CASE STUDY

NEC CORPORATIONNEC FINDS GLOBAL SAVINGS WITH COUPA’S

PROCUREMENT SOLUTIONS

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CUSTOMERNEC Corporation

LOCATIONToyko, Japan & London, England

INDUSTRYComputer & Internet

COMPANY SIZE5,000 +

Coupa: Gavin, can you tell me about your background and what you do at NEC?

Gavin: I was born in Scotland and worked in London and San Francisco as an accountant for Ernst & Young. After returning to London, I worked for Virgin Media and Black & Decker where I was involved in the finance and indirect procurement sides of the business before eventually joining NEC as part of the turnaround team.

Coupa: Would you give us some background about NEC and the different divisions and scope of operations?

Gavin: NEC Corporation is a giant in Japan and we operate in 20-25 countries in the EMEA region. In Europe, we have a business that focuses on developing microwave solutions for carriers. We have an enterprise division that’s focused primarily on the ABX systems and collaboration soft-ware, and we have an emerging public sector, public safety business unit including facial recognition software.Coupa: What was the business challenge you were trying to solve when you first considered procurement solutions?

Gavin: As VP of Finance and Procurement, the first thing I noticed was that we had poor reporting systems. In my former companies, I was able to get my hands around a lot of data, a lot of information, and we couldn’t do that at NEC. On the procurement side, we needed to manage spending. One of the best ways to manage spend though - and it’s probably sacrilege to all procurement guys - is to have people stop spending in the first place, but you can’t do that without putting some tools in place. One of the easiest and quickest wins of procurement is to control and manage that spend. I felt we needed to invest in a new procurement system that could help us do just that.

NEC Corporation is a leader in the integration of IT and network technologies that benefit businesses and people around the world. By providing a combination of products and solutions that cross utilize the company’s experience and global re-sources, NEC’s advanced technologies meet the complex and ever changing needs of its customers. NEC brings more than 100 years of expertise in technological innovation to empower people, businesses and society.

GAVIN JOHNSTON, VICE PRESIDENT OF FINANCE AND PROCUREMENT FOR NEC EMEA

FROM OUR PERSPECTIVE, THE WINNING FEATURE FROM COUPA WAS CUSTOMER COMMITMENT. IN TERMS OF COST, COMMITMENT, AND THE SYSTEM ROADMAP, COUPA HAD THE BEST SUCCESS STORY VERSUS OUR OTHER SHORTLIST SUPPLIERS.

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Coupa: What were the primary requirements that a new procurement system had to achieve in order to be effective? What did you establish as success criteria?

Gavin: We had a reasonably ineffective procurement function and had had no real insight into our spending, where it was going or how much. It was incredibly difficult to pull data out of the system. In terms of requirements, the two imperatives were better controls and a more complete understanding of how we were spending money. In addition, the solution would need to be easy to use because the procurement team needed to have a solid sourcing module. It also made a big difference that Coupa was able to offer a true cloud solution, compared to a hosted solution. Coupa’s cloud solution was very significant because there are big differences from a technological standpoint, access and cost.

Coupa: You were saying one of your key problems was in procurement. Did you have a system when you got in NEC?

Gavin: Yes. We used SAP for most of our procurement activities. The requisition process was all backed up by paper. My first real desire to introduce a new purchase requisition system was when I had to open a purchase order myself. I couldn’t believe how complicated and difficult it was. It was clear that we needed something that would be very simple and intuitive for end users. I have long been an advocate of making the process as simple as possible. Our internal SAP manager realized how complex and clunky SAP was and a lot of incremental work would need to be performed. So it was a very easy decision to move the procurement function onto a client-based platform. And since Coupa could easily integrate with systems like SAP, it was an easier implementation.

Coupa: How formal was the evaluation process? How long did it take, and did you involve stake-holders around the company?

