Expense reporting vendors Fidesic and Payservice.com are gaining traction in the midmarket, with their no frills, low-cost expense management systems for companies with small and midsize spending volumes.
Seattle-based Fidesic, which in December 2003 acquired Onrain, this year announced its first expense reporting contracts with small companies, including Photospin, CapitalStream Healthcare Payment Systems and Lieberman Research Group. Charlotte, N.C.-based Payservice.com recently signed Chempoint, GBH Communications, H&H Systems and Design and Canaccord Capital as customers of its ExpenseVisor solution, which was launched in the fourth quarter of 2002.
To make their products attractive to their target market, Fidesic and Payservice.com are boasting quick and easy setup and configuration with low-cost, hosted solutions that require little or no attention from internal IT departments. The two vendors offer comparable pricing schemes, with setup fees that are below those of established vendors. Payservice.com charges between $1,000 and $1,500 for setup. "The setup fee for an organization of approximately 1,000 registered users would be $1,500," said Fidesic vice president of marketing Cher Paige.
Monthly fees range from $4 to $7 per user per month for Payservice.com, while Fidesic charges $1 per month per registered user, "plus an additional $9 per active user per month," Paige said. Active users are those who file at least one expense report each month.
While the expense market at large is migrating toward the hosted solution as the dominant vehicle for expense management, the model works especially well for midmarket firms.
Christa Degnan, an Aberdeen Group analyst specializing in expense management, said growth in the market hinges on the hosted model so companies can avoid the costly setup fees for license solutions. In addition to the cost structure, hosted products put the burden for setup and maintenance—and ongoing development—on the vendor.
Fidesic said it would take the approach of bundling its expense solution with its other offerings, while still making all available on their own. The company said its most recent customers have opted for both the expense offering and its automated payment solution.
Like many companies in the midmarket, Payservice.com customer H&H Systems and Design had been using modified spreadsheets for employee expense reporting until deploying ExpenseVisor last year. Likewise, nearly all of Fidesic's customers have migrated from Excel-type computer programs to the online environment, according to Paige. Sixty-one percent of midmarket firms had not opted for an online solution, according to BTN research conducted nearly one year ago
(BTN, June 23, 2003).Fidesic's management has some history in the expense management market. CEO John Matsuo was president of Concur Technologies' large-market division until January 2001. Meanwhile, Paige—who co-founded Onrain with John Toman—was CEO of Workflow Solutions when it was sold to Captura in 1998. Paige remained at Captura until 2000, two years before it was sold to Concur.
Onrain's offering attracted Matsuo's eye while his company was on the prowl for an expense component to add to its roster of automated "business-critical financial" software and services. Matsuo said there had been some clamor among his company's customer base for an expense reporting module. "It was a very logical fit," he said. Fidesic's products include software systems and services that automate payables, payments and invoice delivery and payment.
"Anywhere between about 50 and 3,000 employees is the market we've been targeting with our payables and payment solution," Fidesic's Paige said. "That's the broader midmarket. The real sweet spot is 100 to 1,000 employees. There's hundreds of thousands of companies in that space."
Payservice.com claims to support a larger range of company sizes, targeting those with between 10 and 10,000 employees.
Degnan said Onrain's offering has more advanced reporting, customization options and functionality, while Payservice.com is more barebones.