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Thought Leaders in Cloud Computing: Steve Singh, CEO of Concur (Part 3)

Posted on Friday, May 11th 2012

SM: Right. Where you are sitting, the specific value proposition that you deliver, just by virtue of doing that for many years now for your clients, you have already accumulated a lot of this data. My question was do you have the technologies to be able to analyze that data and draw these personalization inferences.

SS: We do. Where I was going is you will see that actually being integrated deeply into our products. For example, all of our data sets are in Hadoop now. So, we’re able to use this information not just for the purposes of being able to analyze trends but then also feeding it back into the application set. For example, when you log on and say, “hey, I’d like to book a hotel,” the reality is that as you use our product, you always had the option to say, “give me more choices,” but when you use our product, the hotel choices that you get will be constrained by two variables. One is what is your corporate policy? And two is what are your preferences within that?

Now, if you don’t have a corporate policy it’d be entirely constrained by your spend patterns and your preferences. What’s relevant to you? So, that information will come back in a way that makes it very easy to select the things that you actually prefer. Or if you say, “expand my parameters by x, y, and z and give me more choices,” that’s easily done within the interface. But what we’re trying to do is figure out how do you do that within the actual normal experience of our applications, within the normal booking of travel.

SM: What do you see happening to the business model? Today, you’re still selling per user, per month, per year subscriptions, right?

SS: Today, it’s still a subscription model. I think what you’re going to see is that the business model will evolve to include additional revenue streams. For example, in the managed travel segment, which is where we sell to larger corporate clients, you’ll see not only an opportunity to continue to deliver our subscription services but also an opportunity to deliver economic value to suppliers, which may show up in transactional fees.

SM: How does the enterprise react to that? You are monetizing the employees of the enterprise in that scenario. How does the enterprise view that? Or would they want a cut of that?

SS: It’s far more important to look at it and say, “are you doing this in a way that actually helps the enterprise? Are you doing this in a way that actually helps the employees?” As long as you are, I think the reality is that this will be embraced. In fact, we’re finding that it is being embraced because of that. If you think about it, today, more than 35% of all travel expenditures are outside of policy … outside of your corporate rules or corporate policies and any suppliers you might be using on a corporate basis.

Most enterprises don’t even know what’s being spent outside of that 35% of spending. They have no idea where it goes.

SM: So, you think that by streamlining all of that, you can actually apply algorithms of group buying and stuff like that that would bring efficiency to the enterprise that would be the incentive for them to get you to monetize them on transaction basis.

SS: Exactly. Also, think about this. The reality is that what you want as an enterprise is to understand where your [money] is going and how to best leverage spending. The challenge is that oftentimes, they don’t know where that [money is being spent]. Therefore, they can’t leverage that spending in any way, shape or form that’s material, especially when they have 35% to 40% of expenditures that aren’t even captured. So, if you use tools like ours where you make a process smoother and a better experience for the end customer, then not only is the end traveler using our applications but we’re also capturing all those expenditures. And as you’re capturing it, by the way, you’re also lowering your distribution costs for the suppliers. Now, if you’re lowering the distribution costs for the suppliers, our argument is that if we’re lowering the distribution cost for the supplier,  the end buyer  and the corporate customer ought to get a benefit from that. So, they do, in fact, get an economic benefit.

This is exactly why we look at this and say, as we move from being an applications company to being an applications, content and commerce company, we’re adding value not just to the supplier but also to the end corporate customer, which is the customer that we serve.

This segment is part 3 in the series : Thought Leaders in Cloud Computing: Steve Singh, CEO of Concur
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