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Coupa, BELLIN and Treasury Management Systems: What CPOs and CFOs need to know about TMS and links to procurement technology (S2P, P2P, AP)

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Earlier today, Coupa announced its acquisition of BELLIN, a treasury management system (TMS) provider. We covered the announcement on Spend Matters.

And on Spend Matters Nexus, a subscription service that focuses on sector M&A, we provided background insight into BELLIN, treasury (as a function) and the value proposition for procurement and AP in bringing procurement and treasury systems closer together from a systems perspective.

In this Spend Matters PRO analysis, we provide an introduction to treasury management system (TMS) components, describe the rationale for a TMS (over manual or kludged processes) and describe their touch points (foundational and advanced) with procurement technology systems / process architectures — including source-to-pay, procure-to-pay and accounts payable systems.

This research brief is aimed specifically at CPOs and CFOs, as well as source-to-pay process leads/owners and treasurers.*

But before we begin, let us tease out why this move should be perceived as exciting by CFOs. To bastardize one of the most famous statements of all time, this is a small step for Coupa, and a GIANT leap for procurement technology. Think about what “business spend management” is for a minute.

What is “spend”? It's cash flowing out the door.

So in practice, business spend management in Coupa jargon is essentially supplier cash disbursements management — ideally impacting cash before disbursement! But treasury is cash with a big C and therefore it’s spend with a capital "S." In practice, this is Coupa's first real foray — any vendor’s, for that matter — into broadening into "big spend management,” something we wrote about 5 years ago in fact!

Prior to making this more concrete in terms of what comprises a treasury management solution and its touchpoints with a source-to-pay (or procure-to-pay) procurement architecture, let us also keep our eyes on the prize by broadening the focus of business spend management.

If the business itself (i.e., CFO/CEO/board) is focused on return on invested capital (ROIC) and C as a proxy for cash (although in practice it’s always harder to liberate it than it is in theory), then procurement can transcend its role of just improving "R" through “spend”/savings, and take a more strategic role in bringing procurement and treasury together:

  • Freeing up cash through working capital improvement programs
  • Variabilizing costs to reduce invested capital and asset footprints
  • Reducing costs of capital and improving earnings (e.g., rebates) via innovative trade financing programs
  • Aligning spend planning and cash planning to sync up procurement and treasury with each other and the business during the FP&A process
  • Investing cash into innovative suppliers (e.g., digitally disruptive ones) rather than T-bills

OK, enough (attempting) to wax eloquent on the future of finance and procurement for now.

Let’s get down to what we’re here to introduce today: “TMS 101,” BELLIN, Coupa, the enterprise opportunity, and impact on the market.

* For vendor analysis, market and M&A-centric analysis, see our Spend Matters Nexus coverage of the deal.

Coupa acquires BELLIN, targeting treasury management (Part 1: BELLIN Analysis, Treasury Background, TMS Components & Procurement / AP Intersections)

Mergers and Acquisition News in procurement industry

The worlds of procurement and finance continue to collide. Earlier today, Coupa announced it had acquired BELLIN, one of the few independent treasury management providers in the market. BELLIN offers a full-featured treasury management system (TMS).

TMS solutions typically include capabilities to support cash management, bank connectivity, cash/liquidity forecasting, risk management, accounting/compliance and payments.

BELLIN has historically competed in a market where many solutions are not entirely substitutes for each other (e.g., comparing SAP Treasury and Risk Management to Kyriba is not apples-to-apples).

The same could be said for Ion’s portfolio of solutions (e.g., Reval, IT2, Wallstreet Suite, Treasura, Openlink, City Financials + commodity management plays, etc.), FIS, GTreasury and others.

This Spend Matters Nexus brief sets the context for Coupa’s acquisition of BELLIN. It begins by introducing BELLIN and then provides insight into how a broad-based procurement/finance/spend suite such as Coupa dovetails with the treasury function.

Subsequent Nexus analysis will focus on fleshing out the benefits of bringing together treasury and P2P capabilities, looking at treasury management’s total addressable market (TAM) in the context of source-to-pay — and B2B payments! — as well as the implications of this transaction on the competitors in the market.

Jason Busch is Managing Partner of Azul Partners’ Investor Advisory Group. He works with sponsors, CEOs and boards on data-driven due diligence, M&A and strategy. Jason is also the lead author of Spend Matters Nexus, a private newsletter and subscription service. Disclosure: Azul Partners provided due diligence services to Coupa as part of this transaction.

