SAP's acquisition of Concur Technologies expands its cloud network, gives it access to another large list of customers and keeps it competitive with Oracle and IBM, analysts told CMSWire.

SAP announced last week it had acquired the Bellevue, Wash.,-based business travel management software provider that will beef up its HANA platform.

The estimated $8.3 billion deal brings Walldorf, Germany-based SAP 23,000 customers and 4,200 employees, according to a letter to customers from the SAP Global Managing Board. SAP is led by CEO Bill McDermott, and Concur's chief is Steve Singh.

"The end game for SAP, as shown by its acquisition of SuccessFactors and now Concur, is to assemble a big portfolio of horizontal cloud business services useful to many customers," said Ted Schadler, vice president and principal analyst for Forrester Research.

Robust Cloud

Schadler knows Concur well. He interviewed them for the book he co-authored, "The Mobile Mind Shift." 

According to Schadley, SAP is buying two things with Concur.

"First," he said, "it's buying a robust, multi-tenant cloud platform for travel and expense report," Schadler told CMSWire. "Second, it's buying a whole bunch of travel and expense customers, including buyers that SAP doesn't directly sell to today."

The Forrester analyst called Concur's T&E Cloud "pretty unique in its market, though others exist." He cited Egencia as an example. 

In his July blog post for Forrester, Schadler reported that the "success of the strategy and technology platform is reflected in the rapid growth of his company, from a startup in 1993 to more than $540 million in revenues in 2013."

He added Concur’s cloud technology platform delivers four benefits:

  • Concur software running in the cloud is the same for every customer. So developers working on it can fix problems continuously and roll out new services daily.
  • The Concur service is integrated with a wide range and growing list of travel providers such as airlines, hotels, car services and trains to deliver a complete travel experience.
  • Concur’s cloud platform is ready to meet the spikes in demand that happen when weather turns stormy and delays cripple the air travel system.
  • The modern T&E cloud prepared Concur for the needs of business travelers -- the most mobile people on the planet. 

"SAP is taking a leading position here as it did with the SuccessFactors acquisition," Schadler said. "Oracle and IBM had to follow suit."

Following the Competition?

Was this move a response to a competitor's recent movement?

Elizabeth Hedstrom Henlin, senior analyst with Technology Business Research, Inc., (TBR) told CMSWire that as "vendors including IBM and Oracle consolidate their clouds, we see this as a move on the part of SAP to further clarify its portfolio strategy, on-premises and in the cloud."

Concur’s large customer base spans industries and geographies, TBR officials wrote in a report, and therefore the "acquisition provides SAP significant cross-selling and addressable market expansion opportunities."

SAP noted, TBR officials pointed out, only 30 percent of Concur’s customer base is running SAP. 

"Aside from the more apparent cross-selling opportunities of Ariba and Fieldglass," TBR reported, "SAP has the opportunity to sell SAP HANA and its broader on- and off-premises applications portfolio, including SAP ERP, to Concur’s customer base of more than 23,000 enterprises, nearly half of which are SMBs."

Big Bets on Networked Economies

R. Ray Wang, principal analyst and founder of Constellation Research, said one of the key features in Concur is the ability to centralize procurement and expenses.

"This is a required function for trading networks," he told CMSWire. "Concur has a great base but they've been running a loss for while. SAP is basically buying a customer base and future revenue stream. However, the Coupa product is a more modern product and has higher potential should IBM or Oracle get into the game."

SAP, Wang added, hopes to use trading networks as its leverage point between the manufacturing base of customers and the network of buyers in the market.

"It's a smart move in the long run but hard to execute," Wang said. "SAP also has a number of organic apps such as their own Time and Expense that are more modern but less feature rich than Concur. Customers should demand a credit towards Concur usage and like functionality."