Concur Technologies, Inc. was incorporated in 1993 as Portable Software, and soon offered as its first product a shrink-wrapped retail application to automate travel and expense (T&E) reporting for individuals. It expanded its product line in 1996 by offering a client-server travel and expense package called Xpense Management Solution (XMS), and again in 1998 by bringing XMS to the Intranet. The Intranet version of XMS - recently renamed Concur Expense - now accounts for the majority of Concur's travel and expense-related revenues, which in turn are the bulk of the company's overall revenues.
Concur has recently been expanding its capabilities through acquisition. The ten-person 7Software was acquired in 1998 - two years after 7Software was incorporated. 7Software had a product called CompanyStore that was to be used to automate the procurement of routine items such as office supplies, furniture, computers and expendables; these are generally referred to as MRO goods (for "Maintenance, Repair and Operations"). It was at this time that Portable Software changed its name to Concur and announced its EmployeeDesktoptm (now called Concur eWorkplace) strategy of moving past the T&E market. The new strategy is to offer a single desktop platform for all in-house functions, including T&E, procurement, Self-Service Human Relations (SSHR), time and attendance, and facilities management.
In June 1999 Concur acquired Seeker Software, a provider of Web-based human resource self-service applications, in order to incorporate The Seeker Workplace (now called Concur Human Resources), Seeker's suite of HR employee and managerial self-service Web-based applications, into EmployeeDesktop (now called Concur eWorkplace, see below).
In October of 1999 the company renamed its product line to Concur eWorkplace. This product promises workplace access to T&E management, travel booking, Web-based purchasing, HR processing, and other functions yet to be named. Its announcement was marred by a simultaneous release of preliminary fourth-quarter financial results significantly below analyst expectations - the difference was approximately $3 million out of an expected $12 million. Chairman/CEO S. Steven Singh, a co-founder with Michael Hilton, attributed the shortfall to unexpected delays in closing business, due in part to a lengthening of the sales cycle brought on by their introduction of three new products during that quarter. Concur has had some concerns about its sales force as the company has transitioned from a single product to a corporate portal positioning, and has addressed these with new hires at all levels.
Concur has attempted to paint itself as the challenger to Ariba, the acknowledged leader in E-procurement applications, although Concur is not the clear number two in that market. However, Concur's wider strategy of being a single solution for all of what it calls the "workplace eCommerce solutions" certainly calls for it to go head-to-head with the E-procurement leader. This is because E-procurement is widely seen as the most significant business-to-business application area. It is the one that most significantly impacts a corporation's profitability.
The MRO procurement area is in the midst of turbulent change as the market morphs faster than the definitions can keep up. Concur's differentiation against Ariba early in its strategy was based on its broader range of products, primarily its T&E product but also its SSHR solution delivered through its integrated front-end portal, and its intent to deliver to smaller companies than were within Ariba's field of vision. Ariba has taken initiatives to reach smaller companies as have other vendors.
Concur's response to the small and mid-size market is more ambitious than those of its larger competitors. In line with its position as a provider of a full range of desktop services, Concur announced its ASP (application service provider) model in which its complete product line is available for companies to use via the Internet. These applications are operated by Concur, using Exodus Communications as a host. They offer the same capabilities as the software a larger firm would purchase and install on its own servers.
Also confusing the issue in E-procurement is that the line between product developer and impresario is becoming very fuzzy. PurchasePro, for example, does not have any "product" at all. Its function is to create public and private marketplaces where suppliers and buyers come together. Ariba and Commerce One do have software products, in both client-server and Internet versions, but also devote considerable effort to building markets and aggregating diverse vendor content into unified catalogs. Concur, which began as a software vendor, has also created a marketplace, Concur Commerce Network™, which serves as a single site for its customers to procure goods from a wide variety of vendors.
Another significant problem for all players in this arena is to integrate with a company's existing back-end processes, which may range from legacy products to integrated ERP solutions. The latter are especially important because the lagging ERP industry, seeing browser-based application deployment as its best market opportunity, will be a competitive player. Concur's approach to these problems is to provide the technology necessary to link to all the major ERP systems.
Concur has partnership agreements with all of these vendors and has so far had no difficulties in obtaining the information needed to build interfaces. However, there are some indications in other parts of the industry that the ERP vendors, who are attempting to remake themselves into E-commerce providers, are becoming reticent about being helpful to companies they now see as competitors. If this becomes a trend then vendors like Concur could be squeezed; however, we doubt that it will pass the annoyance level.
