Automatic Data Processing (NYSE:ADP) has built a franchise by providing services for businesses that need to outsource a noncore segment (that is, payroll). A much smaller company, Concur Technologies, Inc. (NASDAQ:CNQR), wants to do the same for something that most companies must deal with: travel & entertainment reporting (T&E). While ADP has a market cap of $26 billion, Concur's market cap is a much more modest $281 million.

Many companies use paper-based systems or Excel spreadsheets to manage T&E reporting. While such methods get the job done, they are prone to mistakes and costly. Efficient companies, such as Dell (NASDAQ:DELL), try to find ways to minimize such expenses and do so with Web-based systems. Yes, Dell uses Concur's product. In fact, about 1,700 customers use the product.

This week, Concur announced its fiscal fourth-quarter results. The company posted revenues of $15.5 million, which was up from $14.2 million in the same period a year ago. During this time, net income declined from $1 million to $600,000.

In light of the underwhelming quarter, is Concur an example of a company with a "nice-to-have" technology, not a "must-have" technology? Perhaps.

But there appears to be something more. First of all, more companies have workforces with access to the Net. More importantly, Concur has designed its technology on a hosted model, similar to what (NYSE:CRM) does. That is, instead of requiring customers to pay hefty licensing fees, the costs can be spread out in terms of a subscription. This makes it much more affordable for small and mid-size companies to use automated T&E systems.

But there is another interesting driver for Concur's business: the requirements of Sarbanes-Oxley. All public companies need to keep accurate records; if not, the CEO and CFO could be criminally liable. Thus, having an accurate reporting system for T&E is critical.

Concur has had to go through the difficult process of transitioning its business model from license fees to subscriptions. But this was absolutely essential. After all, according to its estimates, the company thinks that its market is about $5 billion per year -- which would even interest companies like, well, ADP.

Fool contributor Tom Taulli does not own shares in the companies mentioned in this article.