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Re-inventing cloud expense management - with Certify CEO Bob Neveu

Jon Reed Profile picture for user jreed October 31, 2014
Summary:
Since SAP announced plans to buy Concur, cloud expense management has become a front burner topic. But how does cloud expense challenger Certify see the market? We talked to CEO Bob Neveu to find out.

When Certify CEO Bob Neveu sold Recruiternet in 2005, he didn't vanish onto golf courses. Like all diehard entrepreneurs, his only question was: what's next? That answer turned out to be Certify. Co-founded in 2008 with his brother Alan (the CTO), Certify bills itself as "the leading cloud-based travel and expense report management solution for companies of all sizes."

But Certify is not your typical SaaS story. Yes, the annual growth rate of 78 percent is "SaaSy," but there are some big twists: like the company's Portland, Maine home base - thousands of miles from Silicon Valley. That hasn't stopped Certify from growing to nearly 1,000 customers and 1,000,000 users across 18 countries. 

Since SAP announced its plans to buy Concur on September 22, cloud expense management has suddenly become a front burner enterprise topic. I recently had an in-depth talk with Neveu, where we dug into Certify's business model and his take on the Concur acquisition. I also learned how a small company from Maine punches above its weight by getting in on mobile early, and focusing on user adoption. Here's the highlights.

Reed: How did you build a SaaS company in Maine?

Neveu: Portland is one of those great cities. You can launch a company anywhere - if you have access to good talent. Everyone is online and connected. In Portland, we have great talent, but it's also the quality of life. We choose to live here, and we've been able to build a global customer base.

Reed: Do you think you have a disadvantage versus being located in New York or San Fran?

Neveu: We could have been in San Francisco; we could have been in New York. But when you go to those marketplaces, you have a huge increase in cost and a major war for talent. When you're not in one of those markets, it does take longer to get noticed and to create awareness. You've just got to work at it every day. But if you do something long enough, eventually you make it there.

B2B startups and venture capital: does location matter?

Reed: Are you losing out by not being close to Silicon Valley and the venture capital relationships that you can form there?

Neveu: Whether you're in Silicon Valley or you're in New York, you've still got to call on venture capitalists. Maybe you meet VCs at a networking event, but you've still got to pitch them.  Nowadays, it's really no different for me to pitch my way into a VC from Portland, Maine. It almost always ends up in an interesting conversation about Maine and how lucky we are to live there.

There's so much competition in the VC market today that people are forcing themselves to look outside the tech hubs. They're putting development teams in all markets, and they look by category. The Internet is the best Yellow Pages you could ask for.

Reed: The hunt for talent affects enterprises of all sizes. What have you learned?

bob neveu twitter
Bob Neveu, Certify

Neveu:  You don't have a lot of startup energy in places like Portland, Maine. So when we find great talent, we have a much easier time keeping it. People commit to our company. We don't have that situation of losing twenty or thirty people in a month. We do have an office in San Diego - right in the heart of the Gaslamp District. We believe in destination offices. Our customers can come see us; our partners can come see us. There is great talent in the San Diego marketplace as well.

Reed: Rewind the clock to 2005. You and your brother sold a company called Recruiternet. You had the resources to launch a company in just about any industry - so why expense management?

Neveu: The sky wasn't necessarily the limit, but we had a lot of options. We narrowed it to three possibilities - two were in the medical space. But the other one kept nagging at me for years: the expense piece. When we first looked at expense management and expense reporting, there was Concur, and then there was everybody else.

At the time, one out of two companies in North America were using either Excel or paper for doing expense reporting. We saw a legacy leader that really hadn't - at that time - fully embraced the cloud. We saw a bunch of second tier providers that were still doing legacy on-premise and custom code, with no true SaaS provider there. When we saw that, we thought, "We've just got to go after this."

How mobile and cloud impacted Certify's launch strategy

Reed: And you were thinking about mobile from the get-go.

Neveu: It was as simple as saying, "Gee, there's this thing in my pocket called a phone, and we could use the camera on that to capture receipts." Certify was actually the first provider in the space to do mobile receipt capture. This was when cameras were less than one megapixel. They had no auto focus, they had no flash. Everything was cloudy. It wasn't the cloud - it was literally cloudy! We certainly weren't the reason for mobile growth, but we really bet on that platform, and we continue to re-invest in it. Today, we're still the leader in mobile capture technology and receipt automation.

Reed: Was there any enterprise resistance?

Neveu:  When we were doing the B2C thing and freemium options our first couple of years, we saw an opportunity. What needed to happen was basically the consumerization of the enterprise. We quickly shifted from B2C.  That's when we were able to start taking really cool technology into the enterprise. CFOs were saying, "I think my people might use that. That looks pretty cool, let's give it a shot." And we were off to the races.

Reed: Given this was 2008 or so, did you start with a cloud build?

Neveu: In our prior lives in the recruiting business, that was the old hosted ASP model. But when we launched Certify, the multi-tenant cloud model was already out there, so we jumped right on it. We said, "We're going to do this as an activation model, instead of an implementation model." We went single instance, multi-tenant, pure SaaS, and it worked.

