Does IBM Emptoris, Coupa Announcement Raise More Partnership Questions Than Answers?

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Earlier this week at Empower, the annual IBM procurement event, IBM Emptoris and Coupa announced a broader sales and distribution partner agreement, one built on top of a previous partnership between the 2 vendors. The IBM team told Spend Matters that the 2 providers have approximately 6 clients in common right now, including a large financial services client. The partnership goes beyond a distribution agreement from an IBM perspective and also includes joint API-based and pre-built connector development that is in progress.

Writing on his firm’s blog, Rob Bernshteyn, Coupa’s CEO, makes the following observations about the partnership:

“…Together with IBM, we're announcing a new joint solution that seamlessly combines IBM Strategic Supply Management with our Coupa Procure-to-Pay (P2P) and Coupa Open Business Network solutions. IBM and Coupa have partnered previously on joint ventures, and this new solution deepens our partnership.

I believe that IBM is working to resell Coupa [i.e., selling on IBM's paper] and they have both committed to investing resources to ensure that the unified solution provides more value than either solution alone could deliver to the world's biggest companies.

IBM's solution handles deep supplier intelligence, complex contract management capabilities and multi-faceted risk scores. Preferred suppliers are automatically presented to users in the easy-to-use consumer-like shopping platform that Coupa has become known for, seamlessly integrating automatic compliance with complex business rules into the natural buying process. Supplier collaboration is handled through the Coupa Open Business Network for purchase order, e-invoice and related transactions, at no cost to suppliers.

IBM has complex contract lifecycle capabilities that help procurement professionals ensure that they're not only getting the best price, they're also protecting the organization from risk by dealing with legitimate suppliers. That's good supplier hygiene, and IBM has a best-in-class solution when paired with Coupa's platform.

We're partnering with IBM because these complex supplier and contract capabilities are important, and we're not building all of them out just yet. We've made a strategic decision to spend most of our near-term energy and resources on unique functionality that helps companies save more by bringing more categories of spend under management, making it so every employee can be a responsible spender.”

We have our own views on the partnership and have shared these on Spend Matters PRO. But perhaps most important, the partnership raises just about as many questions as it answers:

  • Will the partnership allow IBM Emptoris to “pass” more first-round RFP screenings for prospects looking for an integrated source-to-pay (S2P) solution rather than just an “upstream” set of solutions in the sourcing, spend analytics, contract management and supplier/third-party management areas?
  • Will being on the basic IBM price sheet have the type of impact that both parties would like to see given the Enterprise Licensing Agreement (ELA) model that has been important for many IBM Emptoris sales to date – but that is not yet covered by the agreement?
  • Will Coupa, which has historically been perhaps the most aggressive solution provider in sales pursuits in the broader S2P sector, also support IBM sales, where the Emptoris product line is stronger – or will Coupa prefer to push its own modules? We have observed in this sector that sales behavior in the field and business development/marketing alignment do not always walk in the same direction.
  • Given that IBM has developed pre-built connectors and APIs, what will the integration actually look like? In which system will a vendor/supplier master reside? How will portal registration and the updating of vendor data compared with catalog/content data work? These are just a few of the integration questions that matter.
  • Coupa is a vendor that remains in hyper growth mode at the moment on just about all fronts from product innovation to customer count to revenue growth. In contrast, Emptoris IBM is much more mature and conservative in its expansion plans and overall go-to-market approach. Will the two cultures mesh from a partnering perspective?
  • Given the significant P2P gap in the IBM Emptoris product set in a market in which suite deals – or at least suite capability are increasingly becoming common, wouldn’t an acquisition of key technology make more sense? Might IBM Emptoris look at Coupa as an acquisition target, and this merely a first step in the M&A dance?

We are excited to see IBM Emptoris expand the breadth of its capabilities that it can deliver through the partnership. But with partnerships such as this, the devil really is in the execution details. For our perspective on the partnership and prospect/customer recommendations, please see our Spend Matters PRO analysis, published earlier today.

Voices (5)

  1. Heiko Schwarz:

    Thank you for sharing your thoughts. I spoke with many former colleagues at IBM/Emptoris/Coupa and feel like there is almost one mid-and longterm winner of this partnership: Coupa. IBM benefits on short term that they will be even more liked by the big five partners (that can now bid for full suite procurement transformations and deliver tons of services) and own IBM BPO offerings. The upside for IBM will be of short nature. Here is the why: as far as I understood Thomas Kase and the comments from the Coupa CEO right, Coupa will still go on with delivering features on areas which are covered by IBM (vendor mgmt, eSourcing, contract mgmt etc). Remind the stretch of “one code base”. This is confirmed by conversations that I had with experts that work out the integrations between the 2 players (which leads to irritations between product managers already now..).
    I am very curious how it develops and look forward to get your thoughts on this as well!

