is a subjective term) and then implement a rigorous system of controlling MP's expenses with the same level of accountability and justification that is required in any commercial operation. The consequences for breaching this should be the same as in any private company (a byelection!).

A fair salary for an MP is a hornet's nest I won't poke today but given that these men and women run our country I think the number should at least be on a par with the earnings of those who run our private companies and institutions.

Raising MP's salaries might actually help the Chancellor right now as he would get some of the money back courtesy of his shameful 50% shocker yesterday.

A Thought As We Begin 2009

As the New Year begins I'm struck by the negativity and sense of doom being reported by the media. An Echo Chamber has formed whose sole purpose seems to be to convince us that we are facing dark times and unimaginable misery.

Certainly there are challenging times ahead and whilst I will leave it to the Economists to make their predictions for how bad 2009 is going to be, let me share 2 quick thoughts:

Stay Positive & Adapt

To borrow a quote from that classic - The Shawshank Redemption, "get busy living or get busy dying".

One of my favourite restaurants is the Yaadgar Indian Restaurant in Ireland and when dining there last week the owner Gul Badshah was doing his usual cheerful tour of the tables. The inevitable topic of the current economic climate came up and his view was a refreshing alternative to the normal dour predictions. "Our mortgage and fuel bills are half what they were 6 months ago, I'm tired of the press telling me how bad things are when we are all better off".

Recognising that is customers may not share is optimism, he adapted to the mood by allowing clients to bring their own wine which of course they did and the result was a full restaurant every evening with most buying additional wine and beer whilst dining!

Opportunities Abound In Bad Times

My favourite read of 2008 was undoubtedly The 4 Hour Work Week by Tim Ferriss and I'll finish with a direct lift from his recent newsletter. A quote from his mentor (you can read the full article here):

"While many are wringing their hands, I recall the 1970s when we were suffering from an oil shock causing long lines at gas stations, rationing, and 55 MPH speed limits on Federal highways, a recession, very little venture capital ($50 million per year into VC firms), and, what President Jimmy Carter (wearing a sweater while addressing the Nation on TV because he had turned down the heat in the White House) called a “malaise”. It was during those times that two kids without any real college education, Bill Gates and Steve Jobs, started companies that did pretty well. Opportunities abound in bad times as well as good times. In fact, the opportunities are often greater when the conventional wisdom is that everything is going into the toilet.

Well…we’re nearing the end of another great year, and, despite what we read about the outlook for 2009, we can look forward to a New Year filled with opportunities as well as stimulating challenges."

I wish you all the best of success and happiness in 2009.

Computer Says No

Fans of Little Britain will be familiar with Carol, the inflexible Administrator played by David Walliams who uses her Computer as an efficient tool of inflexible bureaucracy.

I was in Ireland this weekend where a minor political scandal (Salongate) and recent revelations about Employee Expenses at FAS has reopened the debate about the most effective ways of managing the process of Authorising and of course Rejecting employee expense claims.

Our work in implementing Expense Management Software Solutions around the world has inevitably led us to discussions on this subject with all of our clients. While there is no hard and fast rule to cater for differing organisational cultures, my belief is that where at all possible, the system should impose the rules rather than relying on a Manager or Administrator to catch and challenge.

Whilst undoubtedly frustrating on occasions, the "Computer Says No" approach avoids the inevitable pitfalls inherent in a system where a junior Administrator or Colleague has to challenge a friend/colleague/manager regarding line items of expenditure.

Our own Expense Management Software expense@work will allow organisations to impose limits on expenditure at a group or individual level so that £400 Hair Cuts, £2,500 per night hotel rooms and First Class Air Tickets simply wont get through the system. Challenges can be soft "are you sure" or hard "no!" and reports can be produced to show the big spenders (compared to a company average for example).

It is not for me to question whether it's a good use of public funds when our Politicians travel the world in comfort to promote State Enterprise, however with the proper systems in place one can ensure that their expenditure is at least in line with policy (however tight or generous that may be).

VAT Changes

I have mixed views about the VAT Changes recently announced by the Chancellor but on balance it's too little and too late.

Of immediate concern to us is the impact it is having on Customers using our Expense Management Solution expense@work and also users of our Time Recording and PSA Solution time@work. (We have produced some guidance notes here...). The Support Desk has been inundated with calls from Customers who are concerned about correctly adjusting their Business Systems at such short notice.

The changes introduced will undoubtedly cost businesses precious time and money as they modify calculations and test the revised VAT Rates (15% from December 1) across their Business Solutions.

More generally, the changes in rates have little or no positive impact on most UK businesses (as they can reclaim VAT on purchases) and from the evidence on the high street, prices are already facing downward pressure with product pricing being calculated at levels which factor in the given VAT Rate (so a TV costing 199.99 today is likely to cost the same next Monday!).

The acid test will be the Coffee Shops. Watch the prices on Monday, if they have not dropped (they must charge VAT when you eat your Croissant instore!) then you know they are pocketing the 2.5%.

