Concur must be doing something right. They’ve had strong growth since being acquired by SAP in December of 2014. Their 32 million connected users and 32,000 corporate customers represent increasingly overwhelming dominance of the Travel & Expense solutions space. Often when a smaller1 entrepreneurial company is bought by a much older and larger firm, it does not go well. However, Concur appears to be positively thriving as part of SAP.2 SAP’s leadership has given Concur a lot of autonomy while embracing their vision for business networks.
Concur has benefited from being part of SAP in a number of ways, most obviously by access to SAP’s global customer base, which has brought in some big clients for Concur. They are also taking advantage of SAP’s globalization services to help implement and keep up with regional regulatory/tax/legal differences, country/region-specific functional requirements, language translations, formats (date/time, etc.) and units of measure, currencies, and cultural differences (for example in the far east there is more emphasis on the formal request and approval of spend and less on expense reporting). SAP already has a huge number of people on the ground all over the globe fully dedicated to keeping up with these things (regulations change almost daily); far more people than a standalone Concur could afford or justify.
Concur-SAP Financial Integration
One announcement that generated excitement amongst existing SAP ERP customers was bi-directional native integration between Concur and SAP ERP (ECC 6.0 and later) available for beta early Q2 this year, with S4 support planned for later this year. This is more than a traditional flat-file based connector. It is bidirectional system-to-system synchronization of financial master data, WBS (Work Breakdown Structure) elements, purchase orders, sales orders, vendor information, payment information, and more. Master data synchronization can be scheduled as often as needed, down to near-real-time. Errors are reported in real-time, so the user could correct it and resubmit right away, rather than finding out only after a batch process is run. People have said that the setup is much easier than today’s method using flat files. On the roadmap are payroll integration, expense reposting, and more.
Ongoing Quest for the Perfect Trip
As we reported last year, core to Concur’s direction and strategy is striving for the ‘perfect trip’. Getting there is tricky as they need to balance making it as effortless as possible for the traveler while providing the controls, policy enforcement/persuasion, and tools needed by those responsible for managing T&E spend. Concur gathers feedback via customer surveys, events, website, interviews, usability studies, and the 5,000+ members of their LinkedIn community to better understand areas of improvement needed. They have been working on making implementation easier, reducing setup steps, and improving how they handle audit and credit card data. They are also investing in services to provide more automated regulatory rate updates such as mileage rates and VAT rates.
A key part of the perfect trip is the expense report that writes itself — always an ideal to strive for, but step by step they are getting there. This is one of the key roles for the Concur’s network leveraging partnerships such as with Uber, Starbucks, airlines, hotel chains, and others to automatically bring in, integrate, and categorize expense data directly from the source while the traveler is on a trip. For hotel itemization, Concur today can automatically itemize hotel bills via e-receipt partners and Concur’s ExpenseIt. Moreover, they announced the “Expense Assistant” which can show your reports and receipts, what has been added and what is still outstanding. Expense Assistant is now available in beta.
One area of common complaint, especially by administrative assistants using the system, was having to find and enter the names of attendees for meetings to justify expenses. Concur has added a feature to send it the meeting invitation and it will automatically add the names of the attendees to the expense report.
TripLink, Capturing Direct Bookings
The vast majority of corporations want to capture direct bookings (i.e. where the traveler books directly with the airline, ground transportation or hotel suppliers) while an increasing number of travel suppliers are pushing direct bookings by lowering rates for loyalty program members.3 This is where TripLink comes in. By partnering with a growing portfolio of leading travel suppliers like Avis, Marriott, Starwood, United Airlines, Lufthansa etc., TripLink enables suppliers to extend the traveler’s corporate discounts at the supplier website and automatically sends the reservation information to Concur. Once captured by Concur’s TripLink, the supplier reservation is visible to the company travel managers. This helps companies gain early insight into T&E spend and ability to fulfill their duty of care practices. Concur has been working on the TripLink UX for travelers to connect their Concur profile with suppliers, driving accelerated traveler enrollment and engagement. TripLink usage grew by almost 80% last year. TripLink also engages the corporation’s TMC, and giving the TMC access to TripLink bookings.
