Expense Vendors Retool To Reach Buyers

<B> Expense Vendors Retool To Reach Buyers</B>

By Mary Ann McNulty


Early adopters of automated expense reporting systems have traditionally been the big spenders who have the most to gain by streamlining reimbursement processes. The waste inherent in expense reporting, however, is forcing even smaller companies to reengineer such processes. It also is prompting vendors to recognize that, with a little retooling of their offerings, pricing, servicing or platform--primarily moving to Web-based offerings--their products can easily extend to this market.

Midmarket corporations rapidly are recognizing the financial opportunities offered by streamlining and automating expense reporting with links to their payment systems and maybe even automating booking, said Tom Wilkinson, president of the Travel Management Group in Alexandria, Va.

For the midsize market, selling senior management on the need to spend $50,000 to $500,000 to license, implement and market a new automated travel process has been daunting. But, the rapid deployment of Web-based systems--even the hosting of all servers--along with service bureau environments are making the investment of both time and money much more feasible for midmarket companies considering such technology today.

"Overall, they've been somewhat slower moving forward on this, probably because they haven't done the larger analysis" on business process reengineering that most large companies have done as part of an enterprise resource planning solution, Wilkinson said. But "they're catching up very quickly. The waste inherent in the traditional expense reporting process is apparent to managers at all kinds of companies."

Consultant Grant Caplan, principal with Consulting Strategies in Houston, likewise has seen midmarket companies' interest in expense products ramp up in recent months.

Recently studying the capabilities of six expense vendors, Caplan found that midmarket companies now have many more expense options than the largest companies, primarily due to scalability. With that retooling, products designed and marketed for the largest companies can be scaled down in functionality and cost to meet the midmarket needs, while products designed and marketed for the small market can be scaled up.

"If you're General Motors, there are really only two products to choose from--those that have proven their ability to handle 10,000 concurrent users," Caplan said.

Midsize companies, which Wilkinson defined as those with U.S. booked air volume of $4 million to $15 million, slightly smaller than BTN's range of $5 million to $30 million, face different issues in selecting automated expense solutions than their larger counterparts.

On the one hand, most companies of this size haven't made the huge investment in an enterprise resource planning system, Wilkinson said. Therefore, they don't face the challenge of selecting only expense solutions that can easily integrate. Yet, they do walk a fine line in selecting a system that will integrate with whatever else they have installed for human resources, accounting and general ledger. "Perhaps they're not as far along in developing enterprise-wide solutions and implementing them. On the other hand, that means they don't have the need to integrate expense into ERP," he said.

The smaller the company, the more likely it is to pursue outsourced solutions, Wilkinson added. "Several major vendors, like Concur and IBM, are moving into that part of the market, which has been dominated by Gelco."

IBM last year announced plans to repackage its offering--perhaps in a service bureau environment--as a way to appeal to smaller companies scared off by its typical six-figure price tag. IBM's latest version, a Java Web-based product, also allows the company to offer the option instead of the client-server environment.

Service bureau vendors Gelco Information Network in Minneapolis, RPL in Dresher, Pa., and Value Integrated Network in Barrington, Ill., have recognized that with little start-up costs, their offerings appeal to companies of all sizes. Although Vin.net offers its software in both a service bureau and license basis, all customers are using the service bureau. The low-cost leader in outsourced expense processing, RPL has been offering service bureau options for under $7 per expense report, but has been surprised that both large and small companies are interested in its full range of outsourcing options, from automated and manual auditing to receipt imaging/storage and trend analysis.

While he is definitely seeing more middle market companies sign on as customers, Robert Rayca of RPL said the returns on investment aren't always as rich as in large companies. The problem, he said, is that accounting employees in midsize companies frequently get to know their customers and can almost predict the violators and their errors. "At the same time, perhaps these people can be better used in accounts payable," he added.

On the Go Software in Sunnyvale, Calif., designed its entire offering, as well as its sales and marketing efforts, for the midsize to small market, lured by research that indicates there are 50,000 midmarket companies with annual revenue of $25 million to $500 million and from 25 to 1,000 travelers. Others, like Captura Software and Concur Technologies, have bought up their competitors in order to better position themselves to go after the midsize market.

Captura last year purchased Workflow Solutions and Concur acquired ADP's expense offering, primarily to gain access to hundreds of thousands of midsize market leads. Other vendors, including Extensity, InterPro Software and Necho Systems, already are touting customers in both large and middle markets.

Emphasizing the benefits of automation and process streamlining, even payment system vendors are pushing their card products to the middle market today, as they recognize the vast potential to deploy new solutions, rather than convert from competing brands.

"You don't have to be a Fortune 100 company to take a look at what's going on in technology today," noted Mark Walton of Travel Solutions Group, Rolling Meadows, Ill.