This morning, Coupa Software (NASDAQ: COUP), the San Francisco-based spend management solutions provider, announced that it has purchased Hiperos, the New Jersey-based provider of third-party risk management (“3PM”) solutions in the cloud, for an undisclosed sum. Ardent Partners analysts took a briefing with the Coupa team in advance of the official announcement to learn more about the deal and how it will add value to Coupa’s B2B spend management platform. On the call from the Coupa team were Vice President of Product and Segment Marketing, Ariane Lindblom, Vice President of Product Strategy and Innovation, Donna Wilczek, and Director of Analyst / Influencer Relations, Rebecca Morris. From the Ardent team, we had Vice President of Marketing and Research Director, Robert Cohen, Vice President of Research and Research Director, Christopher J. Dwyer, and Senior Analyst, Matthew York.
About the Deal
Donna and the Coupa team painted a picture of the business landscape that is changing, and with it, the risks and perils that diverse companies (including many of their existing customers) encounter today and will encounter tomorrow. They are rising, she said. What’s more, organizations that provide goods as well as services need to have greater visibility into their supply chains; and they need to go beyond first-tier suppliers, particularly if they work in heavily-regulated industries. Moreover, new regulations, like GDPR, are imposing steep fines for non-compliance. As a result, it is no longer feasible to limit risk assessments to sourcing events, or to first-tier suppliers. Savvy organizations need to continuously monitor, assess, and manage their supply risk across their supplier base.
According to Coupa officials, it acquired Hiperos and its supply risk management solutions, particularly with regard to third-party risk assessment, aiding regulatory compliance (e.g., GDPR), and boosting cyber/information security. These facets are especially important for companies that deliver goods or services to the U.S. Government and are required to have visibility into their supply base beyond first-tier suppliers.
Donna said that providing Hiperos’s 3PM capabilities through the Coupa Business Spend Management Platform will enable Coupa to tap into a supply risk pool that is not available elsewhere. It will do for risk data what it does for spend data (i.e., “from one to many”): aggregate spend, supplier, and risk data from across the supply chain, provide a unified, holistic view of a company’s supplier base, including their suppliers’ suppliers (second-tier suppliers), and ultimately provide risk mitigation throughout the sourcing and procurement process.
Coupa’s resultant Risk Assess capability (based on Hiperos’s 3PM solution) adds a new risk domain to its platform. It joins Risk Aware, which aggregates financial, credit, and judiciary scores and creates a risk score using third party elements. Risk Assess will also complement a supplier management capability, which is comprised of supplier information, performance, and risk management tools. Risk Assess will be placed directly onto the Platform’s technology stack and, along with Risk Aware and Riskopy, round out its existing Supplier Management offering to provide a holistic supply risk management capability that is both qualitative and quantitative in its assessments.
According to Donna, one of Coupa’s goals is to embed Risk Assess into the entire sourcing and procurement process; to roll the assessment data into supplier risk scores; and to incorporate risk analysis and management with enterprise-wide spend data for a rich risk assessment. Another goal for Coupa is to develop Risk Assess to the point where suppliers are providing their own data and information; and that the platform will automatically inform the supplier what data or piece of information they must provide in order for the application to perform an accurate risk assessment.
Coupa officials stated that integrating Hiperos’s 3PM solution as Risk Assess onto the Coupa Business Spend Management Platform contributes to their “unified vision of spend and risk management.” Herein, source-to-contract and procure-to-pay are joined by 3PM on the network, creating community intelligence wherein spend, supplier, 3PM, and risk data enrich each other and create a more holistic view of enterprise risk.
According to Donna, Coupa intends to move quickly integrating this acquisition onto the Coupa Platform. That said, its first goal is to ensure customer success during the transition from Hiperos to Coupa. Coupa’s go-to-market strategy and pricing plans were not discussed at the time, although they are keenly interested in retaining and building upon Hiperos’s customer base, particularly in highly-regulated industries. They are also very interested in ensuring that their customers receive value from Risk Assess and its integration with other Coupa risk analysis/management solutions.
Ardent’s Analysis
Hiperos was an early player in supply risk with a specialization in supporting financial services, providing a third-party risk management offering that has been part services-part technology. However, outside of financial services, it struggled to find great traction (and had problems finding the right internal client within a company) in other industries. In July 2014, Hiperos was acquired by Palo Alto-based Opus Global LLC and became part of a GRC solution portfolio; but the solutions with which it was matched did not necessarily make sense to be paired. As a result, Opus selling Hiperos makes sense, as does Coupa acquiring Hiperos because the ownership of managing supply risk tends to fall under procurement The deal also gives Coupa a foothold in financial services and continues its strategy of adding solutions (see Aquiired!! Coupa Buys Aquiire and Gains Real-Time Catalog Search Capabilities, Coupa’s Acquisition of DCR Workforce Reinforces Procurement’s Critical Role in CWM, and Coupa Closes the Loop with Acquisition of Spend360) to build out its footprint.
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