SAP’s acquisition of Concur Technologies continues the SAP strategy to grow in the Enterprise market with externally acquired Cloud solutions. Concur joins Ariba, SuccessFactors, and the acquisition of Fieldglass in March 2014.
The acquisition is designed to boost SAP’s reported revenue growth of only 4% in 2013 with Concur’s 2013 revenue of $546m. More importantly, Concur achieved revenue growth of 28% in the 3rd fiscal quarter 2014 and projects 27% revenue growth for 2014.
SAP’s acquisition strategy is a response to competition from cloud solution providers. NetSuite is aggressively attacking SAP, this week with full page ads in the Wall Street Journal (“maybe somebody should get fired for choosing SAP”). NetSuite revenue grew 30% in second quarter 2014. Competitors point out SAP’s complex and long implementation cycles, and difficulty with the integration of legacy SAP on premise solutions with the acquired cloud offering.
Concur’s strategy was focused on growth over profitability, consistent with a goal of being acquired. For the recent 9 month period ending June 30, Concur reported a net loss of $80m. Sales and marketing expenses consumed 42% of all revenue.
While the Concur acquisition may be positive for Fortune 500 SAP clients, the benefits for mid-market clients and resellers are questionable. SAP will need to focus on the integration of their complex legacy ERP with acquired cloud solutions, and especially with Concur’s multi-tenant architecture. One would expect this effort to be more important than investing in a seamless integration with mid-market Dynamics and Sage ERPs. Concur’s recent foray into procurement and AP invoice automation will now run into in-house competition from the enterprise market leader Ariba.
Mid-market clients expect web-based and mobile solution with out-of-the-box integration with their preferred ERP and with specialized ISV business applications, document management, and business intelligence tools. They have neither the resources nor the patience to cope with complex custom integrations or import/export processes.
Compared with the VAR channel strategy of Dynamics, Sage, and fast-growing cloud ERP providers (NetSuite, Acumatica), Concur’s vast marketing budget reflects a direct lead generation and sales focus. It is hard to search expense-related information without being bombarded with Concur advertising.
Realizing that mid-market clients rely on their solution providers for advice and support, Concur recently made some efforts to support mid-market channels with a half-hearted presence at ERP community events and by paying “advisor” fees. For the Reseller channel, the Concur Advisor program makes even less sense with Concur as part of SAP. The bottom line motivation for the reseller community remains to provide a wide range of integrated solutions to meet their client’s needs with complete and customizable out-of-the box capabilities, that partners can sell, implement, and support. The best resellers are focused on building long-term profitable relationships with their clients.
Paramount WorkPlace offers a web-based and mobile platform with value-added solutions for Sage, Dynamics, and Blackbaud ERPs. WorkPlace can be deployed on premise, in the cloud, or a hybrid environment matching the current environment and a future direction to cloud. Most importantly, WorkPlace is not cobbled together, but seamlessly integrated with the mid-market ERP and specialized ISV business applications, budgeting, and reporting tools. And last but not least, Paramount remains committed to the partner channel.
by Paramount Technologies