Coupa and integration: Mobilizing to tackle M&A complexity [PRO]

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Editor’s note, May 13, 2021: Since publishing our December 2020 PRO article on Coupa’s M&A integration efforts, Spend Matters has received multiple briefings from Coupa on the topic. The provider has shared detailed timelines and statuses for integration projects relating to all of its major acquisitions over the past several years — in addition to sharing its overall playbook for M&A integration. This PRO research brief updates and replaces previous coverage on Coupa’s M&A integration progress and plans.

Outside of M&A transactions themselves — which, for those who have never gotten a front-row seat themselves, involve unbelievable amounts of research, diligence and paperwork — software M&A is, unfortunately, often more art than science when it comes down to making combined assets work together. Indeed, few firms are able to drive integration between acquired assets in a timely manner, as planned in the original discussions and presentations that get shared with customers after a deal is closed. Granted, part of the challenge may be semantics as to what constitutes “integration.” This is why Spend Matters decided to create strict definitions for the five levels of post-merger technology integration (See: here, here, here, here and here) that are extensible far beyond our corner of the procurement technology market.

M&A is no longer optional as tech providers get larger. You simply can’t talk about larger vendors in the procurement sector without M&A being a key part of the conversation. Coupa is perhaps the case study here. Outside of SAP, which entirely remade itself from the outside in across the extended procurement technology area via three large acquisitions, Coupa is undisputedly the top acquirer in this market as measured by frequency, size, deal flow and the willingness to push the limits of what constitutes procurement and finance technology (e.g., moving into treasury management/payments and supply chain design and planning.). And this is in addition to a consistent stream of funding and development to internal product development: Coupa disclosures note that the vendor reinvests approximately 20% in revenue into R&D, a figure totaling $134 million in 2020.

Coupa’s acquisitions have addressed a variety of business cases, including not only the addition of functional specialists that differentiate Coupa’s coverage compared with other suites but also smaller tuck-ins to address key customer challenges (e.g., the acquisition of ConnXus to enhance supplier diversity coverage across suite components). Initially these acquisitions were smaller and tended to be more “acqui-hires,” in which Coupa rebuilt the acquired solutions in its own Ruby-on-Rails-based P2P solution (and incrementally expanded the core Coupa platform’s data model to support the new functionality in its expanding suite for business spend management, BSM) — providing the benefit of a single code stack and object structure to maintain scalability, support and consistent usability across the entire solution suite.

Yet as Coupa has pursued growth beyond its roots as a P2P player, it has made a series of increasingly large acquisitions — with 2020 seeing five deals, including the $1.5 billion acquisition of supply chain management provider LLamasoft. (That activity has continued in 2021, which has included the acquisition of another travel booking provider.) Because M&A is an important issue for Coupa customers and prospects, but also for understanding the effects of acquisitions on an organization’s procurement technology architecture in general, this Spend Matters PRO piece explores:

  • Coupa’s philosophy and approach to acquisition and integration strategy
  • The hurdles that all vendors face in expanding via acquisition (and what Coupa is doing to address them in its case)
  • Technical integration examples
  • Our point of view on Coupa’s continued growth strategy through acquisitions

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