American Express continues to disappoint in the Spend Management sector of late, having taken the ball on their opponent's 40 yard line numerous times with the result so far having been numerous interceptions and punts and nary a touchdown, not even a field goal (trust me on this analogy -- I’m from Chicago and my team is not exactly having a good year, despite having a payroll in the top third of all NFL teams). Amex's latest acquisition of Revolution Money, earlier today, suggests a continued migration away from business-focused P2P capabilities. Revolution Money, rather than enabling B2B payments and connectivity, is a consumer-focused card offering that merges the concepts of debit cards, credit cards, and PayPal-like capability into a new offering. It's nifty for sure, but in my view, does nothing to help American Express' customers focused on the Spend Management arena.
Amex's eProcurement, eInvoicing and payment efforts in the Spend Management sector in the past decade could best be described as a string of unfortunate failures. Arguably, their only moderately successful move that's not fizzled out yet was an investment and partnership with Rearden Commerce. Other investments and buyouts including Marketmile/Ketera and Harbor payments ended up being nothing more than costly distractions. Consider some previous thoughts that Spend Matters shared on the subject. In a column earlier this year, I wrote about the unraveling of Harbor Payments noting that "like almost everything else Amex has touched around procurement offerings over the years, outside of travel-related products, things did not work out as planned ... from past deals with Marketmile/Ketera to the more recent Rearden investment and Harbor Payments, Amex has made serious attempts to break into the market, but they've always come up short on the execution side relative to what they could become. Rumor now is that the venerable financial services company is struggling to fully integrate Harbor into its suite of capabilities and the group is largely functioning independently -- or at least not in a collaborative, go-to-market manner -- with the rest of Amex."
At the time I wrote that column, I was able to "confirm from multiple sources that the Harbor integration has hit new lows and that Amex has nearly abandoned the solution, at least on the invoicing side of the house". But what caused this deal to fail? I opined on the subject that "Some close to Amex blame Harbor's technology as the reason for the challenges ... Amex is still including some very limited payment components from Harbor on their price sheet, but besides that, it appears they're not selling the solution in the field anymore, opting instead for another invoicing option from a third party. Perhaps this is due in part to the rumored management disintegration of Amex's source-to-settle group. Regardless, the botched Harbor acquisition is further proof that companies without a track record of success integrating software components into financial solutions should stay away from the apps market, at least from an acquisition perspective."
American Express' failed P2P acquisition and investment strategies to date are a perfect example of how internal strategic planning and business development teams loaded with ex-strategy consultants from McKinsey and other firms can show an excellent grasp of the overall market and what organizations should do on paper, but that in reality, completely ignore internal management and structural limitations that can cause investments and acquisition to go awry. Unless Amex is focused on their core card and payments business -- or travel -- I'd handicap their odds of pulling off a successful deal in the B2B space at next to nothing based on their recent track record. If anything, my sources suggest, all the strategy folks running around Amex have proved a hindrance rather than a help in this area.
As for Revolutionary Money? Considering their business model was more a threat to Amex's legacy card business than anything else, perhaps it will prove a smart defensive move in the consumer and processing space. And following in the logic of the Beatles, I supposed it just might work after all. As the lyrics of one of my favorite rock songs of all time goes, "You say you want a revolution, Well, you know ... You say you got a real solution ... We'd all love to see the plan ... But when you want money ... All I can tell you brother is that you'll have to wait ... Don't you know it's gonna be all right ... all right ...” Indeed, let's hope that given how Amex has floundered in the business-to-business space of late and for the sake of their shareholders, that this consumer-driven move ends up being "all right".