Multiplying Margins in Procurement at Coupa

Multiplying Margins in Procurement at Coupa

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Michael Van Keulen explores how Coupa is working to multiply margins for its customers through visibility, simplicity and powerful data

How would anyone respond to being described as a ’rockstar’ in their chosen industry? 

In the case of Michael Van Keulen, Chief Procurement Officer at Coupa, it is with enormous humility and diplomacy.  

“This company has 2,500+ employees and I genuinely believe that we have got some of the best people in the world working for us,” he says.  

“I happen to be one of the people that is very visible externally, but the 2,500+ people here actually allow me to do what I do every day.”

He is one of the most well-known faces and thought leaders within the industry and, after joining Coupa at the start of the pandemic in 2020, is helping drive the company into the next phase of its growth and high-performance journey.

Michael’s career path began in finance at Arthur Anderson during the 1990s, before moving into technology and then retail at brands like Footlocker, VF and Lululemon. It was during his cross-over into retail he realised the power and potential that effective procurement can have for the success of the wider business.  

“When I was asked to deploy eSourcing at Footlocker in Europe, I realised I could combine my finance brain with business and have a real impact in how the company is performing,” he explains.  

After being headhunted by Lululemon, he had the chance to help build a procurement function at a high-growth organisation from the ground up. One of the ways he managed to build that successful procurement and supply chain strategy was by deploying Coupa’s solutions, which ultimately helped lead him to his current position.

His balanced background of retail and finance has set him up perfectly for that role, as he feels it puts him in a strong position to empathically work with their customers having been in their position.

“I always say to anyone in procurement, you need to have finance acumen, and you need to have an understanding of finance,” he says. “You need to understand what matters to the CFO because ultimately the CFO is a critical person. They can either be a strong ally or a strong disbeliever in the value that procurement can create.”

As well as knowing how finance is the engine-room of a successfully running business, Michael also appreciates the ultra-competitive nature of an environment like retail.

“Retail can be ruthless. You can just look at the history books, how many retailers were flying high and ultimately didn't make it,” he adds. “We always said ‘retail is detail’, and it taught me a lot around fact-based decision making, to really drive optimal outcomes by taking away the emotions and optimising our Operating Model.”

This appreciation of detail for Michael dovetails perfectly with the Coupa approach to its relationship with customers, as it seeks to make margins multiply for every user and aggregate improvements across their whole procurement, sourcing and supply chain operation.

Coupa: A global leader in total spend management solutions

Coupa’s mission has never been clearer, as it set itself out as the ‘margin multiplier company’ at Coupa Inspire earlier this year.  It was another watershed moment for the company that, founded in 2006, has since evolved into a global leader in total spend management solutions.  

With 3,000+ customers, US$6tn worth of spend and 10+ million suppliers, Coupa has ambitions to not only solidify its market position, but to grow and innovate at the leading edge of the industry.  

Michael reflects on the external factors influencing business in an uncertain world, such as inflation, interest rates, energy prices, supply chain disruption and geo-political uncertainty - but flips the conversation to focus on the areas a procurement operation can control.  

“When we think about surviving all these external business challenges, we must be able to move quickly and decisively with a high level of confidence to optimise the opportunities that we have no matter what the external environment is,” he says. “You have two choices. Either you don't invest and just let that environment impact your business, or you start to think about what the art of possible is.”

He describes the differences between the two as the ‘margin erosion zone’.

“Every dollar, every hour, every opportunity you miss, it just simply widens the gap between where you are now and where you should be,” he adds.  

This includes having total oversight of internal and controllable factors like managing third party risk, ESG, compliance, spend management and supply chain.  He argues confidently that having the right ecosystem allows a company to deliver an optimal operating model and ultimately drive greater value for a business.  

It is this multiplier effect that excites Michael, as the aggregation of small changes cumulatively leads to a disproportionate impact. “It is improvements to your operating model that, in aggregation, compound to deliver outsized positive impacts to your margin,” he says. “Removing complexity is where you can optimise the outcomes for your business.”

Customer-driven development

As much as Coupa helps its customers to find increased success, Michael is quick to emphasise how the input of its customers helps the company develop effective software solutions. It invests around 17% of revenue a year in research and development to improve its offering, which benefits the whole customer base as Coupa operates on a high configuration model rather than as a customised system.    

