Concur, SAP, data and the pivoting of corporate travel

The rumoured bidding war is over – Germany-based SAP emerged as the victor in the battle to acquire Concur. The deal for …

The rumoured bidding war is over – Germany-based SAP emerged as the victor in the battle to acquire Concur.

The deal for the US expense management and corporate travel IT company was $8.3 billion, more than three times as that much paid by Priceline to buy OpenTable earlier this year.

SAP was mostly known as a back office financial vendor but has clearly set its sights on expanding the footprint of the company.

First of all, there is some obvious synergy between Concur and SAP.

And with travel being so pervasive across every vertical industry, Concur is an obvious fit.

SAP, it is worth recalling, is no stranger to travel, having a partnership with Amadeus back in 1999 (here is a copy of their joint press release).

The partnership was renewed this year.

Fifteen years ago it was all about capturing the back office interface. It was simple – Amadeus controlled the front and SAP controlled the back.

However, by 2014 the focus had changed into managing a corporation’s money and making more effective use of the cash.

This reflects the underlying changing nature of corporate travel in the second decade of the 21st century.

For many years, corporate travel has been regarded as a main-stay of the travel agency and GDS worlds.

Travel management companies and GDSs shared common values and a similar view of the marketplace – it was a symbiotic relationship.

But the pivot is on.

New horizons

This year’s GBTA sessions in Los Angeles, for example, demonstrated a less-than-subtle shift, with a new focus on so-called sharing economy companies such as Uber and Lyft.

But that’s not the only indicator of the change that’s occurring.

Last year’s ownership change at American Express was another example of the pivot in corporate travel.

This shift is driven by several reasons.

There is a change in the corporate traveller, their habits and personas (think Millenials rather than Mad Men).

Furthermore, one element that has caught the eye is the actual evolution of conventional travel management itself, not least as a result of the changes of its customers.

The former heavy-handed compliance policies are fading in favor of budget-driven management tools like, well, Concur’s Open Booking platform.

Of course, this is not new – the general decline of corporate travel has been occurring over time.

One cannot ignore the blood bath that followed the global financial crisis in the late-2000s. The consolidation of the US airline space has also caused a traveler backlash of sorts, with the resulting higher fares having hit corporations and their travel budgets.

That backlash is quite acute to the entity footing the bill – the corporate travel department under the chief financial officer.

Why Concur?

Concur, with its detailed expense management platform, is seen as a friend to that process.

The impact of all this is slowly rippling around the industry.

Even the good news doesn’t have that much of a silver lining. There are reports of growth in the GDS segments (after years of decline) as mentioned in the ARC numbers, but the growth does not match the market place of total airline traffic growth in the US.

The same is true outside of the domestic market and across the broader global market.

Concur, whether by accident or design, has managed to find the exact place in the US market which needs its tools to help manage corporate travel in the new world order.

Are the TMCs and the GDSs actually able to achieve that same magnitude of value? Perhaps the answer to that can be gleaned in the fact that the premium of the purchase price that SAP is paying for Concur is about the same level as the total price for the forthcoming Travelport IPO (at the top end of the proposed range).

Data

There is a clear trend on the global scale of acquiring and utilizing information about customers – specifically, all data is good data, but specific data is great data.

Corporate data has not had a lot of visibility, as previously the value was hard to leverage. The levels of personal data and the normal reticence of companies with regards to information about their employees are contributing factors.

But as Oracle has shown, collection, collation and the leveraging of personal information – even if anonymized – is critical to being able to understand and influence customer behaviour.

Indeed this can be done with today’s tools in a far better way and with greater impact than traditional hands-on, policy-driven tools.

Oracle has shown that owning customer data is key to pre-eminence in the data driven ecommerce world we now live in.

SAP knows that the far bigger Oracle is ahead in its ability to tap into both pure data and meta-data (data about data), which can then be extracted from transactions.

It also sees that the value of the customer data can be used across other sectors and into the consumer market, if Concur and its family of companies can leverage their currently big footprint (in corporate) into the broader travel sector.

Data – itls all good, all the time. And it is now an incredibly valuable commodity, because there is so much that can be leveraged with it.

Concur is of crucial value in this foodchain by being a starting point to the corporate environment.

Owning key transactional detail data really holds a lot of value.

And now, it seems, someone has finally figured that out.

NB: Corporate travel image via Shutterstock.