Concur's customer base is comprised of more than 320 companies, representing over 2.4 million employees. Companies ranging from 50 to 200,000 users have selected Concur's products.
The company recently hired a seasoned procurement specialist, Mark Sullivan, as Vice-President and General Manager of Concur Procurement for its Large Market Division. Mr. Sullivan most recently served as chief procurement officer for Imation Corp.
Vendor Strategy and Trajectory
Concur will announce Version 6.0 of its Concur eWorkplace product for Q2 of 2000, and will be putting it into beta in the near future. This is the version of the product that will offer the unified single interface - from a single login to integration at the database level - that is needed to complete its picture for being a provider of a true desktop product suite.
No one can deny that Concur has a compelling case. To buy similar applications from other vendors requires separate integrations and employee training. Once Concur has placed one of its applications inside a company, the version 6.0 promise is that addition of other functions is nearly seamless - and both faster and cheaper than the alternative.
Already selling based on the promises of Version 6.0 as much as on the functionality of the individual modules, Concur's strategy relies on leveraging its leadership position in T&E solutions, its growing position in SSHR, and its more than 2.4 million current users to sell its other applications to its customers. At the same time, new sales prospects for a single application are treated to the vision of workplace integration. That this is a message that appeals to executives is proven by the fact that HR and Procurement executives frequently attend the sales presentations of the T&E product.
For Concur, leveraging that leadership position does not equate to emphasizing repeat sales. Concur believes that the key to winning is to aggregate as many sites and users as possible. Thus, their sales strategy is to emphasize new customers rather than repeat sales. Also, they are taking the move from product vendor to suite vendor very seriously. As an example of how it permeates their thinking, the Concur.net marketplace will extend past MRO or capital assets to include suppliers of travel and HR products. The latter offering could be especially attractive to companies with cafeteria-style benefits plans. Done right it could allow individual employees to manage their benefits offerings without resort to HR staff.
Concur's activities have been devoted to Version 6.0 and to launching its ASP product and its new marketplace. This looks to us to be a well thought-out plan, clearly in line with the overall strategy. We would expect that R&D will continue emphasizing the vision. Look for announcements like these over the next year:
New related application areas, including time and attendance and facilities management. Time and attendance is likely (probability 60%) to be developed internally, but we would expect facilities management to be added through acquisition (probability 85%).
New features to its keynote T&E, SSHR and purchasing products. The national mess with HMO medical care suggests that a natural extension would be to provide tools for employees to manage their benefits accounts right down to tracking submissions to, and payments from, insurers. This may seem to be merely a feature that would benefit employees, and not the employer directly. But we suspect that a good deal of productive desk time is actually spent on the phone trying to get through HMO bureaucracies. Since Concur's Intranet and Internet products already allow employees to access their benefits information from home, a feature like this could actually impact the bottom line. (It's only half tongue-in-cheek to suggest that corporate portals may eventually offer grocery shopping and other consumer conveniences.)
Better integration with emerging XML business standards including Microsoft's BizTalk. Concur has already established itself as having an "open" approach that can work with any other standards, including those used by rivals Ariba and Commerce One. The bulls in the XML standards arena are likely to be kicking up a lot of dust for a while, and Concur will naturally want to track them. Open standards is an especially important story for attracting vendors to its marketplace.
New unrelated product areas. With its excellent rules engine for defining workflow, any area of a business that has complex workflow definitions is a natural for Concur to enter. Document management is one possibility: it is still a sleeping application except in niche industries (like publishing) and a few specialized areas (specifically the E-commerce division of the typical company.
The extent to which Concur's strategy affects operations can be seen in its most recent quarter. Figure 1 shows Concur's Sales and R&D expense history. The large increase in spending in the 4Q99 and 1Q00 reflect a decision to accelerate the process of moving their software to support a Web-based ASP model. This was a response to a much more active interest in ASP products than originally projected. The interest also extended to larger companies - Concur has had expressions of interest from companies with as many as a thousand employees. The payoff has been that of 47 new license customers in the first quarter, 35 were from ASP licenses. (Overall, Concur's spending on R&D and Sales has been about average for the industry - see Figure 2, which shows the most recently reported numbers from Concur and its competitors - a 10K is from an annual report, a 10Q is from a quarterly report.)
