Coupa acquires LLamasoft…didn’t see that one coming.

News came out this morning that procurement solution provider Coupa was acquiring LLamasoft. Interesting and unexpected news to say the least.

Over the past few years, Coupa has enjoyed some impressive growth, doubling revenues from 2017 to 2018. Coupa and Jaggaer were two of the fast growing supply chain vendors, both focused on procurement. LLamasoft has long been the lone champion of the world of supply chain simulation (granted they expanded their offerings.) I have always wondered when they would be acquired or merged to offer a large supply chain offering. That day has finally arrived!

Some initial thoughts:

• Reaching into a new addressable market – I had a conversation about this merger with the comment, “Why would a procurement department need supply chain network optimization?” 100% agree. But if the merger is done properly this will expand the reach of Coupa, get away from the procurement department and into a wider addressable market. Coupa seems motivated to fill out their offerings via acquisitions, could this just be the beginning of other such moves to expand deeper into the supply chain planning and execution space?
• It’s the data stupid – We are all digital businesses now. I remember Jeff Immelt hammering away on this during a General Electric event. He was right. Whether you are a sneaker company like Nike buying Celect or Koch acquiring Infor, the name of the game now is expanding your data footprint. Coupa knows and works on the procurement side of the street, lots of data around costs that impact our supply chains. Now add a powerful analytics engine to the mix. Trying to do some advanced supply chain network optimization, wouldn’t it be nice to have some rich data about costs added to that mix?
• Procurement pays the bills but…to truly help drive business growth you need to bring some planning or execution know how. There is no doubt that supply chains always need to keep an eye on their direct and indirect spend. Savings on that side of the ledger frees up opportunities elsewhere. But these same companies need to have sophisticated tools to ensure they can identify and capture new market opportunities. Look for procurement focused solution providers to continue to look towards planning and execution providers to expand their portfolio.

It will be interesting to see how Coupa leverages Llamasoft moving forward. Will this be the beginning of a shopping spree from Coupa? E2open did something similar a few years ago, granted they were private and were able to make aggressive moves without too much scrutiny from the public markets. Keep an eye on Coupa to see if they continue to push into the planning and potentially execution space.

Congrats to Razat for navigating a great deal for LLamasoft!