Coupa acquires BELLIN to add treasury management and boost payments capabilities

Coupa, the suite provider of business spend management solutions, has acquired BELLIN, a treasury management provider, in a deal that is part of effort by Coupa to build out bank connectivity for B2B payments, offer treasury depth of capabilities, and create accounts payable and procurement synergies. And it’s part of an industry trend to improve payments capabilities in source-to-pay and procure-to-pay solutions.

Terms of the transaction were not disclosed.

Coupa said in an interview that BELLIN, a two-decade-old German firm, has strengths that lie in control over cash and liquidity as well as forecasting. Coupa said customers want to see where their cash is at any one time, and that suppliers would like to know where payments are in the approval process — much like the convenience that consumers have with tracking packages to their home.

Coupa Pay: Solution Overview — 2020 Update

For most companies, supplier payments represent 80% of total payments (internal and external). Payments include intercompany payments and payments to third party vendors. While there is no “typical” company, many larger enterprises operate multiple legal entities (think sales offices, factories, distribution centers located globally), with multiple banks, and hundreds of banks accounts. Tens of thousands of vendors, suppliers, gig workers and employees must be paid globally. It is messy, to say the least!

The payments function is, still, generally, a largely unautomated backwater. Some of the most (comparative) manual processes within finance and procurement still exist around generating supplier payments and handling different payment types. The challenge of doing this with multiple bank relationships and multiple disbursement accounts, while making sure the company has an updated view of its cash position via current payables information further complicates (and slows) activities.

For these reasons, B2B payment has become a very hot topic. So it’s no surprise that Coupa, a source-to-pay suite provider of business spend management solutions, is interested in carving out its share of the opportunity. But Coupa is not alone. Whether it be real-time fraud detection, applying APIs to bank connectivity or facilitating cross-border payments, there is no shortage of investment by numerous fintech vendors to help companies become more efficient with their payments.

But probably nowhere is there a bigger interest than managing payments in a unified single interface, across multiple channels, banks, rails, and to handle both domestic and cross-border payments to suppliers, contractors and employees while performing real-time fraud detection to stop payments before they are made — reducing dependence of after-the-fact payment recovery processes. This is where Coupa’s vision comes into play with its Coupa Pay offering.

From a procurement and AP lens, Spend Matters PRO has covered Coupa Pay before. See:

Today, we'll focus not only on updating our coverage of Coupa Pay to reflect the latest release capabilities as of Q2 2020, but also provide a perspective on the solution from the lens of the finance organization, especially account payables, which is tasked with much of the complex orchestration of B2B payments.

Coupa buys ConnXus: Product Background and Deal Rationale

Coupa announced Monday it has acquired ConnXus, an Ohio-based provider of supplier relationship management and diversity solutions, for an undisclosed sum.

The deal continues Coupa’s ongoing R&D investment augmented by its corporate development streak. Over the past 18 months the San Mateo, California-based S2P provider has acquired five firms, including another in the SRM space, Hiperos (now unified into the Coupa platform as Coupa Risk assess). But while the Hiperos purchase expanded Coupa’s third-party risk management capabilities, ConnXus brings an entirely different set of supplier management functionality. This includes deep expertise and data related to supplier diversity initiatives — for which ConnXus is best known — as well as several related offerings, such as an automated supplier master data cleansing service.

So what does ConnXus bring that’s new to Coupa, and why does the acquisition make sense in the context of an already strong-performing supplier relationship management and risk solution? This Spend Matters PRO brief reviews the SXM offerings of both ConnXus and Coupa, exploring the deal rationale from a product perspective. It also explores what the deal means for current customers and prospects. A separate brief from Spend Matter Nexus will cover the acquisition from an investment perspective.

Coupa acquires ConnXus, adding a wealth of supplier diversity capabilities

In its second acquisition this year, Coupa has acquired the supplier diversity specialist ConnXus, according a Spend Matters interview Monday with Coupa, a suite provider of business spend management solutions. Terms of the deal were not disclosed, but Coupa said talks had been going on since 2019 and that the coronavirus disruption played no role in the negotiations.

