<B> Portable Becomes Concur</B>
By Mary Ann McNulty
<I>Redmond, Wash.</I> - Expanding its reach beyond expense reporting into electronic commerce, forms management and virtually any other corporate function where automation can lower costs, Portable Software Corp. today announced that it changed its name to Concur Technologies Inc. and acquired a start-up electronic commerce developer called 7Software.
Concur executives took the first step in transforming the company beyond expense reporting on June 30, with the acquisition of 7Software.
The Palo Alto, Calif., firm developed CompanyStore, an intranet-based procurement system to order supplies and track information from the desktop. The founders of 7Software, previously Microsoft employees, built the internal Microsoft Market online ordering system that's touted as saving Microsoft more than $35 million in its first year and is now processing more than $1.3 billion in office suppliers, books and other materials needed within Microsoft. 7Software so far has won two customers for its product, Visio and Syncor International Corp.
"Both of these announcements are really part of an overall expansion of our vision, moving from having a single solution to a suite of employee-facing applications," said Michael Hilton, chairman and chief technical officer of Concur. Coining the term, "employee-facing applications," Hilton is referring to travel expense management, travel booking, front office procurement, budgeting, time and billing, facilities management and human resources self-service. In short, it's "anything that helps an employee become a more productive member of the company and automates the business process that you need to get done as an employee."
Competitors like Ariba are trying to coin the term "operating resource management" to describe the same applications. Others just call them enterprise applications.
Whatever it's called, it's a nascent category, but one believed to have huge potential as more and more corporations develop the internal technology to automate their operations.
Unlike enterprise systems like Oracle, PeopleSoft or SAP, where 5,000 installations is considered a large piece of business, Hilton sees his suite of employee-facing applications being deployed to tens of thousands of users within a corporation--virtually everyone who needs to fill out any kind of form.
With a foot already in the door at more than 125 corporations that have installed XMS, Concur executives believe they have an advantage in convincing corporations to try other applications in its suite. "Leveraging XMS is one of the ways we feel we can win in the procurement space. The market leader only has 11 or 12 customers," Hilton added.
In coming months, Concur developers will be revamping the CompanyStore's interface to mirror the look of its Xpense Management Solution. Hilton expects to have an integrated product by year-end.
"Where we're heading is building a suite of employee-facing applications and tying them all together with a common, browser-based desktop," Hilton said. A manager would go into the same module to approve a vacation request, computer purchase order or expense report.
As they've begun to implement expense reporting and other applications designed to lower operating costs, corporate executives have complained that the disparity of interfaces is too confusing, Hilton said.
"Customers are saying they really want a common workflow, to tie these different processes into a single source," Hilton said.
In terms of expanding the suite, Hilton wants to have at least one other application to debut sometime next year, most likely through another acquisition rather than development.
"HR self-service space is the one we've spent the most time researching," Hilton said of his strategic planning efforts. The concept would be to take virtually any paper form that employees now must fill out, from sick time to W-2 to 401K deductions, and automate it.
CompanyStore is essentially an online catalog that companies can deploy throughout their organization to simplify and lower the cost of purchasing office supplies, books, temporary help, computers, marketing services or materials. It is typically used for low-dollar, high-volume items, Hilton said. As with XMS, the application is licensed on a per-seat basis. For 1,000 users, the price would be $150 a seat, plus the costs of implementation and annual maintenance.
"One of the biggest places you save money is by being able to dramatically reduce the number of vendors--much like in travel spending," Hilton said. "By really allowing the customer to control purchasing, you can control the costs and leverage your buying."
Hilton said that Microsoft is saving $19 million a year using the system and has reduced the number of office supply vendors it uses from hundreds to just one. Visio, with about 400 users, saved about $1 million in its first year of operation.
"We've been looking at this space for about six to nine months," Hilton said. "We looked at seven or eight different companies. We think 7Software's domain expertise and the people behind the product are unique. They built a very large scale production before at Microsoft."
Beyond that, Hilton said, Portable executives were drawn to 7Software due to the similarity of technology choices of both companies. Both are browser-based front ends, but use no Java. This approach allows both companies to easily deploy systems in most companies, which generally are not using the latest technology.
One of the strengths of the CompanyStore, Hilton said, is its ability to take credit card feeds from procurement cards--much like its XMS product can take feeds from T&E cards--to automatically reconcile purchasing. To date, developers have created links so that the e-commerce software can take feeds from American Express, and they expect to expand that soon.
The Portable name had to go, company executives decided, as it no longer fit the mission. Portable started out selling end-user expense software. "As we evolved over the years, the name really didn't fit. We really felt the name Concur is abstract enough" to fit no matter what area the new company decides to automate.
7Software's 12 employees have all relocated to the Seattle area. Hilton declined to discuss the purchase price or other terms of the acquisition, other than to say it was financed through conventional means. Going forward, he plans to grow the company aggressively, most likely through cash or stock.
Over the past year, Portable executives have told analysts and the press that their plan was to take the company public. Hilton would only acknowledge that "it's something we're constantly evaluating.