Coupa: Can e-procurement apps tackle the midmarket?
Can two Oracle alumni hit bring e-procurement applications to the midmarket? Coupa, a Foster City, Calif., startup sure hopes so.
Coupa, founded by Dave Stephens and Noah Eisner after years in Oracle's advanced procurement group, will announce Coupa eProcurement Express on Monday. The software is free and specifically designed for the midmarket.
The general idea behind the software is to make purchasing at smaller companies like shopping at Amazon or any other e-commerce company. Coupa CEO Stephens argues that the biggest reason e-procurement applications fail is lack of employee buy-in. In other words, if e-procurement is too difficult for employees there's no sense in going through the implementation.
Also interesting about Coupa's software is the way it's built. For starters, Coupa's e-procurement apps are open source. They are also developed using Ruby on Rails, a language that was chosen for development when the company launched a little more than a year ago.
Stephens recently spoke to ZDNet. Here's what he had to say on a few key topics. There's also a brief gallery highlighting key points.
Why does the midmarket need its own e-procurement software? Stephens says the idea for Coupa hatched while he was at Oracle. Many companies have installed e-procurement systems, used to purchase everything from office supplies to PCs to PDAs, but failed to get returns because employees didn't use them. For midmarket companies such as misstep could really hurt the bottom line. "Even if they could scrape the money together and put an e-procurement system in the implementation is not successful due to employee non compliance," says Stephens.
On open source technology, Stephens said Coupa's software is open source because the technology has improved dramatically and development can go faster. Coupa was able to build its first beta with four people. An enterprise version of Coupa's e-procurement software is in beta and so far has 3,600 downloads.
On getting employees to comply with corporate purchasing requirements, Stephens said the easiest way to get employees to follow the purchasing department's rules is to make the user interface familiar. Coupa's software is designed to look and operate like an e-commerce site. You can also review products, add tags and describe purchasing items. Stephens said Coupa is looking for a "Amazon.com meets enterprise" vibe with its software.
"Some systems have a highly regimented categorization system with parameters set by purchasing. With tagging, employees actually describe items and help the system get smarter," says Stephens.
How do you define a midsized enterprise? To Coupa, a midsized enterprise has anywhere between 100 to 5,000 employees. A typical Coupa customer has about 500 employees. For these firms an e-procurement system is needed to create an audit trail to track purchasing. Features like uploading entire catalogs from chosen suppliers aren't necessary. Why? Midsized companies don't have purchasing power so they are largely looking for efficient electronic systems to get off paper processes and better track "one off" purchase.
Why use Ruby on Rails for Coupa? "At time we started company Ruby was the only choice had to develop rapidly with the best productivity," said Stephens. "From a coding perspective we were coming from Java code so Ruby caught our interest. With Ruby 50 lines of Java are compressed to one. Our Java developers were unsure at first but after a bit they said they would never go back."