Coupa's new leadership has a vision to let autonomous AI agents do the buying

In the two years since Thoma Bravo swooped in to take spend management vendor Coupa private, most of the key leadership names have changed, beginning with the appointment of Leagh Turner as CEO a year ago. But perhaps the most intriguing change was the appointment of long-time SAP veteran Salvatore Lombardo as Chief Product and Technology Officer (CPTO). In his first media interview since taking up the role last month, he tells us about his ambition at Coupa to build a new approach to sourcing and buying, based on autonomous agents.

He arrives with fifteen years' experience in product management and in building highly scalable infrastructure, first as Head of SAP S/4HANA Source to Pay & Order to Cash during a time when SAP's spend portfolio was transitioning from on-premise to cloud, and then leading the global product and technology teams at SAP Ariba. He says this experience has helped him develop a deep appreciation of the business issues that procurement leaders face and which can be solved with technology, along with a strong vision for the future of B2B sourcing and buying. He tells me:

I have it all laid out in my head on how it could look like to disrupt the market the next time, and I think that's what I can also bring to Coupa — the visionary next era of Coupa.

Enabling supplier collaboration

At the heart of that vision is a focus on supplier collaboration. The first step is to expand the Coupa platform so that it's not just a place where suppliers can email their order confirmation and submit invoices, but is also where buyers can find reliable supplier information, including risk profiles and ESG data from sources such as EcoVadis and IntegrityNext. Where it gets really interesting is to then start enabling transactions and collaboration between buyers and sellers, so that instead of simply exchanging documents, the system allows them to collaborate around the creation of data objects that carry through the invoice transactions or the contract operations. He goes on:

If you have this connection very well done, then you can start with invoicing as a service. Why do I need to have all these transactional processes today? Because we have two different systems which need to talk and need to match. But if you bring those into one, if you bring this object into a network, you collaborate together on the object. The object itself will tell you, 'Look what you are entering, I can tell you immediately it's not validating. This is wrong, because I [the object] know the field.' ...

Now, imagine contract as a service... Why not bringing that object into the network one day... and then collaborating on that? The collaboration can also be a system talking to this object and saying, 'I have here a sales contract, and I filled the procurement contract from the other side.' This is the contract, the collaboration contract, which we work both on — you, supplier, and me, buyer, for that moment, for this transaction situation. When this is cleared, the contract is cleared. But this contract will be the basis for the PO, for the call-offs, for the special agreements, for the invoicing at the end, because the contract is the truth.

Of course, AI plays a big role in this future scenario, with autonomous agents managing the objects, interacting with buyers and sellers, and making appropriate recommendations as needed. It's going to take time to build out, but looking five years ahead, he expects that all routine tasks will be automated, and strategic buyers will rely on the network to discover suppliers and evaluate sustainability, carbon footprint, risk awareness and other factors, with a speed and efficiency that is far in advance of today's manual processes. He sums up:

This is where in future procurement will shift, and the operational, including or even a good portion of sourcing, will be completely done by AI and bots in this network, because you can't do [this degree of automation] outside.

Why Coupa?

Why come to Coupa to build all this rather than staying at SAP? He believes that Coupa has three core advantages. First of all, he was attracted by its cloud-native pedigree — as he says, a "born-in-cloud stack rather than brought-to-cloud." Secondly, there is the unique community dataset Coupa has been able to amass through winning the permission of customers right from the start to pool and analyze their data in aggregate. Finally, he cites the ambition of its management to grow and scale the business to serve the largest enterprises, without the constraints of an incumbent, publicly quoted company like SAP. The decision to move on from SAP had come before he agreed to join Coupa. He adds:

I wanted to do one more big thing. I didn't even know that I would join Coupa, but I knew that I wanted to do something new.

He acknowledges that this is a big break with the current procurement processes built into Coupa today, but believes this is necessary to truly realize the potential of AI. He explains:

If you use AI and just ask the question, 'What can I automate tomorrow?', you will gain a little bit of value out of it. But this is not the real disruption. No, the real disruption is combining it with the idea of collaboration, inventing collaboration objects which know each other [and] have the data set, which they can call, discuss, and create things with each other because they're intelligent agents as bots, talking to each other, so to speak. For this, you need to really go deep into the design of such a new object.

I also spoke to Leagh Turner, Coupa's CEO, who is excited by Lombardo's vision, and says that many customers see the potential, too. She says that one told her, "I don't have the luxury of manual processes. I can't afford them." Another confirmed the importance of having technology automate as much as possible, saying:

I want you to do that, and I believe that it will be best for my business, because I'll be able to take cost out, and I'll be able to use the people that are in those roles for higher-order function rather than manual work. And Leagh, you just have to keep up with me.

She also believes that Coupa's access to a pooled customer data store is a unique advantage in the AI era that it has to make the most of. She says:

Most companies talk about it, but if you haven't spent 17 years building a data store — with customers that actually say, 'Oh yes, I want to contribute to that, I agree to that' — you can't do it. And that's the thing that's so amazing...

It all begins with the data. If you have really good data, and you have high volumes of data, that's really good. You can train AI to do things at a faster rate than those who don't have it. It's amazing. And if your entire community wants to contribute to that in perpetuity, then you can get there a lot faster.

With the backing of Thoma Bravo, she is empowered to move ahead with a vision that's daring but gives Coupa the potential to scale to even more growth. She comments:

Is the vision bold? Yes. Do you have to place your bets in enterprise software? Yes, you do. You have to decide what you're going to be uniquely great at, and try and separate yourself from everybody else who says that they can do it, yes. Then you've got to double down. You've got to bring in the right people who have the same ambition. And then you've got to test it [with customers] all the time.

My take

The new management at Coupa is certainly shaking things up, but in a way that clearly builds on the foundation left by their predecessors. There's risk in pushing ahead with such a disruptive vision, but significant reward, too, if it proves successful. Certainly there's huge merit in looking at how the new technology of AI can really enable a new way of handling the end-to-end procurement process, cutting out much of the imperfect communication and duplicated effort built into how things are done at the moment. One of the key principles of Frictionless Enterprise, diginomica's blueprint for digital business, is "to reduce transaction costs... by providing an optimized network platform that transparently brings providers and buyers together." The vision that Lombardo outlines definitely measures up — we're intrigued to follow Coupa's progress over the next few years bringing it into being.