A lot is happening in the world of personal mobility, with new business models like car sharing, ride sharing, mobility integration and demand responsive systems like Uber making waves. Even within some of these new mobility models, we are seeing huge amounts of business model innovation. For example, car sharing has evolved from “station-to-station” only solutions, to also offer free-floating solutions where one can pick and drop off a car anytime, anywhere. We have also seen growth of peer-to-peer car-sharing solutions, where someone rents their personal car to others, usually through an intermediary IT platform; clearly a solution for those not as emotional about their car as me! We’ve also seen emerging “low-cost car-sharing” models, such as Citeecar, with rentals for $1.16 per hour in Germany.
We have not witnessed many innovations in the corporate mobility offerings in the past 10 years, but with Mega Trends like connectivity, convergence of the business and leisure market (called “Bleisure”), multi-modal integration and a young mobile workforce, this could all change very quickly.
So what is the future of corporate mobility? The Global Business Travel Association reports a market size worth more than $1.2 trillion, owing to increasing business travel in emerging markets in particular. We believe this market is about to flip on its head and consolidate due to new market and product solutions and new entrants and mergers and acquisitions bringing new competencies to the table.
For a start, when considering corporate travel, we notice corporates moving from analyzing the total cost of ownership (e.g., in managing their fleet of vehicles) to the total cost of mobility, which includes merging several functions within their value chain. Consequently, the boundaries between fleet, travel and expense management are blurring to the extent that in many companies the travel manager is also the new fleet manager, or vice versa. Corporates are merging the systems and the services required to deliver this; the systems are becoming cloud-based platforms and IT booking tools, and the services (e.g., travel management, customer service, and “content” such as flights and hotels) are becoming available on a self-service basis for the employees, through booking platforms and apps, for example.
A good example of this is the platform from Concur, a company that was recently acquired by SAP for over $7 billion. I would label Concur as the next Facebook of corporate travel due to the reach and potential of its platform, and the premium paid by SAP supports this conclusion. Concur continues to grow exponentially and has over 25 million end users from its 20,000 business clients. The growth of the company is impressive and could, in the future, challenge the business model of technology and distribution firms like Amadeus, who have access to 90 % of the world’s corporate flight bookings. But what’s to stop Concur from making its own travel service, thereby competing with Amadeus, travel agents, or payment providers in the future?
Whilst employees enjoy a more convenient service, the benefit for corporates is that the Web-based and mobile tools for booking, approving and expensing corporate travel are improving their organizational efficiency and giving visibility into employee compliance of corporate policy and traceability. In an ideal world, we would all like to fly business class and stay in the Four Seasons on our business travel, but not many companies allow it; these platforms are reducing such rogue spend and allow for rejection of the trip or justification from employees where they break such policy.
An interesting trend is the convergence on two fronts. Firstly, the convergence of Business & Leisure travel, increasingly termed “Bleisure.” As business travelers continue to undertake leisure activities as part of their business travel, a new opportunity for ancillary services is rising, as does the expectation for a broader range of travel and mobility services, such as split billing for personal and business use. Secondly, we see convergence in competition. A new set of players comes as fleet, travel and expenses management services merge. Vehicle fleet and leasing companies are now trying to get into this space by expanding their product line, and at the same time some car companies like BMW see themselves playing a key role in corporate mobility through their leasing arm. IT companies also are entering the market through their systems know-how (as seen with SAP paying a hefty premium for Concur). Of the growing $1.2 trillion business travel market, CWT estimates the value of the global expense management market at $49 billion, which shows why several IT companies are starting to diversify their offerings and acquire or partner with industry players. It will be an interesting few years as convergence of technology will lead to new entrants in this space and continued M&A.
The future of corporate mobility will also involve the integration of several modes of transport, providing door-to-door transportation and services for employees and, in many cases, will also merge and support several employees if they are traveling to the same meeting. KDS, whilst much smaller in client size (5,000 clients, 1 million end users) has innovated with a complete corporate mobility integrator platform called Neo; it shows you the exact route from office to destination abroad and the total cost of that trip (and times) by different options. Whilst in a nascent stage, if the number of providers increases and the proposition becomes truly global, this system has massive potential to increase convenience and visibility of the trip to the approver. For example, they already integrate with an employee’s Outlook system, so once an invitation is sent from a client, the travel can be searched on that basis with cost/times and booked directly. Any rules that are not compliant can be flagged as usual, and approvers are informed on the choice/route taken.
Increasingly, corporate mobility is also going social as it caters to millennials and Gen Y by adopting shared economy business models into their corporate travel policies. Airbnb is being accepted as a form of accommodation, and so is car sharing and ride sharing. We therefore see a continued diversification of such services, a good example being corporate car sharing, which has attracted investment from leasing and rental providers in particular, offering employees not only a flexible mobility solution, but also increasing the number of employees being targeted for B2B mobility solutions (as, usually, not all employees get a company car, but they all have access to the corporate car share vehicles).
Frost & Sullivan’s mobility team and I have completed a voice of the customer study with over 600 corporates to understand their future mobility needs. The next iteration of this topic will discuss the key findings of the research, be sure to check out my next article for an in-depth look into the minds of these companies.
This article was written with contribution from Martyn Briggs, Mobility Program Manager with Frost & Sullivan’s global Automotive & Transportation practice.
This article was written by Sarwant Singh from Forbes and was legally licensed through the NewsCred publisher network.