Earlier today Coupa announced that they are acquiring Contractually in order to build on the Contract Authoring functionality and provide customers with a Contract Lifecycle Management solution that is impressive from both a UI and Collaboration standpoint. The unified suite will be entirely in the cloud and should bode well for Coupa.
IDC's Quick Take
Some procurement applications include some contract lifecycle management (CLM), but many users tend to author contracts in Word with the usual version control and redlining issues, use another application to "sign" the contract, and then attach the finished contract in the procurement application for management through the lifecycle of the document. Coupa's January 14, 2016 announcement to acquire Vancouver, Canada based company Contractually disrupts that disjointed process by bringing together the procurement and legal teams to work collaboratively on contracts and then allowing the company to actually buy against the contract, all with in Coupa and all in the cloud. Terms of the deal were not disclosed.
See the original press release here.
M&A Announcement Highlights
Coupa has historically offered contract management capabilities as part of its solution, but it was focused on repository, alerts, compliance, and reporting on contracts that had already been signed and attached to the procurement activity. So the acquisition of Contractually fills a gap that enables users to collaboratively author the contract from the beginning, sign them electronically, and then buy against the contract, which in procurement is often extremely complex as many contracts contain thousands of items, specific deliverables, multiple change and purchase orders. As both products are written in Ruby on Rails, Coupa is expected to incorporate the Contractually offering, presumably making the unified solution available in a near term product release.
Coupa has previously shown their willingness to acquire companies to incorporate new functionality into their suite. In July 2015 Coupa acquired InvoiceSmash, which expanded the accounts payable and e-invoicing capabilities and acquired Xspenser in 2013 for expense management.
Based on a demo IDC saw on January 8, the Coupa/Contractually process will be extremely easy to use, which encourages use beyond just the procurement department and furthers Coupa's goal of capturing all company spend, not just what goes through procurement. For example, a marketing user needs to hire a speaker for an upcoming event. The user signs into Coupa, selects the process for buying a marketing service (other selections may be supplies, facilities, travel, etc.), enters the required information, and clicks the "author" button to select a contract template for hiring a speaker. The user can then invite a third party, e.g., the company that provides the speaker services, to collaborate on the contract. The contract is self-documenting, meaning you can see who made which changes and when those changes were made. The contract is signed, the speaker's services are then acquired, a purchase order is generated, and later an invoice is matched to the purchase order and payment is made. The complete activity is managed within the Coupa unified solution.
IDC's Point of View
The procurement software market and process is ripe for disruption. New vendors such as Coupa have emerged over the past 10 years and established vendors are rewriting applications onto new platforms and/or moving them into the cloud. Even though some vendors include contract authoring features in their procurement applications, the processes have often remained siloed with the contracts being written in Microsoft Word, passed back and forth via email, creating issues of version control and making it unclear who actually made which change to the contract languages, punctuation, terms, and conditions. Eventually the contract is finalized and another application is used to manage the electronic signing of the document. Meanwhile the procurement process has continued through the negotiation, buying may have already started, and the contract is attached after the fact.
From a collaborative authoring standpoint, the Contractually CLM offering exceeds customary contract lifecycle management methods. The interface is intended to be reminiscent of Microsoft Word, while also bringing some of the popular functionality of Google Docs. This means that the original author can create a contract in the cloud and share it with colleagues internal or external to their organization. When a contract is shared with others, they will not need to create an account on Coupa and all of their changes will automatically be tracked. This collaboration model eliminates redlining problems and version control issues that often occur when using a separate tool for authoring documents.
IDC believes the acquisition of Contractually is a very good one for Coupa as it works to be the leader in changing how companies think about and manage all of their spend, not just the spend that runs through the procurement organization. Coupa's easy-to-use approach for capturing spend has made it one of the fastest growing companies in the Enterprise Resource Management (ERM) software market and IDC recently named Coupa as the fastest growing, on its list of the 20 largest SaaS ERM software providers in 2014 (IDC, December 2015). This robust growth reflects strong demand for Coupa's user friendly and flexible software, but Coupa is wise to continue to add significant functionality as it looks to stay in front of its competition who are also actively updating their own offerings in this area.
Taken from this IDC Link Report.