The History of Coupa: A Tale of Two Industry Titans – Part 2

(Editor’s Note: As a follow-up to my previous article, The History of Coupa, I want to share the reactions from industry thought leaders regarding Thoma Bravo’s $8 Billion acquisition of Coupa and what it means for the industry. I also wanted to revisit my 2009 radio series “Emerging Giants: The New Titans of the SaaS World” to compare two present-day industry leaders’ unique paths to success and the potential impact on their end-users going forward.)

Here are just a few of the responses from notable industry observers:

• “I was very surprised and left wondering about the future of the “brand”. What do you think?”

• “Well, this is interesting… and the trend in our industry! With private sector spending being significantly reduced because of the need of slowing down the inflation, most of the S2P players have disappointing growth forecasts. After Basware, Mercell, (Ivalua not going IPO as well), now Coupa. I think it’s also a great opportunity for Thoma Bravo, the price is reasonable. Now it’s time to work on profitability of the company, focus on sales, increase customer lifetime value, and reduce expenses.”

• “I’ve just stepped off a flight but I’m quite surprised. Although becoming a private company will probably be a good thing in the long term because it focuses them more on strategic planning rather than impressing the stock market. I wasn’t familiar before with the outfit that’s about to buy them. Thanks for the heads-up!”

• “Not sure I have much to say Jon. Many software segments are highly fragmented markets. Coupa is well regarded at least for procurement. Further consolidation and integration should be expected.”

Here are a few more comments:

• “Interesting. I wish I was a Coupa investor… is my initial thoughts. Need more time to digest the news but Coupa needed to get into a few other spaces to make it the “IT” platform.”

• “Thanks for asking, Jon. I didn’t see that news yet. My first reaction was to think that it is in the logic of the concentration of the offering side. It may not seem obvious through this move, however there are many small-medium companies (and a plethora of young ones) with good products offering complementary solutions (with an overlap, sometimes). My second reaction, is to wonder how much more they are going to charge to recover the investment, given the premium paid. And I am curious about the synergy Thoma Bravo will be able to foster between Coupa and some of its other companies, as many deal with data collection and transformation. I don’t know TB’s portfolio in detail, still I am certain they’ll be able to combine and leverage various technologies and data streams. What are your own thoughts on this acquisition?”

• “I’m not surprised.  I heard earlier this year they were shopping themselves (and understandably as that’s the best way to monetize what they’ve built).  A PE buyout is always an interesting journey (having been through these myself.) Depending on the firm’s goals for flipping or holding the company, it could accelerate OR stymie investment, product enhancement, etc.   Also, it will be interesting to see which of the Coupa execs stay or take a buy out.”

• “Interesting.  I am not familiar with Thoma Bravo, so it is difficult to know the true long term strategic plan.  As we know, investment firms tend to take a shorter-term view, which would be concerning for development of future platform technology/data improvements.   However, TB could be interesting in growing the business and leveraging technology already in it’s portfolio, which would benefit the current Coupa team. How did you like my ‘non-answer, answer’.”

• “Obviously, this is a big deal Interesting that they now will be a private company, so it seems that there are things they want to achieve without public investor scrutiny i.e., Dell. Coupa is a highly regarded Gartner 4 quadrant recognized company – hopefully we will see more good things.”

Another Titan Speaks

Under the heading: In your due diligence to finalize your Source to Pay vendor, are you confident that your vendor will be able to partner with and support your business for the next decade, if not more? another Titan (Zycus) from 2009 emphasized that privatization is a key to “future-proofing your business” by highlighting the following points:

• We are privately held, cash flow positive, and hence fundamentally strong.
• We carry zero debt and zero external equity.
• A fundamentally strong product and business for over two decades
• Insulated from the market conditions, no concerns on business viability
• We are customer focused without market distractions.
• Quarterly results pressures or demands of investors/ markets do not drive our strategy.
• Allows us to invest in customer-centric innovations like Merlin AI, AppXtend, and projects with longer gestation cycles.
• 100s of Global 1000 have trusted Zycus for over 2 decades.
• Having supported our clients across many economic cycles and thrived through many recessions, it is no wonder many customers call us the “All-weather Procurement Technology partner” vendor.

I have been asked by many people what my thoughts are regarding the recent Coupa news. Going back to 2009 (and much earlier), I have my own take on what it means. However, as a CPO procurement professional, I am interested in knowing what impact you believe it will have on your digital transformation journey going forward. Please share your comments below.