Expense Management In An Economic Downturn

Expense Management is a dull and unpleasant process. This is true both for employees who need to submit claims and also for Finance Departments and Compliance Officers who are required to manage the process.

Like visits to the dentist, its something that most people put off as long as possible and invariably end up enduring more pain and unpleasantness as a result.

In times of economic uncertainty the spotlight of scrutiny is pointed even more brightly on an organisations Expense Management processes and procedures. Badly managed or non existent systems can lead to problems with taxation compliance and maverick spending by employees. 

Expense Software such as our own expense@work can of course provide the framework within which policies can be enforced, however the onus is firstly on the organisation to agree and document policies which can then be enforced using appropriate Expense Management Software.

The Aberdeen Group are regular publishers of surveys on this subject and their most recent report makes for interesting reading:

• 80% of organisations have seen their T&E expenses increase by an average of 14% in the past 12 months.
• The main drivers for implementing Expense Management Solutions are firstly, access to data and visibility of employee spend and secondly, concerns regarding compliance with company policies.
• One of the most effective actions which an organisation can take to control costs and ensure compliance is (not surprisingly) to implement an Automated Expense Management Solution.
• Regular reviews of the data available from these systems can have a dramatic effect on compliance, employee spend and the organisations bottom line.

It's a publication worth reading for organisations who are considering implementing a solution and also for Sales Professionals and Consultants who are advising clients on their choice of Business Solution Software.

Upgrading the systems@work Website

We have been making some structural changes to the systems@work Website over the past few weeks.

This is primarily to improve the speed with which users can access information about our Time Recording and PSA Solution time@work and our Expense Management Software expense@work.

We have also added a new Case Studies section and additionally migrated the systems@work.tv page to the ScreenCast platform. This will make it very easy to publish our Webcasts and Seminars to the site within minutes of live events.

We have noticed a steady increase in the number of visitors to the site in recent months. The is partly because of the natural growth in the user community but we believe its also because of our high Google Rankings which are consistently seeing us in the top 2 or 3 on the natural listings for Time Recording and Expense Management queries.

Ensuring that visitors to the site find it easy to navigate is a primary objective for us and to aid with this and improve interactivity we have been experimenting with some of the new tools and technologies available to us.

One of the more interesting developments has been the introduction of "Brenda" (name under review!). Brenda is a breed of website technology known as an Avatar and we have been experimenting with how we can use this to guide visitors to the appropriate section of our site easily and with minimal distraction.

Its very early days and you are likely to see alot of changes and improvements to the realism, voice style and content in the coming months. Of particular interest is the way we can use AI technology to enable these Avatars to simulate real time chat in sections of the site such as support and sales.

Let me know what you think!

Touchstone Group Client Conference

Today I presented our Expense Management Solution expense@work at the Touchstone Group Client Conference.

This is an annual event which we have been involved with for many years and was held at Sandown Park Racecourse in Esher. The theme of the Conference was "Staying Ahead of the Field".

Christopher Alexander on the difference between a fifty-year-old carpenter and a novice - (37signals)

Link: Christopher Alexander on the difference between a fifty-year-old carpenter and a novice - (37signals).

This article on 37Signals explains something I have often pondered in the world of Business Solution selling. What is the difference between an experienced presenter or persales person and a novice. Why do some people need to prep for hours or days for a demo and others can just turn up and do it.

Twitter Service

Today we have setup a systems@work Twitter Service which you can subscribe to at http://www.twitter.com/systemsatwork.

You will need to setup a Twitter Account (which will take about a minute) and I would recommend you turn on SMS updates (no charge) to get the full benefit.

If you are unfamiliar with what Twitter is all about then this Keynote from Mark Pesce at Microsoft AuReMIX08 is as good an overview as I've seen.

The systems@work Twitter feed is linked to our News RSS Feed our Knowledgebase RSS Feed and my del.icio.us Press Coverage Feed so you can consider it a clearing house for all things relating to systems@work.

Twitter is one of those services which can take a little time to "get" but if you persevere it opens up a world of opportunities. Some interesting Twitter feeds are.....

BBC Tech News
BBC Click
Barck Obama
Hilary Clinton
gcal (if like me you use Google Calendar this is a must)
Salesforce.com

Innovative Companies

I've always known that our Time Recording and Expense Management Software appealed to a particular type of organisation. Generally they tend to be dynamic companies, who have a forward looking outlook and see technology as a mechanism for productivity enhancement and an enabler for more effective management decision making.

I was particularly pleased to see two of our clients recently receive very positive comments in the press.

The renowned American Publication, FastCompany, recently published an article entitled the The Worlds 50 Most Innovative Companies. FastCompany is a publication I particularly enjoy. For those unfamiliar with its style, its a mix of The Economist meets Wired meets GQ.

At number 23 in their list for 2008 is Arup, one of the worlds leading Engineering Companies and a longtime user of time@work.