Extreme Scalability — Tiny to Huge
Most enterprise software is designed for a certain market size, either very small companies, mid-sized, or large to very large firms. Very few manage to span even two of those size segments. Concur is the first I’ve seen trying to build a single system to handle the very smallest company (less than 10 people), up to the very largest companies in the world. One thing that makes this plausible is that the needs of the traveler are not that different between the SMB (small and medium business) and the large enterprise. All travelers want the expense report that writes itself and extreme simplicity. But the needs of the enterprise travel group vary a lot — in the smallest firms there is no such group; just the owner trying to control expenses. In the largest companies, there can be multiple divisions with radically different travel needs and policies.
So, how is Concur approaching this extreme scalability? To serve smaller firms, they didn’t create a separate small business version, but rather selectively turn off functionality, exposing just the parts that small businesses need, in a prepackaged way. They are continually working on simplifying the onboarding process (‘activation’ rather than ‘implementation’). That requires a solution that is preconfigured, preloaded with best practices, anticipating the decisions they have to make and providing more validation. They provide self-service education about travel and expense, and where desired, outsourcing options for T&E management via Concur partners. In this way, a growing company can keep using the same system from the time it is a three-person company up until it is a 3,000 or 30,000 person or larger company. SMB (Small and Medium Business) is Concur’s fastest growth segment,4 representing a substantial portion of their client base. Concur’s invoice product is one of the big drivers of growth in this segment.
Concur’s invoicing solution is their fastest growing product, more than doubling last year. The system is used to capture invoices, set up and approve vendors, do 3-way match of invoice, PO and receipt, route for approval, and auto-pay, with reporting and analytic tools. It provides for payment directly via check or ACH, for both invoices and expense reimbursements, though most customers still pay through their ERP system. Some smaller firms who do not use POs are using Concur as their purchasing system, while those with a well-developed purchasing system use it to complement their system. Over a dozen partner apps complement the invoicing functionality, such as Thompson Reuters ONESOURCE Indirect Tax (for calculating tax on AP invoices), Avalara AvaTax (tax verification), and Oversight (T&E analytics to detect potential fraud, waste, and abuse).
Ariba Invoice Management vs. Concur Invoice
Both Ariba and Concur have invoicing functionality. Ariba’s invoicing is part of their complete P2P (procure-to-pay) system, whereas Concur’s is meant to co-exist with other P2P systems (including Ariba). Ariba is good at the full purchasing lifecycle and complex validation with many rules, whereas Concur’s invoicing focuses more on employee-initiated spend, though they do have validation rules and can do all spend for companies. Some companies will use Ariba for spend under management and Concur for the long tail of unmanaged spend. The Concur folks said while there is some overlap in functionality, there is little overlap in the markets they serve.
At the Consumer Electronics Show in January, Concur announced the launch of Concur Labs, a place to push the boundaries and try out new ideas. Examples of projects they are doing there include:
- Connected Car — Working with Ford, they showed a prototype at CES of this mobile app that connects to the car’s odometer to let the traveler automatically track and submit mileage for expense reimbursement.
- App Recommendations — When you book a trip, it provides a list of recommended apps to download, based on your destination, travel plans, and previous expense data.
- Personal Card Expensing — When you log into your personal bank account, it lets you check off which purchases are business expenses and they instantly show up in Concur.
- Travel/Home Automation Connection — Knows when you’re traveling so it can communicate with your Nest or other home automation devices to turn down the heat/AC, change your lighting settings (for example automatically turning lights on and off while you’re gone to make it look like someone is home), security settings, etc.
They expect over half of these experiments will not become commercialized products for sale. The Labs provides a venue for trying out bold new ideas that their mainstream product organization might not be able to experiment with.
