Cut Costs by Controlling Rogue Spending, Inflated Expense Reports

Don Tennant
Slide Show

Cloud-Hosting Preferences for Enterprise Resource Planning (ERP) Software

If you’ve ever padded an expense report or used company funds to purchase something for your personal use, you’re not alone. According to the results of a new survey of office workers in the United States, one-third admitted to stealing from their companies in devious ways.

The survey was conducted by uSamp on behalf of Coupa Software, a provider of cloud-based spending optimization software. Some of the other noteworthy findings of Coupa’s 2013 Employee Spending Survey:

  • 54 percent of respondents said they have “gone rogue”--making purchases without advance approval.
  • 66 percent of those surveyed said they have made “risky purchases” for everything from overly expensive dinners (38 percent) to exercise equipment (9 percent).
  • Devious ways respondents have stolen from their companies include inflating the cost of a taxi ride on a blank taxi receipt (16 percent) and increasing the amount of the tip claimed to have been given to a waiter/server (11 percent).

The fact is, it’s very easy to spend money when it’s not your own. As companies strive to find ways to cut costs, one area that needs to be front-and-center is spending and procurement policies and procedures. I had the opportunity to talk about all of this with Coupa’s CEO, Rob Bernshteyn. For starters, I asked him how a spending optimization platform can control ad hoc expenses like the ones that typically appear on expense reports. He said Coupa has found a way to help manage these “unstructured” expenses:

What most companies have done is structure the components that are structurable, like which class on a flight different levels of employees can fly in. What they have a hard time addressing are those qualitative things that are not structurable. What we do is bring in what we call “peer dynamics.” We’ll compare a particular expense against a peer group, over the last three months, six months, or a year, of folks that have done similar things. We’ll convey a thank-you for being thrifty, for example, when the expense amount is a couple of standard deviations below the averages for that peer group. If the amount is significantly over, we’ll convey a message that says, “Couldn’t you have spent smarter?” Behind all of that are our algorithms and computations that show certain people on average were relatively thrifty, and others tend to be pretty big spenders. So when this goes to the back office, to the comptrollers and others, they don’t just audit everybody or nobody. They prioritize it in the order of people who are most likely to be kind of abusing the system a bit. So it treats people like people--it gives them some visibility into how they might be pushing it a little, and it rewards those who are being thrifty. It creates a culture of responsibility, vs. treating people like robots and giving them these hard compliance things that don’t work--people get around them.

You don’t have to do much reading up on Coupa to find that it has a reputation for being a very hard-nosed, sales-centric company with a very aggressive, methodical approach to sales. I asked Bernshteyn what the driver is of that culture, and he responded that it’s not so much aggressiveness in selling:

It’s more aggressiveness in helping companies visualize the value that they can get. In our industry, very often vendors have been evaluated based on features and functions--they’ve been evaluated as product companies. We’re not a product company--we’re a software-as-a-service company, which means we’re not just trying to sell you some sort of product. We’re trying to ensure we’re generating real value for customers so they stay with us forever. So our sales team is sort of assertive in showing the business value our platform generates--they’re not aggressive in just selling some software. They’re aggressive in challenging the customer to think in different ways. I think that’s certainly what’s underneath that reputation.

I asked Bernshteyn how much success Coupa has had in getting into companies that are Oracle or SAP shops, given that Oracle and SAP have their own procurement modules. He said Coupa has been “wildly successful” with that:

We’re a strategic expansion for Oracle and SAP core general ledger capability. In fact, in many cases we sit on top of multiple ERP deployments, be it SAP, Oracle, Great Plains, J.D. Edwards or others. We provide the company with spend management and spend optimization visibility that runs across all of those different environments. So we’re a strategic extension--we’re effectively an abstraction layer on top of those systems, and we’ve been very successful there… On average with ERPs, we’ve seen levels of adoption [of those systems’ procurement functionality] of 9 percent to maybe 20 percent of spend rate. So it doesn’t matter what features and functions they have, if they haven’t been successful in getting company employees to conduct their spending through those systems. We have a very, very usable platform--a user experience/interaction environment--that creates pull on behalf of end users. End users would rather log in and buy an expense through our system than they would any other way. We’ve changed the paradigm from pushing older ERP technology and training, to a dynamic of pull. Because of that, we have gotten to levels of adoption in the range of 80 percent to 90 percent of spend rate.

Bernshteyn added that one of the things that characterizes Coupa is a “very high tolerance” for making mistakes:

We encourage making mistakes all the time. I would take people making mistakes over not acting any day of the week. We also recognize the need to correct those mistakes very, very quickly and to move forward. I pride myself on being quick with course corrections--I continuously push everyone in the organization, starting with me, to be very good about making those decisions as soon as humanly possible.

Add Comment      Leave a comment on this blog post
Jul 25, 2013 11:31 AM NoMoreThuggery NoMoreThuggery  says:
Hey Don Remember that Sarvesh guy who was hassling TR? Well, looks like he's headed to the big house. Here's some more grist for writing about the corruption we are importing (they call it baksheesh). "According to the Complaint, DHARAYAN, GUPTA, ATLURI, KUMAR, and KOPALLE paid the kickbacks and bribes through conduit companies established by BUSH and SINGH for the very purpose of disguising the true nature and origin of the illegal payments. To further conceal the bribery and kickback scheme, BUSH and SINGH sent false invoices to the conduit companies for consulting services that never occurred. Many of the kickbacks and bribes were paid pursuant to these false invoices." Reply
Jul 27, 2013 4:28 AM Dolores Dolores  says:
Check out the hilarious comment too: "Wow. The penalty for Corruption in the USA is quite stringent." See also the lead time for the investigation before the DOJ pounced. If Infosys is doing the victory dance these days, maybe they shouldn't be. Reply
Jul 27, 2013 8:04 AM Dolores Dolores  says:
Off topic, I know, but here's another bit of bad news for visa fraudsters: Reply

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