Expense Partners Are Changing Fast

<B> Expense Partners Are Changing Fast</B>
<I>ADP Sells Out To Concur, Galileo Allies With Vin.net</I>

By Mary Ann McNulty

In a dizzying pace of developments in the nascent automated expense reporting market, ADP has decided to exit the market after just two years and is believed to have reached an agreement--still unsigned at press time--to sell its business to Concur Technologies, Redmond, Wash. The developments have prompted expense service bureau vendor RPL Expense Management Services Inc. of Dresher, Pa., which has been licensing ADP's software for use by its largely pharmaceutical clientele, to hasten development of its own Web-based software, with release now slated for April.

Separately, Galileo International and Value Integrated Network, Barrington, Ill., formed an alliance in which Galileo acquired a "minority equity stake" in Vin.net, which bought the former's Travelmaster client-server expense software. The pact calls for both companies to co-brand, produce and market T&E reporting solutions.

ADP's Dan Bove, vice president of strategy and business development, confirmed plans to sell the business, but declined to offer further details. A top priority in the sale negotiations, Bove said, is to ensure that the new owner will fulfill requirements of customers who need expense reporting now and in the future.

One source, who spoke on the condition of anonymity, said the expense market simply hasn't grown big enough, fast enough for ADP to continue sinking resources into it. "There is no hundred million dollar expense market, yet," the source said. Consequently, ADP approached a couple of existing expense vendors, to gauge interest in acquiring the business.

When asked about ADP, Concur's Natalie Hadfield said, "when a deal isn't signed yet, I can't comment." Last month, Concur filed its revised initial public offering documents with the Securities & Exchange Commission. SEC rules prohibit company executives from speaking publicly about IPOs until after they begin trading.

RPL began developing its new Tracer by RPL software earlier this year--before any of the recent events--when it learned that ADP planned to alter its service bureau relationship, said Robert Rayca, vice president of RPL. In 1997, ADP and RPL formed a partnership in which RPL licensed ADP's e-Xpense software for use by its service bureau clients and agreed to handle the outsourcing for any ADP clients that at that time were simply licensing the expense software. In August, ADP announced that it was bringing expense processing inhouse, relying on RPL only for receipt scanning (<I>BTN,</I> Aug. 3).

Tracer offers three different user interfaces: an online e-mail version, a Web-based version for Internet and intranet use and a remote client version for dial-in connectivity. The software is expected to go into beta test in January. Existing RPL customers using ADP's e-Xpense will be able to continue using the software.

Users will be able to import charge card data into their expense reports to ease data entry, automate entry to corporate general ledger and financial systems, and set up direct deposit employee and charge card settlements, Rayca said.

RPL will continue to offer clients a touchtone phone option to file expense reports. Since its founding in 1994, RPL has positioned itself as a full-service expense processor, relying on others for software provided to users.

"We work for a corporation's automation and processing perspectives, rather than trying to restrict our clients' options," Rayca said. "RPL's systems easily interface with any off-the-shelf product or client-developed expense report package." RPL processes expense data from three commercially available expense reporting packages and from one client-developed system.

RPL processes nearly 700,000 expense reports a year for several large East Coast corporations. Tracer will be offered at no extra charge, as part of its service bureau expense report processing package, priced at $2.50 to $3.40 per report. RPL document processing fees, which include scanning, imaging, policy audit and document archiving, range from $2.25 to $3.70 per expense report, Rayca said.

The document processing service captures the complete expense report and supporting receipts on a compact disk, which the client then can store. From 3,000 to 5,000 expense reports and receipts are held on each CD. RPL also offers a service in which its own employees audit expense reports, according to corporate policy, and e-mail employees to explain any problems. RPL provides clients with a monthly audit report that details the types and extent of problems, to help companies revise policy or make other adjustments.

In the separate Galileo/Vin.net deal, Travelmaster customers will get the option to migrate to the Vin.net product or continue to use Travelmaster. Since first introduced in the late 1980s, more than 300 companies have purchased Travelmaster, including many government entities and cost-reimbursable contractors. However, only the current version is year 2000 compliant, forcing some existing users to upgrade or find other systems in the next year. For those who elect to continue using Travelmaster, the partners will develop a browser-based interface to ease data entry.

"Through this alliance, we're able to offer our corporate customers very attractive T&E options, directly or through our travel agency customers," said Michael Foliot, senior vice president of Galileo. "These include updates to the Travelmaster product's current systems or Vin.net's own T&E system, along with new products we're jointly developing and marketing. The added product support, coupled with the software options, will add significant value for our corporate customers."

Vin.net chief operating officer Pam Furey said the alliance "provides us with extensive global reach via Galileo's distribution network and leverages our introduction into many international markets through an experienced list of early adopter Travelmaster customers."

Although Vin.net licenses its software to corporations, all of its customers are using its turnkey, service bureau setup, relying on Vin.net to handle the installation and management of the system.