Coupa’s Acquisition of Trade Extensions — Sometimes It’s Better to Be Lucky

AdobeStock/Sonja Calovini

Author’s note: I originally wrote this at Coupa Inspire. Then I reflected on it.

Does Coupa understand what it just bought in the form of Trade Extensions, that little sourcing optimization company from a sleepy college town north of Stockholm?

Don’t bet on it. But don’t worry, they’ll figure it out soon enough.

Several of us ruminated on the possibilities over happy hour at Coupa Inspire, so I’d thought I’d share two of the highlights, the inside (and ever-so-slightly-inebriated) analyst view if you will.

Templatizing Category Enablement

We agreed on the idea that Coupa can use optimization to power up category-specific sourcing apps in a variety of ways, including enhanced bid flexibility and award determination analytics. In other words, go ahead and assume that a library of turnkey, category-specific sourcing apps will soon surface become generally available to the Coupa community.

It’s an effective way to “package” sourcing optimization for the masses, and Trade Extensions’ pending release of TESS (Trade Extensions Sourcing Solution) has been designed to support that kind of distribution strategy. It’s a no-regrets move, for sure.

But there are other cool ideas that may be more difficult to pull off but could be true game changers. One centers on the power of users — collectively. Think about it. With all the emphasis placed on community intelligence at Coupa Inspire, consider what could really happen with the intersection of Coupa’s group buying model (Coupa Advantage) and Trade Extensions down the line.

The True Power of the Community. Optimized.

In short, what Coupa now has is a trading algorithm designed to optimally clear expressive electronic markets. For the time being, forget about the “buy network” or “sell network” distinction. Now think of Coupa Advantage as a single network with a recurring resource allocation problem. If individual members of that community represent nodes on that network — each with varying preferences and constraints, each with differing objective and subjective decision criteria, but all sharing a goal of maximizing value — how do they separately and collectively determine the tradeoffs that will result in the best possible allocation for the community?

Raja Hammoud, Coupa’s VP of product marketing, ended her presentation at this year’s Coupa Inspire reminding the audience that “none of us are smarter than all of us.”

While that generally may be true, whether Coupa realizes it or not, it just bought a technology that, in a networked sourcing context, can definitively settle that question.

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