In this special edition of Supply Chain Matters This Week in Supply Chain Tech, we highlight for readers a workforce reduction underway at procurement technology provider Coupa Software.

This follows a previously published commentary this week highlighting another noteworthy headcount reduction announced by logistics visibility tech provider project44.

 

Business procurement spend management support technology software provider Coupa Software initiated this week a corporate wide headcount reduction.

In an email sent to all Coupa employees on May 30, Charles Goodwin, Interim CEO and Chairman indicated that after several months, this tech provider’s executive team reformulated an operating plan for 2023 and the years ahead, and with that, a company reset strategy toward operating more efficiently vs. that of “growth at all costs.”

Goodwin further stated in the communication that the workforce restructuring decision was not made lightly, nor were the reductions performance based. The apparent goal is stated as a “leaner, flatter structure, with fewer layers and leaders closer to the business.”

Some History

In the communication Goodwin addressed the question of why these changes are being enacted after the Thoma Bravo announcement in December 2002.  That announcement from Thoma Bravo was a definitive agreement for Coupa to be acquired in an all-cash transaction valued at upwards of $8 billion, that would make Coupa a privately held company. The move further included what was described as a significant minority investment by a wholly owned subsidiary of the Abu Dhabi Investment Authority. This action, at the time, represented a reported 77 percent premium to the company’s closing stock price on November 22, 2022, the last full trading day prior to media reports involving a potential transaction. Reportedly at the time there was speculation that another PE firm had interest in Coupa, hence the premium price. Further, accompanying reports indicated at that time that Coupa had an operating loss condition.

Goodwin indicated in this week’s communication that the headcount reduction action was not undertaken because of new ownership, but rather to “put Coupa on a stronger footing for long-term success.” Yet, a published report from Bloomberg regarding the headcount action had a banner headline: Coupa Software Cuts Jobs After Thoma Bravo Completes Purchase.

Our Supply Chain Matters readers will also likely recall that in November 2020, Coupa had acquired supply chain network design and analytics software provider Llamasoft for a purchase price of approximately $1.5 billion in a combination cash and Coupa equity stock arrangement. At the time of this acquisition Llamasoft included the capabilities of Opex Analytics, a Chicago based provider of artificial intelligence-based applications for Fortune 500 companies.

The Llamasoft acquisition was essentially billed as strengthening Coupa’s supply chain support capabilities in the area of Business Spend Management. Our initial published Supply Chain Matters assessment was that it appeared that the synergies among the two providers was difficult to understand given that both providers targeted different strategic buyers and user communities.

That observation appeared to play out post-acquisition with the subsequent shedding of Llamasoft employees and with efforts to assimilate the company’s analytical technology capabilities, especially the former Llamasoft Supply Chain Guru suite.

In an April 2021 published update, this Editor noted indications to augment elements of supply chain guru’s community intelligence for the Coupa BSM platform with supply chain network design and planning capabilities. Llamasoft’s Supply Chain Guru suite was rebranded to Coupa Design to Procurement Bid and we were informed that specific business process scenarios had been demonstrated that leverage network design and deployment with specific procurement spend management needs.

We referenced our 2021 prediction that technology that could address multi-tiered supply chain visibility with continuous detailed supplier risk information would bring added value to companies managing global supply chains. We sensed that Coupa was understanding this need, but the open question was commitment, timing and addressing tech buyer targets. On the one hand, three years later a new breed of supply chain visibility and supply chain risk mitigation start-ups are taking advantage of this opportunity. Sadly, with this week’s announcement, it would not appear that a restructured Coupa will have such a capability. We would add that a further casualty of this workforce action is indeed the demise of Llamasoft’s market vision and of its software capabilities, without Coupa exercising any further acquisition(s).

Specific Takeaway for Coupa Software Customers and the Tech Market

Our message to Coupa’s current customers is to assess what this particular restructuring strategy implies for future direction, support and technology development efforts.

As in many of these ongoing headcount reduction developments, senior management will indeed communicate a more efficient organization, increased autonomy of teams and response to market needs. In the current environment, private equity investors indeed seek clearer paths to profitability and that is reflected in the flurry of announcements coming from start-ups and established tech providers catering to business technology needs not only in supply chain but other business process and decision-making dimensions.

Three years of pandemic challenges, disruptions, and of technology market opportunities have brought forward implications and of reckoning. They include several bank failures involving Silicon Valley sources of financing and the end of cheap money in the notions of now higher interest rates.

Customers will now need to assess their technology investments, technology provider partnerships and co-development in the context of profitable as well as growing technology providers.

 

Bob Ferrari

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