American Express Gets Serious About Spend Management

Despite its massive clout as a diversified financial, travel, and business services giant, American Express has spent many years treating Spend Management as a hobby -- at least from a solutions perspective. Despite dabbling with Ketera and others, Amex has yet to launch a truly strategic Spend Management offering to the Fortune 100 or SMB markets. But it looks like things are changing. The latest news to come out of American Express is the launch of a new travel and services marketplace in conjunction with services Spend Management "concierge" provider Rearden Commerce, a pioneering vendor in the sector. Amex will also invest $22.5 million in the provider as part of the relationship (for those doing the math, I reckon that Rearden is getting at least a 3x-5x multiple on revenue from a pre-money perspective out of Amex).

As a quick intro to what Rearden offers, I'll quote a previous entry on them: "Rearden enables all employees in a company to better manage and integrate their basic services spend (e.g., travel, entertainment, web conferencing) into a portal that directly interfaces with Outlook, PDAs, and even phones. It's so incredibly easy to use and actually makes compliance fun! Well, almost. At the least, it makes it painless and more efficient than non-compliance. I can personally see how Rearden will shave minutes -- potentially hours -- off of administrative tasks that employees at all levels of an organization go through each day. In fact, it could someday become easier to use Rearden than to rely on a secretary (once the system is capable of populating expense reports in addition to calendars) ... Rearden Commerce is really a personal services 'concierge' in the most basic sense."

For further immediate analysis of the announcement, check out The Wall Street Journal's story on the news (registration required). According to The Journal, "This year, U.S. companies are expected to book more than $36 billion in travel services online, yet fewer than half of business travelers book using the tools provided by their company, according to travel-industry research and strategy firm PhoCusWright Inc. Even fewer business travelers use corporate online tools to book more than flight arrangements.Often, employees search outside their company's tool because they find better deals and easier-to-use Web sites elsewhere. American Express is hoping to change that by teaming up with Rearden, which has been establishing one of the world's largest online marketplaces for all kinds of services provided by more than 135,000 suppliers ... Booking travel services online beyond the basics isn't new; other companies such as Orbitz and Travelocity offer online-booking tools that allow for similar services. But the breadth of American Express's product is what makes it different, said AMR Research software analyst Bruce Richardson."

But partnering and investing in Rearden is not enough for Amex, it would appear. On top of today's announcement, it is rumored that American Express is about to announce plans to acquire Harbor Payments, an EIPP (electronic invoice payment and presentment) provider which also offers payment and billing capabilities. Without question, American Express is getting serious about becoming a player in the Spend Management market. But one wonders if we'll see them get into broader procure-to-pay capabilities as well (beyond their current targeted efforts). One could see how the Ariba Supplier Network -- or a JV leveraging it -- could fit in very well with their expanded set of marketplace and supplier enablement and access capabilities. Stay tuned on Spend Matters, as we continue to explore this latest news out of Amex in the coming days. In between meetings and flights, I'm hoping to speak to Rearden later today as well to get their perspective on their deal with American Express and what it means from a customer and solutions perspective.

Jason Busch

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