Business Spend Management (BSM) from a Marketer's Perspective

Business Spend Management (BSM) is not (only) a finance problem. It's an everybody-in-business problem. It's a software category that impacts every aspect of an organization - from IT to marketing to contractors who are hoping to get paid on time. In short, every business and every function needs to be aware of how broken these processes (and supporting technologies) are today, and how we can fix them so we can focus on what we do best: our jobs.

BSM encompasses five core solutions and related business processes -- Source-to-Contract, Procure-to-Pay, Travel & Expense Management, Risk & Supplier Management, and Spend Insights.

These are not just back-office processes (nor should they be doomed to software that feels like (or actually was) designed in the 1990s.) These processes impact everyone in an organization, including vendors and suppliers that help that organization run.

For instance, if you've ever hired a contractor or purchased a product for your business, unless you're the CEO, you likely had to secure budget, confirm that budget actually exists, get approvals from a chain of people, get a contract signed -- then, even if you followed processes perfectly, your supplier would inevitably wait for payment and, when it didn't arrive on time, you'd have to follow up (multiple times, with multiple people) to ensure they got paid. Meanwhile, with the contract in paper or a third-party contract system only, and not connected to a BSM platform, it needed to be dug up to sent to AP to pay your vendor. At worst, your vendor is pissed about the late payment(s) and refuses to work with you (after you spent all those hours finding the right partner and negotiating a deal.) At best, it leaves a sour taste in everyone's mouth and delays the project.

Similarly, for employees who travel for work, submitting travel and expense receipts can be a huge hassle. Even the best-meaning employees can accidentally submit requests for reimbursement that do not meet corporate policy, and the time it takes for a finance team to manually audit these submissions means that reimbursing employees takes longer than it should. No one in the business likes that.

These challenges are global and they are felt across virtually every sector and type of business, regardless of whether the organization is public, private, government, or non-profit. Every business needs to purchase products through a supply chain, hire contractors, and manage overall indirect spend. Audit requirements in one industry versus another may be stricter than others, and supplies required and supplier challenges may be different in one industry compared to the next, but BSM as a whole is a real and serious challenge for every single organization today. And, fortunately for everyone else in the organization (stuck with painful, outdated and siloed software with poor user interfaces to manage their spend), finance leaders have had enough.

Business Spend Management: Why Now?

One of the things I was most surprised about when I joined Coupa Software was just how fragmented the Business Spend Management software space was. Having worked in and marketed to HR, marketing and sales, I knew there was still room for consolidation in cloud-based technologies for these roles and processes, but HCM (Human Capital Management) and CRM (Customer Relationship Management) were well-established software categories that merged solutions together that work better as part of one comprehensive platform, instead of a disjointed collection of siloed applications.

In Business Spend Management (BSM), where consolidating fragmented applications into one centralized platform perhaps makes the most sense, legacy technologies have largely stood in the way of innovation - at least in terms of rational consolidation. Coupa CEO Rob Bernshteyn explains the history of this challenge best in his recent article "Welcome to the Era of BSM--Business Spend Management."

In this post, Rob highlights how Enterprise Resource Planning (ERP) applications of the 90s and early 2000s, once innovative in their own right in connecting business processes such as core financials, human resources, and CRM to a central database, no longer can effectively scale to become "ERP mega suites for all business practices." In 2013, Gartner coined the term Postmodern ERP, basically saying that while ERP systems will continue to the be the technology backbone and system of record for most organizations for the foreseeable future, cloud-based best of breeds could add more flexibility and business value in many areas.

"We have always had information technology support for many of the underlying processes in Business Spend Management. But, it has never had a proper name because like HCM and CRM before it, the market has consisted of a fragmented collection of ERP add-ons and best of breed point solutions, and the industry’s thinking about it has also been fragmented."

- Rob Bernshteyn, CEO, Coupa Software

In the world of Business Spend Management, solutions for procure-to-pay (P2P) and source-to-contract (S2C) ERP modules were plentiful, even in the late 1990s. CommerceOne, VerticalNet, and Ariba gained traction to support this clear market need. After the downturn in 2001, however, only Ariba survived, and was rolled up into SAP for $4.3 billion in 2012. But, still, separate applications and paper processes were still required for everything from invoice to contract to travel and expense management, all core parts of BSM. Even in the case of T&E, successful startups acquired by ERP megacompanies are often not integrated seamlessly into one platform, and instead--even though owned and sold by the same company--require separate applications to be installed and maintained by significant (and costly) IT resources.

It Just Doesn't Make Sense the Way It Is Now...

As Rob notes, "we have to think bigger and more holistically about spending." Spend should not be thought of and broken out by spending through procurement, expensed spending, and invoiced spending. Everyone in the company--not just finance--suffers when there is not one consolidated view and solution to manage all of that spend. IT resources are overtaxed. Product development & marketing projects get delayed due to vendor mismanagement. Sales teams are frustrated by delayed expense reimbursements. HR struggles to get new technologies added to increase employee satisfaction and retention. And legal is stuck with handling crisis after crises of uncertified suppliers that have unethical business practices or worse.

Still, finance and procurement teams feel the brunt of the pain day in and day out. Invoices come in daily without any Purchase Order filed (or, with one filed and misplaced.) Closing the books cleanly each month is a nightmare without P.O.-backed work. Employee expenses are submitted with no simple automated process to check for errors. Sourcing organizations are unable to leverage real-time data to best determine where to focus attention on major sourcing projects. Suppliers are calling and emailing, angry about late payments that the right members of the finance team may have not even known were due. Talented finance team members, that should be investing their time in thinking strategically and negotiating the best deals for the business, are instead wasting hours upon hours managing tactical audits and chasing down information that should be in one system in the first place.

These legacy processes and solutions just don't work for businesses today. Companies of all sizes need a comprehensive, open, and user-centric solution for Business Spend Management. As industry analysts recognize the need for a unified approach to BSM, CxOs are shifting their thinking around this entire category. Instead of adding "check the feature box" solutions sold by their ERP vendor, smart business leaders are already investing in cloud-based Business Spend Management platforms to reduce costs and reallocate resources and spend to high-value strategic projects, combating the massive amount of waste (often millions upon millions of dollars) and unnecessary business risk created by these disjointed and user-unfriendly point solutions for every single piece of the spend management puzzle. It's time for one platform. It's time for BSM.

For more information about Coupa BSM, visit www.coupa.com (or send me a LinkedIn message!)