Biz Travel Power Play: Tech Giant SAP Gobbles Up Concur

It was another marriage of global tech titans last week, as Concur, the U.S.-based leader in travel booking and expense reporting, was acquired by global IT company SAP.

Headquartered in Walldorf, Germany, SAP SE has locations in more than 130 countries and a roster of top multinational customers for its business-management systems. This is its second travel-related announcement this year; in June SAP formed an alliance with global GDS Amadeus.

While hints of Concur’s courtship of potential suitors have been in the financial press for several weeks, the news, announced late on Thursday, took many in the retail travel industry by surprise.
 
Phone lines are buzzing
“I hadn’t heard about this,” said one industry executive, reached by Travel Market Report on Friday morning. He added, “Hopefully SAP will have a more friendly and collaborative approach with TMCs than the current leadership.”

By mid-morning, Travel and Transport executive vice president and CIO Mike Kubasik was calling it “another crazy day in the travel industry.”

“My phone’s been lighting up,” he said. “Our industry is used to these kind of acquisitions, but the interesting thing on this one is that Concur bought TRX, GDSX, TripIt, Gelco – they really acquired a lot of companies – and then sold it all to SAP.”

Looking forward, he said, the question will be where SAP will focus, whether on the T&E side or the travel side.

Lots of questions
More than 50% of Travel and Transport’s customers use Concur, and more than 25% of its  large-market customers use some instance of SAP, said Kubasik.

“We’re being told nothing will change but, long-term, will Concur retain its people and its management team? Will this acquisition improve the products and platforms?

“Certainly SAP has a lot of horsepower, but is it portable to travel, how long will that take, and will it cause less focus on innovation?

“The questions we have are the questions we are getting from customers.”

Impact on Concur
Norm Rose, president of Travel Tech Consulting, Inc.,  said the alliance is likely “a good deal for both companies.”

Rose said his biggest concern is that Concur, a company known for its creativity, will be stifled by its new mega-boss. “I’m hopeful its innovative spirit will be maintained and that it will be free enough to continue to innovate,” he said.

On the plus side for Concur, the acquisition will give the company access to SAP’s massive client list of global customers and surely help it grow – a fact that is both good news and bad news for other TMCs, Rose suggested.

What it means for TMCs
Concur is both an ally and a competitor to TMCs, Rose noted, as many companies embrace open booking and resell expense management as a service.

“It could be a positive thing, that Concur will gain greater integration with corporate ERP systems. But I don’t know what the shift will be and how that will impact other travel agencies,” he said.

The acronym ERP refers to the “enterprise resource planning” software that is SAP’s core product. ERP systems are sets of integrated software products that handle many different business tasks, providing end-to-end management across the various functions of large corporations, from sales to human resources to finance.  

Building on strengths
At Whirlpool Corp., senior manager of global travel services Madia Sargent said she had few concerns about the ripple effects of the new alliance. “As an SAP client and a Concur client, this may actually enhance our partnership,” she noted, adding: “Great move for my friends at Concur.”

Indeed, Concur and SAP stressed that the acquisition will enhance the position of both players; both are cloud-based software suppliers that together have more than 50 million users. In their announcement, the firms said the move will help Concur expand overseas and into the large corporations that are at the heart of SAP’s customer base.

Concur brings a lot to the table as well: It will help SAP move downstream, introducing it to Concur’s customers, only 30% of whom now use SAP products. And SAP can market Concur’s expertise in U.S. government travel, where Concur has elbowed aside traditional players like Carlson Wagonlit, to its customers abroad.

Frosch Travel weighs in
At Frosch Travel, meanwhile, vice president of Concur platform sales and service Steve Sedgwick said SAP’s $8 billion investment in open platforms may well change the travel distribution model. It also offers a new opportunity to TMCs that can change with the times, he said.

Made aware of the deal on Thursday, before it hit the press, Frosch immediately began preparing marketing materials for customers; by Friday morning Frosch was “preparing our customers for the news they were going to hear,” he said.

As a reseller of Concur’s TripLink, “we’re very excited here at Frosch,” Sedgwick said. “We think SAP will bring additional value to our corporate clients. We believe they will enhance TripLink and make it much more attractive to new vendors and new customers.”

New role for TMCs
While many in the TMC community already felt threatened by Concur, and likely are even more concerned with the latest news, Sedgwick is not among them. “The travel industry is continually changing and bringing new services to customers. Our role is changing, and as it does new opportunities evolve,” he said.

To survive, travel agents must understand the limitations of a vendor like Concur or SAP “and insert themselves into that space,” Sedgwick said.

“Many TMCs are looking at this and thinking, ‘These are new competitors.’ But somebody is going to have to be the expert, to customize these services for the corporate customer. New services will evolve, and we will find ways to create value.”

Said another travel agency executive, “It’s a new dynamic now in travel, and it certainly will be interesting to watch.”