Coupa Acquires Spend360, Adds Best-in-Class Spend Classification Capability to its Suite

kritchanut/Adobe Stock

Coupa announced early Tuesday it had acquired Spend360 International Ltd., a best-in-class spend classification vendor. Coupa “has acquired substantially all of the assets of Spend360 International Ltd. to help companies digitize antiquated processes for data classification,” the company said in the acquisition announcement.

Coupa noted the acquisition closed in December 2016 and that financial terms were not disclosed. Further, “Coupa expects the capabilities from Spend360 to be made available to select Coupa customers later this year. As part of the acquisition, the Spend360 team has joined Coupa to continue developing forward-thinking approaches for data classification and predictive insights.”

How should customers and prospective customers of  Coupa approach the combined organization and Coupa partners? Get our latest recommendations and analysis over on Spend Matters PRO. 

Spend360 was founded in 2011, and the expertise of the team behind the solution goes back even further in the space. Paddy Lawton, Spend360’s founder and CEO, was previously CEO of Digital Union, an e-sourcing provider that was acquired by VerticalNet.

Spend360 brings to Coupa a small team of experts well versed in deep analytics and algorithm development. Headquartered in the U.K. with offices in the U.S. (Seattle) and Australia (Sydney), Spend360 has added more than 100 customer in North America over the last two years and reached into every major industry vertical. It also has a robust partner ecosystem that includes such providers as KPMG, PwC, Wax Digital and Scanmarket, who resell or embed the Spend360 solution into their own capabilities.

Spend Matters PRO subscribers can read additional coverage and analysis of Spend360:

Spend Matters research suggests the “front-end” process for enabling spend analytics, on which Spend360 focuses, include:

  • An extract, transform and load (ETL) component that acquires spend data from multiple solutions. These source systems can include ERP, accounts payable (AP), travel and expense (T&E), e-procurement systems, and card and other relevant buy-side data sources. The ETL components can also include acquiring invoice data (with line-level details) provided by suppliers or supplier networks
  • Data cleansing capability
  • Data classification that ideally allows procurement organizations to classify according to flexible taxonomies and create personalized views (by user, role, division, region, etc.) into data based on individual category tree structures
  • Data enrichment (e.g., risk, CSR, diversity data)

Spend Matters' analysis of the transaction indicates:

  • The two providers had previously partnered and had a working understanding of each other’s capabilities
  • Spend360’s revenue was likely in the same range as other spend analysis providers acquired by larger procurement solution vendors, including Spend Radar (SciQuest), BIQ (Opera) and Spikes Cavell (Xchanging)
  • Sector valuations (even for small providers with a services component in their revenue) are currently in the 4–6X+ (revenue) range given the scarcity of strong technology and the synergies from integrating spend classification with broader suite-based capabilities
  • Spend classification is a subset of the broader spend (and supply) analytics market — and arguably the most critical component of it today, since the analytics component is increasingly becoming a commoditized offering
  • In the spend classification area, Spend360 has leapfrogged most competitors with its recent releases in its approach to cleansing and classifying data. As we noted in recent Spend Matters PRO research that reviews the solution, “Spend360’s use of deep machine learning is now competitive with human accuracy levels (i.e., 98%)”
  • The acquisition is synergistic to Coupa since all of Coupa’s customers can benefit from the capabilities Spend360 brings to enable core spend analytics and Coupa can embed Spend 360’s capabilities within other solutions it brings to market
  • The transaction will drive competitors to innovate in the areas of machine learning and artificial intelligence, since nearly all (today) are using legacy, rules-based approaches to spend classification, which still require a material human element to achieve levels of cleansing, normalization and accuracy that are in line with the latest automated capabilities from Spend360 (once the system is sufficiently trained in a given area)  

Over on Spend Matters PRO, we provide continuing coverage of the acquisition, including a definition and analysis of spend visibility components and what the acquisition will provide to Coupa today between its own set of front-end analytics capabilities and those that Spend360 brings. We also explore the differences between legacy approaches to spend classification versus machine learning- and artificial intelligence-driven models, as well as what each means for procurement practitioners.

Disclosure: Both Spend360 and Coupa are Spend Matters clients.

Discuss this:

Your email address will not be published. Required fields are marked *