SaaS leaders NetSuite and Coupa have announced a new partnership that will see the enterprise players go to market as part of a new partnership, followingdemand from their respective customer bases for tighter integration between the companies' cloud suites.
Given NetSuite's focus on financials and Coupa's focus on spend management, it's not too hard to imagine where the companies have found some common ground.
However, what's interesting about this deal, unlike a lot of 'partnerships' in the tech industry, is that NetSuite will actually compensate its sales teams for selling Coupa products. The companies believe that this agreement will be mutually beneficial – with NetSuite anticipating that it will acquire new customers, thanks to what Coupa brings to the table, and with Coupa hoping that its suite will appeal to NetSuite's broad base of customers.
I got the chance to speak to NetSuite' COO Jim McGeever at Coupa's annual customer and partner event in London this week, where he said that NetSuite doesn't often enter this type of agreement and only does so when it will help the company's bottom line. He said:
It's a pretty unique partnership – we have lots of partners, but this is only one of a handful where our sales team will actually be out there pushing Coupa's products and getting compensated for it. We only enter into these types of deal when we think that there is a real value to our customers and the reason that we do it is not because we want to sell Coupa's products, but because we want to sell more NetSuite products. That's the motivation for us to do this. We believe that as a result of this partnership and what Coupa brings to the table, that we will sell more NetSuite.
Coupa is a really great and easy to use purchasing solution for a broad employee base, which when is tied in with NetSuite inside a company, will mean you will get a lot broader adoption. It also gives us a competitive advantage against our competition, the old school on-premise, SAPs and Oracles of this world.
McGeever was clear that although NetSuite sales teams will be compensated for selling Coupa into its existing install base, this is largely about acquiring new customers for NetSuite. He also believes that this will be of great benefit to Coupa, given that when NetSuite has entered into this sort of partnership in the past, NetSuite has accounted for up to 20 percent of the partnering company's sales.
I also got the chance to speak to Coupa CEO Rob Bernshteyn about the partnership, where he agreed that the deal was about both greater value for the companies' customer base and extending the reach of Coupa. He said:
It came about logically, even five years ago, that there was a great deal of synergy between what NetSuite does and what Coupa does. But now we have over a dozen joint implemented customers; so customers were often reaching out themselves asking, why aren't you partnering? So I reached out to Zach Nelson and we decided to go to market together.
The second reason is faster distribution. They have a wide host of customers that could use our capabilities. Why wouldn't we take advantage of that? If you are a NetSuite customer and you want to get your spend under management, why wouldn't you use this Coupa platform? We see Coupa as a strategic extension to ERP – to help you get more value out of this core accounting platform that you have.
Coupa Release 12
Coupa also announced an update to its applications this week, which includes a host of new features that aim to optimise spend and supply chain management in the enterprise. Coupa Release12 includes;
A more flexible and open business network to manage suppliers. Coupa argues that about 30 percent of a company's suppliers engage with their legacy business networks, with the remaining 70 percent reverting to process heavy paper trails. Release 12 now includes 'Supplier Actionable Notifications', which allows buyers to transact with suppliers directly from email, without suppliers having to register on the business network.
New features to help companies comply with regulations when working on a global scale. These include digital signatures, improved auditing functions and HIPAA compliance.
Intelligent inventory – giving users more visibility and control of their inventory, which aims to eliminate redundant spend and streamline stock management.
Bernshteyn was keen to highlight that by implementing Coupa and getting control of spend and the supply chain, enterprises will save money. He said that putting the business case together and pinning down that all-important ROI shouldn't be a problem, especially given how messy spend management practices have been in the past. He said:
There's a huge opportunity for ROI, that's the beauty of this space. It's hard with CRM, arguably, to say that it will bring you in more revenue. ERP is ERP. You get better engagement out of your employees with HCM – there's correlation with these but it's not causal. In our space it's pretty causal. We are saving customers 6-10 cents on every dollar that they're spending money on, that's measurable results – that doesn't even factor in compliance and spend control preventing you from buying things you shouldn't be buying.
We estimate we have saved our customers over $2bn and we have 450 customers.
Coupa sees that it has a couple of differentiators that give it a competitive advantage, apart from being in the cloud. Firstly, Bernshteyn recognises the importance of the UX and claims that Coupa has been built with a 'pull' approach, rather than 'push'. He said Coupa doesn't want to rely on power users within an organisation, he wants it to be a tool that users would rather use instead of any other method.
Not only this, but Bernshteyn believes that the company's dedication to the spend management and supply chain optimisation space is a big sell for customers – Bernshteyn doesn't want to get distracted by anything else. He said:
We also don't have an agenda other than helping customers optimise spend – we're not trying to do ERP, we're not trying to do databases,we're not trying to CRM. We want companies to spend smarter, save money, drive compliance, drive adoption.
Our customers want an organic, tightly pre-integrated cloud suite of source to settle, with expenses, with supplier information, with supplier risk, with contract management – they want it all. The marketplace does not have that today at all. The only option is to buy from a company that has bought a bunch of other companies and tried to hook them together, or some custom solution. We are very carefully organically expanding our platform to deliver these areas over time.
We want to win this market, we think this is a tens of billion dollar global market. The way that Salesforce.com has won CRM, the way Workday has won HCM, the way NetSuite is winning ERP, we want to win this whole supplier management and supplier optimisation category.
But unlike some of the SaaS and cloud vendors out there today, Bernshteyn isn't interested in putting on a show and spending money where it isn't necessary. He wants to build the company sensibly, in a smart way, that allows for more spend when there is the opportunity for more sales. He said:
We monitor our sales and marketing efficiency very carefully. The sales and marketing efficiency metrics haven't changed in six years. So, if we have spent more, it's because we have also earned more. We are not overspending, but we are also not underspending as we develop into the market. It's one of the ways that you can build a responsible business – you can get greedy, that's not what we want to do.
One of the differences about us is our vales, that's not something to be understated. Ensuring customer success, focusing on results and striving for excellence. I think these values are part of what has made us successful. I think that's a big deal.
There is obvious common ground for NetSuite and Coupa here, which will not doubt make for a mutually beneficial partnership.
I'm also impressed with Bernshteyn's enthusiasm for the market, he knows that this is a big opportunity. But I also like that he isn't going to be foolhardy. Whilst being bold and brash has worked for some, it has created problems for others.
Will Coupa be able to align itself with the Salesforces and Workdays of this world? It is well positioned to do so. The problem it has is getting people to fully understand the significance of supply chain and spend management – although it's not as 'fun' as CRM or HCM, given its a fundamental function of most businesses out there (a function that's been often been overlooked for years), its importance shouldn't be underestimated.
Disclosure: NetSuite, Coupa, Salesforce, Workday and Oracle are all partners at time of writing.