Dave Stephens’ new venture

Dave Stephens' new venture has been greeted skeptically by Jason Busch.

Jason writes "I wish Dave the best of luck in his new gig, but I have more questions at this point than anything else, as I'm sure anyone would reading their rather spartan landing site and Dave's short announcement at Procurement Central.

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there's a big difference between embracing Open Source and actually making a lot of money off it. Merely giving away applications with somewhere between 20% and 80% of the functionality of the best of breeds and ERP players and charging maintenance is not enough to ensure success…"

I can understand Jason's skepticism – launching a new application into a maturing software market is a tough way to make money.

I'm stepping outside my area of expertise, but I'd say that Dave's chance of success depends entirely on the shape of his target market. If he goes after the most demanding customers in the spend management market with a version 1.0 system then he will have a long slog in front of him. Dave gives some clues in his blog announcement that going head-to-head with the incumbents may not be his game plan.

Dave writes "On the technology front, the Coupa team knows all too well today's enterprise software is overly complicated, heavyweight, and yawn-inspiring. Our open source alternative aims to be the antithesis – lightweight, easy to deploy, and fun."

To me, this does not sound like a pitch to the most demanding customers. It sounds like a pitch to 'overshot' customers who do not require all of the features of the current suite of products or to non-customers who are excluded from the current suite of products for reasons of price or complexity.

The first diagram below shows how I see the current market for spend management products. The green portion on the left of the circle represents overshot customers while the red portion on the right represents undershot or demanding customers. Making a go of a new software application in this type of market will be tough.

The second diagram shows the market as I think it needs to be for Dave to succeed. His new system needs to appeal to a large, currently untapped, market of purchasers, leaving the top end of the market to the incumbents.

I reckon this will be fascinating to watch unfold. Good luck Dave!