Coupa Adds $22 million to War Chest, Shares Strategic Direction (Part 2)

Please click here for Part 1 of this post.

Looking at functional enhancements, Coupa has very specific goals in terms of what it intends to build. For example, take the area of contract management. Coupa does not plan to ever be "an Upside," in Rob Bernshteyn's words. "We won't go down to the level of creating n-tier templates and authoring tools as they do," he remarked. But they do want to be the "Google drive or Dropbox of contracts...providing metadata around individual agreements, alerting and contract management capability that is pre-integrated into requisitioning to drive compliance and POs specifically based on contract terms." If someone needs true contract management depth -- for legal authoring and redlining, for example -- Rob suggests that their partners like Emptoris will always be happy to take a call. But Coupa will deliver contract management as a means to further the capabilities of its core P2P capabilities.

Coupa HQ: A Former Bank (Snacks and Foosball in the Vault).

Coupa will continue to invest in analytics built on top of its suite as well. Integrated benchmarking alongside analytics that report on internal data and performance will also continue to be a feature of the suite. But one newer area of functional expansion we can expect will be in the area of budgeting to enable finance leaders and budget owners alike to better set policy, monitor, enforce and adapt to the evolving business environment. Coupa will also invest further in T&E to provide greater functional depth to effectively compete with incumbent providers on the feature and checklist level (rather than just providing a different and streamlined user experience). For example, Coupa is adding TripIT integration for expenses this spring.

Coupa Screen Grab: Understand Your Team Performance

Regarding supplier connectivity, Coupa shared with Spend Matters that building out its supplier network capability will be a continued focus, including providing enhanced supplier search, integration and related capabilities with its offering. The network will also include a significant investment in community capabilities, including user- and supplier-generated collaboration. Other network investments will focus on accelerating and simplifying the process of onboarding and managing suppliers. However, Coupa does not plan to charge suppliers for connectivity, pledging "no network fees or processes" to support their participation.

A Screen Grab of Coupa's Spend Optimizer -- Analytics Meets P2P

In our recent customer analysis, channel research and selection work, Coupa still does not win in the proverbial feature 500 checklist race in P2P. In some areas it still has material gaps, especially as it pushes outside of core eProcurement into invoice automation. However, Coupa's overall user experience, pragmatic interface, speed and ease of implementation and real-world capabilities will often cause those who consider Coupa in direct comparison to others to opt for the provider even when feature/function analysis figured prominently in early shortlist decisions. If Coupa can continue to build out its footprint and depth as quickly as it has and match legacy providers like Ariba on the feature/function level while driving new innovations in others (e.g., social, benchmarking), its continued momentum could really shake up the broader P2P market.

Another Screen Grab of Coupa's Spend Optimizer -- Spend and Supplier Data Captured Through the Coupa System

However, Coupa will not be without its challenges. The company's real strength lies when companies prioritize usability and the overall user experience over absolute capability and deep IT and process integration. Moreover, Coupa does not have an integrated source-to-pay story to tell without the help of partners. Nor does it have particular depth in contingent or SOW and project-based services procurement (two areas we would like to see it develop greater capability, bringing fresh integrated procurement thinking to an area that is currently being all but completely won by non-P2P vendors at the moment).

In short, Coupa's latest funding round will help it secure its place at the top of the P2P heap along with Ariba, SAP, Oracle and others. And its ability to put more sales boots on the street will create continued challenges for competitors that have outgunned it to date with commercial organizations which are much larger (but still lost the battle to Coupa in new customer wins, despite having a larger sales presence). But how well Coupa can execute on their organic product expansion vision -- and how much they opt to build their own capabilities in areas such as contract management and services procurement -- will determine, in large part, whether Coupa remains a competitor in this market versus the one others are gunning for in the years to come.

After all, it's easier to go hunting than be hunted. And making the transition to sniping from afar versus defending and claiming one's place at the top of the food chain will require continually evolving Coupa's outwardly market face, even if the underlying DNA remains the same. Regardless, in a market where new entrants are likely to challenge Coupa, Ariba and others with alternative approaches and mindsets, things are bound to get quite interesting for everyone involved.

Stay tuned as we continue to investigate Coupa in the coming weeks on Spend Matters. We'll dig into the patent litigation as well as examine volume levels and trending mapped to customer count (and volume levels within customers, including typical on-boarding speed and time to scale), per some of the questions raised by Spend Matters readers.

- Jason Busch

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