How efficient is your organisation in the procure-to-pay cycle?

Coupa is a US based company offering cloud based procurement services. It is the fastest growing company in our market with 120% growth over 6 consecutive years. They have 400+ customers, including many of the world’s largest, who use Coupa to streamline their P2P processes with an easy to use, fast to implement, innovative and cost effective cloud computing platform. They have received the top overall ranking from both Forrester and Gartner for their ease of use, time to value, customer satisfaction, and technology platform.

2014 Coupa Benchmark

The Coupa Benchmark is designed to provide procurement companies with a broad visibility and guidance by sharing benchmark measurements on key performance indicators. The first Coupa Benchmark was published in 2013. In the 2014 report (A Guide to Procurement Success) Coupa updated values for the six performance metrics included in the first report: Request-to-Order Cycle Time, Number of Approvers per Requisition, Invoice OK-to-Pay Hours, Visible PO Spend-on-Contract Percentage, Percentage of POs sent via CXML and EDI, and Self-Service Potential.

Coupa also included benchmark data for an additional four key metrics that indicate not only procurement performance but also the maturity of procurement processes: number of Catalog Items, Punchout Sites, Embedded Buying Policies and Web Forms.

The benchmark data was extrapolated from customer usage metrics on the Coupa cloud platform, analyzing data from hundreds of thousands of global users, over 750,000 suppliers, millions of transactions and billions of dollars of spending. The performance metrics are based on aggregate data; no individual companies are identified. Care was taken not to skew the results with new customers or customers with less than $5 million spend.

Where there are significant differences based on company size, the Coupa Benchmark divides company size categories based on annual revenue as follows:

Large: More than $1.5 billion
Medium: $250 million - $1.5 billion
Small: Less than $250 million.

In each metric Coupa explains ‘Why the metric matters’ and ‘What you can do’.

Metric 1: Req-to-Order Cycle Time (hours)

Req-to-Order cycle time is the length of time it takes between a requisition being submitted and an order being issued (total hours, not business hours). Cloud and mobile technologies have “democratized” the approval process; now even small companies can use technology to get approvals quickly.

Metric 2: No. of approvers per requisition

This metric describes the average number of approvers required for purchase requisition approval at a company.

Metric 3: Invoice OK-To-Pay

The Invoice OK-to-Pay hours (total hours, not business hours) metric represents the length of approval time for an incoming invoice for payment. This includes matching invoices to POs and any approval cycles required.

Metric 4: Visible PO Spend-on-Contract

The Visible PO Spend-on-Contract percentage indicates what percentage of all PO-based spend is tied to vendor contracts. Typically, larger companies with more resources and processes in place have more spend under contract than smaller businesses. Many organizations today are using P2P systems for non-traditional P2P uses such as marketing, utilities, cleaning contracts, and temp labour.

Metric 5: Percentage of POS Sent via CXML and EDI

The percentage of POs sent via CXML and EDI measures the number of POs that are transmitted electronically to suppliers. Many suppliers, large and small, are taking advantage of electronic commerce methods. Even smaller suppliers have the opportunity to connect via networks like the Coupa Supplier network. (For this study, the Coupa Supplier Network transactions were not included.)

Metric 6: Self-Service Potential

Self-service potential refers to the percentage of employees within a company who are allowed to create requisitions.

Metric 7: Catalogue Items

The Catalog Items metric tracks how many items an organization has in its online purchasing catalog available to buyers for searching and selection. This metric does not include items in punchout sites. (See Metric 8.)

Metric 8: Number of Punchout Sites

A punchout site is a connection from within your own catalog or procurement system to a supplier’s website. The punchout site is maintained by the supplier but is integrated with your procurement system and uses your negotiated pricing with the vendor.

Metric 9: Embedded Buying Policies

This metric looks at the number of “how-to-buy” policies that are embedded in the procurement system. These are policies that appear online, at the point of the request, to provide the requestor or purchaser with the policy and procedure insight at the moment they need it.

Metric 10: Number of Web Forms

Web forms are online, guided forms that help employees submit all the information necessary for a request. Web forms may be populated with drop-down menus, so employees can choose the location, device or service they need, as well as enter text in unstructured fields.

CTMfile take: Although this is a very North American focused report, it provides a clear description of the dynamics of today’s procurement business. The advice on ‘Why the metric matters’ and ‘What you can do’ is outstanding, as well as being well written. Report is really worth a read or at least giving to your procurement department. Download here.

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How efficient is your organisation in the procure-to-pay cycle?

2014 Coupa Benchmark

Metric 1: Req-to-Order Cycle Time (hours)

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