Coupa Completes Trade Extensions Deal

Yesterday, Coupa completed the purchase of Trade Extensions, the sourcing optimisation software firm. We wrote about the deal here when it was first announced, and clearly nothing untoward on either side has come out through the due diligence process. Here is a short extract from yesterday’s press release.

“Because Trade Extensions can be configured to collect precise data that organizations need during the request for information (RFx) process, it allows buyers to benefit from the mathematical optimization that Trade Extensions provides in the analysis phase. Numerous scenarios can be quickly analyzed, which allows buyers to ‘play’ with the data and answer countless ‘what if’ questions to find solutions that meet their strategic objectives …

… “Through the years, our optimized sourcing has become the de facto standard for companies needing true strategic sourcing,” said Garry Mansell, former CEO of Trade Extensions. “Joining Coupa gives us the opportunity to share this innovation with even more forward-thinking companies while offering end-to-end spend management to our existing customers. We are excited to become part of the Coupa family.”

So the union, heavenly or otherwise, between Uppsala / Swaffham and California is complete.

But those locations give a clue as to why some observers have been surprised by this tie-up. Trade Extensions developed from brilliant Swedish Maths academics and some hard-nosed Mars Group logistics executives who worked out of the Mars UK Masterfoods division in sleepy Kings Lynn (hence the Swaffham location).

A one very smart leader in our field said to me this week, “it seems like an odd deal. Coupa’s whole proposition has been based on simplicity and ease of use, then they’ve bought a firm with one of the most complex products in our industry”.

It was a good point, but we gave him three reasons why we suspect this will prove to be a good deal (for both parties).

  1. While sourcing optimisation is complex, there is an emerging trend for firms who have this capability to look at how some of its aspects can be brought into more “everyday” sourcing technology. Meanwhile, Coupa’s adequate but not leading-edge sourcing tool was always going to be developed into something more sophisticated, at least for the customers who want and need that. So the market may converge on sourcing products that combine both simplicity of use for most projects, but with optional “smart add-ons” to the basics, and then with considerable true optimisation depth and complexity when required.
  1. Coupa’s product may be easy to use but they have a lot of very clever people sitting behind that. Meanwhile, Trade Extensions simply have some of the smartest people working in our sector, full stop. The products might be quite different, but we suspect there will be considerable natural respect between the two teams at all levels and in all areas - not just in the techie space, either.
  1. As we have said before, Trade Extensions has an incredible client list for a company of its size – actually, an incredible list for a company of any size. The firm certainly has more Fortune 100 customers than Coupa currently does. So the cross-selling opportunities and just the ability to get into these accounts will we think have huge value to Coupa.

So good luck to both parties, and Coupa are really laying down the challenge here to SAP Ariba, BravoSolution, Tradeshift, Basware, Ivalua and others.  And do go back and read what our US colleagues had to say about the deal here if you are a current or prospective customer of either firm.

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