Fighting P2P Words: ‘Coupa is Rehashing Ariba with a Better UI’

Arm wrestling

Sitting down with Tradeshift’s Christian Lanng always presents an opportunity to hear exceptionally strong opinions on the industry and technology. He is one of the best people to argue with, as well, as his opinions tend to get sharper the more you push back. Christian is also good for some of the best one-liners in the history of this sector, such as his quip “Ariba doesn’t have customers, it has prisoners.”

Last week, I spoke with Christian over Skype and posed a number of questions about why Tradeshift is entering the procurement sector. (See our coverage of this launch, including the acquisition of Merchantry, here, here and here.) Christian was full of his usual piss and vinegar, as they say, firmly putting Coupa, Ariba and others in the crosshairs. As usual, he came off like a presidential candidate on the stump — albeit with slightly more hair and I’d argue deeper arguments than most — of procurement tech.

In a series of posts covering the interview in the coming week, we’ll share what we learned. I first posed the question to Christian, “Why is Tradeshift getting into the transactional procurement market?” Here’s what he had to say on the topic:

Christian: I know the market is asking, “Hasn’t this problem been solved already?” Come on, this sector has been around for over a decade. But the real problem is not close to being solved as I see it. We basically have come to accept mediocrity and a baseline for success that is really bad. I see it as a similar situation in accounts payable and payments five years ago. Organizations call it success when they connect with 10-15% of suppliers in either e-invoicing or broader purchase to pay (P2P). In short: No one expects a lot and in turn, they don’t expect enough from their solutions. Coupa is rehashing what was done with Ariba before with a nicer UI.

Jason: What is your angle then?

Christian: We need to start with a different technology approach to transactional procurement. Today’s models are built on catalog management systems. But Amazon, the winner so far in consumer markets, is not catalog-based. It is one global, virtualized, real-time database you can search and purchase from that takes information from hundreds or thousands of sources and merchants and makes it available in context.

Jason: So catalogs are dead?

Christian: Catalogs died on the consumer side of P2P a long time ago — but they live on within B2B because of legacy technology. Our approach at Tradeshift is to get rid of catalogs completely. This allows us to do simple yet critical things such as extending the ability to suppliers at multiple tiers in the supply chain to participate. Once you think beyond the catalog paradigm, about what I want my organization to both buy and sell, a change occurs. It’s about seamlessly mixing services, direct and indirect spend into one experience.

Jason: Have we really failed so far?

Christian: Apart from catalogs another root problem is that rogue buying hasn’t been solved. Rogue buying now is part of the proposition of P2P — it still happens. I think it’s proven by now that you  can’t change behavior and that we must instead try a different approach. It’s the process and the tools that must shift. Just blaming people is a cop out. Others are trying to capture the world in a procurement system — to put buying in a controlled box and it will never match everyone’s needs.

Jason: This feels like it’s flying in the face of purchasing enablement today — is it?

Christian: Well I think purchasing today has got to realize the existing model has failed and we have got to switch the mindset. Tradeshift instead goes through the browser as a window to the outside world. We take the procurement system into the internet rather than trying to bring the world into a tiny box. You can go anywhere on the Web and find supply and pull information back into Tradeshift. That’s a big change from the past in P2P. In short, you can grab whatever you want to check out and pull into a purchase request. Yet as the procurement professional you get insight into spend and you still control the buying activity, getting much closer to 100% spend insights.

Put on your flack jacket and stay tuned as our conversation with Christian continues.

Voices (11)

  1. Pierre Mitchell:

    Mike, I KNEW you’d like the polymorphism piece because of its role in enabling mass customization.

