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What Don’t You Know About Your Spend: How Community Intelligence from Peer Group Data Reveals Previously Undiscovered Opportunities to Spend Smarter

  • December 10, 2019
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  • By Charlene Wang & Adam Fleischer

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  • Coupa

In part one of this blog post, Not Just Any Crowdsourcing, we discussed how to take the best of consumer crowdsourcing and adapt the technology and principles to the business world with some critical enhancements. For example, in business, we don’t just want information from any crowd. We want information from our crowd, or ‘peer group’-sourced data and information. We also want that information to be predominantly fact and data-based – rather than just subjective opinions – and comprehensive on a global scale. Plus, we don’t just want to know what our problems are, we want to know how to solve them.

 

In this post we’re going to delve more into how crowdsourcing has evolved into peer group community intelligence that helps community members make better decisions. At Coupa, we are working closely with customers to pioneer capabilities that provide a community-intelligence-driven platform for B2B spend management that drives measurable improvements in spend outcomes. These capabilities are best illustrated by a few Coupa customer stories, starting with Teleperformance, one of the largest global outsourcing companies in the world. 

 

Getting control over something as big and complex as managing a country
Wade Lyons, VP of Global Procurement, is always searching for ways to drive greater efficiency and provide a positive user experience. With a staggering 300,000 employees in 80 countries, Wade’s job is complex. (As a comparison, Iceland has around 300,000 residents, so Wade’s job is like managing a country, except that instead of having all his constituents in one geo, Wade’s constituents are all over the world!)

 

Before using Coupa, it was difficult for Wade to pinpoint where he could get more efficiencies out of existing processes. But by reviewing insights powered by community intelligence, he now can easily pinpoint the right areas to focus on. For example, Wade was able to see that his approver cycle times for POs were much slower than best-in-class for his industry. These slow cycle times were delaying important purchases and frustrating business managers.

 

Improving PO cycle times and accelerating new supply chain development
Coupa Community Insights prescribed turning on Approver Insights, which provides end-users with community-based feedback when their cycle times are slower than the community average.  Wade explains that, after turning Approver Insights on, “We’ve seen a reduction in cycle times of 54%, and we can now identify which suppliers the community already trusts so that we can launch in new markets faster.” Wade's story illustrates the need for a large and unified dataset in order to find the right insights to help his company.

 

Coupa’s recipe for community intelligence and the (not so) secret sauce
Coupa’s business spend management (BSM) platform is built on the foundation of a large and growing community. With a vision to unify data, we built a cloud-native platform architected for big data. Today, Coupa Community Intelligence applies AI and machine learning to over $1.4 trillion of Coupa community spend data from over 1,000 customers and five million suppliers. There are essential ingredients to cooking up a community-intelligence-driven platform capable of managing and informing B2B procure and spend. While they aren’t secrets, some are hard to come by.

 

What Wade needed for Teleperformance, Coupa delivered
First, a large pool of accurate, unified data at scale with a common taxonomy that allows for meaningful analysis and legal permission to (anonymously) share this data. As part of Coupa’s initial vision started a decade ago, most all customers opt-in to anonymously share their data for community intelligence. There have been very few exceptions. This opt-in presents a meaningful barrier for other solutions to replicate what we do.

 

Second, Coupa provides a powerful cloud-native platform and AI-driven big data solution in order to unify and analyze so much data. Such a solution needs a consistent data architecture and AI-based classification of all spend data. In sync with the company’s vision, Coupa was architected from its inception on the cloud with a consistent data structure that was designed to unify massive amounts of complex spend data in order to provide best-practice prescriptive actions to help companies spend smarter. 

 

Our next story illustrates how community intelligence can provide prescriptive recommendations that help companies take action based on community intelligence.

 

Powerful insights and easy prescriptions to improve spend outcomes
The Andersons – a diversified company rooted in agriculture that conducts business globally in the commodity trading, ethanol, plant nutrient, and rail sectors – has company spend occurring at hundreds of corporate offices and sites in the field. Chad McDonald, Director of Procurement, has the challenging job of finding ways to get leverage across that spend for savings and efficiencies. 

 

Chad thought he had too many vendors in some categories, which he felt was inefficient and kept him from getting the best pricing or highest quality products. However, Chad didn’t have compelling data to convince colleagues how company-wide sourcing and supplier consolidation was a smart move. Community intelligence provided Chad with benchmarks that identified his company had three times as many suppliers for safety equipment than the industry average. Finally, Chad had some compelling data he could use to convince his colleagues. 

