Coupa – Challenging the Purchase-to-Pay Paradigm

Coupa is no longer a small but disruptive force in the spend management / purchase-to-pay software market. Over the past five years, the firm has become one of the major players, in terms of size, staff numbers and in the breadth of its offering, which has gone well beyond that original P2P focus into sourcing, spend analytics and related areas. The expansion in Europe has also been spectacular; from Alex Kleiner literally on his own (and usually on a plane) three years ago, it now has a team of over 50 staff this side of the Atlantic, and is still growing rapidly.

We caught up with Gabe Perez (VP, Strategy & Market Development) and Donna Wilczek (VP Product Management) from the firm recently to talk about one particular new aspect to their product which has caught our eye. That is what they call “Supplier Actionable Notifications.” It is patent pending apparently, which does give some idea of the genuinely innovative nature of the development.

What it means is that Coupa is short-circuiting the usual rigmarole of suppliers having to be on-boarded and registered in some way in order to be part of the buyer’s system or network. “Without registering on a network, suppliers can create invoices, acknowledge purchase orders and add comments to documents directly from email. The conversation thread is automatically updated in Coupa.”

So a relatively informal email-based purchase, contract and invoice can be converted into a fully recorded transaction, included in the system, recorded and fully analysable.  "You can transact with just email. And the minimum technology you need is a mobile device like a smartphone" says Perez . And as always with Coupa, there are no supplier fees to pay either; still a major competitive advantage over many of its competitors. There are also automatic email invoice status updates to suppliers, without suppliers having to log in to a network to check status or call AP departments. Real-time status is also visible to suppliers via the Coupa Supplier Network.

Here, as in the past, Coupa is challenging the procurement orthodoxy. We will come back and explore what we mean by that in the future in more detail, but broadly, it is looking to make it easy to transact with any supplier with whom the organisations wants to trade. Very sensible, you might think? Because, as they say, 75% of the typical organisation's suppliers are non-strategic, change constantly and transact infrequently.

But actually, when you think about it, many procurement functions have in some sense been very happy to make transacting difficult. We put barriers in the way. “That supplier is not on the approved list.” Or maybe “we have to go through a lengthy onboarding process before we can even try this supplier out.”

And procurement does that in part to control and restrict spend. But Coupa is saying its technology can make it easy to do business with any supplier, yet still fully capture all the data that is required for control, analysis and recording purposes. Its tools do allow control, through approval hierarchies and so on – but it is a different sort of control from the “let’s make life difficult for users” that many procurement functions have used as a tool to gain influence inside their organisations.

That makes the firm perhaps the most interesting in our market in terms of what they are doing to challenge prevailing assumptions, ways of working, and even views of best practice, in the purchase-to-pay field. Just as we see market-informed sourcing as a paradigm shift for category management and strategic sourcing, Coupa is moving the P2P and spend compliance goalposts. That could have major implications for procurement, and certainly requires practitioners to be aware of these developments.

We’ll be back soon with some further developments from Coupa. In the meantime, my colleagues Jason Busch and Xavier Olivera have produced a very useful paper if you are into P2P issues, titled “Cloud P2P Deployment: A How-To Guide to SAP and ERP Integration with eProcurement and Beyond”. And it is available free to download here.

Voices (6)

  1. Gabe Perez:

    Rj,

    Thanks for the note. The number one pain that is still around most P2P processes is paper invoices. Although some countries have mandated eInvoicing, we are seeing that globally most companies still get a lot of paper. For companies without systems, the reasons are obvious, but for companies with systems we have seen may reasons for failure, but the root cause of most are it is too difficult or costly for a supplier to invoice, whether it is supplier fee’s, the need to have to part of and on-boarded to a proprietary network/portal, or just too limited of options to invoice. Remember, ANYTHING outside of a supplier’s AR system is extra work, so what we have done is make creating a PO from an Invoice the minimal amount of clicks and data entry needed, using the most common app in the workforce; email. We can do this all while providing line level compliance, with all that is needed is the supplier’s email address. Even with a supplier submitting, the company’s compliance workflow around approving an invoice will kick in.

    Our goal is to provide many options to suppliers to invoice electronically, so that it is easiest for them to participate. This is just the beginning of our innovation, stay tuned!

  2. RJ:

    Thanks Gabe. My question arose from Peter’s statement that “Coupa is short-circuiting the usual rigmarole of suppliers having to be on-boarded and registered in some way in order to be part of the buyer’s system or network”. The attraction seemed to be that Fred in Marketing could find Bob at a local design agency for his low value need, send Bob an e-mail of their requirements and Bob could respond with his e-mail invoice. That would be very appealing to many stakeholders in most businesses I’ve worked with but put the fear of God into risk managers, legal teams and CFOs. So it’s great that the supplier does need to at least exist on the organisation’s system before you can have this interaction. However, it does still worry me on two counts: (i) I’m now not clear why this is such a huge step forward in efficiency of transactions if we still need to do this onboarding work and (ii) we all know that the number of suppliers that are “live” in an AP system does not accurately represent those that are “approved” by the business – some are historical that just haven’t been purged or blocked, others were only ever intended as one-offs etc. It therefore seems to put another burden on the Procurement and/or AP team to ensure the supplier database is completely clean: not in itself a bad thing but I suspect a lot of work for many organisations.

  3. Gabe Perez:

    @ RJ – Suppliers in Coupa are only from a customer’s supplier master so they will always be vetted by that companies process.

    @Nathan – The email has a token and only be used from that supplier’s email address. If an email is hacked, that is not something anyone can prevent, that is an internal email security issue

  4. Nathan Jones:

    This is very interesting. Question is how do you deal with security (if at all)? If the Supplier’s email is compromised or email is forwarded by mistake to someone else can they click these notifications and post invoices too?

  5. RJ:

    This is a very interesting development in functionality which I can see many internal stakeholders wanting to jump on immediately. As Procurement teams look to move away from low-value, non-strategic control areas I think it will also appeal to many in larger organisations who struggle with the management of “tail spend”. I guess the real areas I’d like to explore are how this can integrate with risk management policies (we all know how users and suppliers may try to circumvent policy to get a fast deal but can create massive risk exposure on even low value but highly strategic products or services) and how the data can be managed to identify consolidation opportunities or where purchases are being split to fall beneath control thresholds. I’d assume Coupa has mechanisms in place to manage this as it’s fairly basic stuff but will definitely want to know more.

  6. Rob Bernshteyn:

    Love being part of, and contributing to innovation. Thank you for this wonderful write-up Peter. We’re just getting started!

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