    In understand Christian’s perspective on the catalog. But I think catalogs are great for SKU-based widgets. In fact, check out this catalog based on leading design thinking: https://www.youtube.com/watch?v=MOXQo7nURs0
    🙂
    For services, catalogs are a much harder stretch, cognitively and technically. People are not widgets and even info based services are hard to wrap your mind around in a catalog metaphor. BUT, bigger to me is HOW catalogs have been managed. Suppliers and users are familiar with them, so let’s make the experience delightful and the process, even though buyers and sellers may have different objectives in what the ‘optimal’ experience is (e.g., sellers like up-selling/cross-seliing and buyers don’t). Yes, most of current UI’s stink. Too much data replication in a syndication model. And business networks can help somewhat, but they can add cost/complexity too. Such 3rd party hosting of the content is another data store. Merely replicating a new/improved Ariba ASN catalog (but w/o the firewall so any buyer can find any buyer) isn’t solving the bigger problem. We need better standards for such catalog content and supplier registry content that allow buyer discovery. Something like UDDI driven down to the item level. GS1 is trying to address some of this in the product supply chain: http://www.gs1.org/sites/default/files/docs/architecture/GS1_System_Landscape.pdf
    say what you will, they’re pushing and making things happen.
    There was some effort in late 90’s via DARPA I think to let suppliers put some such content outside their firewall to allow easier discovery / pub-sub. Then came the web agents. And they all died on the vine, other than B2C pricing bots. I think this’ll come back from the dead in B2B in next few years.

    Definitely need some more leadership in reducing B2B friction. I applaud TradeShift’s efforts. Need a platform. And also need open standards / open (and adopted!) APIs around the various platform elements.

  2. Mike Oswalt:

    Apparently, “bitter and twisted’s” fax machine is on the blink again. You know… you just can’t trust technology can you? I think it is interesting. Clearly Jason and Pierre are tag teaming the theme because when I read Pierre’s post on “Polymorphism: The Key to a Mass-Customized Procurement Organization and Technology Platform” I couldn’t help but, make a connection back to this interview. I’m not saying it is “what’s next” or that what’s next will solve the ills of an industry. I am saying I give credence to data flow over documents and that BIG data benefits depend on discrete data (semantic web, RDF, triplestores) that data flow supplies. Interesting… indeed.

  3. Kathiravan Subramaniam:

    Sorry, Basic Question.

    If there is no catalog, how the procurement department can control the spend from any non-qualified supplier or direct the spend through the negotiated suppliers. If the end users in the organisation go on shop from the internet, how can you get volume based discount. How do you control? Catalogs are needed still, right?

    1. Christian Lanng:

      Hello Kathiravan,

      Great question. Tradeshift Buy still comes with the ability to buy based off catalog based data, but as a buyer you don’t have to manage it any more, all product information is loaded into the Tradeshift Product engine which is a search-able real-time product data-base. Here you can store all information such as volume discounts, special prices or relationships with suppliers, but it’s not based on a catalog per se, but rather your relationship with the supplier. This makes it much easier for the buyer to manage and much easier for the supplier to participate, both sides win. Apart from that Buy Anywhere is a feature that ALSO enable you to buy from the internet and pull it to Tradeshift Buy to be managed like any other process.

      Best,

      Christian

    2. bitter and twisted:

      The magical procurement unicorn will create data out of thin air for you.

  4. Christian Lanng:

    @jason

    Force.com was certainly not a given when salesforce.com launched it, lot’s of resistance (and snark from analysts), but the business case was just too good to miss out on. We have recently talked to a number of very high-profile CPO’s who really like the idea of having a PaaS platform for the supply-chain, because the return of value is so much higher than the stand-alone-application or suite approach and it doesn’t box them in.

    Any investment in connecting your supply-chain is a sunk cost no matter what solution you pick, but at least with Tradeshift you have an open-ended return of value since you can roll-out many more processes than any other suite or pick from competing offerings within sourcing, spend analytics, payments, etc. to chose the one that fit your needs.

    Secondly it is becoming clear that there is a huge merging of domains going on between treasury, AP, procurement, supply-chain, direct and indirect which is another huge case for needing a more flexible approach than the suite, unless you believe that the magical silver bullet suite covering all of those areas will soon exist (don’t hold your breath for the Ariba, Concur, Fieldglass, +++ monster to be integated any time soon).

