Building a team, building customer value: The state of expense management today

Building a team, building customer value: The state of expense management today

An interview with Bob Neveu, Certify president and co-founder

As more companies make the switch from spreadsheets to automation, expense management software providers are enjoying years of steady growth from businesses of every size and across every industry. With all the activity happening in the space, we recently talked with Certify president and co-founder, Bob Neveu, to get his perspective on the state of expense management and what it takes to build real value for customers today.

Bob Neveu, CEO of Certify
You and your team launched Certify in 2008. What did the landscape of expense management look like then and what encouraged you to jump in?
The industry in 2008 is actually very similar to what it looks like today. Back then it was one big guy and everyone else, and in many ways this is the same thing we see today. Concur is still the one large market provider, and since they've been acquired by SAP it is very much cemented as that large enterprise player. In 2008 there were also a whole bunch of small- to mid-tier providers, and Certify was one of the first competitor entrants into the space. We saw the opportunity to get into the expense management space and be a disrupter, to be a challenger brand and take market share. One of the key numbers we were paying attention to at that point was from an Aberdeen Group report indicating that 48% of companies in North America manage expense reports with spreadsheets or paper. Today, it's about 43%. So, it's really interesting to see that there's just that much greenfield now.

From a more personal standpoint, the initial idea to get into expense management was really borne out of the experience of running my first software company prior to starting Certify. We used spreadsheets for expense reporting, and on a monthly basis it was just so time consuming and frustrating for our employees and accounting team members. So, we knew we could do better, and in doing so we could also help solve a very real problem for thousands of businesses. Living the pain of manual expense reporting was an inspiration for us.

Certify is obviously not alone in seeing the opportunity in the expense management space. What’s your take on the competition?
I think everyone's products and marketing have excelled over the years with increases in functionality, and better user interface and integration capabilities. And many of the same competitors are still around since we started. Companies like Expensify, Chrome River, which started out with a vertical market focus servicing the legal space, and Nexonia in Canada. Coupa is another. We have also seen several acquisitions in the space with ExpenseWire being acquired by PayChex, Cybershift and Sum Total, and of course SAP buying Concur.

In the past few years, several smaller vendors like Tallie and Abacus have entered the space. They are really mobile app driven, not enterprise driven. They tend to be more about individual consumer spend management and are trying to break into the small business market with various product offerings, and I think with mixed success. But by and large it’s the same group of companies that we've seen in the space. And everybody is kind of going after the same piece of the pie. Expense reporting is a very generic problem. It's not unique to an industry or particular vertical. If you're sole practitioner or a company with one to five employees you probably have expense reports. Of course, as companies grow in size the challenges become more acute, but it's still a generic problem. And because it's such a generic problem, it really allows any provider with a decent solution to enter into the space, win a few customers and make a go of it. And this is really true across the entire SaaS (software as a service) spectrum. However, to be a true leader in the space, you need to have a strong point of differentiation. It’s important to have a great product, which is truly best in class. But for a B2B provider, you need to have more than just an online product. There are lots of solutions out there, but you got to look at service and support, you got to look at integrations, pricing and contract terms. It’s about finding the right solution to fit the need, then understanding how all the other parts of the offering line up to support the customer. And not all business customers are the same. Some companies are completely happy to use a true “self service” model and launch a new product for internal use. While other companies rely on their vendor to be a full-service provider and lead the implementation, training and support efforts. So, it’s really important that buyers understand their real needs and make a vendor selection based upon the skills and core competencies of the various providers.

A few of your competitors have received significant valuations through venture investment. What’s your take on all the activity that’s been happening in the space?
The T&E space is really interesting because it is incredibly broad-based and cuts across all industries and companies of all sizes. Because it is truly a generic problem you see lots of interest from the venture capital world, as the addressable market is so large it’s truly undefined. And while there are many providers in the space, there is still a lot of opportunity in the marketplace. When you have 40-plus percent of the companies in North America using Excel and paper, there's just a massive amount of greenfield. So, everyone is looking at it and saying, you know, this is a cool space with various established and emerging providers. To a certain degree this validates the space and validates what we're doing, as real investors with real money are willing to put it to work in expense management. There is a tremendous amount of pressure in the private equity and venture capital worlds right now to find good, viable SaaS software providers and back them. And I would say it's not so much to dominate the space. Rather, investors are looking to get a meaningful return.

Certify also has its investment partners. What is your philosophy on VC funding and what are some of the ways you’ve used investment to build customer value?
I think the critical part for us is we have never been the kind of company or management group that’s interested in going out to raise, say, $50 million just to get it on the balance sheet then figure out later what we want to do with it. We're very, very tactical and we are extremely capital efficient. And we make cost-effective choices. For example, we’re not in Portland, Maine, and San Diego by accident. We could just as easily be in San Francisco or New York or any other well known and expensive tech center, but this decision would absolutely increase our operating costs and it would increase the amount of capital necessary to be successful. We’re pleased with what we’ve been able to do and with the talent we’ve been able to attract. And this plays directly into the value we can create for our customers. Like any commercial enterprise, we look closely at build, buy and partnership opportunities, and first and foremost we are a build shop. Now, we’re not going to build our own data centers or spend money and effort to build something that’s a commodity. But certainly all the intellectual property in Certify, we build it ourselves. We have successfully automated the creation of an expense report and we are the only provider in the space today that can make this claim. We have three patents pending and our automation technology is truly best in class. And at the end of the day we’re just really committed to the idea of financing growth through operations. It’s about customers buying our software for the value it presents, then reinvesting back in the business and our people to build even better solutions.

Looking ahead 5 or 10 years, what are the kinds of growth and developments you expect to see in expense management?
Certainly there's a lot to watch in the industry and a lot to watch competitively. There are disrupters out there, like Google for example. Through Google Calendar and Google Docs, they're now parsing travel itineraries right out of your email and putting it into your calendar automatically. Google also bought ITA, the fastest airline search solution out there. So, when you’re in Google Maps you can choose to get to your destination by car or by foot, and in some instances now you can choose to go by plane and it will show you the fares. So, there are a lot of potential disruptors out there, but I don’t think the consumer-side players are going to be a major influence on business travel for several years. The enterprise still needs controls on spend management, and that’s our focus. I do see the need to continue to drive features, functionality and innovation into our products for expense, as well as related areas of spend management whether it's invoicing or further integration into travel. You will see Certify continue to take a leading role in building out new ideas and new functionality to displace and disrupt to the marketplace.

What would you say is your strongest asset at Certify?
Our team. Our people have made us the company we are today. We have the highest user satisfaction rating in the expense management space. We have held that distinction for the past two years, and we expect to earn this again for 2015. And while product development and automation help make this happen, it’s really all about the people behind the product that makes us great. I am not a developer, rather I build and manage teams. It’s the best part of my job, bringing people together and helping them succeed. I love winning deals, being competitive in the marketplace and earning respect from our industry. But nothing is more rewarding than selecting new team members for Certify, nurturing them into success and watching them thrive in life. Team Certify rocks!