We've spent quite a few words lately highlighting many of the new capabilities and design elements in Coupa's latest spring release. In short, the application not only continues to charge down the path of breaking new UI ground. Coupa has caught up in a number of areas where it was previously lacking, including new features on the contract management, invoicing/matching and basic RFX areas. However, I don't believe Coupa is really competing in an existing market as much as it is potentially creating a new one by serving as a front-end portal to all corporate buying and spending activities. Granted, they're still missing key areas (e.g., travel) to capture all spending, but between the native indirect eProcurement and T&E capabilities, plus their ability to sit on top of other applications as the primary buying interface to capture spend and budgeting information, the vision is more than partially baked.
How will we know Coupa has carved out its own front-end buying not-so-niche market? As we begin to see instances of Coupa not competing but complementing solutions such as Ariba, Oracle, SAP and others, sitting as the front-end buying portal for all spend, we'll know they're competing in their own market. Without question, Coupa will increasingly go head-to-head against all the major P2P vendors, especially as larger companies learn about what they're capable of (and no doubt, they'll win their fair share of business with their overall design and philosophy, not just because of improving feature/function parity and low pricing). But the potential market here is so much bigger than what we've come to think of as traditional Spend Management software.
Coupa shared with Spend Matters that as of the end of the first quarter in 2011, they had over 180 customers. Based on our analysis of new customer deployments, Coupa's type and number of new wins each quarter suggests a number of things:
- Their net new P2P customer count each quarter appears to be growing faster than any other vendor we're aware of in the market, certainly owing to strong middle market penetration
- Coupa is gaining traction with larger companies and is capable of winning head-to-head battles against larger vendors with a longer history of serving Fortune 500 companies
- Companies are signing up for more multi-year deals than before
- There is no discernable industry concentration, although Coupa appears to be gaining favor in a number of sectors (including retail) where there are significant distributed operations (e.g., stores, branches) and decentralized buying
- Churn (non-renewals) are among the lowest we have observed in the market. Virtually all companies that select Coupa stick with Coupa; i.e. this is nearly a cult, not a P2P user community
As impressive as net new customer wins are, the active number of users logging into Coupa on a regular basis come from a buying perspective. This number, which Spend Matters estimates is now in excess of 50,000, could very well double based on current sales and new wins in a matter of quarters. Not surprisingly, the spend going through Coupa's platform is increasing at similar clip to the number of users accessing the platform.
This speaks in part to Coupa's somewhat cheesy (but completely serious) unofficial mantra: success, not (just) satisfaction. The focus on driving customers to results is not something that all vendors put front and center. To drive continued adoption and use, Coupa continues to make a number of small tweaks to their capability including standardizing on specific screen widths to allow for easy mobile access and also limiting the use of Flash to enable usage on the iPad. Functionally speaking, Coupa also now has more functional capabilities than before including e-invoicing capabilities, inventory visibility, sourcing, contract management, spend reporting, and benchmarking/KPIs -- not to mention core eProcurement and T&E capability.
On the topic of electronic invoicing and supplier connectivity, Coupa downplays the concept of a supplier network because they almost take for granted that document exchange and interoperability (e.g., supplier invoices and POs) are a critical piece of system. Yet there is a network-like capability resident in the cloud approach. Suppliers don't pay additional fees because Coupa positions the outcome as the benefit for buyers, not a part of the process where there is really no rocket science in between organizations. However, once suppliers are enabled via Coupa one time, it is extremely quick to turn them on for another customer (perhaps this explains how Coupa is able to bundle supplier enablement into their standard cost structure).
At the end of the procurement day, Coupa is about selling the results of better buying and controlled spending. Period. Their latest marketing campaign, which panders to CFO-focused metrics (e.g., "Real % OPEX reduction" with tangible, customer example percentages provided), very well may help a provider that is just different -- not better or worse, functionally gifted or functionally deficient, just different -- from everyone else stand above the regular P2P fray. But for Coupa, the yardstick they're measuring themselves against isn't whether or not they can beat existing incumbents and gain a bigger share of the current P2P market pie. It's whether or not they can create a market of their own and become as ubiquitous an interface as a SalesForce.com for anyone who spends inside a company -- or wants to measure and track that spending.