Coupa Inspire 2019 - customers get real about spend management transformation

Profile picture for user jreed By Jon Reed June 26, 2019
Summary:
Coupa has big ambitions for Business Spend Management. As a functional suite? Sure. But as a driver for transformational change? For a gut check, I went to Coupa customers for their views.
Coupa KPMG customers
Customers American Water (left) and CNA

Coupa Inspire 2019 opened with CEO Rob Bernshteyn doubling down on Coupa's intention to turn the BSM (Business Spend Management) category into a rival to CRM or ERP.

No, BSM doesn't yet match CRM or ERP as a market-recognized term, but Bernshteyn's point is made: this isn't a narrow e-procurement conversation anymore.

Less than 40 percent of Coupa's revenues come from e-procurement now. Coupa's customers are using an average of 4.6 Coupa applications.

The competition is fierce, but the cloud spend management suite/category is established:

  • Coupa cites a 5x increase in spend under management since 2016, with almost $1.2 trillion in annual spend on the Coupa platform.
  • More than 1,000 Coupa customers are live on the platform. They are all part of Coupa's Community Intelligence benchmarks and Business Spend Index.

But customers have more immediate concerns than vendor growth. To bring customers along in your transformation pitch, you need two things:

  • A compelling future vision, with relevance to your customers' own digital ambitions - not yours
  • Plenty of ROI along the way, to keep the hype of "early days" technology like AI in check

Can we connect BSM to "iconic customer experiences?"

Bernshteyn puts it this way: "spendsetters," as Coupa calls its forward-thinking customers, need to deliver on customer experience to compete in today's environment. To make his keynote case, Bernshteyn shifted quickly to customer anecdotes:

For Stacey Taylor of MGM Resorts International, "procurement had to be the glue." She pulled together marketing, HR, food and beverage, and "helped them figure out how to create these iconic customer experiences." Results to date include a transition to 90 percent electronic invoices. MGM has gone from 30% PO-backed purchases to now 98% PO-backed purchases.

Bernshteyn: "They’ve achieved $3.5 million in savings that are redeployed to help the business create these iconic experiences that drive the top and bottom line." Or there is Highmark Health, from the day two keynote, with 625 percent ROI savings versus department budget cost - and 90 percent electronic invoicing as well. Bernshteyn:

Look at P&G, who took a massive risk on us a few years ago. Now they're driving more than $50 billion through the platform.

But is BSM a transformative engine, or just a back office efficiency play? Bernshteyn seemed to anticipate that skepticism when he said:

Rolls Royce is talking about the business spend management initiatives we're doing there on their earning calls, and they're not the only one.

In the flurry of customer profiles, Bernshteyn cites Pearson, in a multi-year shift from textbooks to "becoming the Netflix of education." But it's not about a handful of standout use cases: "This is a community we have here," says Bernshteyn. Coupa's day one news backs up that message, amping up Coupa community spending: Coupa Unveils Innovations for Business Spend Management Community to Spend Smarter Together.

Keynote stories are a good start, but I need to hear it directly. So I went in search of customer stories. Top issue on my mind: what makes cloud spend management different from the narrower e-procurement projects of the past?

I found some clues in a Mastercard customer presentation, "How MasterCard Implemented Coupa on Top of Existing Systems." As in this slide:

How do you launch a spend management transformation?

But it was a customer keynote session, facilitated by Coupa partner KPMG, that made the biggest impression. When I realized the discussion had a poker theme, I was wary. But the stories from American Water and CNA Insurance carried through. The first topic: how do you launch your spend transformation initiative?

KPMG customers on spend management

Josh King, Chief Procurement Officer of American Water, focused the launch on two crucial tips:

  • Choose a forward-thinking spend management solution.
  • Make sure your BSM platform will support digital transformation projects, even if they aren't on the table today.

