Category Archives: Procurement Innovation

Coupa: Crouching Cheetah, Hidden Hippo

For those of you who have been following along, I recently did a 3-part series on Coupa (Part I, Part II, and Part III), a company that has been taking off like a rocket in the e-Procurement space (growing almost 200% year-over-year with one stunning customer win after another), where I asked if their strategy had shifted to customer acquisition first and building a better platform second, as it seemed to me that their rate of product innovation over the past year has not kept pace with their historical rate of product innovation. And while I will freely admit that the most important thing in business is customer acquisition and retention, and that this often means focussing on customer requests, which usually fall under the category of renovation, first and innovation second, I really admired Coupa for their devotion to innovation first and figuring out what the customer needed before they asked for it.

I’m happy to say that Coupa took me up on my challenge and decided to spend a few hours reviewing in detail not only what they have done, but what they are working on now and future directions they have mapped out. The short story is that the product team has been very busy not only fleshing out the core platform, but on finding ways to take its accessibility, usability, and generality to the next level.

From an accessibility viewpoint, they’ve started porting to the Force.com platform. While they haven’t announced it yet, and don’t plan to for a few months, Coupa Expenses is now available on the appexchange2, and can be found by a simple search. Force.com users can now use Coupa Expenses to accurately determine their cost of sales (which allows them to more effectively forecast revenues, estimate expenses, and allocate resources). This app not only allows you to track expenses, assign them to opportunities, and get up-to-date reports against budgets at any time, but also includes the “frugal meter” that lets an employee now when a cost is frugal or high compared to averages and / or limits. And there’s more to come.

They’ve also been working extensively on their API. This may sound boring as all get out, but the real value of a Procurement platform is only realized when all of the spend is accessible through that platform. In other words, unless you have an integrated view of spending that includes direct, indirect, Contingent Labor/SoW, and T&E spend, you really don’t know how much you’re spending and, more importantly, the TCO of categories where the products you are buying require support services and T&E expenses to manage both the manufacturer and/or services provider. If a company is using one (Best-of-Breed) platform for direct, one for T&E, and one for indirect and/or contingent labor, then the spend is distributed across multiple systems and no one system gives an accurate view, unless it is integrated with all of the other relevant systems. Generally speaking, these integrations are expensive as most of these systems (and classic ERP systems in particular) don’t have good APIs and only experienced, expensive, third parties can accomplish the integrations. But with fully documented open and transparent APIs that expose all of the data elements and core capabilities of the platform, any decent development team can accomplish the integration. Not only has Coupa fully exposed and documented their API to allow for easy integration with ERPs and Supplier Networks, but they have also built an extensive site at integrate.coupa.com to allow their customers to integrate with any systems they need to quickly and easily. (And with their Boomi partnership, most customers can integrate Coupa with their ERP systems with very little effort.)

From a usability viewpoint, not only is the current instantiation of the UI (intelligent-)search based, but the UI workflow is being streamlined to make regular tasks as quick, easily and painless as possible for the average user. From auto-calculating miles in expense reports (using Google Maps) to auto-classifying receipts (using OCR when possible), it’s all about making it even easier to use than Amazon or eBay, so that organizations get the adoption necessary to make their eProcurement initiative a success.

From a generality viewpoint, they’re working on features and functionality that will take e-Procurement to the next level in the average mid-market company, regardless of vertical. Look for a few announcements late this quarter / early next quarter on how they’re going to do that (and how they’re going to not only address the weaknesses with their new benchmarks and budgeting capabilities, but take them to a new level as well). The development cheetah has been running at full speed in the background, and once the product management hippo gets excited, it’s going to charge with an almost unstoppable force.

Want More Influence? Ask the Right Questions!

In a recent post over on Commitment Matters on getting to the top table, Tim penned a great post on where a CPO should be placed on the organizational chart, and why. Nine paragraphs in, after discussing the standard view of Procurement as a cost centre (which never gets direct reporting status to the CEO), the department that’s only visited when something goes wrong, and a barrier to getting things done, Tim made a great point. A CPO is only going to get a seat at the top table if it makes a significant contribution that visibly improve organizational performances.

This is only going to happen if Procurement shifts its emphasis from cutting costs to adding value. This requires Procurement professionals to change the types of questions they ask, the data they collect, the conversations they have inside and outside the department, [and] the areas in which they invest in skills. When Procurement approaches Engineering, it can’t be about “how can we help you cut cost” because, in Engineering’s mind, that translates into “how can we help you cut quality and increase risk of failure”. It has to be about “how can we help you source the highest quality products and services within your budget”. Similarly, when Procurement approaches Manufacturing, the focus has to be on “how can we help you ensure supply at the highest levels of service”? If a production line shuts down, that could cost a lot more than paying an extra 2% on the raw material costs. This isn’t to say that cost shouldn’t be a factor, as value can monetarily be defined as profit contribution – total costs of operation, but that cost can only be one, small, component. Once Procurement is trusted, then the questions can shift to “how can we help you get the level of quality and service you’re currently getting at a better price, so you can show a year-over-year cost savings and look like organizational heroes”.

I’d strongly encourage you to read Tim’s post on getting to the top table. It’s a great thought-piece.

