Coupa Gains on Competitors in Expense Management, Driven by CEO’s Unusual Vision of SaaS and Success

4/22/13Follow @wroush

Three decades into the PC revolution and nearly two decades after most businesses joined the Internet, you’d think that software makers would already have identified every conceivable inefficiency in the way companies work, and that they’d be running out of ideas for how businesses can use technology to save more money.

Not even close. Take purchasing and expense management as an example. Electronic systems for procurement, invoicing, and reimbursement have been around since before the dot-com crash, but the average company still spends a jaw-dropping $28.91 to process a single expense report, according to a 2010 report from research firm Aberdeen.

That leaves a big opening for startups that promise to help other businesses get their spending—and the way they manage it—under control. And one of the companies plowing right through that opening is Coupa, based in San Mateo, CA.

Backed by $49 million in funding from Mohr Davidow Ventures, Crosslink Capital, Battery Ventures, BlueRun Ventures, and El Dorado Ventures, Coupa is attempting to steal the markets for corporate procurement and expense management software away from older competitors like Concur, Ariba, and Oracle. It offers a subscription-based Web and mobile service that aims to make placing a purchase order, paying an invoice, or submitting an expense report just as easy for corporate employees as shopping at Amazon.

It may not be as sexy as building mobile games or running a crowdfunding campaign to build a smart watch. But the fast-growing startup, which has doubled in size over the last 18 months, to nearly 200 employees, is out to fix a problem that affects every business—namely, the dreary process of actually paying and accounting for the supplies, materials, and services that keep a company operating.

A Coupa group photo from April 2013

A Coupa group photo from April 2013. (Click or tap image for larger version.)

Coupa’s solution seems to be working—last year market research firm Gartner placed it first in its rankings of e-procurement companies, above Ariba, SAP, and 50 other competitors. It’s used by more than 300 companies, including some as large as McDonald’s, Subway, Salesforce.com, Gannett, Blackstone, Reebok, and Adidas. On an average business day, half a million transactions flow through the system, with a total value of more than $5 billion per year.

And after four meetings with the company since September 2011, I’m ready to attribute the company’s rapid growth largely to its bold CEO, Rob Bernshteyn. He’s a a former SuccessFactors executive who joined Coupa in 2009 and is carving out a place as one of Silicon Valley’s most single-minded leaders.

Bernshteyn’s vision for Coupa is part technological, part ideological. The technology part is all about the cloud; the company argues that a Web-based, software-as-a-service approach is more flexible and efficient when it comes to tackling a complex, cross-organization function like expenses.

The ideology part, which seems to be just as important in this case, has to do with the way Bernshteyn views customers and the way the company thinks about sales.

In a nutshell—and this is going to sound like marketing folderol, but bear with me—Coupa is focused on helping its helping individual users be more successful in their organizations, rather than on increasing nebulous measures of “customer satisfaction.” The distinction is pretty key, and I’ll come back to Bernshteyn’s ideas about that in a moment.

But first, the lowdown on Coupa’s technology. It consists of a suite of cloud-based applications. There’s one for submitting requisitions and purchase orders electronically, one for tracking invoices from suppliers and making sure they’ve been approved and paid, and one for tracking employees’ business or travel expenses. There’s also an application for centralizing purchasing contracts, another for benchmarking your company’s spending against other companies that use Coupa, and yet another for running reverse auctions, where suppliers compete for a company’s business.

Inside the search bar that stretches across the top of the main Coupa screen is a simple prompt asking, “What do you need?” That Google-like interface is designed to make employees feel like they’re just shopping online, while at the same time helping them comply with purchasing policies.

Most employees would like to do the right thing when it comes to spending company money, Bernshteyn says. They just don’t have the patience to dig through company policies or use complex client-server software to find an approved supplier, so sometimes they take shortcuts.

“There is maverick spending everywhere,” Bernshteyn says. That’s because “in the past, procurement was a blocker. If you wanted to get anything done, you had to go around them. Our philosophy is exactly the opposite.”

Say you need a new peripheral device for your office laptop. Coupa’s goal is to make it easier to … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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