Concur Bets Big on Mobile, the Next Big Revolution in Biz Travel
Concur Technologies is often cited as one of the Seattle area’s under-the-radar success stories: A growing public company, founded in 1993, that sells travel and expense reporting software to businesses big and small.
Instagram, it definitely ain’t.
But the cool-obsessed technology industry, whose investors and insiders tend to reward swagger, is missing something if it hasn’t looked at Concur’s recent run of investments and technology initiatives.
Those changes tell the tale of a company (NASDAQ: CNQR) that is betting on the next big change in the digital world, the rapid shift of computing into cloud-based services delivered instantly to users toting powerful mobile devices.
It promises to be a much bigger shift than the original change from analog to digital that got Concur started.
If the Redmond, WA-based company can navigate this huge change in how people find and pay for travel, and hold off Wall Street’s hunger for short-term results, Concur could eventually lose that “quiet success story” label.
Many people probably know that Concur bought TripIt for up to $120 million in early 2011, a big play to consolidate modern online travel booking with Concur’s existing products. “Today, if you look at the U.S. market for corporate travel, 50 percent of all online booking of corporate travel occurs in Concur,” CEO Steve Singh says.
Less talked about are Concur’s investments in other small companies. Concur is the largest shareholder in RideCharge, the makers of the Taxi Magic smartphone app for booking cabs, after leading a $4.6 million investment in the startup in 2009.
(RideCharge is headed by Tom DePasquale, a former Concur executive who joined the company through its 2006 acquisition of Outtask—Concur’s first foray into adding travel booking services.)
In addition, Concur has a stake in Room 77, a San Francisco startup that promises to help travelers select their own hotel rooms by showing the layouts and even window views before they check in, similar to how airlines let you pick specific seats on a plane. For its overseas operations, Concur also invested $40 million last year in Cleartrip, an online travel-booking service focused on India.
The company also has been building a developer platform that offers outside coders, existing customers, and travel suppliers the ability to tie their software into the Concur system’s 18 million users at 15,000 companies—and even build new apps that could do things the larger company might not be equipped to handle.
“There’s going to be a set of people in Chile who will do a better job of building out train and bus and hotel booking than we can ever do, because they’re in-country and they’re there focusing on that problem,” Singh says. “Our view is, we don’t care if it’s specific to five people in the world or applicable to all 18 million users.”
Wall Street, however, would like to see higher profits on Concur’s considerable revenue stream, which is expected to hit about $440 million for this fiscal year. While some analysts have been bullish following Concur’s winning of a large, multi-year travel contract with the federal government, many have the stock rated as a “hold.”
Concur could stop re-investing its money and deliver 30 percent operating margins that would surely please Wall Street, Singh says: “If we wanted to do that, we could do it overnight.”
But that doesn’t fit the company’s philosophy of developing its business for the long term. “Your job for your shareholders is not just to build a great company today, but it has to be a great company on a sustainable basis,” Singh says.
For just about anyone in the software business these days, sustainability means having a clear vision for how mobile computing will transform your customer base, your products, and your competition. The U.S. is just now starting to see smartphone penetration reach more than half of all mobile phone users, and tablet computers are being pumped out by everyone from Apple and Samsung to Barnes & Noble and Toys ‘R’ Us.
That probably goes double for Concur—travel is, of course, done on the go.
“If you go back 18 month ago, we had roughly zero users on our mobile products. Today, we have about 2.5 million mobile users,” Singh says. “Somewhere over the next three to four years, it’ll be the majority and perhaps even all users whose primary access to Concur will be through mobile devices.”
So what will that mean for the average business traveler? If Concur’s sights are set correctly, some pretty cool stuff could be coming down the pipeline soon.
Booking flights through a smartphone app with voice commands, Singh says, is probably less than a year away from being a reality. And advances in on-the-fly hotel check-in are close behind.
“When I get off a flight, why can’t I start a check-in process to my hotel as I’m walking off a jetway?” Singh asks. “There’s no reason not to. Concur knows that the flight landed. Concur knows that you’re staying at the Sheraton.” That should be available in the next 12 months or so, he adds.
A little further down the line are things like near-field communications readers tied to hotel room doors, which could let travelers with NFC-equipped smartphones have a security code sent to their handset after they check in, giving them access to their room with a wave of the phone.
Singh says the timeline for that kind of technology will be mixed—some hotels will be upgraded to handle NFC technology in six months or so, but others will take years (to say nothing of the rate of adoption of NFC in more smartphone handsets, something Apple recently declined to include in the iPhone 5).
That’s a long way from the days of paper expense forms. Less than a decade ago, Singh says, some very large companies still employed teams of workers who did nothing but turn paper expense reports into digital data.
“Sprint had 40 people who just rekeyed expense reports,” Singh says. “My God, that’s a terrible experience. Do you think those poor people wanted to do that?”
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