Sourcing in the Fast LaneDelivering Value with Strategic Sourcing

2020 Value Report

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2020 Sourcing Value Report

© 2020 Coupa Software. All rights reserved.

In the face of unprecedented market volatility and supply chain disruption, many CFOs have shifted gears from

investing for growth to containing costs, mitigating risk, and supporting board-level environmental, social, and

governance (ESG) initiatives.

Sourcing teams are uniquely positioned to deliver these pressures by sourcing smarter—helping businesses reduce

costs and mitigate risk, all without painful headcount reduction. Leading CPOs make it a priority to empower their

Sourcing teams with the right tools and best practices to maximize their horsepower and deliver the most value.

This guide will help you understand how world-class enterprises have achieved these benefits very quickly—

capturing positive ROI in as little as six months with millions of dollars saved in the first year. And you will be

prepared with the right questions to ask when evaluating solutions to get the most value out of your sourcing

transformation.

Deliver Rapid Value with Strategic Sourcing

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2020 Sourcing Value Report

© 2020 Coupa Software. All rights reserved.

Start Your Engine: Focus on Sourcing Transformation to Capture Rapid ROI

Digital transformation initiatives focused on reducing costs and improving efficiency have been common for many

years. However, many of the proposals for digital initiatives that CIOs and CFOs review have extended or uncertain

payback. Focusing digital transformation efforts on Sourcing can deliver payback in the first year and continue to

deliver value for years to come.

To get started on your initiative, focus on the following three opportunities for value generation:

Achieve Optimal Solutions: by fully modeling needs and analyzing complex scenarios

Improve Sourcing Productivity: from strategy to collaborative decision-making

Realize More Value: by integrating sourcing with risk and spend to avoid value leakage

See the detail behind these numbers on page 4.

$14.9M - $23.7M 1.5% - 2.4% < 6 MonthsAnnual Savings Savings as a % of

Addressable SpendPayback

Annual Run-Rate Savings for a Large Company Moving to a Strategic Sourcing Platform

Are You Ready to Go the Distance with Strategic Sourcing?

While actual results will always vary, based on our work with other organizations, we conservatively estimate:

Digitizing strategic sourcing requires a foundation in procurement maturity. If procurement at

your company is transactional or business-led, learn more about how to get to the next level

of savings and impact in the Procurement Maturity Model.

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2020 Sourcing Value Report

© 2020 Coupa Software. All rights reserved.

Step on the Gas: Take on Today’s Business Challenges with Strategic Sourcing

Sourcing begins with strategic planning and leads to executing an event, but it doesn’t end with the award. Sourcing

teams must measure realized savings and business impact—not just negotiated savings.

While Sourcing is in a great position to add value in many ways, from cost savings to ESG impact, risk mitigation,

and bringing new sources of innovation into the company, most Sourcing organizations face challenges. CPOs and

company management teams can help address these challenges by embracing strategic sourcing initiatives that bring

advanced tools to core sourcing work and seamlessly connect sourcing with contracting and spend.

Sourcing Challenges inOrganizations

How Strategic Sourcing Helps

Achieve Optimal Solutions: tailor events to distinct business

needs, analyze more supplier bids, and invite creative bidding.

Improve Sourcing Productivity: streamline opportunity identification,

supplier selection, scenario analysis, and collaborative decision-making.

Realize More Value: integrate sourcing with third-party and spend management to avoid

value leakage and risk.

Missed Opportunities for superior award decisions

Inefficient Processes for analysis and collaboration

Eroded Value due to lack of scalable processes to address risk and ensure

contract compliance

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2020 Sourcing Value Report

© 2020 Coupa Software. All rights reserved.

Based on our analysis, we estimate an average enterprise* can potentially achieve achieve between $14.9M and

$23.7M savings annually.*

These savings have been estimated based on a combination of value drivers commonly associated with spend

management. By using a combination of aggregated data taken from Coupa’s customer base of 1000+ firms, and

from industry analyst benchmark data, we arrived at the following:

*Based on a company with $1B in annual spend. Larger companies may see greater savings.

VALUE DRIVER Conservative Best-in-Class

Conduct More Sourcing Activities $10,056,000 $16,760,000

Reduce Budget Overspend $4,000,000 $6,000,000

Reduce Leakage from Maverick Buying $780,912 $911,064

Reduce Purchase Order (PO) Processing Cost $36,000 $54,000

Total Annual Business Impact $14,872,912 $23,743,064

Born to Perform: An Analysis of Total Annual Business Value

Deliver Measurable Impact in Year One with Strategic Sourcing

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2020 Sourcing Value Report

© 2020 Coupa Software. All rights reserved.

Break a Record: Experience Even Greater Results

Coupa customers see a range of financial impact depending on their sourcing maturity and industry:

Companies with lower sourcing maturity find greater potential and savings with Strategic Sourcing.

Retail, Manufacturing, and other industries sourcing Transportation, Packaging, and certain Raw Materials

see greater financial impact due to high spend in these categories.

Financial Services, Healthcare, and Public Sector see greater impact from streamlining compliance with

digitizing sourcing.