Gavin: We started in October. We went through a very formal process. Working with Gartner we had a short list of vendors by the end of November, and signed with Coupa on Christmas Eve. Another major input was integration with IT. So we involved the IT guys from the get-go to insure that they bought into the system. It was important that any new system be consistent with our IT strategy to put as much out into the cloud as possible, as much managed services as possible.

Coupa: What were the key components of the evaluation process?

Gavin: The evaluation process included people internally that were really struggling in terms of get-ting information: finance, accounts payable, and the procurement teams. We needed to first identify what the core groups needed to get out of a procurement system. At the time, we didn’t go wider in the business because one of the key criteria for us was that the system was going to effectively be an Amazon.com for business. Our basic approach was to determine if the system was as easy and simple as placing an order on the Internet. We knew we could judge that as well as anyone else because we’ve all experienced that as consumers. It was one of the key criteria for us.

Coupa: Do you see a big capital cost difference for cloud versus on-premise?

Gavin: Yes. Cash flow is a significant factor, but the biggest benefit from having a cloud solution versus an on premise solution is your software is continually refreshed.

Coupa: Can you talk a little about sourcing?

Gavin: We’d done some e-sourcing before with third-party software, so one of the things in the Cou-pa roadmap that we were quite interested in was the e-sourcing module. It went live earlier this year. We’ve used it for a couple of e-auctions and found it very friendly. We’re using it as a mechanism control by procurement rather than by the end-users, but the integration in Coupa enables you to basically push something out for comparative bidding very easily.

GAVIN JOHNSTON,NEC CORPORATION

Coupa’s cloud solution was very significant because there are big differences from a technological standpoint, access and cost.

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I think our next real focus is putting other things like contracts onto the system, so we can get better analysis of on contract spend, but also ena-ble the invoice purchasing to be much more efficient.

Coupa: I’m curious to know about your implementation and roll out. Are you fully procure-to-pay? What’s the level of integration you’ve established with SAP?

Gavin: In terms of implementation, we signed the contract on December 24. Two weeks later, we started the project and it went live March 28. These timeframes include building interfaces to SAP and everything else behind the scenes and developing a training program. In terms of the process, we’ve implemented the acquisition to purchase order modules. We are effectively generating purchase orders in Coupa and firing that into SAP, the back office guys then pick it up. Everything’s then a purchase order and invoice matched within SAP. From a geographic footprint, we’ve got Scandinavian countries in the north; down to Italy and Spain in the south; and basically from the UK across to Far Eastern Europe. We’re now looking to roll out Coupa to Russia. Coupa’s recently introduced Cyrillic alphabet packs. Throughout the process, we found Coupa to be such an intuitive system to use that it’s been quite well adopted.

Coupa: Does having user adoption have an impact on visibility or spend?

Gavin: Yes. We now have the dashboards to centrally analyze and understand spending patterns. With Coupa, you can also look at compliance, which has been effective in changing behavior and bad habits. There’s a top ten hit list of the worst approvers. I think it was quite an eye-opener for people in the organization when they appeared in that list. Users know the only way they can get something approved quickly is to follow the system; otherwise it falls into a black hole. Then there is what I call maverick or non-PO spending. I report on these things in our European leader-ship meetings, so people know where they stand in the lead. And nobody wants to be at the bottom.

Coupa: Do you use the mail approval?

Gavin: Yes, the level of mail approval is probably around 10 to 15 percent and the average approval time that we have on our end-to-end process is around 20 hours.

Coupa: Going back to when you were selecting the product you were going to use, what were the winning features of Coupa that convinced you to choose them?

Gavin: From our perspective, the winning feature from Coupa was customer commitment. Whenever you go through one of these RFQ process-es, you get an understanding of how committed a supplier is to a potential customer. In terms of cost, commitment, and the system roadmap, Coupa had the best success story versus our other shortlist suppliers. It also made a big difference that Coupa was able to offer a true cloud solution, compared to a hosted solution. Coupa’s cloud solution was very significant because there are big differences from a technological stand-point, access and cost.