Why Uber is largely missing the Corporate Boat for now–Ten Key Reasons why Uber has not significantly penetrated the corporate ground transportation market

Ten key reasons why Uber has not significantly penetrated the corporate ground transportation market (other than syphoning off personal rides by business passengers on their T&E or personal credit card statements) are numerous.  They are:

  1. No solution for the predominantly direct billed (account) billing preference of approximately 80% of the Corporate ground transportation customers in the NY Metro market (and their P Card solution to put all the account expenses on a single credit card leaving the corporate client with a nightmare reconciliation process is no answer)
  2. Failure to accept future bookings which is what every other travel booking platform provides and accounts for a significant (anywhere from 30-40% of the total ride volume)
  3. No answer for corporate lineup or rank/queues
  4. No ability to capture corporate business rules requirements, e.g., cost center, client matter numbers, integral for internal chargeback or allocation of the expenses
  5. No ability to “order on behalf of”, a typical scenario in Corporate where an admin or secretary books/orders on behalf of their boss or VIP
  6. No ability to book multiple cars at the same time, e.g., for an event or small party travelling with same/similar itineraries
  7. Duty of Care gaps—with all the well-documented issues with their insurance or lack thereof with their contractor drivers (and lacking the “gap” insurance typically provided by base station operators). Uber’s callous indifference to the safety of corporate travelers by shamelessly hiding behind the wall of “we’re a software company, you’re on your own and at your own risk” shows disdain for their customers.
  8. Sub Standard criminal back ground checking to weed out drivers that are sub standard
  9. Uber’s outright refusal to provide ANY MIS or reporting on their ride data, which corporate craves for their own internal Big Data requirements. Uber shamelessly hides behind their own wall of lawyers and right to privacy of the data—even when that data is tied to a corporate credit card that is the property of the corporate entity they’re supposed to be servicing!
  10. Outrageous “surge” pricing that ramps up to 16X the normal rate during supply shortage just won’t fly in corporate where negotiated rates and predictability of expenses and procurement-methodologies are totally anathema to Uber’s surge methodology.

Wow, only ten reasons. I thought there were more.

In short, right now Uber is a consumer app only and while they’ve successfully indirectly disrupted the corporate car service/limo business primarily by shrinking their competitors supply of drivers by poaching their competition’s drivers away, making less cars available for the corporate end user, to some degree forcing corporations to use their service, Uber clearly still doesn’t have an answer to the corporate business model–except to win the war of attrition.

But the question is, why, after being in the space for over four to five years, knowing that the corporate car/limo service is nearly what the consumer spend is do they not have an answer?  What is Uber waiting for?  Instead Uber continues to try to expand in foreign markets now to enhance their global reach (and their litigious activities which have banned them all over the world).

One simple reason could be, as a so-called disrupter, Uber is playing a waiting game, a game of attrition, determined to weed out all their competition by continuing to poach drivers from their competition so that eventually corporations will have no choice but to use their services—on their terms. It is a position of pure arrogance and short-sightedness.

But of course a main reason one could state Uber has chosen to avoid/ignore reasons 1-10 on the prior page is one can easily see it would total lay waste to their current, simplistic, steam roller business model. For Uber to implement all of those requirements from corporate would require them effectively admitting they’re no different than anybody else and that is simply not going to happen with an organization as arrogant and determined as Uber.

Some speculate the only people that ultimately will benefit from Uber are the initial investors and investment banks involved in their eventual IPO, who will rake in the short term dough, as it’s not clear that Uber will be in the mix long term.  Many speculate shortly after their IPO they will implode.

Interestingly, however, Uber fails one of the critical litmus tests for a true industry disrupter—what they serve the greater good.  Yes, their app made it easier to order and get a car and yes, some of their trips are cheaper (subsidized by their own obscene pile of cash they’ve amassed) than their competition,  is 16X surge pricing beneficial  or “for the greater good?” Is charging New Yorkers extreme surge pricing during hurricane Sandy ‘for the greater good”?  And what happens if Uber is the only game in town? What has happened with every other monopoly—is lack of competition good or bad for consumers??

Speculation leads towards their real future and pursuit being what to do with all the big data they’re compiling on their passengers and will likely try to leverage and or sell (legally or not) to other retail scenarios and or in partnerships with other callous cash rich entities like Google.

So Uber does not fit the true disrupter definition—they won’t benefit the greater good. They plan to benefit only themselves ultimately.

So when will Uber come up with a real answer to Corporate’s needs? Maybe never.   Does Uber think If they’re the only game in town, corporate will have to capitulate to their business model ?  Maybe they think they can convince enough of their salivating investment banker clients to force their service on the very IBanks they work for, by-passing all the critical items mentioned in 1-10, ignoring the banks’ legal, compliance, operations, procurement and practically every other silo’s internal guidelines and business rules, the same ways that these banks lost their minds in the recent financial debacle, nearly ruining our economy.  Stay tuned.

