SAP‘s recent $8.3b deal to acquire on-line travel and expense management vendor Concur can be read a few ways. The first, and most positive one, is that it shows that SAP is continuing to try and broaden its appeal, diversifying from being “the ERP company”.
Another view is that SAP has had a few bites at the cloud cherry and mostly failed. Concur brings a massive cloud infrastructure with it, and SAP can make use of this in other ways.
A third, less charitable view is just that SAP has a large amount of money that it needs to be seen to do something with – and Concur was around at the right time and place.
Which one is most likely? I would plump for diversification, with a bit of cloud thrown in. SAP acquired SaaS-based human capital management vendor, SuccessFactors, in 2012. It can be argued that Concur fits quite nicely into this vein – both are SaaS; both deal with managing employees. This takes SAP from being the ERP solution for a few to a provider of functions for everyone; becoming a far stickier and embedded supplier that is even harder for an organisation to extricate itself from.
However, such a simplistic view hides many problems that could now face SAP as it integrates Concur. Travel and expense management is complexity that only a few software vendors have managed to deal with. It is not a simple replacement for employees using Excel spreadsheets to log their expenses – but requires deep domain expertise in areas such as multi-national tax laws, per diem rules, how travel management companies (TMCs) operate, how to interact with financial institutions on a broad scale to manage company and personal credit cards in a secure and effective manner and so on. Concur understands this in spades – but what impact will SAP have on this?
Sure, SAP understand the first part of this: ERP has had to deal with multi-national currencies and tax laws for some time. The rest, though, is new territory for SAP.
Not only are the basics of expense management a difficult area, but Concur has been pushing the boundaries of what it does. In the US, it has various deals for example with integrated taxi cab expense management, where the employee uses their mobile phones to identify a nearby cab and hail it electronically, and then pay the cab driver via the phone with the expense directly integrated into expense claims. Other ongoing work has been looking at how travellers can have their whole trip automated from booking through travel and stay with capabilities such as the use of near field communication (NFC) as a means of booking into hotels without a need to go to the check in desk, and for mobile phones to act as electronic keys to unlock the hotel room door. Such work requires a certain mindset and understanding of the travel and entertainment expense world – and the investment of large amounts of money.
Also, with Concur’s 2011 acquisition of travel details management vendor TripIt, SAP finds itself with a more consumer-oriented product: taking it well out of its comfort zone.
It leaves SAP with a couple of choices – the first is to pretty much leave Concur as a separate entity, trying to keep all its existing staff and domain expertise to continue focusing on what Concur has been calling “the perfect trip” experience. SAP can provide Concur with the deeper pockets to continue work in achieving the perfect trip – but is SAP up to understanding this and achieving any pay back on such investment?
For customers, they now find themselves with the unfortunate impact of moving from dealing with a small but fleet of foot and interesting supplier, to a rather staid and enterprise-focused behemoth. I believe that this will raise flags for many customers: those who have been dealing with Concur in the past (travel and expense management professionals) are unlikely to be the ones in a company who have been dealing with SAP, and many companies will have ruled out SAP for other functions such as ERP and CRM and have gone for others, such as Oracle or Microsoft. Dealing with SAP may then be seen as the thin end of the wedge, with rapacious SAP salespeople trying to usurp the incumbent ERP and CRM vendors.
As with most acquisitions, the SAP/Concur deal will raise worries in may existing customers’ minds, and will open up opportunities for Concur’s competitors. As stated earlier, the market is not exactly flush with such companies that understand travel and expense management well and have software that addresses all requirements. For companies such as KDS and Infor, the SAP/Concur deal must be seen as opening up opportunities.
For Concur’s existing customers, I would advise caution. The two companies’ view of the world are not the same – watch to see how SAP manages the acquisition; watch how many staff start to move on from Concur to join its competitors. If it becomes apparent that SAP is trying to force Concur to fit into the SAP mould, maybe it will be time to look elsewhere.