While Coupa has not revealed how it will use the funds from
its planned initial public offering, the exposure and the new pool of cash from
a successful IPO can only mean good things for the spend management software
provider and the business travel sector, according to experts who spoke with BTN.
Jason Busch—founder and head of strategy at research and
advisory firm Azul Partners—anticipates Coupa will use the IPO funds to
continue acquiring companies as it has been doing. Earlier this year, Coupa
acquired contract management and automation company Contractually, and in July
2015, it acquired open booking platform TripScanner and cloud e-invoicing
company InvoiceSmash. In February of last year, it acquired procurement cloud
software provider ZenPurchase.
"Right now the capital market and M&A environment
will favor those doing acquisitions [over] those being acquired because it's
more challenging today than it was six to nine months ago to raise funds,"
Busch said.
Coupa's aim has been to acquire people and technology to
embed in its platform, not to acquire revenue streams, Busch said, adding that
Concur's plan to acquire Hipmunk similarly was a technology play.
He and Gartner Research director Chris Pang believe the IPO
will give Coupa the funds to raise its profile, show off the goods and make
more investments. "It will essentially give them much greater awareness in
the broader market and provide them with a potential war chest to go out and do
more around travel and expense, as well," Busch said.
Coupa's Edge
Coupa is a procurement vendor primarily, but it acquired
expense management platform Xpenser in 2013 and rebuilt it to make it more
robust. Coupa now sells it as an add-on, and that platform is
"underappreciated within the procurement community," according to
Busch.
According to Pang: "Most vendors never really put a lot
of focus on the T&E module. … Coupa is one of the few vendors that have
spent money more deliberately and proactively on the solution. If you're
choosing between B-to-B vendors and looking for different ways to tease out
which vendor is going to be better for you and you're looking for an integrated
T&E management platform, then Coupa does stand out head and shoulders
compared to a lot of their competitors."
Coupa's opportunity, according to Busch, is a single
platform that offers both procurement and expense, while most platforms do not
offer both. SAP's Ariba integrates with the SAP-owned Concur Travel &
Expense, but it is not built on the same platform. "Does Coupa have all
the capabilities, platform and network of Concur? No, it doesn't, but being on
one platform has its advantage," Busch said. "The idea of having
employees expense in the same place so that the employee can go to one
interface that they're familiar with and all of the workflows, approvals and
user experience are common—that's an advantage."
A year ago, another competitor, Deem, began to bill itself
as a "commerce-as-a-service provider" platform, offering 11 million
individual products, including travel and expense. Following the departure of
founder and CEO Patrick Grady in April, though, it narrowed its offerings to
focus on travel and ground transportation. "Yes, there are other vendors
doing similar things to Coupa, but the nearest and most well-known competitor
[Deem] isn't going to be laser-focused on this particular area at the
moment," said Pang. "While Deem is still selling the procurement
application, it isn't front and center in terms of its overall strategy."
Shifting Market
Adding to Coupa's proposed IPO and Concur's acquisition of
Hipmunk, American Express Global Business Travel plans to buy France-based
booking and expense management provider KDS in the fourth quarter.
"The idea of being able to offer a consumer
experience for business travel and expense is becoming much more important, and
that plays to the recent acquisitions" and to Coupa's IPO, said Busch.
"A lot of solutions are not only getting more user friendly, they're also
bringing some of the power that was originally pioneered in the consumer travel
and shopping space. But … you have to tie in all the rules, workflows, commissions,
profiles and budgets of corporate travel, which we all know is
complicated."