 

Mobile Apps for corporate car transportation are here to stay but you must avoid some of the pitfalls

Mobile AppsMobile Apps for booking corporate black car/limousine or yellow taxi transportation have picked up steam in the New York City market, in particular with the advent of Uber three years ago (2011). Use of these applications will expand even further with the eventual rollout of the eHail yellow taxi application pilot program in New York City now that an injunction has been overturned.

Applications like Uber, Hail O and Taxi Magic will be participating in a one-year pilot which will allow pedestrians to book a yellow taxi for immediately pickup in certain zones of New York City via their smart phones or tablets. But these applications are primarily targeted at the consumer, not corporate.

But there is a distinction between the mobile applications that target yellow taxis as in the pilot and the mobile applications that target the corporate ground or livery target market. Yellow taxis have precedence for use by corporate users, even for business purposes at times, an accepted corporate practice.  Many Corporations support use of yellow taxis for some business use in particular because they are often lower cost than livery or corporate black car services on short routes and can be easily put on their expense account, now that credit cards are accepted in all yellow taxis.

Services like Uber are invading the corporate territory competing with corporate black car services, not yellow taxis, by targeting corporate users from the consumer side.

Consumers are also corporate employees and the “consumerism” of business applications and devices, have already invaded the corporate space. Apple and Droid Smart Phones and Tablets, sold in millions to consumers who also happen to be corporate employees, have invaded corporate IT in droves. But IT security risks have limited their adoption in the business place on firm networks.

Similarly, mobile ground transportation booking applications, which are fun, funky and user friendly (many are “one click”) and which a targeted to the same demographic that purchased all the Apple/Droid mobile devices, are invading existing corporate car booking processes, siphoning away business from existing corporate black car suppliers.

Operating as “rogue” alternatives to contracted/preferred Corporate ground transportation vendors, one mobile operator in particular, Uber, has brought the ire of Corporate Procurement officials who are tasked with monitoring and maintaining corporate approved vendors and contracts as the corporate watchdog.

What are some of the pitfalls of the corporate car mobile apps?

  • By definition, the mobile application providers, some of whom provide their own fulfillment/vehicles, are not approved vendors for the corporations whose employees they target, often for business rides that take business away from approved, contracted vendors.
  • Employees who use these mobile applications are often in violation of corporate company policy if the mobile app vendors are not approved vendors.
  • The mobile booking applications may be higher priced than their existing corporate ground transportation contracted vendors during certain times of the day, certain routes.  In any event, there is no published tariff to rate shop vs. their corporate approved vendors.
  • With no published rate tariff nor any necessary conformity to a rate tariff, in some cases, it was observed recently that for the identical itinerary taken three days in a row by the same passenger, he was charged three different rates. That doesn’t happen in a corporate ground transportation program with pre-established rates.
  • Mobile application providers excuse themselves from any liability or risk from providing the service as their drivers are owner-operators. This unlike the corporate black car providers who provide insurance, services to drivers and corporate clients alike.
  • Mobile applications are not capable of capturing nor storing (to profiles) critical company requirements information, such as the passenger’s employee id, cost center, client matter #, project or cost codes, necessary to earmark these expenses correctly to clients and for accounting purposes. With 75% of the ground transportation spend in the greater NYC area still direct billed or account payment type, this is a critical issue as expenses normally billed back to a client can end up unallocated, costing these companies revenue recapture. This is often lost on the typical end user or passenger.
  • All car charges are via credit card and are generally Point of Sale where pricing is final in the vehicle ; there is no data or rate “scrubbing” to sanctify the rates charged is correct in an industry where billing issues and overcharges occur frequently.
  • For Corporations who are still on a direct billed or account billing process with their corporate suppliers, the redirection of significant ground transportation spend to the T&E system, causes several significant drawbacks.  T&E systems often have limited reporting. By having to manage corporate ground transportation expense in both direct billed and credit card payment methods means loss of consolidated reporting and “split” allocation corporate ground transportation expenses. Also credit card companies do not provide the full pricing detail that is typical in the industry. This is called “level 3 detail”. Credit card companies are typically only able to provide Level two detail, e.g, total ride cost only, to expense management systems.

What is the optimal solution for the corporate ground user?

  • Corporate end users should make sure that any of the mobile booking companies are approved vendors for the company they work for, or else they risk being reprimanded for violating company policy
  • Deploy a mobile corporate car booking system that your corporate ground transportation providers can provide, or,
  • Use a mobile corporate car application like Sedan Magic that can be linked to your existing corporate ground transportation booking system/platform.  This will allow you to leverage:
    • Your existing suppliers to maintain contractual obligations
    • Maintaining your contractual pricing and pre-process scrubbing process
    • Follow your corporate-approved payment and reporting process
    • Captures the critical company requirements data (and validates it)

     

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