Updated! CORONAVIRUS RESPONSE: Sourcing and Commodity Management — Help with direct materials sourcing and automated supplier discovery

Updated April 23: This post about the Sourcing and Commodity Management category has been updated with profiles of additional solutions for direct material sourcing — Ivalua, SAP Ariba, Synertrade — as well as solutions that help with automated supplier discovery — SAP Ariba and Tealbook. The updated passages are italicized, and the new profiles are toward the end.

In this installment of our “Coronavirus Response” series, Spend Matters will explore sourcing and commodity management, with a focus on direct materials. With the COVID-19 crisis impacting logistics and existing supply bases, in China (even though China seems to be recovering), the rest of Asia and Europe (thus far), there will be numerous emerging needs for companies across manufacturing. This PRO brief will focus on solution providers that we’ll profile in this category: Allocation Network, Coupa, Jaggaer, Ivalua, SAP and Synertrade — which help with direct sourcing. You can also use solutions for automated supplier discovery from SAP Ariba and Tealbook, although other COVID-19 related resource sites for supplier discovery have also popped up from scoutbee, Thomas, and various sector-specific resources (e.g., D&B, govshop, and others in the federal government).

The mission of this series is to examine categories of relevant solutions and example providers that professionals in procurement, finance and supply chain organizations should investigate to reduce, and even mitigate, coronavirus supply risk. And even if the solutions are only addressing a subset of the issues, the ability to respond intelligently in the short term can also help set organizations up for the future when sanity returns to the world.

Today’s brief focuses on the second of the seven solution categories that we’re covering:

1. Supply risk management solutions that include supply chain risk, CSR risk, supplier financial risk, etc. (Read this category’s PRO analysis and solution recommendations here.)
2. Sourcing and commodity management, including advanced sourcing, direct sourcing, automated supplier discovery, and commodity management to help dynamically plan and source.
3. Advanced procurement analytics to enable direct procurement and/or to perform “spend planning” when demand drops out or spikes. (Its profile for this series is here.)
4. Procure to Pay (P2P) that emphasizes working capital, dynamic discounting, payment control and related finance priorities to help inject cash into the P2P process — especially for many cash-starved suppliers. (This category is discussed in-depth here.)
5. Fraud, P2P and vendor management safeguards when new suppliers need to be set up quickly, and also when lowlife fraudsters try to use the pandemic as a way to steal money and IP. (Its profile for this series is here.)
6. Providers with deep contract analytics that can analyze a contract portfolio for affected contracts from suppliers (and customers) for not just force majeure clauses, but other related clauses that tie to the multiple risks popping up at once in the pandemic. (Read in-depth detail on this category here.)
7. Contingent Workforce and Services solutions that are able to, at a minimum, help rapidly ramp up on-demand workers to deal with massive resource shortfalls. We are looking at four categories of solutions: for sourcing remote/online work; solutions for sourcing and managing mobile-first contract workers anywhere you need them; solutions to “direct source” and manage contract workers; and solutions for data management and analytics.

Owing to the magnitude of the crisis, Spend Matters recently made the series introduction available for free to all readers. PRO subscribers can see our follow-up pieces that profile the other categories and their solutions in that market. We will include a lot of information on each category PRO brief that readers can see without hitting a paywall, but since we also draw heavily from our existing deep-dive analysis of the providers from our SolutionMap database, some information will be available only to our PRO subscribers.

For sourcing and commodity management, the emerging needs for companies across manufacturing will include rapidly identifying new sources of supply, conducting complex sourcing events for materials, parts and components (which may be tied to broader bills of material), qualifying suppliers based on targeted requirements (e.g., for a specific line), and managing and tracking suppliers based on custom scorecarding.

After the pause button is lifted on production — in cases where one is put into place — these needs will become especially acute during the recovery phase in specific regions (which may be different from the recovery phase in other geographies).

Each category-specific PRO piece in this series has three sections:

1. Problems and Use Cases. We’ll highlight the problems in force (which will vary through different phases of the crisis) and the various scenarios where solutions can provide deeper insights, intelligence and scalable workflows.
2. Solution Rationale and Value. We’ll outline how various solutions can help solve the problems and the specific questions that they’ll help answer.
3. Example Providers. We’ll highlight the solution providers that can support the problems and deliver value.

Some providers are offering coronavirus-specific programs and “freemium” commercial offers, and we’ll note those whenever we update this piece. We’ll also start the series with providers that we already have deep knowledge on, but we’ve been seeking information from other vendors too.

