The relationship between Concur and the travel agency
community thus far has been symbiotic. Concur receives high-margin revenue in
the form of licensing and booking fees from its travel partners and passes off
the high-cost call center management to the travel management companies. In
exchange, TMCs have access to a booking and expense tool and receive new
business leads from Concur. The model has worked for over a decade, but change
is in the air.
Some TMCs are starting to realize that by outsourcing online
booking capabilities to a third party, they have basically commoditized
themselves. On average, 70 percent of all bookings are made online, and most
TMCs use the same online booking tool, which they have little control over, so it
makes it very difficult to differentiate one TMC from the next.
But the TMC mentality is changing. American Express Global Business
Travel recently acquired KDS, a T&E technology provider, and since then,
ties between Amex GBT and Concur are unraveling. Separately, Egencia acquired Traveldoo
and plans to integrate expense, as well, lessening its dependence on Concur. These
large TMCs are developing a more vertical solution. This new model includes both
the T&E software and the TMC services under one roof. This solution will
lead to a more streamlined and fiscally competitive offer for companies in
search of a better, all-in-one travel management and expense platform.
Today, if you are a company looking for a new T&E partner,
the process is complicated and requires a large investment of both time and
money. First, you seek out an expense management company and then settle that
contract. Next, you are given a list of several dozen very similar TMCs to meet
with separately and eventually choose one to contract with. Once you have
chosen your expense provider and TMC, then you begin a separate implementation
processes with each company. The entire process can take months, and once set
up, it is still unclear as to who should be called when there is a problem with
the travel booking tool, the travel policy, the expense policy, the T&E
reporting, etc. Business travel should not be this complicated.
The pricing is a separate mess. Multiple companies with
separate P&Ls each need to drive revenue to be profitable. The expense
side, for example, generally includes a fee per expense report and a monthly
fee just to access the travel booking tool. On the TMC side there will be an
endless menu of fees: online bookings, offline bookings, exchange fees, after-hours
fees, VIP fees, international fees, separate fees for reporting and even duty
of care fees. So many fees coming from multiple companies has complicated T&E
to the point of exhaustion.
Looking to the future, it’s a very realistic scenario to
have T&E software and a TMC as parts of a single, unified platform. There
will be only one P&L and thus only one company that needs to be profitable.
This new company will not have to pay for third-party software and will thus be
able to pass that savings on to their customers. T&E could be an all-in-one
offering with a combined, robust, single reporting platform. There would be one
contract, one point of contact and one price that covers everything related to T&E
from the online booking tool to the TMC support to the expense report. This
would be a real breath of fresh air for companies looking for a much simpler
solution, a real alternative to the status quo.
As the race to an all-in-one travel management
and expense platform heats up, the software-as-a-service model for T&E
software will be the last to the finish line. As T&E companies compete head-to-head
in developing the most functional vertical solution, the real winner will be
the end user, the customers.