How to Succeed at Business Spend Management

We are proud to release the Coupa Benchmark for 2018. This report contains data on the results that top performing companies are achieving in 12 critical areas of the Business Spend Management (BSM) process using the Coupa platform.

In BSM, as in all areas of human endeavor, benchmarks are invaluable because they tell us what is achievable, and help us set our goals. They help us define success, and in doing so, push everyone toward new standards.

The four-minute barrier

For example, Englishman Roger Bannister first broke the “four-minute barrier” for a man running a mile, clocking in at 3:59.4 on May, 6 1954. Following that performance, many other men also broke the barrier. In fact, over the last 50 years, the record has been lowered by almost 17 seconds. Today, it’s standard for an elite male middle-distance runner to run a mile in well under four minutes.

Interestingly, Bannister helped break the barrier with the help of pacemakers, specialized runners he could match speed with on various sections of the course in order to keep him on a record setting pace. Matching ourselves against the performance of others is an important part of pushing past our limits.

Also of interest—prior to Bannister’s performance, there had been reports of runners breaking the four-minute barrier, but some runs took place at events where different regulations were in place, or timing couldn’t adequately be verified, or on tracks which may not have met the standards for official competition. So, though it was believed that a man could run a mile in under four minutes, it had not been proven beyond the shadow of a doubt.

A new way to measure

What does this have to do with the Coupa Benchmark? In business, with any core process such as BSM, Customer Relationship Management (CRM) or Human Capital Management (HCM), companies seek out benchmarks from other, similar companies to gauge their own performance in that process area. Are they going as fast as their competitors? Where are they more or less efficient? What is actually achievable? How do you know what to measure in the first place? These benchmarks often play a key role in building a business case to invest in improvements, and in defining the desired results of that investment.

The way these and other business processes have been benchmarked in the past has been through surveys. There are many excellent analyst firms who regularly conduct rigorous, in-depth polls, questioning companies about their business practices and results, compiling the answers and publishing their analysis.

In the world of on premise software, this was the only way to do this--ask people and collect their answers. Even with the best designed survey methodology, you’re relying on the respondent to interpret the questions as intended, pull up the correct data, ensure it is complete and accurate, and provide a true answer.

Our methodology is different. Because all of our customers are using the same cloud based platform, instead of surveying customers and asking them to dig into their data, we can survey aggregated, anonymized transaction data from more than $570 billion in cumulative customer spending that has passed through our platform.

So, instead of asking a customer, how long does it take your company to approve a requisition and turn it into a purchase order, which is one of our key process efficiency benchmarks, we can simply query our data to see how quickly hundreds of thousands of requisitions executed on our platform have been converted to purchase orders.

The Leaders’ Index

For this and each of our 12 KPIs, we’ve created a Leaders’ Index, which is the average result for the top quartile of Coupa customers in a particular KPI. Since all of our customers are running on the same track, with the same rules and the same referees, so to speak, we can say beyond the shadow of a doubt that top performers in Purchase Requisition-to-Order Time on average complete that process in 11.6 hours.

The 12 KPIs are divided into four key areas: Process efficiency, digitization, compliance, and savings—the hallmarks of a mature BSM function. Leaders in the various BSM KPIs are found across companies in all industries and sizes, demonstrating that these benchmarks are achievable by a wide range of companies by using Coupa.

There are many measures of success within BSM beyond these 12. With this report, we are highlighting those we believe are foundational. And, for each KPI we share best practices for improving your performance in that area, so you can build toward a BSM function that maximizes the value of every dollar your company spends.

Defining success

When you decide to embark on a BSM initiative, one of the first things you need to do is define what success looks like, and how you’ll measure it. Surveys and benchmarks are a great resource for that, and the benchmarks presented here can help you set very specific targets.

Then, look for proof points. The Leaders’ Indexes presented here represent scores of customers getting similar results—not just a handful of elites breaking the four-minute barrier. If scores of companies can achieve these benchmarks, you can too.

That doesn't mean you shoot for four minutes right off the blocks. Maybe you shoot for 20 minutes. Then 10. But you know four is the benchmark and the gold standard, and that helps you define your goals, and your training plan. Download the report and get started.