Greg Tennyson, CPO at Salesforce.com, gives a quick breakdown of how to calculate the savings from automating procure-to-pay transaction costs.

I recently had the opportunity sit down with  Greg Tennyson, the CPO at Salesforce.com, and ask him how he would quantify Coupa’s value.  A self-described tech buff, Tennyson has the impressive ability to put the most erudite aspects of Procurement (and other) tech processes in layman’s terms. He can make the complex seem deceptively simple, and was able to give me a back-of-the-envelope style estimation of the savings Coupa e-Procurement can help companies achieve.

Aside from Coupa e-Procurement being a true, multi-tenant SaaS provider, (and thereby adding value via the unique benefits a SaaS product can bring to an industry previously plagued by extensive deployments, customization, and lack of visibility)—Greg addressed the value of Coupa as it effects actual savings in Salesforce.com’s Procure-to-Pay transactions.

In the video, he defines his goal—to reduce transaction expenses so that they compete with Procurement Card transaction expenses. He then goes on to define the average p-to-p transactions expense as anywhere from $100 (according to Aberdeen) to $150 (according to ISM); and a Procurement Card transaction expense to be about $15-$20.

Then he does the math—he multiplies the number of transactions by the delta, and the outcome shows significant savings.

Is the number derived perfectly accurate? Of course not. There is no end to improving value estimates. But it does shed some much needed light on a controversial subject.

Got an opinion? Sure you do…everyone’s got one! Give us an idea of how you define value or estimate savings in procurement and spend management for your company. We’d love to hear from you.