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

4/22/13Follow @wroush

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find the right piece of equipment within its system, and get the purchase approved and paid, than it would be to buy the same gadget at Amazon or Office Depot. “Because we have a very intuitive platform that’s easier to use than any other alternative, companies don’t have to push it—employees are pulling,” Bernshteyn says.

One of Coupa’s boasts is that it’s the only maker of spending management software that puts procurement, invoicing, and expense tracking into a single system. Concur mainly handles expense reporting; Ariba, which was acquired by German software maker SAP last year for $4.3 billion, is mainly used for procurement.

Bernshteyn calls Coupa “a single solution for controlling all non-payroll spending in the cloud.” The company says customers who have consolidated these previously separate functions have reduced their administrative costs for expense management by up to 11 percent.

At a recent conference for Coupa customers and partners in San Francisco—where Coupa announced that, among other things, it had purchased a San Diego expense management startup, Xpenser—I talked with Hyrum Kirton, vice president of procurement at Salt Lake City, UT-based Avalon Health Care. Avalon runs a network of 40 skilled nursing facilities and hospices and has 4,800 employees and $320 million in annual revenue. The company has long owned an enterprise resource planning system, and ERPs traditionally include finance and accounting functions. But Avalon’s system didn’t provide a centralized process for handling purchasing and accounts payable, which was a point of frustration for Kirton.

“It was very difficult for me to know for sure that everything was being bought within our guidelines,” he says. “I could make recommendations and give best practices, but it was very difficult to police.”

Avalon spent two years evaluating new e-procurement systems, Kirton says. The company had four main requirements. The new system would have to centralize invoicing; it would have to show facilities managers their budgets, and deduct all expenses from those budgets, to encourage spending discipline; and it needed to be “provider-pay,” meaning that suppliers shouldn’t have to spend anything to hook into the system. Finally, Avalon wanted employees and managers to have the ability to submit and approve spending requests on the go, via their mobile devices.

Kirton says Coupa was the only system that provided all four key features. Because Coupa is Web-based, for example, its system is accessible from any smartphone browser.

On top of all that, at Kirton’s request, Coupa’s engineers built some features specifically for Avalon, including an accounting module that helps the company deal with tax and freight expenses. “I feel fortunate that they have been giving me that amount of time, given our size,” Kirton says. “I am not their biggest customer by any stretch.”

Kirton says his job has gotten easier, and his whole department has become more effective, thanks to Avalon’s contract with Coupa. And that leads back to Bernshteyn’s almost monomaniacal emphasis on what he calls “customer success.”

At a company all-hands meeting that I attended in September 2011, Bernshteyn told his troops that both engineers and salespeople at Coupa should focus first on making the platform so easy to use that managers and employees choose it over other methods, and then on making sure that something good happens as a result.

While many companies obsess over metrics such as J.D. Power satisfaction ratings, Bernshteyn says the only measure he cares about is whether customers feel like they were able to get something important accomplished using Coupa. “We are not interested in satisfying anybody,” Bernshteyn said at the all-hands meeting. “You need to deliver real business value. You need to hear words like ‘I was able to go to my CFO and get promoted. I created real change in my company.’”

Translated into sales strategy, that means Coupa doesn’t spend a lot of time pushing the individual features of its software, even though it has plenty to offer. In Bernshteyn’s view, a successful customer becomes a “referenceable” customer, meaning they’ll volunteer to advocate the product.

“Our job is not to sell technology,” he says. “It’s to go through this cycle of awareness to implementation to customer success, which leads to referenceability, which leads back to sales. This will make us absolutely invincible in this market.”

Whether Coupa is yet invincible remains to be seen. Its current stable of 300 or so customers represents only a tiny slice of corporate America, and competing systems from giants like SAP and Oracle are deeply entrenched in the companies that use them. But in an era of consumerization in business, there’s a general push for office software that’s faster to implement and less cumbersome to use, whether on desktop PCs or mobile devices.

Those are Coupa’s strong points, and it’s why the software is now running on the iPads of store managers at tens of thousands of Subway locations around the world, where it’s being used to order everything from Swiss cheese to chocolate-chip cookies.

“The big players left us an opportunity to fix the mess,” Bernshteyn says. “The opportunity is huge.”

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

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