    Cheers,
    Heiko

  2. Aditya:

    Having worked at IBM Emptoris and seen first hand how IBM operates and what their strategies are, I think this is a smart move by them.
    From the IBM perspective:
    – It fills the eProcurement hole that they have in their solution offering
    – Although this is a partnership, I would be too surprised if Coupa is an acquisition target. I’d be surprised if they were not.
    – With Coupa’s capabilities and the IBM Emptoris products like Contract Management, Supplier Life Cycle Management, Project Management, and Spend Analysis – a very powerful and compelling story is being written.
    – IBM is laying out a very clear strategy and taking its competition (Ariba / Oracle) head on.

    From a prospective customer / existing customer perspective:
    – This is a powerful story and the value is huge. It’ll allow greater compliance, reduced leakage of spend, and unparalleled visibility.
    – Keep in mind that this is just a story. Although it has the potential to define the industry (yes, I think it can be that big), executing it isn’t as simple. At best, realizing this will only be possible towards the end of 2016 into 2017
    – If Coupa is an acquisition target, and many including myself believe they are, be prepared for some serious road map changes and direction changes when it does happen. I would focus more on where they are now than where they will go because it will change
    – If you buy Coupa or IBM products, buy them for what they are today and where each product will go individually, rather than the potential that this narrative has. This is a long way from implementation, but makes a great sales and marketing pitch

    All in all, this is a smart move by IBM and Coupa and could transform procurement as we know it today, but it is only a story. Looking forward to future updates…

  3. Thomas Kase:

    Anon(ymous),

    Feel free to contact me directly for more info – it’ll be given in confidence.

    First of all, I strongly suggest you read this article: http://spendmatters.com/2014/07/28/coupa-versus-the-suite-world/ – it has my “aha!” insights into Coupa’s dev approach – and Rob Bernshteyn told me personally that he liked that writeup.

    You make good points about the visibility – the P2P folks (not just Coupa) kind of miss the boat on spend analyTICS (multi-stack) and what they deliver is in-solution spend analySIS (aka unsexy “reporting”) which isn’t as sexy, but on the other hand what they offer is vastly superior to the ERP content – albeit not full visibility a la a true Spend Analytics solution. In their defense, knowing vastly more about a subset of your spend can be superior to knowing precious little about everything or anything.

    SA and CLM are easily combined across platforms – especially with current API and other deep handshakes – so as long as whomever you pick has some clients up and running on your chosen combo, you should be fine. Yes, there are benefits with a single platform, but Coupa’s “CLM” and “SA” aren’t anywhere near ready to be stacked against CLM and SA from BoB providers. They do develop quickly however…

    I think it comes down to how complicated you are. number of ERP stacks, number of existing data silos, how fast and clean you can make the transition – because IF you go ALL IN with a P2P firm, and just push EVERYTHING through that platform, pretty soon you will have amazingly clean spend data, and you no longer have to worry about traditional analytics.

    IBM/Emptoris is also about leadgen – getting a pipe into IBM’s clients. And validation (for Coupa) – to show that they are seen as major league by the biggest firms. Which supports their future fundraising/IPO etc strategies. And, who knows, possibly even IBM could open the check book and buy Coupa? We’ll see. Would be a good fit.

    I will be at Coupa’s upcoming Inspire event in a couple of weeks (June 2-4 in San Francisco). I strongly suggest you go there too, and reach out to me, happy to talk with you, or anyone else interested in my opinion.

    Thomas

  4. anon:

    My team has been evaluating Coupa for the last few months and we’re on the verge of making a decision. This announcement has shaken our confidence in the evaluation we have been making. Here’s why…

    – We are looking for a full cycle source-to-pay solution.
    – Coupa have been pitching hard that their own sourcing and contracts tool, while relatively new, is catching Ariba and Emptoris fast and will soon overtake them. Their pitch has been based on their direction / trajectory rather than the current state of their tool.
    – So partnering with Emptoris/IBM undermines coupa’s pitch to us. They are either on the trajectory they represent or they need a partner to get them there. Which is it?

    We have already identified that Coupa’s “spend analysis” tool is just a reporting suite – which is not yet full spend analysis but will be exciting if/when it is.
    And we believe Coupa’s P2P tool is exciting too, even though it is functionally very limited compared to the competition.
    But we were excited by their story and their trajectory. Should we expect an about-turn on these two fronts as well?

    What else have we been missing ?

  5. Bill Kohnen:

    Probably way beyond “first step in the M&A dance”

    Given the common feeling that the cloud SaaS bubble is close to bursting viable companies (NetSuite, Salesforce etc) are all looking for a max value sale, like Concur.

    Unfortunately for many really good and innovative smaller developing companies it is likely that at best their technology might be picked up by bigger companies.

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