Business spend management specialist Coupa this week became the latest enterprise applications vendor to unveil an app marketplace. The new marketplace is an extension of its existing CoupaLink certified partner program, from which most of the initial roster of 70 certified applications are drawn, with a further 20 or so partners still awaiting certification. App marketplaces are two-a-penny these days as every vendor seeks to position its offering as a platform, but Coupa's makes its debut at an interesting juncture in the spend management sector and may turn out to have greater significance than most. We spoke to Nigel Pegg, VP and GM of the CoupaLink Technology Ecosystem, today to find out more.
The motivation for launching the marketplace is to give more visibility into the range of integrations and applications available across the partner ecosystem. It's in Coupa's interests to encourage partners to extend its platform with localization or specialized functions, and to make sure customers are aware of the expanding range of options. Pegg says:
Creating a marketplace gives us an opportunity to let those partners strut their stuff, to let them show that their [offerings] are uniquely differentiated. It creates that dynamic in the market that creates the best customer outcomes, because they're engaged in a healthy competition for our customer dollar.
There's a 3-tier model for participation, with Coupa making a significant commitment to co-marketing and joint selling at the highest tier. Pegg comments:
What we're really looking to do is a co-investment model, that means that with all of our ecosystem partners, participating and co-investing with us, it gives us an opportunity to drive this and create more growth in that ecosystem.
The choice in the marketplace covers a wide range, from supply chain insights and supplier risk analysis all the way to travel and expense and IT management. There are two main categories, says Pegg. Some are integrations to other installed enterprise applications, such as ERP, HCM and expense management. Others extend the functionality of the Coupa platform, for example adding support for regional or industry-specific taxation and compliance requirements. Some of these may be embedded to run natively as modules within the Coupa environment — such as providing real-time supplier risk assessments or up-to-date information on ESG (environmental, social and corporate governance) status — so that they appear as tabs within the Coupa app. Pegg explains:
This is a huge benefit to our customers because they don't want a swivel-chair integration where they have to go to another system and ... then relate it back to their Coupa platform. Our partners really prefer to embed or build on top of our platform so that it's sitting within that overall context.
The Coupa platform has been steadily extending its reach over the past few years, moving beyond core sourcing and spend to encompass payment and treasury, contingent workforce management and supply chain planning. At the same time, enterprises have been looking to do more with supply chain and spend management, such as getting more sophisticated in collecting and tracking data about where components are sourced. Pegg comments:
The pandemic has done nothing but accelerated that, adapting to those conditions. Having a better kind of 360-degree view on how you're managing both your direct and your indirect spend ... I think has a lot of room to continue to evolve. It's just a place that's just naturally custom-built for an ecosystem to come in and provide that optionality and that depth.
The combined result of these trends is a growing set of opportunities for new players to extend the platform with additional capabilities. Pegg cites several examples:
- Supplier collaboration - making it easier to onboard suppliers and handle updates or adjustments to transactions in progress.
- ESG reporting - supporting suppliers to ensure timely and accurate ESG information, covering everything from carbon emissions to child labor law compliance.
- Metadata extraction - using machine learning and natural language processing to extract metadata from contract systems.
- Bringing procurement to the table - connecting procurement into relevant activities within specific enterprise functions such as IT licensing and management, or treasury management.
- Business intelligence - providing analysis and recommendations based on spend and sourcing data.
- Process mining - identifying and solving bottlenecks in the source-to-pay process.
- Collaborative sourcing - connecting into Coupa's community intelligence platform or or third-party sources to support better buying outcomes.
As long as five years ago, Coupa CEO Rob Bernshteyn was comparing Coupa to CRM giant Salesforce, saying:
One could imagine that you could also open up the infrastructure to do a lot of other things further down the road. So we have invested in the platform in much they same way Salesforce did.
So is today's launch of the Coupa app marketplace its equivalent of the launch of the Salesforce AppExchange more than a decade ago? I've often found it curious that businesses are prepared to invest so much more into their sales operations than they do into its mirror image, the buying function. It's taken a lot longer for the full spectrum of business spend management to shape up into a co-ordinated set of capabilities to rival CRM, but the Coupa platform is starting to get there, and the next step is to build out an ecosystem. I can't imagine that Coupa is ever going to catch up to Salesforce's size, but with Salesforce's ecosystem generating revenues of around 4-5x the vendor's own $25 billion in sales, a similar multiplier could add up to a pretty big number.
On that note, yesterday's commentary on Coupa published by Jason Lemkin, founder of the SaaStr conference, contains an intriguing chart. This provides a Coupa estimate of its total addressable market based on both the total target customer base and the potential to expand into additional functionality beyond its current offerings. Add those two together and the chart posits a $94 billion opportunity — a huge and somewhat unobtainable step up on Coupa's current annual revenues of somewhere above half a billion a year, but perhaps a telling measure of the ecosystem potential in the BSM space.