Closer to home, The Sunday Times Top 100 List's always make interesting reading and last Sunday it was the turn of the Sunday Times 100 Best Small Companies.

Listed at Number 13 is another longstanding time@work user Brand Learning who are a dynamic and highly successful Marketing Consultancy.

I would never be so bold as to suggest that our software was the reason for the success enjoyed by Arup or Brand Learning, however I do like to think that the attributes of these successful organisations and their attitude to Information Technology is reflected in their choice of systems@work as a Solution Provider and time@work as the software to manage their business.

San Francisco

I leave today for a short visit to San Francisco today where one of our new time@work Clients is based.

72 hours in one of my favourite cities (I lived there in the early 90's) is not a bad way to spend some time but I could happily do without the 24 hour round trip.

It has  been a hectic few weeks for us as we just signed our first client in Moscow last Thursday (for an April 1 go live!) and the number of clients upgrading to Version 3 is becoming an avalanche.

Preparations are also well under way for the 2008 systems@work Conference on April 17th and the Registration Site went live on Monday. Its great that one of our expense@work users,Lloyd's, have allowed us to use the Old Library in the Lloyd's Building which is going to be a fantastic venue.

2 Chimps & A Gorilla

Much has been written on Microsoft's bid for Yahoo and the truth is, only time will tell how it plays out.

However something which really is quite daft are the theories coming from so called expert analyst's. Their simplistic models work on a false "synergy" theories which makes perfect sense if you accept their premise. Unfortunately they are wrong in the underlying assumption.

If you ever want to understand why Microsoft buying Yahoo is at best "a challenge" don't listen to the the '2nd and 3rd place coming together" argument. In summary it says, 1 chimp can't beat a gorilla but 2 might!

Instead consider golf as a better metaphor. If Ernie Els and Phil Mickelson decide to take alternate shots and play Tiger Woods, their chances of winning are just the same as if they were playing him individually (at best).

If Microsoft and Yahoo can't beat Google as separate organisations then there is nothing to suggest they will automatically do any better as part of a combined operation.

I'm not saying that Microsoft can't dominate in certain of it's chosen markets and only a fool would write them off. However Search is Google's turf and I see nothing in this takeover which will change that.

CODA Up For Sale?

It appears that the long predicted consolidation in the Financial Software Market is continuing apace with Agresso making an offer for CODA. The offer is currently being considered by the CODA Board so its by no means a done deal.

We have many mutual customers with CODA particularly on the Expense Management side where our expense@work solution has proved a good fit.

Unlike many, I welcome further consolidation as it will lead to the development of standards for the storage of and access to financial data. Ultimately (perhaps 5 or 10 years from now) we will see a common unified data structure for Ledgers with the potential to move a Chart of Accounts and historical transactions between systems with ease.

Microsoft, SAP (certainly) and Oracle and Infor (I think) will probably be the last ones standing.

Expense Management Reaches The Public Eye

The recent high profile stories concerning problems with Employee Expenses at The National Audit Office and The Metropolitan Police has highlighted how important it is for organisations (both Public and Private sector) to have procedures and systems in place which manage the Employee Expense Management process.

Business Solution such as our own expense@work and time@work (and others too) are being used by organisations throughout the world for precisely this reason but the interesting point about Sir John Bourn's troubles is that a good expense management package would probably have come to his rescue rather than highlighting any misdemeanors!

Sir John is being publicly ridiculed for the £27,000 claimed on meals over a 3 year period and in many of the tabloids is being portrayed as a character reminiscent of Monty Pythons Mr Creosote. A rudimentary grasp of maths would tell you his meals averaged less than £200 per week and while this is unlikely to see him nominated for "frugal CEO of the month", it would barely register a blip compared to some of the claims I have seen in our work with clients over the years (I once saw a single expense claim for £28,000 on client entertainment).

I would have liked to know how his expenses compared with his peers in other government departments, then perhaps we could have judged his "crimes". If expense@work had been in place its something they could have found the answer to in under 30 seconds.

With the correct systems in place, the Control and Monitoring of Employee Expenses could ensure that these type of problems never arise:

Software Has No Emotion - It enforces the rules and does not care whether you are the chief exec or the tea lady. Limits can be applied by person, department or any other rule you care to enforce. The enforcement approach can range from a stern refusal (expense@work can stop the form being submitted), to a word in the ear of your boss (in the form of an alert to your manager) and also a friendly piece of advice (an alert to you which says "did you know you should only be claiming £200 per night rather than £300, are you sure?")

Software Asks All The Right Questions - "What class of Airline Ticket?",  "How many of your colleagues were involved in the Client Entertainment?", "What was the purpose?"

Software Churns The Numbers - "How much is he spending on Entertainment each month?", "show me all employees who spend 10% above the 12 month average", "which employees always forget their VAT Receipts?"

Of course the other great advantage of an automated expense management solution is that it ensures that all your employee expenses are in line with Inland Revenue Guidelines. When the inevitable audit arrives you can continue to sleep well at night!