Coupa – game changers in P2P technology? (Part 3)

Last week we featured here  and here  the strategy behind the Coupa P2P platform, and what it means for clients, following their recent announcement of a serious market drive into Europe.

Why Europe now? “Our customers are demanding  it” says Alex Kleiner, their new European head. They’ve already got an impressive client base, with their biggest success coming from organisations with many devolved locations, where the ease of use and implementation counts for a lot. So retail and catering clients feature strongly in their list, with firms such as McDonalds and Subway. They’re US firms but obviously have a significant European presence – hence the desire for Coupa to support them more locally.

(That recent Subway win is pretty mind-blowing actually – “the largest multi-location cloud business application deployment to-date”, across 35,000 restaurants in 98 countries).

But Coupa are also setting their sights on winning local business.  They’ve just won their first pure UK client – it’s not public yet, but again, it fits this picture in terms of an organisation with multiple locations, and it’s a blue-chip name.  And experience suggests once they win a client, they hang onto them – their 97% subscription renewal rate is pretty impressive.

Coupa are “financially solid”, as Kleiner puts it. They’re privately owned, so they’re not giving away too much about strategy and finances, but we wouldn’t be surprised to see acquisitions on the horizon, probably to extend the capability of the product range rather than to buy market share.  The owners are in no rush to sell out – there is, you feel, a real belief that this can be a very large business, quite quickly.

What will the entry of Coupa to the European market do in competitive terms? Well, they are still a small company compared to Ariba, let alone SAP or Oracle. So we shouldn’t get carried away by this as a market game-changer, and they still need to put in place sales channels, support and so on. But the evidence from the US is that this firm moves quickly and decisively, and we expect their market entry to focus the attention of senior procurement executives on the usability and implementability (bad word, but you know what I mean) aspects of P2P platforms.

That’s always been a big issue, and one of the “dirty little secrets” of our profession is the amount that’s been spent on technology which is never used (“shelfware”).  And often that is because users have rebelled against the complex and time consuming nature of the systems they are asked to use.

But we’re now seeing solution providers recognising this and making fast implementation and ease of use distinguishing factors for their products. That in turn will make CPOs consider those factors more seriously. So although Coupa will, we believe, be successful this side of the Atlantic, their presence could actually benefit some competitors who similarly offer rapidity and ease of use as key features – Hubwoo, with their tools to make SAP more user friendly, and Wax Digital, perhaps the closest UK home-grown competitor to Coupa, come to mind as examples.

The simplicity of their pricing model might also have some effect in terms of changing market expectations. Coupa generally sign a 12 month contract, so they have “skin in the game to perform” as they put it. There’s a single fee – with no additional consulting fees, support costs etc. That will be a refreshing change to many CPOs and software procurers who have for years struggled with byzantine and, at times, extortionate (in both senses of the word) software pricing models.

So if you’re in the market for P2P, or you’re looking to make your current systems and process more user-friendly (perhaps to drive greater adoption, compliance, or spend coverage) then we’d suggest that Coupa certainly deserve to be on your list of providers to consider.  And, most unusually, we also predict that the product will actually make you smile when you see it!

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Voices (11)

  1. Alex Kleiner:

    I have always remembered this thread and thought it would be good to revisit at some point. It seems like a worthy exercise.

  2. Neil Robertson:

    Peter – you may want to add Compleat to the solutions you review. We also “tick all theboxes”, except you will not find us in the Gartner report, but our approach to the market is refreshingly different!

  3. Peter Smith:

    Let me just say – coming in here as referee – that I want to feature more ‘local’ or regional firms in this space – it’s my fault I haven’t done more, although we have covered, for example, Wax Digital (quite extensively), and Proactis and Science Warehouse to some extent. And the recent Gartner report, which I’ll feature next week, has given me a kick up the backside to get out and speak to some of the other interesting players in the P2P space soon I hope!