  5. Dan Roehrs:

    Boy have we all been there; “we take the conservative approach”. Completely get it. But I go back to the point of the “third leg” of success; evolution of practitioner evolution. We, as industry thought leaders have an opportunity to challenge that thought process. Conservative moves are okay, but ought to be prepared for an expectation of conservative results. PaaS (or heaven forbid Cloud) solutions being daring is recognized, but shouldn’t stop us from pushing the envelope of “comfort” to return better than average results in the area of spend management. Since the 90’s we’ve seen this evolution and I suspect that we will continue to see forward platforms like what Ariba did to push the limits against Commerce One, or like what Rob led Coupa to do against Ariba, or what Jack is doing with BuyerQuest, or what Dave and Chirag started with MM4 or what Christian is doing with Tradeshift (to cite only a few).
    It’s absolutely correct that procurement professionals, as a whole, we are more concerned with stability then breakthroughs. You and I know of many, however, that have taken those “risks” and they will tell you their decisions to push the ceiling returned much more (and with greater velocity and with greater scale) success then those decisions that were more conservative. Because the flip side to conservative moves promotes providers to be just as conservative (dare I say complacent) in terms of R&D and adequately addressing the needs of the fast moving buying community. We owe it to the procurement professionals out there on the front lines to be innovative and to push the limits of what’s possible.

  6. Jason Busch:

    Yes, Dan! Could not agree more on the end game here … but the issue, as a head of P2P put it to me this week at a big company, is that “we take the conservative option” [in our group/area] … the challenge is that PaaS models for procurement and A/P are daring. Maybe folks will make the investment in marketing/sales/commercial/operations for a competitive edge but for transactional procurement? The barrier to overcoming the “in the box” approach vs. a community one is very, very significant compared with Force.com given how we appear less concerned in purchasing with breakthroughs and more concerned with stability. It’s also harder for the maverick within procurement to make a move vs. a commercial organization — to make the first spark.

  7. Dan Roehrs:

    Interesting read. It’s great to see such passion in what so many others consider a “dull” or “over rationalized” space as transactional procurement. I would agree with Christian that there is still frustration in the market with the progress (or lack thereof) and the application of these kinds of systems. Furthermore he’s right that it’s a combination of tools and process that need to continue to improve to address these frustrations. Amazon is a great analogy (gee, no one has ever used that one before), it doesn’t apply. Amazon also has it’s own captive distribution infrastructure (among other proprietary tools and processes) that address the vastly different needs of a consumer market than a commercial one.

    As for the web-based “grab and go” example, I agree with Amy’s comment. Coupa has indeed been doing this for years. Ariba has also introduced this technology recently. But good luck deploying it. You see what providers think is a really cool feature and (in part) a logical answer to allow for more requisitioner freedom, actually makes CPOs very nervous. But that speaks to the third component of success of these kinds of technologies; practitioner evolution. One may argue that it’s better to capture rouge, off-contract, maverick spend in a simple (big-stick-free) manner so that spending details can be tracked for later analysis and better understanding of internal customer’s needs.

    As for adoption; that varies with the amount of organizations deploys solutions like these. I remember in the 90’s doing implementations with (brace yourself, I’m old) Netscape BuyerXpert and SellerXpert where we were getting over 50% of indirect spend under management. I was even lucky enough to see an ERP e-procurement deployment done for a financial services client who was getting over 90% spend under management. So while I would agree that there’s still spend on the table that’s not being put through these systems, I would more confidently say that today’s expectation is more than 10%-15%.

    I believe the real nirvana lies somewhere like what SalesForce is doing in the CRM space; a core (almost infrastructure) baseline of functionality but with a widely open source code that would allow specialists to add value on top. For example; some of these transactional providers would claim they are spend management for “all but non-payroll” spend. But that’s not realistic, nor would they want that kind of complexity (that’s the very thing that’s making these up-starts more and more ERP-like every time they add such specialized features). Instead they could be a basic requisitioning and workflow infrastructure, yet allow a specialized VMS provider (for example) to handle the very specific tasks association with procurement services spend. This is like SalesForce allowing for a community of other providers to “plug-in” to achieve an even greater value than what SalesForce themselves could do (or lose “basic” customers by developing so deep).

    Either way, this made for some great discussions. It just means that this space continues to innovate and in the end, that’s something great for all of us!

  8. Christian Lanng:

    Amy, appreciate that – I’m sure Coupa do have a feature that is named/described like this, but there is a huge difference between just chasing a checklist of features versus actually having working stuff. The devil is in the detail, it’s about the execution and linking the process seamlessly end-to-end including payments which I’m pretty sure Coupa is not doing.

    Also next time you should probably disclose that you work for Coupa 😉

  9. Amy MacKinnon:

    “You can go anywhere on the Web and find supply and pull information back into Tradeshift. That’s a big change from the past in P2P. In short, you can grab whatever you want to check out and pull into a purchase request.”

    Luckily Coupa’s been doing that for years 🙂

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