An automotive manufacturer ran more than ten sourcing events within their first six months using Coupa, saving millions on capital equipment, vehicle distribution, and more.

By launching large sourcing events with advanced strategic sourcing technology, companies can achieve positive

returns on their investment in Coupa sourcing within the first seven weeks.

Coupa makes complex scenario analysis much quicker and more accurate. These types of scenario analysis would be impossible to manage in Excel.—Nikolas Klarnskou, Head of Procurement Technology, CRH Read Full Case Study

Procter & Gamble significantly optimized a number of hygiene raw materials purchases. With Coupa, the team was able to manage the end-to-end sourcing process more efficiently, collecting bids and running numerous complex scenarios to optimize the award in a short period of time..—Nico Bac, Associate Director of Purchasing, Procter & Gamble

The [Coupa] solution provides us with a huge and powerful engine to automate data processing.

—Klaus Böttger, Solution Owner, Inter IKEA Group

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2020 Sourcing Value Report

© 2020 Coupa Software. All rights reserved.

How does your sourcing and procurement function perform against these benchmarks? Explore KPIs across 4 core business spend processes to benchmark where you stand.

Download your copy to see how you measure up at coupa.com/benchmark2020

Success in strategic sourcing success is easily quantifiable. But what key performance indicators (KPIs) should you

track to prove your value?

Some of the most important KPIs from our recent Benchmark Report are listed below.

How Do You Stack up Against Best-in-Class?

This benchmark data is unique. It isn’t based on subjective responses to a survey; this is based on how organizations actually work. The data is taken directly from sourcing transactions carried out by clients and their suppliers on the Coupa platform.

—Spend Matters on the Coupa Benchmark Report.

On-Contract Spend(% of Addressable Spend)

79%

Overall Savings (% of Addressable Spend)

6.7%

Non-Tail Suppliers(% of Total Suppliers)

20.8%

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2020 Sourcing Value Report

© 2020 Coupa Software. All rights reserved.

To get the most value out of sourcing, it is important to select strategic sourcing technology that’s offered as part

of a comprehensive Business Spend Management (BSM) technology platform. BSM platforms support the entire

Source-to-Contract process as well as Procure-to-Pay, Expenses, Payments, and Treasury Management to obtain

the most value out of every dollar your business spends.

1. Assess Opportunities and Collect Data: get visibility into 100% of company spend and prescriptive suggestions

on what to source (e.g., in-flight off-contract spend) while pushing non-strategic commodities to community-

sourced agreements.

2. Develop Baseline and Define Requirements: free your team to engage with business partners without concerns

for ability to scale, to meet any event size or complexity.

3. Develop Sourcing Strategy: extend award criteria beyond price to include risk, ESG priorities, and more.

Connect with like-minded professionals for help.

4. Execute Sourcing Event: run advanced scenarios, invite creative supplier bids, use mathematical optimization,

and collaborate to optimize awards.

5. Award Contract: automatically move terms of winning bid into contract to begin capturing value.

6. Implement and Monitor: buy on-contract, monitor risk and performance, and validate invoices to avoid value

leakage. Understand the total impact of sourcing, from realized savings to increased spend with diverse suppliers,

on an ongoing basis.

Get in the Driver’s Seat: Capture More Sourcing Value

Learn more in The Strategic Sourcing Lifecycle, a whitepaper by Dr. Michael Lamoureaux

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2020 Sourcing Value Report

© 2020 Coupa Software. All rights reserved.

In times of economic growth and in times of uncertainty, strategic sourcing offers companies massive

opportunities to support bottom-line impact, innovation, sustainability, and business continuity, moving from

just-in-time to just-in-case supply chain. From driving better outcomes through advanced scenario analysis

and collaboration to enhancing sourcing productivity and risk mitigation—strategic sourcing and its enabling

technologies across across across BSM can drive rapid ROI and continue to add value in the years to come.

With additional focus on board-level ESG initiatives and supply chain risk, strategic sourcing also offers

Procurement new opportunities to capture and keep their seat at the executive table. Sourcing becomes more

strategic as teams utilize tools that enable them to better align with business stakeholders without sacrificing

savings or value.

Procurement’s value will always be rooted in savings, and this should be the primary focus of proposals for any

strategic sourcing technology. With the right approach, a typical enterprise can save up to $14M* per year. Many

achieve even greater savings. Some capture hundreds of millions of savings in a single sourcing event.

Full Speed Ahead: The Future of Sourcing Value

Visibility. Compliance. Control. Savings. From One Unified Cloud Platform: Register for a Live Demo Today

About Coupa Coupa Software (NASDAQ:COUP) is the cloud platform for business spend management. We deliver “Value as a Service” by helping our customers maximize their spend under management, achieve significant cost savings, and drive profitability. Coupa provides a unified, cloud-based spend management platform that connects hundreds of organizations representing the Americas, EMEA, and APAC with millions of suppliers globally. The Coupa platform provides greater visibility into and control over how companies spend money. Customers – small, medium, and large – have used the Coupa platform to bring billions of dollars in cumulativespend under management. Learn more at www.coupa.com.

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*Based on a company with $1B in annual spend. Larger companies may see greater savings.