Will BPO providers have to become Application Service Providers (ASP) to compete in today’s connected world?
For Concur Technologies, a Redmond, Washington BPO supplier, the answer is yes. The fastest growing segment of its business is its Web-based solution, according to Rex Bull, vice president of marketing.
Concur Technologies, which specializes in automating the expense reporting process, was founded in 1993, long before the Internet became a ubiquitous business tool. Today the company has over 500 customers in more than 20 countries.† Concur has opened offices in the UK to service European customers as well as offices in Sydney, Australia to cater to customers in Asia and the Pacific Rim. All told, Concur has customers in 20 countries.
The original software, which was a licensed client/server offering, eliminates the need to save receipts in a shoe box. Corporate travelers who charge their plane tickets, rental cars, hotel stays and meals to their American Express cards receive an email once a month announcing their online bills have arrived. They discover that all these charges appear on their computer screen.
After the cardholder approves the charges, the Concur software fills in or autopopulates these numbers in an online expense report. The business traveler just has to add any out of pocket charges (like a Starbucks latte at the airport) to the expense report and press send. The expense report then goes to a manager via email for approval before it’s routed to accounting for payment.
Eliminating the Need for Rekeying Data
The Concur solution grew in popularity because its buyers receive a big time savings because their accounting employees don’t have to rekey the autopopulated data. In addition, the data is more accurate because there is less opportunity for error. And accounting personnel no longer wastes time on the phone checking on the status of an expense check. The system informs the corporate traveler “every step of the way,” maintains Bull.
Automation slashes the time and expense required to audit these reports. The Concur system allows companies to set up special audit rules. “If you have a cowboy in the company who needs to be watched, you can flag every hotel room that costs over $200 a night in his account,” explains Bull.
Employees like the Concur software because this outsourcing solution compresses their reimbursement time. Employees now can receive their expense checks in one to three days instead of weeks.
By compiling all the spending data, companies now have an easier time calculating exactly how they spend their dollars. They can use these aggregate figures to negotiate better rates with their vendors, asking for discounts from airlines or car rental companies.
Then ASPs pioneered the use of the Web to make software applications available to their buyers. The ASP solution was a good fit for Concur because its users were decidedly peripatetic. And, they never left home without their computers. Concur launched its ASP option in October 1999. Today, 200 of its 500 customers have opted for the ASP solution over the traditional client/server option, according to Bull.
Bull says the licensed solution was originally popular with large companies who typically had over 1,000 employees. The small and middle market gravitated to the ASP solution because they could only afford the pay-as-you-go model and the low up front fees. Monthly costs range from $4 to $10 per employee.
Large Companies Migrate to the ASP Solution
Now, however, Bull says “more and more” large companies are turning to the ASP solution. Concur has one client with over 12,000 registered users that selected the ASP route. Bull said the company’s original business plan was to go after the large market for its ASP division next year. Plans changed when the market demanded those services now.
The reasons companies outsource are driving large companies from the traditional BPO offerings into the ASP camp. Corporations don’t have the personnel to maintain the software in-house. They don’t want to have to deal with application upgrades. They want their IT people working on mission critical tasks. And they don’t want to maintain the bandwidth, either. “They can get access to their data quicker with an ASP,” he says.
Although the service level agreements for both outsourcing methods promise arbitration if a dispute boils over, Bull says no dispute has ever degenerated to that level. He says Concur works with any unhappy customers to work out the problem to the client’s satisfaction. If buyers want to end the outsourcing contract early, the buy out clause allows them to cash their way out.
Bull says buyers who are looking to outsource any non-core or contextual process should first check out the application they are considering. Do due diligence on the supplier’s experience with the application. Next, check out the hosting environment. Issues to check out here include security, disaster recovery and back up.
Support Is Crucial When Making a Buying Decision
Who you gonna call if there is a problem? Support is crucial. If you have users in more than one country, does the supplier offer global support? Is the support done by the company that developed the application, or by a third party?
Bull suggests calling the outsourcing provider’s references to get some real time feedback.
Lessons from the Outsourcing Primer:
- Large corporations are outsourcing business processes like expense account reporting to an ASP because they don’t want to worry about personnel or bandwidth using a traditional BPO solution.
- Successful traditional BPO providers like Concur are becoming ASPs, too. The fastest growing segment of Concur’s business is its ASP solution.
- Outsourcing expense account reporting speeds payment to the employee and cuts time for the accounting department.