There are lots of technology providers serving as great proxies for general market growth. For a while, we used to consider Ariba the bellwether vendor in the P2P sector, but now we tend to see the ERPs and their solution partners as more generally indicative of adoption and general trends, owing to the growth and adoption of SAP SRM, among other tools. For sourcing, spend analysis, and the like, the growth of BravoSolution, Zycus, Iasta and others in the same categories make for a good general measure of market growth (as do Aravo, Hiperos, Achilles, CVM and others for supplier management tools and services).
But when it comes to certain vendors, overall growth can transcend existing market segments and trends. Coupa clearly falls into this class, given their fresh thinking in P2P. Its our view that their downright exceptional (for a SaaS/cloud business model) results for 2011 are merely an outgrowth of this. In my personal view -- which does not necessarily represent that of my colleagues -- the simple genius of Coupa is that they came up with a usability philosophy designed to maximize the transactional capture of spend throughout an enterprise through a single system -- indirect, direct, services or otherwise. It's that simple. The (evolving) UI and everything else they've done is an outgrowth of a basic philosophy that led to some awesome numbers in 2011. Peter Smith, my colleague in the UK, captures some of the highlights from Coupa's recent showing, below:
- 2011 revenues increased by more than 120 percent.
- Users of the software also rose 100 percent.
- Spend through the Coupa Cloud Spend Management platform grew at150 percent with the Smarter Expense Management module adoption alone growing at more than 900 percent.
- Total subscription sales transactions for 2011 totaled 152, with a healthy mix of new customers and add-on seats or modules.
- 2011 customer highlights included: Subway/IPC, Home Retail Group, Molina Healthcare, BNP Paribas, Ministry Health Care, Colliers International, B&H Photo, Savient Pharmaceuticals, Universal Music Group, Endo Pharmaceuticals and many others.
- Firm moved to larger headquarters in San Mateo, California to accommodate its 100 percent employee growth rate, and opened new UK office.
Those who follow technology stocks will probably look at these numbers relative to other vendors and may change their perspective on where the growth in the broader Spend Management market will come from in the next few years -- and where to invest. As Mark Gomes writes (disclosure: he is short Ariba), over on Seeking Alpha, "Coupa has embraced...cutting-edge technologies and now threatens ARBA's dominance...Increasingly, it appears that Coupa is winning in areas where ARBA was once unstoppable. Based on discussions with contacts in various IT purchasing channels, Pipeline Data expects this trend to accelerate, including potential displacements in large ARBA accounts. Looking at Coupa's new customer count versus that of ARBA, we believe that Coupa has now become big enough to put a substantial dent in ARBA's organic growth. In fact, we believe that this dynamic has driven ARBA to ramp up its M&A activity as its organic growth dissipates."
And there are others, like me, who care more about how customers will actually use procurement tools in the coming years. But clearly for both parties -- not to mention those who matter most, the actual users -- Coupa is shaking things up, and their 2011 results point to the fact that the P2P market is fundamentally changing at the fringes (and we believe soon at the center as well).
No doubt, there will also be those who continue to embrace older models and approaches (which Spend Matters believes will increasingly be claimed by ERP providers) and those in the ERP ecosystem. But most important, there will be providers like Coupa which are taking a completely different track, beating to their own product philosophy drum and getting it right on the first (or second) pass. Just as Steve Gadd did in his recording of the forever rock-changing drum track for Aja -- for you fellow Steely Dan fans in the audience -- Coupa is playing in a league of its own for P2P that makes direct comparisons difficult. Their 2011 numbers are merely an outgrowth of their ideas and solid execution. As they should be. And we expect an equal or better performance in the future. But unlike early Steely Dan, this is one solution built for the real world -- not just the studio.