Protocol | Enterprise

Coupa is cribbing from SAP and Oracle. Then it wants to beat them.

The $21 billion company is trying to out-innovate its rivals to help organizations better track their spending. But there are still plenty of obstacles ahead.

Coupa is cribbing from SAP and Oracle. Then it wants to beat them.

Rob Bernshteyn is the CEO of Coupa.

Photo: Coupa

Coupa CEO Rob Bernshteyn was once a project manager at Accenture helping customers implement SAP's software. Now, he's fast becoming a thorn in the side of the German tech giant and its rival Oracle.

"These are products companies, they're not software-as-a-service companies," Bernshteyn told Protocol. He added: "[We're] the holy grail of what SaaS is all about."

Those are bold claims from Coupa, a relatively understated but fast-growing company founded in 2006 to help organizations manage spending. Among other services, Coupa offers expense management, procurement tools and, more recently, a business-to-business payment platform known as Coupa Pay.

The looming obstacles for those products are clear. Bernshteyn, who assumed the role of CEO in 2009, is going up against giants like Oracle and SAP that have long-standing relationships with customers, command significantly higher market caps and offer some of the same tools that Coupa does as part of a broader suite of services.

SAP, for example, has Ariba, a procurement marketplace that competes against Coupa's Open Buy. It also has its own expense management platform known as Concur. But for Bernshteyn, products from SAP and others are older, lack innovation and only address a fraction of the overall customer need.

"We've replaced Ariba 100-something times," he said. "It's a very old code line. It's a 1995 code line that's being hosted. It's very difficult to reconfigure."

Coupa already touts Amazon and Walmart as clients — two bedrock U.S. institutions that any software company would love to have on their customer roster — as well as convenience store chain Casey's, DHL and others. Amazon alone manages $24 billion per year on Coupa's platform, per Bernshteyn. (Conversely, the bulk of Coupa's product line runs on Amazon Web Services, the ecommerce giant's cloud service.) Coupa also recently signed a deal with the U.S. House of Representatives, part of a growing focus on the public sector.

SAP appears to recognize the potential threat. It recently hired former Salesforce exec John Wookey to improve products like Ariba, which the firm says hosts $3.75 trillion in annual transactions across more than 5 million companies.

Ultimately, Bernshteyn says he is not trying to supplant all of the products from SAP, Oracle and others that still underpin most large organizations. Among the existing customer base, for example, 60% still use SAP or Oracle. Instead, Bernshteyn's hoping that customers choose Coupa as an added upgrade and, eventually, one of the "four-to-five key systems of record."

"We may have little point-solution competitors around the periphery," he said. "But if a customer understands the vision of what we are playing for, which is managing all business spending on one platform, we really don't have competition."

Coupa also has a secret weapon in what Bernshteyn calls "community intelligence."

The concept is quite simple: Customers share anonymized data on their spending that can then be analyzed to help others make more informed decisions. So, say a supplier of paper clips lowers its costs. That insight can be easily and quickly shared among clients, giving companies the opportunity to restock and capitalize on the decreased prices. Bernshteyn likens it to Waze, which allows users to share traffic condition updates with other users for aggregate benefit.

"That's never been done before in enterprise software," he said. "The data and insights we have are growing with every incremental customer."

Learning from the industry luminaries

Listening to Bernshteyn talk, you can hear the influence of well-known enterprise software CEOs.

The relentless focus on the customer, the need to continually release new products and a desire to serve a greater good beyond offering software are all core tenets of luminaries like Salesforce founder Marc Benioff, SAP co-founder Hasso Plattner and ServiceNow CEO Bill McDermott (also the former CEO of SAP).

Even Coupa's sales strategies mirror those employed by the industry giants, such as using big splashy customer events combined with more close-knit community sessions to build awareness and share success strategies.

But this year, as COVID-19 upended plans for the large-scale enterprise tech conferences that have since come to help define the sector, Coupa has diverged from its rivals and gone small while others continued to go big. It cancelled Coupa Inspire, its annual event, while others like AWS and Salesforce pivoted their marquee conferences to be weeks-long online events.

The pandemic also dented part of its business that it was hoping to grow. COVID-19 sent sales of Coupa's travel management software to a screeching halt. To bolster that product, Coupa had purchased travel price optimization software provider Yapta in January for an undisclosed sum, just months before demand for air travel evaporated.

"Maybe I regret the timing" and the price point, Bernshteyn said, adding, "we think we can come out the gates once all of this settles in a much stronger position."

Still, Coupa's reported consistent growth, with revenue growing 31% year-over-year to $133 million last quarter. And Bernshteyn is bullish on sustaining that momentum. He previously promised investors that the company can grow at a 30% annual rate for the foreseeable future. Shareholders seem to have confidence in that rosy outlook. Since the start of 2020, Coupa's stock has risen roughly 105%, boosting the overall market cap to nearly $21 billion. That far surpasses the Nasdaq's 38% growth so far this year.

Coupa also just purchased LLamasoft for $1.5 billion, its most significant acquisition to date. Bernshteyn says LLamasoft, which offers an artificial intelligence-backed tool to help companies manage their supply chains, will allow Coupa to penetrate deeper into an industry seeing notable upheaval as the ongoing pandemic forces continued shutdowns across the globe.

And while acquisitions such as that and Salesforce's $27.7 billion purchase of Slack are viewed by some as a precursor to a pending wave of consolidation in the SaaS industry, Bernshteyn says he's fielded no serious acquisition offers.

"This company has never had something put in front of us that's for formal consideration," he said. "If we ever did, it's our fiduciary responsibility to take it to the board and discuss."

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