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You Don’t Need a Genie to Fulfill Your Wish!

Nor do you need the CFO to give you a big fat check either! If you want more automation in your supply chain, and according to the recent A.T. Kearney Indirect Procurement Study titled “Higher Visibility, Greater Expectations”, most of you do, all you have to do is call up one of a few dozen e-Procurement providers with a (new) SaaS offering and tell them you’re ready. Not only can you start for a small monthly fee, but the savings will pay for the system many times over.

And if you don’t know what system is right for you, just re-read SI’s recent series that provides A Hitchhiker’s Guide to e-Procurement. It will assist your organization in determining what is really important, what functionality the organization should be looking for, and how the solution compares to other solutions in the marketplace.

Stop waiting, and start buying. Considering you can pay by the drink, quit any time, and take your data with you … in the worst case, you select a system that only enables part of the efficiencies that are available, but that allows you to determine the full extent of the efficiencies the organization could reach with a system more in tune with the best practices the organization identifies as appropriate for adoption. In this case, you simply cancel the monthly contract and migrate to the new system, and triple the organization’s savings.

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A Hitchhiker’s Guide to e-Procurement: Summary

Mostly Harmless, Part XXV

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EIPP, P2P, e-Purchasing, and e-Procurement. What does it all mean?

This series provided a basic introduction to the world of e-Procurement. Each of the phases was discussed and key requirements were highlighted. In addition, the series also overviewed some of the primary challenges associated with each phase, some best practices to overcome those challenges, and some of the benefits the organization could also expect to see. While it was not intended to be complete, it is a great start for anyone embarking on an e-Procurement journey.

In addition, it also provided some great advice on how to compute the total cost of ownership of a system under consideration, how to analyze the efficacy of a solution relative to the organization’s procurement model, how to determine it’s appeal from both public and private sector viewpoints, and how to differentiate a system from EIPP, P2P, and e-Purchasing imitators.

A true e-Procurement solution is a very rich and powerful solution that will automate the tactical back-office process from start to finish, greatly decreasing the resources that must be assigned to tactical tasks, and associated processing costs. Considering that many studies have found that an e-Procurement solution can reduce the cost of invoice processing by as much as 98%, and that a manually processed invoice costs an average organization between 50 and 120 dollars, the transactional savings alone can be enormous. But these savings can be dwarfed when maverick spend is greatly reduced and new opportunities for savings are identified from the centralized warehouse of organizational purchases. An ROI of 5 or more is not out of the question if the right solution is selected and utilized properly.

So if an organization does not have a good e-Procurement solution, it should get one today. There are over a dozen providers in the space with good solutions (and many have been reviewed in the vendor post archives), and at least one of them should be the right fit. For more information on e-Procurement, there’s also the e-SourcingWiki Paper, which, in addition to a brief overview of the cycle and core capabilities, also overviews some important features of e-Procurement solutions in addition to more challenges, best practices, and benefits. In addition, it also has a brief glossary of standard procurement terms. (And, for even more information, one can always check out the Procurement Innovation archives here on Sourcing Innovation.)

That’s all for now, folks. Feel free to flip back through the series and read it again.

Back to the Beginning

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A Hitchhiker’s Guide to e-Procurement: Terminology

Mostly Harmless, Part XXIV

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The first post of the series indicated that this brief guide will define what e-Procurement is, isn’t, and how it relates, or fails to relate, to e-Purchasing, EIPP, P2P, and e-Sourcing. Now that the basics of e-Procurement have been covered, this post will address the terminology before the series concludes.

EIPP stands for Electronic Invoice Presentation and Payment. It is not the same as e-Procurement because any system capable of accepting invoices, processing invoices, and queueing them up for payments can be labelled an EIPP system. Such a system does not need to support requisitions, purchase orders, or analysis, all key steps of the e-Procurement process.

P2P stands for Procure-to-Pay. By definition, such a system only needs to support core purchase order functionality, which lets the supplier know that goods and services are desired, invoice functionality, which lets the buyer know that the supplier has shipped and/or delivered the goods and payment is expected, and payment approval, which lets AP know it can queue a payment against an approved invoice. Like EIPP, such a system does not need to support requisitioning and the associated approval process, does not need to support goods receipt, and does not need to support analysis or tax reclamation. It may or may not include catalog support.

e-Sourcing stands for the electronic implementation of the strategic sourcing cycle, which starts with spend analysis, moves onto RFX and/or e-Auctions, then to optional decision optimization, and concludes with an award and contract. Such a solution does not need to contain any e-Procurement functionality whatsoever.

Then, there’s e-Purchasing , the doctor‘s personal pet peeve, as it has no well defined meaning outside of the UK public sector, where it is a hybrid of the core e-Negotiation technology of the e-Sourcing process, namely RFX and/or e-Auction, and the core capabilities of the e-Procurement cycle, namely requisitioning, approvals, purchase orders and SOWs, invoices, and e-Payments. When used by a vendor, it could refer to any combination of e-Procurement and e-Sourcing technology and such a solution should be reviewed with care.

Of course, many vendors will misuse all of these terms as well as e-Procurement, so one will have to review any shortlisted solutions with extreme care, but this is what the terms mean and why none are synonymous with e-Procurement.

Next Post: Summary

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