Among the many areas affected by innovation from cloud-based software, one of the most disruptive is the way companies and their employees procure goods and services.
That was apparent in Las Vegas June 24-27 when Coupa Software Inc. held its annual Coupa Inspire conference focused on business spend management, where the company showcased how its business model and cloud technology are taking on existing software leaders.Procurement processes don’t usually occupy the spotlight in business strategy meetings, but if Coupa has its way, it will turn the chief procurement officer into one of the most transformative roles in the enterprise.
Coupa has quickly risen to be one of the leaders in the business spend management category, sometimes called eProcurement or procure-to-pay, according to the IDC report MarketScape: Worldwide SaaS and Cloud-Enabled Sourcing Applications 2018 Vendor Assessment.
Alongside similar offerings from SAP SE with its Ariba unit and Oracle Corp., these platforms sit adjacent to enterprise resource planning in the financial information-technology stack, adding richer functionality around the often-overlooked procurement process. Benefits for customers include faster approvals routing, better invoice and purchase order matching, and centralized electronic payment routing to suppliers.
Unveiling a range of upgrades to its flagship Coupa Pay platform and a string of strategic partnerships at Coupa Inspire, the company broadened its integration points and security offerings. In attendance to learn more about Coupa’s growth and upcoming plans was theCUBE, SiliconANGLE Media’s mobile livestreaming studio. TheCUBE interviewed 14 guests, including Chief Executive Officer Rob Bernshteyn and other top executives, as well as active customers such as lulumelon athletica Inc. and Staples Inc. and celebrity keynote speakers Suze Orman and Deepak Chopra. (* Disclosure below.)
Deepening customer base driving growth trajectory
Since its IPO in 2016, Coupa has emerged as one of the darlings in financial software. A recent doubling of the company’s stock price has been driven by the steady growth in the company’s revenue and customer base, which now stands at more than 1,000 companies.
As Michael van Keulen from lululemon athletica explains, their own use of the platform has expanded over time to the point they are now eagerly looking to test and adopt new features:
At Inspire 2019, the company rolled out a series of innovations to its platform, including Coupa Pay for better electronic payments both domestic and abroad and an innovative new partnership with AWS Marketplace to enable customers to track information technology spending from Amazon Web Services cloud services directly in the platform.
Tracking $1.2 trillion of business spend
But as Bernshteyn pointed out, customer acquisition is not the whole story: The total amount of aggregate spend being tracked and routed through its platform has now reached astounding levels. Announced at the conference, that aggregate spend is now more than $1.2 trillion. One customer alone, Procter & Gamble, accounts for $50 billion of tracked spend within a single account.
As more customers come on board and as each customer expands its individual footprint, that amount of aggregate spend is forecasted to grow at a geometric rate. The growth trajectory helps position Coupa in an entirely new competitive landscape: data intelligence on company spending patterns and performance.
Shared data opening up new competitive battleground in analytics
Much of the attention at the show highlighted the emerging power of Coupa’s shared data offering, summed up in its new moniker: “Spend Smarter Together.” Coupa now offers artificial intelligence capabilities that allow the system to make recommendations to procurement officers — what they call “prescriptions” — based on patterns spotted in the underlying data. Examples include identifying suppliers that have repeated delivery problems or the ability to generate discounts from pooling multiple disparate orders into larger single orders.
According to Bernshteyn, more than 1,800 such prescriptions have been delivered to customers based on patterns unearthed in their own data. But the true power of the system occurs when those same AI tools are stretched across a combined data set that includes anonymized data drawn from across their entire customer base.
One of the key benefits of that aggregated data is comparative spending analytics. If you are in the manufacturing business, would it be helpful to know what the rest of the industry pays on average for particular feedstock items? Coupa certainly thinks so. While fine-grained pricing transparency for individual commodities may still be a ways off, breakout sessions at the conference clearly showed customers actively leveraging different comparative performance benchmarks — such as average PO approval cycles — harvested from their peers.
Building customer community: “None of us stronger than all of us”
For conference attendees, one of the noticeable elements of this year’s show were the highlights placed on customer success stories. Placards profiled different customers, while the keynotes regularly celebrated the stories of customers who had been transformative leaders within their own companies in overhauling their procurement processes.
According to Chief Marketing Officer Chandar Pattabhiram, the customer orientation is part of the company’s strategy to double-down on community formation. With shared data now as one of the hallmarks of the company’s strategy, the marketing department is investing in building a new type of customer community, one that is built around “product intelligence.”
As Pattabhiram explained, this approach is actually a new type of community formation. Whereas some companies build community through executive evangelism (think Marc Benioff and Salesforce.com Inc.), while others build around customer education and thought leadership (think Marketo Inc.), Coupa wants to build around the power of customers to share data and prescriptions among themselves:
Malcolm Gladwell: Better procurement builds organizational strength
One of the standout events of the conference was the keynote by author Malcolm Gladwell, renowned for his many books, including “The Tipping Point.” Gladwell delved into new research on how certain companies build unique strengths by understanding the smartest way to invest internal resources.
Procurement is often overlooked as one of those strategic areas for investment. But as Gladwell pointed out, that is because most companies don’t understand the underlying dynamics of organization building.
Gladwell used a sports analogy to make his point. Some organizations, such as a basketball team, can be labeled as “strong-link” organizations, meaning that their strongest members, such as the team’s best player, tend to define the success of the organization. A soccer team, on the other hand, according to Gladwell, is a classic “weak-link” organization, because the performance of its least-famous players often determines success or not. That is because soccer is a lower-scoring game with twice as many players on the pitch and the final outcome tends to be determined by one or two defensive errors.
As Gladwell pointed out, procurement departments are often the “least famous” parts of their own business organization. But according to a weak-link investment strategy, procurement departments — which control the critical function of how a company spends its money — are exactly the type of organizational unit that is often overlooked in transforming overall business strength.
(* Disclosure: TheCUBE is a paid media partner for Coupa Inspire. Donald Klein, a sales representative for theCUBE parent company SiliconANGLE Media Inc., wrote this report. Neither Coupa Software, the sponsor for theCUBE’s event coverage, nor other sponsors have editorial control over content on theCUBE or SiliconANGLE.)
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