This afternoon, I'd like to welcome Pravin Kumar to Spend Matters. Pravin is VP of Products at Ketera. Last week, I asked Pravin if he was interested in offering his perspective on Coupa and Open Source, and he offered to write a guest blog on the subject. Please join in welcoming Pravin to Spend Matters.
The re-invention of the spend management industry is beginning. The traditional players are yet to put emphasis on innovation, either into the technology or into the processes. The younger, more nimble companies are starting to make some strides in order to differentiate themselves. I count both Ketera and Coupa in this category. This innovative spirit ought to breathe new life into the spend management category and lead to some spirited competition, which will be good for customers.
It appears that Coupa offers two key value propositions. The first is ease-of-use in the requisitioning process and the second is being "open source". At first glance, Coupa and Ketera seem to strive for the same goal -- increased user adoption with new and innovative technologies that improve the end user experience. This is important because extensive user adoption is a necessary component to minimize maverick spend. However, better end user experience is not sufficient. Rapid and efficient supplier enablement and content management is an equally important, if not a more critical component for extensive user adoption. Our customers consistently mention that managing supplier enablement and content management is a glaring hole in most of the spend management suites. Without up-to-date content from, and connectivity to suppliers, buyers will not adopt the application no matter how innovative and usable the user interface.
Ketera understands the problem of on-boarding suppliers and enabling content very well -- it is a key competency here. We have been focused on this for a long time and have applied innovative techniques to solving this problem. As a matter of fact, we have customers that use the traditional requisitioning tools, but have purchased supplier enablement and content management solutions from us.
The second key value proposition Coupa seems to tout is "open source". I am not sure why this is important. As Jason has argued, (and I am paraphrasing here) the sausage-making of the business model is not relevant. At the end of the day, the customer has to determine if the value being delivered by the vendor is sufficient. Whether the solution is open source, on-demand, or software behind the firewall doesn't really make a difference.
At Ketera, we try to use open source components in our infrastructure as much as possible. For example, we use Linux as our OS platform, JBoss as our application server, and Apache for our webserver. We also use Lucene and are starting to use Ruby On Rails on some internal apps to get some experience with it. We will likely deploy some Ruby-based components soon. However, this is not going to bring us a sale -- I don't see why a procurement person would care. Maybe an IT person would, but that's not our target. What is important is number of users on the system, number of suppliers enabled, and that the majority, if not all, the transactions are routed through the system -- all of which affect the key business goals of compliance and savings.
Finally, while requisitioning is a very important part of spend management, it is only an operational aspect. Most customers want to follow best practices, which imply a closed-loop spend management process that includes visibility into spend, conducting sourcing events, an integrated contract management system, and finally an electronic invoice management system. While Coupa can likely integrate with third parties, customers will have to decide whether a free, easy to use, requisitioning tool is better than an easy to use, integrated solution. At the end of the day, both are going to have costs.
So while there is no question that open source spend management apps like Coupa's are innovative in nature. I think customers are looking for more than new application delivery methods. Being 'on demand' alone is not what will win the battle for Ketera either. We believe that it will take innovative products that are extremely user friendly and easy to implement, drive up user adoption rates, and enable a closed-loop spend management process. You'll definitely see more on this from Ketera in the weeks and months to come ...
Spend Matters would like to thank Pravin for taking the time to share his thoughts.