Concur’s announcement of its latest quarterly results reminded me of the great example they have set for other companies trying to be Industry in the Cloud (IC) providers. Concur announced that they just completed their first $100 million quarter and would finish the year at a run rate of $500 million annually. This run rate puts them at a size comparable to Ariba.
Concur has made many good decisions and executed on them very well, establishing a really successful company with a $3 billion market capitalization. (To be clear, I am not touting the stock and I own no shares. I thought the stock was expensive at $30– it is now $57!)
For those of you unfamiliar with Concur, they began by automating the lowly expense report, the scourge of every of every traveler and every A/P department . They simply made it easier for employees to submit their expense reports in some way other than excel, added some workflow and added integration into A/P for a document that, by definition, did not involve a purchase order. Concur also began as a traditional behind-the-firewall provider. Think of it as a niche procure-to-pay segment, where procurement is done by travelers using credit cards and payment is employee reimbursement.
Saas. One of Concur’s key decisions was to go SaaS from behind the firewall, much earlier than most behind-the-firewall providers. And not only did they go SaaS, they appear to have eventually aggressively tried to move their installed base off the old platform and onto the SaaS platform to avoid having two platforms forever. Both decisions were gutsy, especially at the early times that they were making them.
Ecosystem/Integration. From the start, Concur also made great decisions about building their ecosystem to make the expense report easy to file. They added integration to the credit card companies, hotels, and other travel providers before the others sought to do so. Perhaps Concur’s biggest decision in this regard was to buy a travel booking solution to add to the expense report software. This completed the experience for the traveler and provided even more integration of information. The ecosystem continues to grow through acquisition (TripIt) and integration to taxi providers, Frommer’s, Avis and many others.
Vertical Focus. Concur made a half-hearted attempt to go horizontal with a procure-to- pay (P2P) solution many years ago, but quickly retreated. They have continually flirted with an invoice solution over the years, but they never seem to have allowed these excursions to divert their attention (or resources) from the central goal of deeper penetration of their core vertical, travel. All of their acquisitions, for instance have been travel-related. Strategy is about choosing what to do well and choosing what not to do at all. Despite occasional temptations, they have never strayed far from the strategy of depth in the travel and expense procure-to-pay process.
Consolidation. A few years ago Concur bought Gelco, one of their few remaining competitors of size. Now most buyers are hard pressed to name a second credible vendor in the space.
Ariba, SAP, Oracle and countless other providers had/have travel and expense solutions almost as long as Concur has, but by specializing, going deep into the requirements of the category and its users, and executing relentlessly, Concur has turned the lowly expense report into a company nearing half a billion dollars in revenues.
For those software providers attempting to be all things to all companies (that’s you, about 500 P2P and e-invoice providers!) take heed.