In an increasingly volatile macroeconomic environment, businesses are grappling with a complex web of challenges—from inflation and supply chain disruptions to political instability and stringent ESG regulations. Fang Chang, Executive Vice President and Chief Product Officer at Coupa, has a clear perspective on these pressures and offers a strategic approach for companies looking to expand their margins in this uncertain landscape. In a recent interview, Chang delves into the concept of the “margin erosion zone,” the importance of benchmarks, and the insights from Coupa’s 2024 Clarity Total Spend Management Benchmark Report.

The Margin Erosion Zone: A New Reality for Businesses

Fang Chang introduces the concept of the “margin erosion zone,” a term coined by Coupa’s CEO Leagh Turner, to describe the gradual but relentless pressure on profit margins that businesses face today. “Right now, companies need to find a way to drive growth within their businesses while facing a lot of external pressures,” Chang explained. “Inflation is stickier than we originally thought, and costs keep rising. There is political instability in many parts of the world. Supply chains are still impacted because of what happened during the peak years of the pandemic. And increasing ESG regulations around the world add ever more complexity to compliance.”

The margin erosion zone is not just another challenge; it’s a compounding threat that can have long-term effects on a company’s financial health if not addressed promptly. Chang highlights the dangers of complacency: “If companies can’t navigate these pressures as they move forward, they see a drag on their margins. And the longer it takes companies to respond, the more that drag on margins has a compounding effect.” This stark reality underscores the need for businesses to adopt new strategies that can help them steer clear of this erosion.

The Role of Benchmarks in Expanding Margins

One of the key strategies Chang advocates for escaping the margin erosion zone is the use of benchmarks. According to Chang, benchmarks provide a critical reference point that helps companies understand their performance relative to peers and identify areas for improvement. “Benchmarks play a significant role,” Chang noted. “As a business, you don’t really know how productive you are unless you can compare your business to its peers.”

Chang emphasizes that benchmarks are not just about measuring performance but are also instrumental in making strategic decisions. For instance, if a company is close to an industry benchmark, it might not make sense to allocate significant resources to improve that metric by a small margin. Instead, those resources could be better spent addressing a different area where the company lags behind. “Our benchmarks give you a reference point to see how you compare in the market,” he said, adding that this approach allows businesses to make informed decisions that drive growth and efficiency.

Real Data for Real Business Results: The Coupa Clarity Total Spend Management Benchmark Report

Coupa’s annual Total Spend Management Benchmark Report is a cornerstone of its strategy to help companies navigate the complexities of today’s business environment. What sets this report apart, according to Chang, is the quality and relevance of the data it provides. “Our Total Spend Management Benchmark Report is unique in a couple of ways. Number one, it’s the data—real data that our customers can use to drive real business results,” he explained.

The benchmarks in the report are based on more than $6 trillion of transactional data from over 3,000 customers worldwide. This massive dataset allows Coupa to offer highly specific insights across 22 operational KPIs within the source-to-pay process. “The benchmarks for the KPIs are based on more than $6 trillion of real transactional data generated by more than 3,000 customers around the world doing business with millions of buyers and suppliers,” Chang noted, emphasizing the report’s unparalleled scope and precision.

Leveraging the Power of Community and Transformation

For businesses new to Coupa or those unfamiliar with the benchmark report, Chang offers practical advice on how to maximize its value. First, he urges leaders to establish clear KPIs that align with their organizational goals before diving into the report. “What are our goals as an organization? Have we actually established KPIs that we can measure and track consistently?” Chang asked, stressing the importance of a solid foundation in performance measurement.

Chang also encourages companies to approach the benchmark report with a transformation mindset. Instead of simply lifting and shifting existing processes onto Coupa’s platform, businesses should use the insights from the report to rethink how work gets done. “These projects are about rethinking what work gets done by people and what gets replaced by technology to fuel growth,” he said, highlighting the transformative potential of Coupa’s platform.

Finally, Chang highlights the value of Coupa’s global community, which he describes as a unique resource for customers. “On the surface, our report is to provide you with accurate benchmarks. But what I want to emphasize is the global community behind the numbers—real companies generating more than $6 trillion in transactional spend,” Chang said. He encourages customers to engage with this community, sharing stories and insights that can lead to new opportunities for growth and innovation.

Navigating the Future with Confidence

As businesses continue to navigate the challenges of today’s macroeconomic environment, the insights provided by benchmarks like those in Coupa’s Total Spend Management Benchmark Report are more valuable than ever. With leaders like Fang Chang at the helm, Coupa is not only helping companies avoid the pitfalls of the margin erosion zone but also empowering them to expand their margins and thrive in an increasingly complex world.

“At the end of the day, it’s about driving real business results,” Chang concluded. “With the right data, the right benchmarks, and the right community, companies can navigate these challenges with confidence and achieve sustainable growth.” As the business landscape continues to evolve, Coupa’s approach to benchmarks and margin expansion offers a roadmap for success in even the most challenging environments.