“What you want in a tech company is successful customers that are renewing because they recognise the continued value that they create out of the platform,” he explains. “That allows us to constantly innovate and drive more value out of the platform for our customers by constantly bringing in new features.”

He sees the relationship between Coupa and its customers as a perfect synergy or technical know-how and knowledge from the business world.

“Our customers really tell us where to go,” he says. “And that is fundamentally different from how a lot of other software companies operate today.”

The use of AI in procurement is another subject that fascinates Michael, as he reflects on how Coupa has essentially been reaping the benefits of the technology for more than a decade when it was known as community intelligence.

“By having permission-based access to anonymized customer data, we have been able to create a data moat that is bigger than anything that I'm aware of in the world,” he adds. 

This allows customers to benchmark performance against key metrics and leverage the insight from that data to boost their own performance.

“It's structured, controlled, reliable, governed data. Real companies doing real business with real suppliers, and we've been doing this for over a decade,” says Michael.  

“What AI is going to do for us in procurement is that the more repetitive tasks will all be replaced by AI. That includes things like category management, contract reviews, red-lining and sourcing.  AI will perform these tasks faster, more effectively with better outcomes which allows procurement to be more focussed on value-based activities such as driving innovation, strengthening relationships and ensuring business continuity.”

Partnerships promoting open integration

Alongside the relationships Coupa nurtures with its customers, Michael emphasises the open discourse it has with its network of providers and partners.  The ‘O’ in Coupa stands for ‘open’ and it is a founding principle that has never been forgotten, as the business has moved through the gears to be a global leader.

“We have an open platform that is very easy to integrate with, whether it is with your ERP or another internal system, but also for external partners to integrate into and help our customers drive more value out of their spending and out of their process,” he explains. 

He agrees these partnerships augment the power of the existing system and add to many areas like analytics, ESG, risk and workflow management.   

“We have got all of these partners that help us to the benefit of our community, and we build native integration with. We do one integration and now it's accessible to our entire community and it simplifies your IT landscape.”

“I think without our partner community, Coupa would simply not be able to scale and grow at the same pace. Our partners are extremely critical to us. They help us with not just deploying the software, but also helping our customers maximise the value they get out of the software,” he concludes.  

Passionate about procurement

As a widely recognised and regarded industry leader, Michael is generous with his advice to professionals building a career in procurement and supply chain management.  

“I love this profession. I think procurement is the coolest thing on the planet today. And I've been saying this for a long time, and where better to evangelise the profession I love than at Coupa,” he says.  

His advice for those wanting to assume leadership positions is to be prepared to deal with the challenges and ambiguity the profession can bring.  

“I think the most important thing in my opinion is do not be afraid to get some scars along the way,” he says, reflecting how this has allowed him to build character and resilience.  

His second piece of advice is for CPOs to ask from a business what they think they need, rather than just what they think they can get approved.  

“I often see CPOs saying their operating model, resources or the technological landscape they have are suboptimal, but that they will never get what they truly need. So they are just going to ask for things that will give them small incremental improvements instead or settle for mediocracy,” he explains.  “I always encourage CPOs to be bold, have a clear vision, articulate our unique value proposition and execute”.

What is next for Coupa?

The future of Coupa is one of ambition, but also one of complete focus.  It is ambitious both for the success of the company, but also for the success of its growing list of customers.  As well as extending its client base, Michael has bigger targets than simply solidifying Coupa’s leadership position. 

“I expect that we continue to surprise our current customers with new features and functions that are relevant for them, that help them drive more value, build more resiliency in their supply chain, and have them achieve strategic objectives through the power of the platform and the community,” he says.

He also sees a focus on effectively realising developments in AI technology as critical for both the success of the business and its customers. 

“We are going to focus on making sure we extract the maximum amount of value for our customers through the power of AI. I think that is one critical element for us,” he explains.  

“We will also continue to focus on what our customers care about whether it's upstream source-to-contract or downstream in purchase-to-pay, and making sure that we bring innovation, develop features that our customers are interested in to ultimately optimise their operating models and support them with whatever comes next in this highly volatile time.”

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