Welcome to the era of BSM - Business Spend Management (3/3)

Business Spend Management (BSM) is a unified set of business processes, supported by software, that encompass procurement, invoice management and expense management — all the ways employees spend money — as well as the related processes of contract lifecycle management, supplier information management, inventory, advanced sourcing, budgeting, and analytics — all enriched by cross-company community intelligence. BSM together with ERP, CRM and HCM — enterprise resource planning, customer relationship management and human capital management — collectively and exhaustively address the core operating processes of every organization.

Why is BSM the name? I’ve thought long and hard about each word.

BSM – gimme an ‘S’

‘Spending’ is not the first word, but it’s the most important word. It’s the meat in the middle of the sandwich.

The world is going to continue to get hyper-competitive. No one will be able to hold back the tide of globalization for long. Top-line growth will continue to get harder and harder.

What that means is operational efficiency will become more and more important to a company’s success. We’re already seeing customers who have made extraordinary gains in operational efficiency and are saving tens and even hundreds of millions of dollars by putting their spending through the Coupa business spend management platform.

That is nothing to sneeze at, and still we feel like we're only scratching the surface. This is about something bigger than operational efficiency and savings, but those are essential.

BSM – gimme a ‘B’

Why ‘Business’? Arguably, the term Organizational Spend Management would be more all- encompassing. But, even if your organization is governmental or not for profit, you still have to adhere to standard business principles. You have to buy things to operate, and you have to create a profit and loss statement with two parts.

The top part is revenue — the money you bring in. But the top part of the statement is meaningless without the bottom part. You could make a ton of money, but if you consistently spend more than you bring in, you’re eventually going to have to change the way you do business.

There is also the peculiar view that somehow the spend side of the equation is not as critical to business as the revenue side.  That is simply not true, ultimately.  Perhaps, the time has come for those that manage spending to be seen rightfully as the business-impacting professionals that they are.

BSM – gimme an ‘M’

You could also make an argument that there should be an ‘O’, for Business Spend Optimization. Certainly, optimizing the value of all the money you spend is the ultimate goal.

What we've observed over the last nine years is that organizations often don't even know what they’re spending money on, across a host of key categories. With spending in three different buckets and often improperly categorized, it’s hard to normalize and aggregate the data. Because legacy systems are hard to use, adoption is low. Procurement negotiates great contracts, but few are using them. Employees are expensing things because it’s too hard to make a requisition and/or it takes too long to get approval. ‘Miscellaneous’ is often a large spending category in many organizations.

Because of the way that folks have historically approached these processes, and because of the technology choices they’ve made, that’s the state of most of the world when it comes to managing spending.

We have to start by managing, but supporting optimization is where we’re heading.

Community intelligence is the key

The key to optimization is data – and not just any data. The advantage of the cloud is that the data from all of our customers is partitioned but also resides centrally. We are using machine learning to normalize anonymized data from what is fast approaching $1 trillion in cumulative spending transactions that have run through our platform, and we are just beginning to tap into what we call community intelligence.

We see this as an incredible source of future value for both our company and our customers, because not only is top-line growth going to get harder and harder, differentiation is going to get harder and harder. What that means is that innovation becomes more and more important.

We are at a very exciting time in the history of technology because we now have huge specialized data sets, the computing power and the data architecture to effectively handle them, and machine learning and artificial intelligence to be able to spot patterns and deliver prescriptive insights that our customers can use to develop new business models.

For example, let’s say you run a restaurant chain, and you have a produce supplier that delivers weekly. Community intelligence could alert you to a local supplier that delivers daily, giving you both fresher produce and more refrigerator space to add other items to your menu. Conversely, it could prevent you from doing business with a supplier that’s got a host of problems you probably couldn’t learn about just from pulling a credit report.

For example, using data from the entire community, we can detect and alert you to a much wider range of expense, invoicing and procurement fraud patterns, helping you appropriately target your audit resources.

With visibility into such a large and growing data set, and the ability to mine it for insights, a whole host of possibilities open up.

BSM – our vision

At Coupa, we set out to develop the most comprehensive suite of spend management applications ever created, with an open, cloud based architecture, matched by an open spirit of collaboration and an unwavering focus on user centricity – delivered in the most accelerated time frames possible.

This has been no small endeavor.

We are now proudly in the top right of almost every analyst quadrant, wave and navigator related to the space, but the one in which we aspire to lead is the one that does not yet exist – BSM.

Looking back, we see that it’s been a long climb to get to this point in the journey. In this series of articles, I've portrayed some of the history in part 1 and our own evolution in part 2. We are aware that we have arrived here by standing on the shoulders of all the technology innovators that have gone before us, and with the support of our growing community of customers.

Looking ahead, we see something new and bigger than what has gone before. Automating procure-to-pay is only one element. Managing employee expenses is only one element. Efficient invoice management is important, but it’s not big enough. It’s all of those things together, and more – contract lifecycle management, supplier information management, inventory, advanced sourcing, budgeting, analytics – all working seamlessly to deliver Value-as-a-Service with prescriptive insights across the platform, as never before possible.

We believe that while Business Spend Management describes it best, we will not define the value of BSM as Coupa alone. We will define it together with our customers and partners who share our vision of using information technology to address the long-standing challenges of managing company spending, and who innovate and co-develop this vision with us.

Let’s blaze a new trail of lasting value in the new frontier of Business Spend Management. Welcome to the era of BSM.