SOURCE:http://www.technologyevaluation.com/research/articles/concur-aims-to-be-single-point-of-purchasing-access-15204/
Concur has recently been expanding its capabilities through acquisition. The ten-person 7Software was acquired in 1998 - two years after 7Software was incorporated. 7Software had a product called CompanyStore that was to be used to automate the procurement of routine items such as office supplies, furniture, computers and expendables; these are generally referred to as MRO goods (for "Maintenance, Repair and Operations"). It was at this time that Portable Software changed its name to Concur and announced its EmployeeDesktoptm (now called Concur eWorkplace) strategy of moving past the T&E market. The new strategy is to offer a single desktop platform for all in-house functions, including T&E, procurement, Self-Service Human Relations (SSHR), time and attendance, and facilities management.
In June 1999 Concur acquired Seeker Software, a provider of Web-based human resource self-service applications, in order to incorporate The Seeker Workplace (now called Concur Human Resources), Seeker's suite of HR employee and managerial self-service Web-based applications, into EmployeeDesktop (now called Concur eWorkplace, see below).
In October of 1999 the company renamed its product line to Concur eWorkplace. This product promises workplace access to T&E management, travel booking, Web-based purchasing, HR processing, and other functions yet to be named. Its announcement was marred by a simultaneous release of preliminary fourth-quarter financial results significantly below analyst expectations - the difference was approximately $3 million out of an expected $12 million. Chairman/CEO S. Steven Singh, a co-founder with Michael Hilton, attributed the shortfall to unexpected delays in closing business, due in part to a lengthening of the sales cycle brought on by their introduction of three new products during that quarter. Concur has had some concerns about its sales force as the company has transitioned from a single product to a corporate portal positioning, and has addressed these with new hires at all levels.
Concur has attempted to paint itself as the challenger to Ariba, the acknowledged leader in E-procurement applications, although Concur is not the clear number two in that market. However, Concur's wider strategy of being a single solution for all of what it calls the "workplace eCommerce solutions" certainly calls for it to go head-to-head with the E-procurement leader. This is because E-procurement is widely seen as the most significant business-to-business application area. It is the one that most significantly impacts a corporation's profitability.
The MRO procurement area is in the midst of turbulent change as the market morphs faster than the definitions can keep up. Concur's differentiation against Ariba early in its strategy was based on its broader range of products, primarily its T&E product but also its SSHR solution delivered through its integrated front-end portal, and its intent to deliver to smaller companies than were within Ariba's field of vision. Ariba has taken initiatives to reach smaller companies as have other vendors.
Concur's response to the small and mid-size market is more ambitious than those of its larger competitors. In line with its position as a provider of a full range of desktop services, Concur announced its ASP (application service provider) model in which its complete product line is available for companies to use via the Internet. These applications are operated by Concur, using Exodus Communications as a host. They offer the same capabilities as the software a larger firm would purchase and install on its own servers.
Also confusing the issue in E-procurement is that the line between product developer and impresario is becoming very fuzzy. PurchasePro, for example, does not have any "product" at all. Its function is to create public and private marketplaces where suppliers and buyers come together. Ariba and Commerce One do have software products, in both client-server and Internet versions, but also devote considerable effort to building markets and aggregating diverse vendor content into unified catalogs. Concur, which began as a software vendor, has also created a marketplace, Concur Commerce Network™, which serves as a single site for its customers to procure goods from a wide variety of vendors.
Another significant problem for all players in this arena is to integrate with a company's existing back-end processes, which may range from legacy products to integrated ERP solutions. The latter are especially important because the lagging ERP industry, seeing browser-based application deployment as its best market opportunity, will be a competitive player. Concur's approach to these problems is to provide the technology necessary to link to all the major ERP systems.
Concur has partnership agreements with all of these vendors and has so far had no difficulties in obtaining the information needed to build interfaces. However, there are some indications in other parts of the industry that the ERP vendors, who are attempting to remake themselves into E-commerce providers, are becoming reticent about being helpful to companies they now see as competitors. If this becomes a trend then vendors like Concur could be squeezed; however, we doubt that it will pass the annoyance level.
Concur's customer base is comprised of more than 320 companies, representing over 2.4 million employees. Companies ranging from 50 to 200,000 users have selected Concur's products.