 

Community intelligence provided the ammunition to convince others
Chad explained, “Community intelligence (gave) me the information to make the case to consolidate spend and identified a $100,000 savings opportunity.” Using this data, Chad is now having meaningful conversations with business units to consolidate spend to preferred suppliers with negotiated discounts and quality controls. 

 

Coupa community intelligence also helps Chad find reliable, trusted new suppliers quickly. Chad can search for community-trusted suppliers using criteria including commodities supplied, ship-to countries, CSR data, ratings, and more. This helps Chad source reliable new vendors faster, and if you want to learn more about how you could do the same, see How To Discover New Suppliers Using Community Intelligence.

 

A prescriptive approach that provides specific, actionable steps.
A prescriptive approach is built into the Coupa platform at the transactional level (see Why Spend Management Requires A Prescriptive Approach). Coupa Community Intelligence starts by providing companies with benchmarks against peers on key spend efficiency metrics – including match rates, cycle times, policy compliance, on-contract spend, savings capture, percentage of electronic invoices, and more. It then identifies improvement opportunities that companies might not otherwise be aware of, and, perhaps most importantly, then leverages community best practices to provide prescriptive actions to achieve that improvement.

 

Like Waze does for you when it re-routes you in real-time based on traffic data and new accidents along your planned route, Coupa uses real-time data from the business community to recommend the best steps to drive results in your business spend. Coupa will reveal previously unknown areas for improvement and provide prescriptive actions based on peer-group best practices. For example, customized prescriptions are provided for everything from realizing early payment discounts to strategic sourcing. Coupa also provides collaboration capabilities that allow users to assign a task to a specific owner and monitor the progress on the resolution. 

 

Reducing risk with community intelligence – fraud detection and vendor risk monitoring
Coupa’s AI-based fraud detection draws on Coupa’s pool of community spend data to detect suspicious behavior patterns across your spend, so you can audit questionable transactions before they are paid. This prevents fraud and spend leakages without your auditors working overtime. 

 

A key benefit of the Coupa platform is that AI does this at scale. Human beings just cannot monitor this much supplier and employee data at once – it's just too much. However, smart AI with the right dataset can. Coupa further supplements this capability by providing "in-moment" capabilities that allow you to prevent spend leakage by stopping certain (suspicious) transactions before they are paid, far preferable to trying to claw back payments after the fact.

 

In addition to automatically detecting suspicious transactions, Coupa monitors news and community data to detect emerging vendor risks across a company’s entire supply base. For example, a top-ranked research hospital with billions of dollars in operating revenue had too many suppliers. They couldn’t monitor each consistently, and some suppliers were sending unwanted invoices that were not pre-authorized. One supplier – that was showing no outward signs of being risky – was repeatedly sending invoices. Everything looked normal, and the supplier and the transactions were flying under the radar.

 

Community intelligence helps identify and reject illegitimate invoices
Coupa flagged the supplier due to a low community intelligence trustworthiness score, which is based on AI analysis of behavior patterns across Coupa’s five million suppliers. Other customers in the community had rejected the supplier’s invoices at an abnormally high rate. The organization investigated the supplier and discovered that the supplier was sending multiple invoices for un-approved product purchases. The organization rejected $60,000 of unwanted invoices that would have otherwise gone unnoticed and stopped additional invoices that the supplier was in the process of submitting.

 

It’s like having a top consulting team built into your transaction platform, analyzing your transactions 24x7
Until a few years ago, you had to pay a high-priced consulting firm to give you what Coupa’s Community Intelligence provides – peer-group benchmarks and customized prescriptions for improving your spend where it will have the most impact. Coupa’s customers no longer need these high-priced consultants and are thriving because of it. 

 

As Coupa’s community continues to grow, the value of its community intelligence is growing exponentially. For example, with the amount of data and community intelligence we’re now gathering, we’ve recently launched our Business Spend Index, an early indicator of economic growth based on analyzing spend decisions from hundreds of companies. Learn all about it in an upcoming post.

 

How do you compare to global industry leaders across core BSM processes?
Measure your source-to-contract, procure-to-pay, and expense management success by exploring key performance indicators across four core business spend processes to benchmark where you stand with Coupa’s 2019 Benchmarking Report.

 

Charlene Wang is Director, Product & Segment Marketing for Coupa’s Community Intelligence and Coupa Pay offerings. She holds an MBA from Harvard Business School and resides in the San Francisco bay area.

 

Adam Fleischer is a regular contributor to the Coupa blog. He holds an MBA from Stanford University and lives amongst the redwood trees in the Santa Cruz Mountains.