King also spoke to choosing the right integration partner for both pursuits. For these two customers, it was KPMG. American Water started with Coupa at the end of 2017. King says they narrowed their selection to Coupa and another main competitor; both had similar functionality. So what made the difference? King told the audience:

We wanted to select somebody that was going to integrate with the market, that was going to continue to grow, that was going to invest in R&D. You saw a lot of that during Rob's presentations today, with a lot of the great functionality rolled out. So we thought that road map best aligns with ours at American Water. And that was why we selected Coupa.

I still see too many enterprises investing in cloud solutions to address an immediate opportunity/issue, without regard to platform. The risk? Data silos in the cloud, and duplicating on-premise complexity. King described this platform balance well. First, the present:

View your platform selection as foundational to your broader digitization strategy... Our internal customers, our internal stakeholders, they really couldn't care less about RPA, AI, those types of the digitization pieces. They just want the here and now. They wanted to make their lives a lot easier. Coupa was foundational for us, and Coupa does that for us.

Then, the future:

The way Coupa set us up from a supply chain perspective is all the data, the analytics, the behavior patterns, all of those things - that just helps feed into our broader digitization strategy. Our plan is to take a lot of that, run through our AI, and that's going to spit out better spending information, better spend [visibility] for us to take action on.

Don't fold on transformation - manage the change

Next topic for American Water and CNA: don't fold on the transformation.

KPMG Coupa slide 2

No matter how user-friendly your software, any change will invoke resistance. King told us how American Water rallied their users by "deputizing" 150 super-users to foster dialogue. He acknowledged you're never going to win over everyone:

You want to make sure that you are hearing everyone out, that you are logging each concern, that you're following up with each concern... You're never going to get to 100%, but you want to get close to that 75 to 80% support. If you can get that, you're going to have a successful go-live. And really in the end for us, it was no complaints, and a lot of praise after the go-live.

What's next for spend management, and where should customers invest? CNA and American Water shared their digital agenda:

KPMG Coupa customers outlook

Themes that jump out:

  • end-to-end supplier and spend management over point solutions
  • decisions fueled by data integration, and across a wider variety of data sets
  • savvy use of AI/automation to improve CX and prescriptive decision making

But if you're going to secure investment for next-gen projects, you need to deliver on the present. The last slide spoke to results:

KPMG Coupa customer results

King spoke to the early Coupa results:

A couple big impacts that we've seen thus far, again, only 60 days is, first one is just greater visibility and operational risks. And prior to Coupa in our legacy system, purchase orders really never went through the supply chain; they were all routed up through the business, so we really never got a chance to see them. Now with Coupa, that's changed completely.

Doug Kortfelt, Senior Vice President & Chief Procurement Officer at CNA Insurance, spoke directly to the transformation of procurement. To pull it off, you have to move from "little c" to "Big C" conversations:

We're all about elevating the profession... Our CEO is asking us to help with expense ratios, margin improvement. The CEO is asking us to change from "run the business" to "grow and innovate the business." So we're involved in all facets of this, and we consider the investment we made with Coupa and KPMG critical to transforming that business.

The day one wrap

The tone at Coupa Inspire is upbeat, but the challenges of change linger. Practical issues/needs raised by customers include integration monitoring with alerts, and a need for even deeper integrations with add-on modules. Integration is already an area of focus for Coupa, but one that will clearly need emphasis as procurement goes into end-to-end mode.

Then there was my subsequent chat with Dipan Karumsi, KPMG's US Procurement Advisory Practice Lead, where we discussed the future of procurement, and the unheaval AI and automation pose to the profession.

This slide from KPMG's future of procurement study sets the stakes:

KPMG future of procurement

That's a daunting set of challenges for any procurement professional - even if there are huge opportunities amidst them (You could spend a whole day on "How not to get disintermediated?"). That sets the agenda for the topics I'm pursuing at Coupa Inspire day two. Of course, Coupa would say that AI can be harnessed in beneficial ways, many of them tying back to their community intelligence initiatives. I am gathering content on these topics now - stay tuned for a subsequent piece.