Let’s jump into how sourcing and commodity management can help.

Through April 2020, a special PRO Expert Survival Pack is available to procurement practitioners only* at up to 50% off — Learn more

Updated! CORONAVIRUS RESPONSE: Procure-to-pay (P2P) keeps the cash flowing during the crisis

Updated April 24: This installment of our Coronavirus Response series has been updated with a profile of a solution that can help with payment automation on a global scale — and because of the COVID-19 disruptions, a special offer has been extended to guilds, nonprofits and trade groups to get free access to the solution. Note: New passages in this post are italicized, and the new profile is toward the bottom.

In this installment of our “Coronavirus Response” series, Spend Matters will focus on procure-to-pay solutions and how they can help manage cash flow during a crisis.

The mission of this PRO series is to examine categories of relevant solutions (and example providers) that professionals in procurement, finance and supply chain organizations should investigate to reduce, and even mitigate, coronavirus supply risk. And even if the solutions are only addressing a subset of the issues, the ability to respond intelligently in the short term can also help set organizations up for the future when sanity returns to the world.

This article addresses the fourth category of the seven we currently have outlined:

1. Supply risk management solutions that include supply chain risk, CSR risk, supplier financial risk, etc. (Read this category’s PRO analysis and solution recommendations here.)
2. Sourcing and commodity management, including advanced sourcing, direct sourcing, automated supplier discovery, and commodity management to help dynamically plan and source. (This category was updated April 23 and is discussed in-depth here.)
3. Advanced procurement analytics to enable direct procurement and/or to perform “spend planning” when demand drops out or spikes. (Its profile for this series was updated April 22 and is available here.)
4. Procure to Pay (P2P) that emphasizes working capital, dynamic discounting, payment control and related finance priorities to help inject cash into the P2P process — especially for many cash-starved suppliers.
5. Fraud, P2P and vendor management safeguards when new suppliers need to be set up quickly, and also when lowlife fraudsters try to use the pandemic as a way to steal money and IP. (Its profile for this series is here.)
6. Providers with deep contract analytics that can analyze a contract portfolio for affected contracts from suppliers (and customers) for not just force majeure clauses, but other related clauses that tie to the multiple risks popping up at once in the pandemic. (Read in-depth detail on this category here.)
7. Contingent Workforce and Services solutions that are able to, at a minimum, help rapidly ramp up on-demand workers to deal with massive resource shortfalls. We are looking at four categories of solutions: for sourcing remote/online work; solutions for sourcing and managing mobile-first contract workers anywhere you need them; solutions to “direct source” and manage contract workers; and solutions for data management and analytics.

Owing to the magnitude of the crisis, Spend Matters recently made the series introduction available for free to all readers. PRO subscribers can see our follow-up pieces that profile the other categories and their solutions in that market. We will include a lot of information on each category PRO brief that readers can see without hitting a paywall, but since we also draw heavily from our existing deep-dive analysis of the providers from our SolutionMap database, some information will be available only to our PRO subscribers.

We began our coverage of procure-to-pay (P2P) solutions from three of the P2P suite players (Basware, Tradeshift and Coupa) with particular strengths in emphasizing working capital, dynamic discounting, payment control and related finance priorities to help inject cash into the supply base (especially harder hit suppliers in need of cash) via the P2P process.

In this update, we’re also profiling an AP automation solution from Tipalti that can do e-invoicing and automate payments on a global scale. The solution facilitates cross-border payments in 120 currencies via multiple payment methods. In response to the coronavirus crisis, it is offering guilds, nonprofits and trade groups free access to its platform for a year.

These initial three vendors, while each unique in the P2P/financing space, all have deep capabilities in payment automation and financing programs — like intermediate trade financing and not just basic non-intermediated early pay discount execution. Tipalti also has robust supplier management and early payment capabilities.

If your organization doesn't have a P2P platform with payment and financing capabilities, one of these platforms could be the most fit-for-purpose, off-the-shelf solution to help you preserve, deploy or have access to cash through the COVID-19 crisis, but obviously longer-term too.

If other practitioners, providers or consultants would like to contribute to coverage in this category, please let us know or fill out this survey.

Each category-specific PRO piece in this series will have three sections:

1. Problems and Use Cases. We’ll highlight the problems in force (which will vary through different phases of the crisis) and the various scenarios where solutions can provide deeper insights, intelligence and scalable workflows.
2. Solution Rationale and Value. We’ll outline how various solutions can help solve the problems and the specific questions that they’ll help answer.
3. Example Providers. We’ll highlight the solution providers that can support the problems and deliver some value.

