On the earnings call Steve talked about selling Concur’s service down to 1 person companies. Since American Express is the leader in serving really small companies for travel and credit cards I would think that this would be an expansion of their current agreement? This is a tricky business model to reach these small customers. For this size of a customer they would have to sign up for the service online in an automated fashion and instead of being billed monthly like normal customers their credit card would need to be charged as part of each transaction so Concur would not have any billing or AR to follow up on. These customers would also not be able to customize the software. I would think the software would be set up for different types of businesses and each type would share this setup? Either way Concur would need someone else to promote this to small businesses like Amex and or Quick Books and Concur would need to just process the signing up for the service and automatically bill to a credit card with little or no Concur employees in the mix. That would be the only way this would work. The nice part about this is there is really not much competition in this area going after small companies and you don’t need the high priced sales people to get a sale.
Why would they would sign up for this service? It is not for all companies but I know they hate having to keep track of receipts for the IRS and now they can throw them away. The main benefits of Concur for them is the auto creation of the expense report. The workflow would not benefit them much but if Accounting approves it Concur can then pay it automatically, which is nice. I would think that Concur could either generate a summary journal entry for them on a monthly basis to enter into their accounting system or they could interface into Quick Books for journal entries? I’m just throwing a lot of items out there but in general I would think that a company that needs a payroll processing company to process their payroll would also need a company to process their expense reports. If they don’t need a company to process their payroll they will probably not need a company to process their expense reports either? Most very small companies do use a payroll processing company. They could partner with a payroll processing company that focuses on small companies like Paychex. I thought that Rearden Commerce had partnered with Paychex at one time to do this?
The anouncment could be an expanded agreement with ADP. ADP does have over 585,000 customers and the current agreement is only for large customers with contracts written by ADP and not self service deals like they are going to start. Either way growth will be coming.
I don't know if they are going to have agreements with all three of them but this is the sweet spot of the market. Their partnership with AmEx is just getting started too. The first stage would not win many new clients because Concur already has most of the large clients that would be willing to move (many have systems that they are not willing to change since they cost so much to get set up and are licenced or home made). The mid and small markets is where growth is at and is just getting started with AmEx and Concur. That along with a new potential partnerships is going to really take off. We should first see signs of this after the anouncement by the job postings that will increase. The anouncement should come in January according to the earnings expectation from what was said in the earnings call. Concur stock will start to take off from this anouncement as many others jump on for the ride. Good Luck!