When Coupa confirmed it was being acquired for $8 billion, spend management industry took note.
It wasn’t because it involved private equity firm Thoma Bravo, or that that deal was struck in all cash at $81 shares, but rather, that it marked a 77% premium above Coupa’s closing price on Nov. 22, before media reports of a potential buyout triggered its ascent.
At a time of widespread belt tightening in the face of global economic discomfort, the terms of the deal reflect the underlying demand that exists for this niche corner of cost savings, and the lengths that so-called smart money investors are willing to go to get a piece of it.
“We’re looking forward to partnering with Thoma Bravo and accelerating our vision to digitally transform the office of the CFO,” said Rob Bernshteyn, chairman and chief executive officer at Coupa, in the press release.
The ownership may change, Bernshteyn said, but the companies’ values were staying the same.
“Every one of us at Coupa will continue to put our customers at the center of everything we do and help them maximize the value of every dollar they spend,” he said.
Industry Surging
Globally, spend management software demand is booming as businesses look to optimize cash flow by cutting their non-payroll costs while gaining insight, visibility and control over this not-insignificant portion of corporate consumption.
The need for spend management solutions are salient and growing, according to PYMNTS research, especially among software-as-a-service (SaaS) firms.
According to the PYMNTS and Airbase survey, 79% of firms that are experiencing fraudulent payment said they were interested in using a spend management system and prepared to pay for the upgrade.
It’s a problem, the study found, that touches both large and small firms, with findings showing that 37% of large SaaS firms experienced issues with lost expense receipts, compared to just 28% of smaller firms that faced that problem.
Usage Lags Need
According to the report, “non-payroll spend management software can help business-to-business (B2B) software-as-a-service (SaaS) solutions providers deploy, account for and control the money they spend, which is crucial for driving growth.”
Despite SaaS firms building their own reputation on helping businesses optimize operations, many have not adopted modern spend management practices to improve their own financial efficiencies.
“PYMNTS’ data found that just 55% of these firms currently use such a system, meaning that nearly half have limited access to real-time data and have not replaced their inefficient manual procedures with automation.”
That has real-world consequences for SaaS firms, as reflected in an earlier study by PYMNTS and Airbase that showed a lack of visibility and control of non-payroll spending is costing SaaS firms roughly 4% of their total expenses.
According to the September report, 90% of SaaS firms reported not having full visibility and control over non-payroll spending. A lack of visibility is also a productivity drain. PYMNTS data shows that “AP teams allocate roughly 17 hours per week for employees to manage non-payroll — equaling 42% of one full-time AP employee’s time.”
One reason for spend management system adoption levels that are lower than survey respondents interest may be a lack of clarity on the time and effort required to implement such a system. New PYMNTS research shows that spend management innovation can be relatively swift, based on reports from survey respondents.
Easier-Than-Expected Installs
While enterprise-wide financial system upgrades are often feared to be disruptive, PYMNTS survey of 225 executives who managed accounts payable (AP) tasks at SaaS firms with 100 to 1,500 employees, found that 9 in 10 of these finance leaders stated that their teams were able to learn and start using new spend management software solutions with a month, with 76% of those at these firms doing so in just two weeks.
While Coupa may be off the market now, the business of spend management is still very much on the rise and active, as demand to control costs looks set to remain a top priority for some time to come.
Read the full report: “Improving Financial Performance: The Speed Of Spend Management System Adoption”
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