Daily Archives: October 24, 2008

The Sourcing Maniacs 2008 Vendor Tour Part VI: Coupa

When we left the Sourcing Maniacs, they had just finished learning about Co-exprise and Sourcing Lifecycle Management. We join them wandering the streets somewhere in Pittsburgh, PA.

Yakko Enterprise Cost Management and Predictive Analytics.
Wakko True Spend Analysis.
Dot Sourcing Lifecycle Managment.
Yakko The Sourcing World is sure a whole lot bigger than we ever thought it was!
Wakko Maybe it was good we got canned.
Dot We’d never have learned all of this if we were still locked in the corporate boardroom.
Wakko So where next?
Yakko Good question! Do we stay with the C’s or move onto the D’s?
Dot I’m curious what that little upstart by the name of Coupa is up to.
Yakko So am I. When they first appeared, I remember we laughed about the idea of an on-demand SaaS e-Procurement application … but after everything we’ve learned so far on this journey, I’m thinking that maybe we wrong and they were right … that maybe new technology is the future of e-Procurement, not legacy behind-the-firewall ERP add-on technology.
Dot After all, new best-of-breed sourcing technology appears to be revolutionizing sourcing, so maybe procurement can be revolutionized as well!
Wakko So where are they?
Yakko I think they’re back in California!
Dot I don’t want to go back to California just yet.
Wakko So what do we do?
Yakko They’re SaaS … and I hear they’re covered regularly by new media – so that should mean that everything we need to know is online. Let’s use the web! I think that’s a cyber-cafe up the street.
  The maniacs enter the cyber-cafe.
Dot So where do we start?
Yakko Coupa.com, of course!
  The maniacs go to Coupa.com and start surfing.
Yakko Wow … what a diverse customer base. Government organizations, science institutes, universities, mid-size companies, even a hockey team.
Dot Multiple major releases a year … I remember that sometimes we couldn’t even get one major release out in an 18-month period!
Wakko And look at that Pricing! It’s even more insane than I am! How can they possibly start at only $295/month and make money? We’d be losing money hand over fist at $2995/month if we were still at our old job!
Yakko Must be something to do with SaaS. Let’s read more about that.
Yakko surfs.
Here’s a great article by the doctor on the e-Sourcing Wiki. According to the article, SaaS allows for great economies of scale, a single multi-tenant instance, and a total cost of ownership that is much, much lower than the traditional on-premise model that we used to promote. Plus, as per this article I found on Sourcing Innovation, they deploy on the Amazon cloud that allows them to keep their infrastructure overhead ridiculously low and only pay for the computing resources they use.
Dot Is on-Premise really that much more expensive? I thought we had a great TCO in the old days.
Yakko I just found this great on-premise vs SaaS TCO calculator on the Coupa site that allows you to factor in license, support, upgrade costs, database costs, application server costs, implementation costs, and annual internal support costs for an equivalent procurement system and it’s surprising. If you managed to score a great deal and get an installed e-Procurement license for only 50K, with an annual industry average support fee of about 20K, and get it installed for 25K, and your tream trained for 25K, your first year cost would be $158,000 and your five year cost would be over $350,000! On the other hand, an enterprise level coupa license for a mid-size business with 1000 users, that costs about 17K with equivalent training costs, if my math is right, would only cost $42,000 the first year, and have a five year cost of only $110,000 … which is less than 1/3 of the five year cost for an on-premise application.
Wakko Wow! That’s less than my annual baloney bill!
Dot And what I spent on Gucci when we had a full time job!
Yakko I guess SaaS really stands for Sumptuary Allowances Actuate Savings!
Dot You’ve been reading the dictionary again, haven’t you?
Yakko It’s almost as interesting as the Universe.
Wakko But I thought you already knew all of the words in the English language!
Yakko I did … but they keep adding more! Did you know that almost 20,000 words are added per year?
Dot Plus all the ones you invent!
Yakko Yassuredly.
  At this point the sourcing maniacs really get off topic and start arguing how many parts of the brain it takes to source, so we’ll skip ahead until they get back to their Coupa discussion.
Dot So what we we doing before Wakko demonstrated how to eat sphaghetti with chopsticks?
Yakko Investigating Coupa I believe.
Wakko And their wacko pricing that’s less than my annual baloney bill!
Yakko And SaaS … which appears to totally rock …
Wakko … almost as much as I rock America!
Dot So, I guess the big question is … at that price, does it do what it needs to do?
Yakko Well, according to the doctor, who wrote an introductory e-Procurement Wiki Article, e-Procurement has up to 9 steps, with the first seven being key: requisition, authorization, purchase order, receipt of goods, invoice, reconciliation, and payment.

Now, according to the Coupa site, it supports requisitioning, multi-level rules-based and workflow-based authorizations, purchase order management, goods receipts and inventory management, invoicing, and integration with existing platforms which allow you to do reconciliation and e-payment.

Dot Shouldn’t it do reconciliation and e-payment?
Yakko Considering that the data you need for reconcilation is probably in your ERP or CM system anyway, built in reconcilation probably isn’t that important, and considering that not only do many companies use AP systems to pay, but that most e-Procurement platforms don’t include a built-in e-Payment mechanism, and simply interface with external e-payment systems, it looks like it’s pretty competitive.
Wakko Okay … there’s got to be something missing at that price! We would have charged $500K a year for this back in the day!
Dot Heck, we would have tried for a million! Gucci and Prada ain’t cheap, you know.
Yakko I guess we’ll just have to try it out!
  Silence ensues for about 15 minutes while they try it … all of it … out.
Yakko That was …
Wakko, Yakko, & Dot Awesome!

Editor’s Note: For more information about Coupa, see this list of indexed posts.

Also, since I’m a little tired of typing, we’re going to break for a week or so … and pick up where we left off early next month.