TD Direct Investing is a UK-based offshoot of the very large Toronto Dominion Bank in North America and provides online share trading to customers. Although TD Direct, by its very nature, is very used to handling and managing all things money related – up until a couple of years ago its internal spend management systems were in desperate need of an overhaul.
Senior relationship manager at TD, Jon Utley, who looks after all third-party relationships, procurement, vendor management and contract management, explains that when he joined the procurement team it was very small and all procurement processes were carried out manually using Excel. He says:
I think it was around 5% of our third party spend was coming via procurement, effectively we were doing the stationary and a few bits and pieces and not a lot else. That was one part of the problem. The bigger problem was our invoice approval system – we would spend all of our time sending out invoices to the business to approve as a valid expense, but we had no means of tying this back to a commitment to spend or a purchase order. So a lot of our invoice approval was based on: we think it's this sort of cost, we think it's this cost centre, we think this person might have bought it, we then try and identify the person that has committed to that spend way after.
As a result, a lot of the time TD was posting costs incorrectly because it wasn't taking the time to check who was going to accept the cost, which cost centre it was coming from, what type of cost it was, or even whether the cost was planned. It needed a whole new purchase to pay process, which sparked the decision to start looking for new purchase to pay solutions on the market.
Utley initially considered TD's internal systems, as the company's ledger, invoice approval and IT ticketing system all had elements that could do purchase orders – but it was decided that none of them would meet the need of a full purchase to pay solution.
Luckily, TD's parent bank – Toronto Dominion in North America – had just signed a large enterprise agreement with spend management cloud provider Coupa. Utley says:
So I went to see Coupa in London and it was clear to me that the product was very, very good – it was probably a bigger solution than what we needed, but because we had signed off in Canada we were able to speak with Coupa and that tie up enabled us to secure a very good deal here in the UK that made it cost effective for us to go down that route. Effectively it was like buying a Mini and getting a Rolls-Royce.
Not only was it a good product, but some of the key attractions were the ability to set up and configure yourself, without any IT involvement. I saw it as an opportunity where we could get something up and running very quickly, have it entirely within control and it met a lot of our other needs. We don't do a lot of purchasing, but we do use a lot of the functionality – for example, we took the opportunity to take out the contracts module, which has been particularly useful for us.
It has meant we now have a database, for the first time, of all of our contracts so that we can track renewal dates on our contracts and store information against that contract relating to its performance.
Utley explains that one of the key issues facing TD when he joined was that a lot of the contracts were five to ten years old and when they came up for renewal, they would just roll-over automatically. As a result, TD couldn't revalidate the costs and it would end up getting tied into a contract that it didn't need. Coupa has now enabled TD to put all of these contracts into the system, where it tracks the renewal dates and allows Utley's team to take actions in a timely manner. Not only this, but Coupa also stores all of the service reviews and performance data against the contracts in a central place for the team to manage.TD's total third party spend in the UK is approximately £35 million – Coupa has enabled TD and Utley to better manage this spend, where most of it is now going through the procurement team. He says:
On the purchasing side, Coupa has enabled us to roll-out a process across the business that our users have welcomed. It's very easy and intuitive to use, there's no real need for end-user training.
We have increased the throughput through procurement, certainly on the transactional side, up to about 20% of third-party spend. The rest of our third-party spend is primarily contracted – and now we have those contracts on Coupa – what that does is give me and the team visibility of around 90% of our total third party spend.
There are other things we could do to increase that further, we could put expenses on Coupa, but unless they were going to give us the functionality at a drastically reduced rate, it's not economic for us. It's not an immediate priority.
Unfortunately, TD has had to put the invoicing part of the process on hold because it is now swapping out its general ledger system so that it is better aligned with the parent company Toronto Dominion Bank. Utley says that this was “a bit infuriating” but it is something that he intends to pick up once the new system is in place because the procurement team is “very excited about having the full purchase to pay picture”.
Utley also explains that there were two main challenges with getting Coupa up and running – but as we see time and time again with enterprise software, the problems didn't actually lie with the vendor, but TD itself. Utley says:
I think our challenge here in the UK was that we are a very small team, a bit tight on resource, we didn't have people with procurement experience, we didn't have existing processes, not all of us were technically competent. I think the first month or so was quite daunting. But it's one of those things, the more you use and learn the product, it becomes more intuitive. The challenge was us being able to put the time, the effort and the right people in at the right time.
Also, I used Salesforce in the very early days when it first came out, and what I learnt from Salesforce was that it was incredibly intuitive and easy to use, so you rush ahead setting all sorts of things up, putting all sorts of things in place and after three months you've created something that's not sustainable.
Coupa is similar in that respect – the challenge is understanding what you can do with the system in the first few months. I think any advice I would give to people is that while there is a desire to get things up and running as quickly as possible, it's always worth taking that little bit of extra time to think a few things through and make sure you've got the right people in the room to make some of those decisions. I think for us a lot of it was very little experience of purchase to pay and procurement processes in the team at that time.
However, despite these challenges, TD took the time and made the investments to get the implementation right. And the evidence is not only seen in theamount of spend going through the procurement team now, as highlighted previously, but also the savings that the company expects to see. Utley says:
There have been savings – but those savings have only been realised because we have visibility and transparency across our cost-base. I know who is spending what before they spend it, I've got the opportunity to stop it, or validate it, or renegotiate that spend, I know what spend we have committed to, I know where the opportunities lie, I can make timely decisions on our contract renewals and more importantly the ability to plan more effectively financially.
If we can put £3million to £5 million through the system and we can get 5-10% savings on everything that comes through the system, you are talking quite big savings for an organisation of our size.
Disclosure: Coupa is a diginomica partner.