Open Platform Using Microservices
Concur knows they can’t create the perfect trip by themselves. They need travel service partners and other partners with depth in specific industries, regulations/taxes, and regions. So, they have architected Concur to more easily integrate with the networks of service providers (airlines, hotels, restaurants, ground transportation, etc.) that travelers use throughout their trip, in order to create the smoothest and most automated possible end-to-end experience, from booking through travel and expense submission/
reimbursement. To achieve this integration, Concur uses a microservices architecture, building its applications as small, independent components that integrate together via language-agnostic APIs.
As of now, over 130 applications and services integrate with Concur, available in their App Center, such as Avis, Uber, Lyft, Airbnb, Marriott, InterContinental Hotels, Starbucks, and specific apps for the business (for example Taxback International for VAT recovery5). For these types of partner ecosystems, size matters — the network effect6 is a factor. The more users there are on the network, the more developers and service providers will spend the effort to integrate. And the more useful apps and services connected to the network, the more users join. Concur saw a more than doubling of the use of apps by their clients last year.
Concur Changing SAP
The title of our article on last year’s Concur Fusion conference was How a T&E Company Just Might Transform SAP. This year we are starting to see some of that play out in a couple of dimensions:
- Best-of-Breed Philosophy — For SAP business units, rather than relying on their solution being purchased just because it is part of the larger integrated SAP suite, each business unit needs to stand on its own as a best of breed application. That requires a much more rapid pace of innovation and the ability to integrate easily with non-SAP environments. Concur has set an example for other business units to follow.
- Network of Networks/Open System Approach — Moving to an open, microservices architecture, enables integration across best-of-breed components. An open network architecture lets other applications and service networks (in Concur’s case airlines, hotels, ground transportation, restaurants, etc.) integrate directly into the end-to-end ‘Perfect Trip’ process. Similarly, an open network architecture could allow other business units within SAP to create their version of the equivalent ‘Perfect X’, and integrate an ecosystem of solution and service providers directly into that end-to-end solution. This allows solving problems much bigger than SAP alone can solve.
These approaches and reengineering of products and go-to-market strategies are starting to influence other parts of SAP; first in Ariba and Fieldglass, but also in ERP, HR, and other businesses. Steve Singh, Founder of Concur and now on SAP’s Executive Board, made a salient comment when he was interviewed on stage at Fusion: “If you don’t forget who you are and the things that are important to you, that define you as a human being, it is amazing how you can have an impact and be embraced. We have our views on how cloud software is delivered, and that the only way to succeed is to be totally focused on being the best in the world. That laser focus has expanded throughout SAP. We want to be the best in the world in every space we engage in.” Aiming for those very ambitious goals represents a positive change for SAP.
1 Concur is not small compared to many software companies, but it is small compared to SAP. — Return to article text above
2 We heard from Hendrik Vordenbaeumen, a German SAP employee who owned SAP’s Travel and Expense since 2010 and is now Global VP of Product Management for Concur Expense. He spoke with great enthusiasm about the integration of the two firms and told a story about the initial meeting of SAP’s expense reporting experts with their counterpart at Concur right after the acquisition; how they immediately hit it off and were so excited to talk to each other about the details of Swedish regulations and other arcana that only expense geeks can get excited about. — Return to article text above
3 Marriott, Hyatt, and Starwood are all examples of travel suppliers pushing direct booking. For example, see Marriott Strikes Back at Online Travel Agencies With Another Direct Booking Push. — Return to article text above
4 Concur defines the SMB (Small and Medium Business) segment as 1-999 employees. — Return to article text above
5 Concur mentioned that one of their large customers uses Taxback International. Taxback looks at their expense data and expects to help that customer reclaim overpaid VAT on car rentals and hotels by about $2M in first year (approximately 20% of the VAT paid), without any effort by that customer’s employees. — Return to article text above
6 The network effect refers to how the value of connecting to a network continually increases as more and more users and service providers connect to it. — Return to article text above
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