  4. Spend Management Man:

    No axe to grind Alex, just thought i’d add a little “balance” to the post by pointing out that there are lots of companies who can (and do) make similar claims the ones made by Coupa in Peter’s post, but none in this region who have quite broken through the clouds (forgive the pun) yet. After all, that’s what the “leave a comment” box is for isn’t it? 😉

  5. Alex Kleiner:

    I’m not really sure where the previous poster is coming from or why they are publically choosing to grind their axe here. I do, however, graciously accept the apology and agree that it is a space worth watching. With respect to Coupa I prefer to let time and results bear it all out. SMM please contact me directly every 6 months or so and we can take stock – I would welcome the dialogue.

  6. Spend Management Man:

    Sorry Alex, my intention was not to knock Coupa directly. My point is that we have seen this time and again from a number of different vendors who have all failed to make an impact. Now its Coupa talking about “the user experience” and being “leaner, smarter, better, cheaper” than Ariba… but over the last 5-10 years I could point to precisely the same messaging from a host of other companies who are still sub $10m. None of which have taken off. And perhaps understanding why not is one of the keys to understand how one might in the future.

    I would love to see Coupa break this mould, but I don’t see anything different yet… Started by a bunch of former execs from an established ERP vendor: check! Raised some VC money: check! Brought in a go-getter CEO: check! Built something which looks nice: check! Given it away to some big companies (mainly in retail where they’re more open to giveaways-in-return-for-PR type deals): check! Started to ramp PR by securing good coverage in the “analyst” reports: check! All sounds exciting, but applies equally well to several others in the UK and many more around the World. It’s a good model to start a company, but what will make Coupa cross the chasm where others have not yet done so.

    The numbers do not lie and until we see a change in the numbers… i.e. breaking free from the sub $10m range into the $20m, $30m… $100m range then Coupa remains little more than “an interesting company to watch”.

    I sincerely wish you the best. I will be the first to applaud you when you start to show signs of being something different !

  7. Alex Kleiner:

    I am shocked and dismayed – but not entirely surprised –that an anonymous poster would wave uncertainty over Coupa’s entry into the UK after only one month. It is my sincere belief that Coupa is a company that will increasingly show visible momentum in EMEA from month to month, now that the foundation has been laid. Time will tell. Spend Management Man, and others, should feel free to contact me at Coupa if doubts remain in the interim.

    The second half of SMM’s post is more meaningful. The fact remains that the procurement technology landscape is completely fragmented – 32 serious P2P companies out of a total universe of 57 were compared in a recent analyst report. The market is huge and very ripe for a technical and commercial disruption similar to what has occurred in other market spaces (search, social networking, recruiting, sales automation, etc.). No P2P provider today has yet broken out to a dominant and iconic status, and the ones who made the early gains are now hampered by cost-structures and legacy architectures that restrict their growth and mobility (similar to the early Telcoms providers that dug up the roads to lay cable, before wireless networking). Musing over why it hasn’t happened yet after 14 years is a reasonable exercise, deciding which provider will be the one to finally breakout and affect lasting change is a much more relevant question in my book.

  8. marketdojo:

    We certainly believe this is the approach to procurement technology that the market is crying out for. It is exactly what we aim to offer as well in this respect which is why we keenly observe the “Coupa phenomenon”!

    Zero shelfware. Single fee with flexible and transparent terms. Extremely intuitive software. Rapid implementation and uptake. All the things we firmly believe in and offer our customers as well.

  9. Spend Management Man:

    Hi Peter, agree that Coupa looks interesting. But they have been around for a long time now (in the US) and still have revenue less than $10m. I also have it on good authority that the blue chip win in the UK was pretty much given away to secure a foothold in the market and then after others including Basware, Ariba and Proactis had withdrawn from the process. But I’ll tell you what I would be interested in your perspective on… why are most of the P2P vendors active in the UK market (Coupa, Wax, Proactis, Compleat, etc.) still absolutely tiny (sub $10m turnover) – why is there still only Ariba and Basware who have broken through into serious businesses? I even understand that SAP and Oracle licence revenue attributed to procurement modules is insignificant – most is given away with wider ERP solutions or to secure more lucrative services agreements. It just seems to be an area that software companies struggle to “make stick”. Thoughts?

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