Hot on the heels of its successful IPO, procure-to-pay SaaS vendor Coupa hit London for its annual Inspire conference this week to discuss its recent achievements and to provide some insight into future plans.
And whilst most media outlets are currently concerned with Coupa’s $1 billion valuation, I got the chance to sit down with CEO Rob Bernshteyn at the event to dive a little deeper into company’s plans and to find out more about the vendor’s data and platform strategies.
My colleague Phil Wainewright has done a couple of excellent pieces on Coupa’s go to market approach - explaining why when it strikes a deal with an enterprise, it tends to stick. There are challenges overcoming inertia in the sales process, but that’s because companies’ spend processes are still littered with paper trails, and have been for years.
But if successful, companies soon realise benefits. Bernshteyn highlighted during our interview that there has been an imbalance between sales and spend within the enterprise for decades, one that Coupa is hoping to address. He said:
The amount of IT that is being applied to selling is insane. We are getting to a point where they are all over us. Think about it - is there a shortage of people trying to sell you something? And they’ve found a way to know what you like, where you live, who you talk to.
But in terms of how we buy and how we spend money, as companies, it’s unbelievable. There’s no visibility. Has your company optimised the way it spends money? No. There is so much operational inefficiency there.
It’s all about the data
With Salesforce having recently announced its AI platform Einstein, there has been an increased focus on artificial intelligence, not only amongst enterprise SaaS vendors, but also buyers. However, the impression one is often left with is that companies are using the word ‘AI’ to fulfil a marketing requirement.
It’s the latest buzzword and everyone has to be seen to be doing something.
However, during my sit down with Bernshteyn I was struck by the opportunity Coupa is creating for itself, with regards to its data opportunity. I was reminded of a recent conversation I had with InsideSales, where CEO Dave Elkington said:
I think there is a bit of a misperception in the market that the algorithm is the goal. The algorithm is not the goal. We’ve got well over 100,000,000 unique North American profiles that have been crowd sourced by our customer sales people.
It’s not unlike any network effect. Has Facebook got the best user interface? Probably not. Does Google have the best search algorithm? Maybe, maybe not. It’s irrelevant. Once you have enough data associated with that network effective data, it becomes the value of Google, it becomes the value of Facebook.
Coupa is potentially in a very similar position. It has the data of hundreds of companies to link, network and provide potential automation in the spend process through the application of intelligence.
Coupa already provides thoughtful benchmarking to its customers, where, for example, it can tell a customer that across the community of customers it takes on average 73 hours to make a certain type of purchase. If you’re taking 3 weeks, it’s possible that you’ve got inefficiencies that need addressing. It is already making companies more operationally efficient by looking at the collective.
However, in the future, Coupa could potentially take this a lot further. Bernshteyn said:
What you could do down the road is get much greater fidelity. You could do it by industry, by company size, by geography. You could say hospital linens are typically purchased at half pallet levels, at these price points, at these locations, we recommend you maintain this much on hand in inventory. We can make this thing so operationally efficient.
And we can then get in front of transactions by making recommendations that say ‘now is a good time to reconsider contracts in this area, because what we are seeing is XX’. It’s intelligence, it’s insight. We have the opportunity to do the same things that IBM is just starting to do with Watson and what Salesforce is attempting to do with Einstein.”
[We could also tell a customer] ‘you’re the 99th percentile - you’re taking 99% longer than most people to approve this type of thing. You’re being nudged into doing something, for example. You can then set a trigger - if this person approved this type of thing 98% of the time, just self approve it next time and give them an FYI. These are the kinds of things that are possible.
And Bernshteyn was keen to highlight that Coupa prepared for this opportunity from its beginnings, by ensuring that its data is organised in a way that makes this possible. He added:
You remember MySpace? People thought it was going to be all hot - you can go to a website and create any experience you want, widgets etc. How come that didn’t really work and Facebook did? What Facebook did differently was structure the data - there was a first name field, there was a last name field, there was a interests field. They structured it.
And when you have that, you can mash up lots of people, you can do analytics on it. I’d say that the beauty is that we’ve set our platform up in such a way that we’ve mitigated the vast majority of those challenges. If you’re a company in any other space, where you have separate data stores, and data may be structured and structured differently, you have different models - it’s very hard for you to have any normalised view. We’ve overcome that.
The future of the platformI also had a conversation with Bernshteyn about Coupa’s platform and what he hoped would be possible going forward for partners and customers. Whilst the information shared was very forward looking and Bernshteyn wasn’t able to commit to any certainties, I soon got an idea of how the company was developing.
Bernshteyn believes that Salesforce has been successful on its platform play, because it didn’t start the company with the objective becoming a platform. Instead it solved a use case - salesforce automation - that then linked to other capabilities and the idea of a platform made sense.
Bernshteyn argues that Coupa has done something similar, by growing out its core capabilities, where in the future it could then make sense to allow others to have greater access to the platform in the same way that Salesforce does. He explained:
If you look at Salesforce. The first thing was salesforce automation, and underneath that was tracking opportunities, tracking contacts, tracking accounts. Then they said, wait a minute, we’ve sold to X company that record, why don’t we market to other divisions of that company and start tracking our inroads there.
Then, they asked ‘who’s servicing that company’? What is their web interaction? Then they open up other spaces. Then they open up other tabs. Basically they exposed the database out so you could track things like projects, and other things.
The parallel arguably is that we started with pre-approved spend, so procurement. Then we said wait a minute, let’s do expenses, let’s do on-going expenses, invoicing, let’s do sourcing.
One could imagine that you could also open up the infrastructure to do a lot of other things further down the road. So we have invested in the platform in much the same way in much they same way Salesforce did. And their approach to date has been much the same in terms of capability by capability.
Procure-to-pay may not be as an exciting topic as sales or marketing, but it’s just as critical to the effective running of any enterprise. What and how you spend matters. Which is why it’s so surprising that companies spend so little time focusing attention on this area. However, Coupa is carefully and thoughtfully carving out its area in the market, pulling together use case after use case of companies that have taken the leap and benefitted as a result.
And it has a big opportunity, if it can continue to execute. I’ll close with Bernshteyn’s comments:
As we have written in the S1, we see a big total adjustable market here. There is a big market here, anywhere in the neighbourhood of billions of billions of dollars. With a big market like that, it’s not so much about getting it tomorrow, it’s about getting customers that get value from working with you and want to stay with you forever. That’s the difference.
The competition is ourselves, we have to execute.