Some providers are offering COVID-specific programs and “freemium” commercial offers, and we’ll note those whenever we update this piece. We’ll also start the series with providers that we already have deep knowledge on, but we’ve been seeking information from other vendors too.

OK, let's dive into the power of P2P solutions.

Through April 2020, a special PRO Expert Survival Pack is available to procurement practitioners only* at up to 50% off — Learn more

At Coupa Inspire in London, 2 game-changing innovations barely got a mention 

Last week, Spend Matters Europe did a great job of summarizing the Coupa Inspire event in London, including a look at the biggest items that Coupa was pushing on its product agenda.

This was great, but the best product-related announcements weren't in the keynotes, and they barely even got more than a mention in the breakout sessions.

So today, we're going to focus on two developments — connectivity and analytics encapsulation — because these innovations can totally change the game in business spend management and should not be overlooked!

Coupa’s ‘Below the Enterprise Level’ Secret Sauce (Part 1: Dissecting What Makes It Attractive for SMB and Middle Market Procurement)

digital

The use of procurement technology in the middle market is heating up. For the purposes of this analysis, we define the middle market as companies between $250 million to $2 billion in revenue. Under that threshold are true SMBs. And above that range are enterprise customers, at least by Spend Matters’ definition.

Granted, this is not a perfect segmentation as the level of needs (and sophistication) in the middle market can vary dramatically by geography, industry and company, all of which can lead to very different technology buying requirements. Some middle firms may end up looking exactly like enterprise-level (Global 2000) customers, whereas others may more closely approximate SMB buyers.

Regardless, within the somewhat flexible bounds of the middle market definition, Coupa, among others, is clearly gaining traction based on a rare combination of ingredients that create a particularly attractive suite within this market segment. These features are also attractive to SMBs too. Coupa has provided information to Spend Matters that its mid-market segment is companies from $250 million to $1 billion in annual revenue and their corporate segment is under $250 million in annual revenue.

This Spend Matters PRO research brief dissects some of the elements that we think contribute to Coupa’s particular attractiveness in this sector (Hint: Very few of these elements are focused on the classic “feature/function” arms race between vendors). In a subsequent brief, we’ll attempt to quantify the importance of the middle market to Coupa in recent wins. And we will explore how some of these elements also apply to other vendors that are succeeding in the middle market as well (with mini case studies featuring Amazon Business, Negotiatus, Procurify, Scout, Tealbook and Tipalti).

Coupa financial results: Delving into another strong quarter

procurement

Earlier this week, Coupa reported its Q2 results for fiscal 2020, achieving revenue of over $95 million (a near 55% increase year-over-year, primarily from organic growth). The quarterly revenue performance beat analysts’ estimates, and non-GAAP EPS was also above expectations, although cash flow from operating activities declined quarter-over-quarter. Regardless, investors cheered the results, helping Coupa hit a price/sales ratio of nearly 28X in early morning trading on Thursday — and a roughly $9 billion market cap (representing over 125% appreciation in the stock price in 2019 alone).

That’s valuation perfection by just about any measure when compared to peers.

But what is happening within Coupa (and the broader market) under the surface that is driving these numbers? This Spend Matters Nexus brief provides insight on broader (and related) market trends while peeling back a few layers of the onion on what’s driving Coupa’s success, including how it is benefiting from various competitive dynamics in the market (e.g., SAP Ariba’s broader integration hurdles), as well as some of the challenges Coupa must confront to fully capitalize on its acquisitions.

Jason Busch serves as Managing Director of Spend Matters Nexus, a membership, research and advisory organization serving technology acquirers (private equity, corporate development, etc.) and CEOs in the procurement and finance solutions marketplace (including contract management, B2B marketplaces/connectivity, indirect procurement, services procurement, direct procurement, commodity management, payment, trade financing, GRC/third-party management and related adjacent sectors).

DCR Workforce (now Coupa)

As part of the SolutionMap RFI process, Spend Matters continuously solicits customer references to determine a procurement technology provider’s placement on the ranking graphics. This is a Spend Matters curated summary of verified customer feedback for DCR Workforce (now Coupa), a SolutionMap-ranked provider.