The company recently hired a seasoned procurement specialist, Mark Sullivan, as Vice-President and General Manager of Concur Procurement for its Large Market Division. Mr. Sullivan most recently served as chief procurement officer for Imation Corp.
Vendor Strategy and Trajectory
Concur will announce Version 6.0 of its Concur eWorkplace product for Q2 of 2000, and will be putting it into beta in the near future. This is the version of the product that will offer the unified single interface - from a single login to integration at the database level - that is needed to complete its picture for being a provider of a true desktop product suite.
No one can deny that Concur has a compelling case. To buy similar applications from other vendors requires separate integrations and employee training. Once Concur has placed one of its applications inside a company, the version 6.0 promise is that addition of other functions is nearly seamless - and both faster and cheaper than the alternative.
Already selling based on the promises of Version 6.0 as much as on the functionality of the individual modules, Concur's strategy relies on leveraging its leadership position in T&E solutions, its growing position in SSHR, and its more than 2.4 million current users to sell its other applications to its customers. At the same time, new sales prospects for a single application are treated to the vision of workplace integration. That this is a message that appeals to executives is proven by the fact that HR and Procurement executives frequently attend the sales presentations of the T&E product.
For Concur, leveraging that leadership position does not equate to emphasizing repeat sales. Concur believes that the key to winning is to aggregate as many sites and users as possible. Thus, their sales strategy is to emphasize new customers rather than repeat sales. Also, they are taking the move from product vendor to suite vendor very seriously. As an example of how it permeates their thinking, the Concur.net marketplace will extend past MRO or capital assets to include suppliers of travel and HR products. The latter offering could be especially attractive to companies with cafeteria-style benefits plans. Done right it could allow individual employees to manage their benefits offerings without resort to HR staff.
Concur's activities have been devoted to Version 6.0 and to launching its ASP product and its new marketplace. This looks to us to be a well thought-out plan, clearly in line with the overall strategy. We would expect that R&D will continue emphasizing the vision. Look for announcements like these over the next year:
New related application areas, including time and attendance and facilities management. Time and attendance is likely (probability 60%) to be developed internally, but we would expect facilities management to be added through acquisition (probability 85%).
New features to its keynote T&E, SSHR and purchasing products. The national mess with HMO medical care suggests that a natural extension would be to provide tools for employees to manage their benefits accounts right down to tracking submissions to, and payments from, insurers. This may seem to be merely a feature that would benefit employees, and not the employer directly. But we suspect that a good deal of productive desk time is actually spent on the phone trying to get through HMO bureaucracies. Since Concur's Intranet and Internet products already allow employees to access their benefits information from home, a feature like this could actually impact the bottom line. (It's only half tongue-in-cheek to suggest that corporate portals may eventually offer grocery shopping and other consumer conveniences.)
Better integration with emerging XML business standards including Microsoft's BizTalk. Concur has already established itself as having an "open" approach that can work with any other standards, including those used by rivals Ariba and Commerce One. The bulls in the XML standards arena are likely to be kicking up a lot of dust for a while, and Concur will naturally want to track them. Open standards is an especially important story for attracting vendors to its marketplace.
New unrelated product areas. With its excellent rules engine for defining workflow, any area of a business that has complex workflow definitions is a natural for Concur to enter. Document management is one possibility: it is still a sleeping application except in niche industries (like publishing) and a few specialized areas (specifically the E-commerce division of the typical company.
The extent to which Concur's strategy affects operations can be seen in its most recent quarter. Figure 1 shows Concur's Sales and R&D expense history. The large increase in spending in the 4Q99 and 1Q00 reflect a decision to accelerate the process of moving their software to support a Web-based ASP model. This was a response to a much more active interest in ASP products than originally projected. The interest also extended to larger companies - Concur has had expressions of interest from companies with as many as a thousand employees. The payoff has been that of 47 new license customers in the first quarter, 35 were from ASP licenses. (Overall, Concur's spending on R&D and Sales has been about average for the industry - see Figure 2, which shows the most recently reported numbers from Concur and its competitors - a 10K is from an annual report, a 10Q is from a quarterly report.)
SOURCE:http://www.technologyevaluation.com/research/articles/concur-aims-to-be-single-point-of-purchasing-access-15204/
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