SAP this month announced that its new cloud-based Travel OnDemand solution is available in the United States and Germany. The solution provides mobile and desktop access to expense reporting and travel bookings via SAP's GetThere partnership.
Travel OnDemand and other sales and sourcing tools are among the new applications in the cloud-based SAP BusinessByDesign platform and application suite, which includes payment, financials and other business operation components. The cloud-based versions are designed to integrate with SAP's earlier product versions, according to company officials. SAP's earlier installed travel-expense options include booking integrations with GetThere or Amadeus and a pre-trip approval function based on traveler-estimated costs. Some customers use expense only, with no travel integration.
SAP officials said they expected Travel OnDemand by 2013 to be available in 15 countries with ongoing global expansion. Additional booking integrations are expected by year-end with both Amadeus e-Travel and iFAO. SAP also is exploring other partnerships and implemented one with Paymetric to enable credit card integration. Officials also have explored the benefits of securing pricing from global distribution systems to include in pre-trip approval estimates, according to SAP chief product owner Hendrik Vordenbaeumen.
SAP officials in December said they had discussed plans to release application programming interface specifications to allow third-party developers to integrate with and pull data from Travel OnDemand. This week, a spokesman said the APIs had not been released and were "currently under discussion. We are planning to continue making integration both to SAP and non-SAP systems tighter going forward." While the cloud version is designed to integrate with SAP's on-premise financials systems, officials said they have been planning integration with standard payment options in both Germany and the United States.
SAP executives said they recognized that many end users don't necessarily like enterprise software, but are forced to use it. "What we're focused on with cloud-based is a consumer-grade experience where people can get on board with ease, use it without reading a 100-page manual__if they ever read it to begin with__and enjoy it," said executive vice president for cloud solutions Kevin Nix. SAP created interfaces for mobile and tablet devices as well as desktop PCs.
To create the new experience, SAP asked 400 travelers, 100 information technology professionals and 40 controllers/CFOs to identify the pain points of existing processes, according to Vordenbaeumen. Receipts and data entry emerged as challenges.
"The best expense report is one that completes itself," Vordenbaeumen said, so SAP focused on ways to automate receipt data entry using optical character recognition technology. "You don't have to itemize hotel receipts anymore," he promised. "We partnered with an optical character recognition vendor to OCR-read all receipts. We scanned 800,000 travel receipts, and they went through with a 99.2 percent success rate. This way we assure that the hotel receipt is itemized."
In the first version of the new product, "we delivered the basics for [all user types], but focused on the traveler and assistant," Vordenbaeumen said. Enhanced functionality for all users will be added in twice-a-year updates, he added.
Travelers can use mobile devices or smartphones to take pictures of receipts and automatically upload them to an expense report that corresponds with trip dates entered in booking itineraries. Travelers must still enter an expense amount, category and any comments. The technology allows managers to approve expenses using the mobile or desktop interfaces. The mobile version displays a list of pending expense reports and amounts with a caution icon next to any reports with out-of-policy expenses. Clicking on a specific report name provides the expense submission detail, including explanation of any noncompliant items. For example, the allowable dinner limit would be displayed next to a higher submitted cost. To request additional detail, such as the names and titles of dinner guests, a manager need only type a few words and the system sends a message to the traveler with instructions to resubmit.
SAP client Stulz Air Technology Systems tested the booking-to-expense solution and plans to roll it out in April to about 40 frequent travelers, according to CFO Thorsten Weiss. Part of German conglomerate Stulz, Maryland-based Stulz ATS has 400 employees who relied on a paper-based expense process and used any travel booking tool they wanted. "We were in dire need of a comprehensive solution," Weiss said. "We wanted to unify on one booking tool."
Stulz ATS last year participated in a "co-innovation" project with SAP to help develop and test the product, Weiss said.
The mobile component "at the beginning wasn't something we were focusing on, but is a very nice feature," Weiss added. "It makes it easier for all our travelers" by automatically assigning receipt images uploaded to trips booked in GetThere. "Ultimately it's a paperless system."
GetThere expense and telepresence alliances director Liz Cox said her company currently has two SAP joint customers for the new cloud-based product, with "another two that just signed agreements and started the process." Implementation could take a couple months or much longer depending on complexity and modules, she said.
An SAP spokesman confirmed that rollouts also were underway at the four companies__including Deutsche Post DHL, Stulz ATS and an unnamed midsize firm__that participated in the Travel OnDemand co-innovation.
SAP said the initial sales focus for its cloud-based version is the existing SAP-installed base. Sales reps planned to market it directly to travel and expense buyers, as well as their more typical information technology clients.
"Of the 4,100 travel customers we have, a large percentage would be interested in this product," Nix said. "We're already seeing this with Sales OnDemand, where happy on-premise customers want to layer OnDemand on top of the on-premise permutation. We think we'll see an increase of travel purchases within our core financials space__the 20,000 to 35,000 customers there. The focus is on existing SAP customers, but SAP Travel OnDemand is also available to non-SAP customers."
SAP said the new travel and expense platform would be priced on a per-expense-report basis with tiered costs based on volume, "in line with cloud-based" competitors. Officials earlier estimated that the model could range from $6 each for those who process 500 or fewer expense reports a year to less than $2 for those that process more than 1 million.
BMO Capital Markets analyst Karl Keirstead in a research note wrote that the cloud-based SAP product, along with Oracle's Fusion Expenses module, could make it "marginally tougher for Concur, although we conclude that the near-term impact on Concur is modest."
Asked during the 2012 Pacific Crest Emerging Technology Summit in February about competition from ERPs, Concur corporate development executive vice president John Torrey noted that "they've all had expense included in their offering. Today we have 60 of the Fortune 100, and I'm pretty sure every one is a customer of Oracle or SAP, yet every one has chosen Concur to automate elements of travel and expense process for them. We think it's because ultimately this proves to be a deeply vertical, transactionally oriented process, deeply integrated into a $1 trillion business travel supply chain that delivers actual content and commerce to end users in a way that horizontally oriented software companies don't. Ultimately, ours is a content and commerce market; when they use our systems, they buy something. That's not true in many other application categories."
During that conference, analyst Brendan Barnicle asked Torrey about price increases reported by "about a third of enterprise software-as-a-service customers" in the past 12 months.
"We have not raised pricing into our customer base and really don't have any intentions to for a long period of time," Torrey said. "When you start to hear us talking about price increases on a public basis, I would start asking questions about the maturity of our market."
Concur since 1993 "has been basically pursuing the same objective, working to automate the core process of expense reporting," Torrey said. "While there are a variety of companies who offer modules and a variety of stand-alones in this market, after 18 years we have 15,000 customers, an interesting business that will do about $440 million in subscription revenue this year. We're profitable at an 18 percent margin level, but ultimately we're focused on trying to reach 10 times the number of companies that we touch today because we're convinced that 90 percent of customers who have things like corporate cards don't have expense reporting solutions.
"We're in a massively unpenetrated market, and we're investing a substantial amount of our operating margin doing things like doubling our sales capacity over the next 24 months to reach all those accounts," Torrey continued. "The concept of raising pricing in that environment is not consistent, either with awareness that we're in a very lightly penetrated market or with our belief that our mission in delivering value is to drive costs down, not drive costs up for our corporate customers. If we're not the cheapest alternative for our corporate customers to automate these processes, then we're pretty sure they'll look for other solutions. If we can be the cheapest and still drive attractive operating margins and returns for our shareholders, then I think that's a sustainable business."