Reed: Did your cloud-only resolve get put to the test?

Neveu: (laughs) - It always seems to work that way. You launch a cloud company, and you're chasing your first big deal. You badly want the customer to build your brand. But then they ask you to branch your source code. You think long and hard, but you have to say: "No thank you." You have to stick to that principle because if you don't, all of a sudden you've got a second install, a third install, and it gets out of hand. We've stuck to that cloud principle that we're making functionality that services 80-90% of the marketplace today. But as for that 10% or 15%, if we don't meet needs then we have to walk away, and refer someone else.

Reed: So you stood by your model - has it paid off?

Neveu: Well, since 2011, we've experienced 78% growth at a compounded annual rate - which put us north of 600% growth, so it's been very, very fast. We had fifteen employees in 2011, and now we've got about a hundred.  We've got customers in eighteen countries. We're processing 5 million receipts and transactions a quarter.

Tackling that best of breed bugaboo: integration

Reed: But having a great cloud/mobile expense product isn't enough. You have to tie it into a bunch of back end systems.

Neveu: True. Even for our midsize customers, every single deal involves integration points. You take a company with a thousand employees - they want to send a thousand employees into Certify so they can create an expense report at any time. That means we're integrating with SAP, with Oracle, with PeopleSoft, with Workday, with NetSuite - you name it. Pick the product, and we're getting that data and sending data back to all these various accounting systems.

A number of times, we have displaced the expense functionality in a customer's own ERP solution. They say, "Look, it's not best of breed. My employees are wasting a ton of time, it's taking two hours to build an expense report. We have to do something else, and we can't wait for this vendor any more." But even today, most of the customers we see are still first time adopters, where they're coming off of using Excel or paper, and they're saying, "We need to do something better than this."

The impact of SAP's Concur acquisition

Reed: SAP's Concur purchase made a big splash. How do you see that impacting your business?

Neveu: There's been a bunch of talk about this Concur deal, and how it's going to impact the space. I think at the end of the day, it's always the best of breed versus ERP.  Take Ariba - it was best of breed, but now it's SAP. I think it's a continual ebb and flow in the software space, and I think it's healthy. The Concur acquisition doesn't define it. It'll continue to go back and forth over the coming years. If you look at mobile payments right now, for example the Apple Pay product - do you as a CFO feel comfortable when your employees start using Apple Pay?  Is your Workday or SAP system going to manage to successfully integrate with Apple Pay, and keep the transactions correct and legitimate?

Whereas if a company like Certify says, "Yeah we're fully integrated, here's how it works and how we lock it all up." You're going to be like, "Okay, they've figured it out because they're nimble, they're aggressive, they're best of breed, let's get that solution." That's where we see the opportunities. Sometimes, we do run into companies that say, "We're committed to our ERP platform, we're really happy with it, and no thanks Certify, we're going to stick with what we've got." In that case, you say, "Okay, on to the next."

In terms of Concur specifically, while some customers who are SAP clients will be happy about the acquisition, we see a lot of Concur customers that are Oracle or Microsoft Dynamics clients, and they're saying, "Well, that one's off the list now because we really don't want to affiliate in that direction." We're seeing a lot of market opportunities come our way because of it.

Reed: When it comes to the integration piece, you're talking a good game, but how do you ease that pain?

Neveu: There's two methods, we can do it with a file, or we can we do it via web services on the API gateway. When you go into big companies, they often say, "Hey an API sounds really cool, but you know what, why don't you send me a .csv file?" Because we've done so much of this now, when a customer says, "I'm on SAP," We say "Great, here's a file that matches SAP," and they often say, "Yeah, that's perfect." The first time you do it is the hardest. Then the second time and the fifth time and the two hundredth time, you just replicate.

A customer case study - user adoption is critical

Reed: Let's wrap it up with a customer example.

Neveu: Sure. H&R Block is a customer of Cerify; they picked us this summer. They said to us: "Look, you've got a great product, but we're concerned about the implementation and user adoption." To make a long story short, we had them live and running in six weeks, even though they had a ninety day plan. They were going to do a pilot launch, but they went big bang instead, and dropped it on 55,000 user inboxes on - I think it was - September 1st.

They had a support team they'd set up internally. H&R Block likes to support their own apps internally even though we offer support. After a week, they told us, "We don't even need the support team, we're not getting any calls." To get user adoption, software has got to be incredibly easy to use. If the user has to sit through a one hour webinar to use it, halfway through they're checking their email... nobody's paying attention.

It's really critical to have simplicity and from a software development standpoint, that's really hard. When you see a lovely piece of software that looks smart and intuitive, it's got a talented development team behind it. We don't outsource any of our development. It's all done by our in-house team, which allows us to iterate faster and respond to customer requests quickly. That pays off in adoption rates. When you press a button and your software does what you expect it to do, that's not easy. That's a really difficult thing to get right.

Image credits: photo of Bob Neveu provided by Certify. Feature image: Colorful application icon concept and the shopping cart © Warakorn - Fotolia.com

Disclosure: Certify does not have a financial relationship with diginomica as of this writing. This story was arranged with help from Certify's PR team. SAP is a diginomica premier partner as of this writing.

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