One of the tenets of frictionless enterprise — diginomica's blueprint for digital transformation — is that, just as the enterprise must become an XaaS service provider to its customers, so back-office functions such as IT, HR and finance must operate as service providers to the rest of the organization. That means turning routine administration into automated self-service processes, freeing up functional experts to become on-demand advisers that work in collaboration with people across the business. It's been interesting therefore to watch Coupa evolve its business spend management platform as the vehicle to do precisely that in procurement.
It's frequently the case that HR is the first internal function in an organization to follow this path, but procurement can also be the standard-bearer. At educational publisher Pearson, Chief Procurement Officer Dan Cameron says that the roll-out of Coupa meant his function was "almost a poster child for digital transformation" across the global enterprise.
Being the agent of this kind of change is a big shift in role and mindset for the procurement function, says Coupa CEO Rob Bernshteyn:
When you think of procurement, when you think of some of these traditional back-office processes, if you are out in the functions, you honestly want to avoid them. They have a stigma of being bureaucratic.
What we're trying to do is completely turn it around, so [they] become empowering agents for all those functions.
I think it's a tipping point in some of the growth we've had and some of the results we've achieved, where we've turned that [around]. People would much rather engage with these processes, these solutions, because they help them get their work done faster, they get the goods and services they need, they keep them within budget.
This year has seen Coupa take several new steps to fill out what its self-styled business spend management platform to encompass all aspects of enterprise spend. There has been the acquisition of DCR Workforce to add contingent workforce management and procurement. Last month's acquisition of Acquiire added real-time catalog search to round out a powerful set of catalog capabilities after its acquisition of Simeno earlier this year. The final element is the launch of Coupa Pay, adding supply chain financing and a digital payment hub to the platform, working with finance industry partners such as Barclaycard.
Into the domain of ERP
The expansion into payments brings Coupa into the realms of accounts payables and supply chain management, which have traditionally been the domain of ERP suites. But while Coupa may be infringing on ERP's territory, Bernshteyn says its sights are firmly set on these peripheral operations rather than core financial management:
The core of ERP that is virtually impossible to pull out — and I don't think really should be pulled out anytime soon, for big multinationals — is the financial and cost accounting areas.
We have no intention of displacing that or fighting for that. We see ourselves as a strategic extension to all of that. If we could pull more value out to the periphery where it's happening, we'll always look for ways to do that.
An example announced last week is a partnership with technology business management vendor Apptio, which helps enterprises track and manage technology spend — and which yesterday revealed it is being acquired for almost $2 billion by private equity form Vista Equity Partners. Apptio is integrating its IT costing taxonomy, ATUM (Apptio TBM Unified Model), into the Coupa platform as a certified CoupaLink partner. This means that when new purchase orders are entered into Coupa, they can automatically be categorized using ATUM for analysis within Apptio. The combination will give faster, more comprehensive visibility into IT spend across an enterprise, including hidden 'shadow IT' spend, Bernshteyn explains:
We have so much IT spend running through our system, but we don't go deep into that area. It's synergistic for us, because in a lot of our customers our champion tends to report to the CFO. They and the CFO are often not, candidly, as tech savvy as a CIO. So it is important for them to articulate the value to the CIO of managing spend and what better way than to say, 'Well, we're also going to help you with your piece of this puzzle, because you've got all this shadow IT happening everywhere.'
Business spend management maturity
Having a unified view of spend is so important to the value that Coupa delivers that the vendor has made it one of the foundation layers of a new business spend management maturity model it has developed. This aims to capture Coupa's learning from engaging with almost 700 customers to date, says Bernshteyn:
We've had all types of experiences, but we've come to the conclusion, when we look at the patterns of successful customers, that the ones that are really successful, they first got their arms around the spend. They just got transactions flowing through a platform where they started seeing where it's going, how it's going through all methods — pre-approved, post-approved, unapproved, all that. And then they began to put on these tools to optimize it.
That finding is different from the typical pattern in procurement, he says, where typically companies focus on implementing new functionality in the back-office without first getting an overall view of what's going on. So the maturity model is designed to help customers make the first step:
We're really trying to empower these folks that engage with IT, CFOs, CEOs to say, 'Hold on one second. We don't have visibility of what's going on here.'
Daniel Schmitz, director of PMTA (processes, methods, tools and the training academy) within the procurement function at Coupa customer Benteler Automotive, welcomes the single platform approach:
That's exactly the direction we are going towards, to have everything joined together in one system — so that the people that use the system have as few media breaks as possible.
Rethinking procurement as a service
The 26,000-employee automotive parts supplier is preparing to roll out Coupa to manage most of its €850 million annual indirect spend, replacing several separate legacy applications. That gives it the opportunity to rethink and automate existing processes based on the capabilities of the new system, he says:
The processes and why we do things today as we do them is based on the information that was available back then. Nowadays everything is so agile and fast, and [with] big data you have all the information at hand to make smarter decisions that weren't available back then.
Digitalizating paper-based approval processes and rolling out a mobile solution will be a big win, he says:
When you have paper-based processes, especially when you have a global organization, it's pretty hard to pass them around as you have to. They have to be signed manually and that's something we really need to get rid of.
So I would say one of the biggest benefits, apart from having one solution that can solve more than one problem, is to become quicker in the future and pave the way for digital solutions.
Through smarter, more end-to-end automation, the system moves from merely enabling the procurement function to actually performing more of the routine tasks as an automated service. This will free up the procurement team from operational purchasing activities role to take on more of a strategic role, he explains:
That we concentrate on the strategic direction the company should be going [is] a very important thing. That's another thing that takes very long nowadays. If we say we want to take a strategic decision, the [existing] system doesn't allow us to really operationalize this decision.