EP 018: Provider of the Week: Candex

0:16Welcome to this episode of Art of Procurement's Provider of the Week series. I'm your host, Jothi Hartley. These conversations shine a light on the established technology providers who are shaping, scaling and continuously evolving the digital procurement ecosystem. In just 20 minutes, we explore each organization's product strategy, market impact and the ways they help procurement teams solve real business challenges. Our Provider and Startup of the Week episodes are the only formats that are out of procurement that focus specifically on a company's product. Today, we are featuring Candex. Candex was founded in 2011 to solve the tailspend problem by removing complexity from purchasing and payments.

1:05They enable businesses to engage, collaborate and exchange payments in a compliant way without setup in each other's financial systems. And to tell us more about Candex, I'm delighted to welcome CEO Jeremy Lappin. Jeremy is CEO and co-founder of Candex. He has 20 plus years of entrepreneurial experience with Candex as his third tech company. Before Candex, he was founder and CEO of Bounty Jobs, a successful recruitment tech company, and also founded and Vercity, an education technology company that was sold for$80 million. Thank you so much, Jeremy, for joining me as our Provider of the Week. Thank you, Jathi.

1:53It's such a pleasure to be here, so I appreciate the opportunity. Oh, you're very welcome. Okay, Jeremy, let's dive in and let's get to know you a little bit more and let's find out a little bit more about Candex. So for anyone who may not be familiar, what does Candex do today and how has your solution changed and evolved over time? Yeah, of course. I mean, it's sort of what you said earlier, but we are a tailspend provider. And what does that really mean is large organizations like Nestle or L 'Oreal or Dell, they have a lot of vendors and a lot of very small vendors, one-time vendors, and they have significant processes to onboard vendors.

2:35And so what we do is we get set up as a vendor to these companies all over the world. And we can invoice on behalf of anybody to get money from them. And then we pay their small vendors for them so that they don't have to. And so it reduces an enormous amount of noise in their vendor master teams and procurement and their people can move quickly. And that's effectively what we do. Okay. And how has the offering, how has the solution changed over time from the day one, if you will, to now, I guess it's giving us a little bit of an insight in terms of what's changed out there. Yeah, I mean, we typically evolve to meet the needs of our clients.

3:17And so if you mentioned we were founded in 2011, but we didn't really get into the business that we're known as until 2018. And so it took us a while to build the infrastructure and also to find what they call product market fit, where we found a real need and a way to get it into the market. And so the Candex that the world knows now is really from 2018. And since that time, we've added an enormous amount of capability. I think it could be summed up in adding a lot of new countries. So it's very difficult to offer countries. And a lot of our clients are multinationals that operate all over the world.

3:58And so we actually have a local presence in 55 countries and we follow all the local invoicing rules and have all the tax situations systematized. So a lot of automation, a lot of new countries, a lot of different types of taxation situations. So to be able to do withholdings when they're required or pro forma payments when they're required, things like that are a lot of nuance that our customers really need cross currency capabilities are something that we've added over the last eight years. We've also added a capability that's very popular and gaining a lot of traction right now called programs.

4:39And what a program is, is a non-PO based payment. So most of our transactions, we get a PO, we then invoice against that PO, it's paid, we pay the vendor. In a program, they're very high volume payments usually or payments that are not managed by procurement. And oftentimes it's not practical to get POs. And so we might connect to a system that keeps track of time for people guarding a lobby, or we might power a employee, like a charitable contribution program where companies match charitable payments from their employees, or an incentive program for marketing expense or access. So there's all sorts of situations where we'll do large batches of payments that are not single PO based and we call those programs and that's been very successful addition to our product offering.

5:35Okay, that's really interesting. And it also sounds to me like there's a lot of complexity out there and especially when you're talking about different countries, different markets and the different offerings. I think we'll dive into that in a bit, but I just want to focus at the moment in terms of your solution, your offering, I suppose, as opposed to others out there. What would you say are the strongest areas of differentiations that sets you apart from the current marketplace? You know, we have a lot of customer quotes. One of my favorites is, it was so easy, I thought I did it wrong. And so we sort of perceive our role as to get rid of that complexity and make it so that it doesn't show to our users.

6:25And so one of the things that make this so challenging is all of the edge cases. In the payments business, if you don't solve the edge cases really, really well in an automated, systematized way, it becomes very hard to gain significant adoption. And so we really pride ourselves on edge cases, on making them disappear, on getting the payments through and making it so that the users from our clients don't feel the pain of those situations. So you might have a random import situation and Kandex will work or a withholding situation and Kandex will work or, you know, something minor that in other cases might cause a major problem to them.

7:10somehow just works. They don't know why it just works, the users that are creating the orders. But it does. And that sort of makes our brand very powerful as this easy thing that succeeds and always works. And you don't have to undo things and redo them in a different way. And I think that's one of the things that really separates us. We're very professional. So we We manage our relationships very closely, very well. I think people really appreciate that. And we have a can-do attitude. So when there's situations that require configuration, either we have it already because it's incredibly configurable or we're excited to sort of dig in and bring it to the client for them.

7:58No, that's interesting. I like what you say there about it was so easy. We do it right. And that says a lot about the psyche of the persona that's in procurement and supply chain. And I guess the interactions within finance in terms of, I guess, we're so used to things not being so smooth and we're always told to break something. Maybe we can get into that a little bit in terms of whether you've come across that. And that's how that's influenced your roadmap. But just moving into that then, how has your customers demand over the years changed to the point where that has influenced your development roadmap?

8:38And what's that looking like? Well, it's many of the things I laid out. And so almost all of our development is customer driven. It's to support different divisions they have, different types of controls they need, different types of payment situations. they might have high volume needs, the need to do immediate payments on certain types of things where their CFOs won't let them. So I think there's just an enormous number of strange little needs at big companies. And they can't really vary internally what they can do, but they can use an external provider like Candex to accomplish what they need while living within the confines of their own rules of their company, which are fairly rigid.

9:33And so I think that is really where things are driven from. And that's why our customers really appreciate us is because they actually can't get these things done internally often. Right. So it sounds like they're influencing both ways. So they're influencing your development, but you're also influencing their ability to act in a certain different way or process in a slightly different way, but still within the guardrails of what they need to do as a business. Yeah, absolutely. And one of the other things that separates Candex is I think most companies, when they sell their product to a company, they're trying to get the company using their product as a tool, right?

10:15And, you know, they have so many tools. One of the biggest problems at every company is there's too many freaking tools. And when we go sell a new client, we're not trying to roll out a new tool. We're actually trying to make their existing tools, their existing control processes. We're trying to make them all better. We're not sort of creating a new system that everybody has to log into that needs to be rolled out, that, you know, has to be managed, that someone has to worry about, that everybody needs a ton of training on. So we sort of sit into their existing stack, whatever that may be, and just make it better and easier because almost all of the procurement tools out there break because of all the little vendors.

10:59So if you sort of imagine a company like Dell with 50 ,000 vendors, 35 to 40 ,000 of them are really small. A lot of their systems and processes don't work or accommodate that. But if you got rid of the 35, they'd be great. And so it really makes their existing stuff better and easier, and it makes it so they don't feel like buying Kandex or rolling Kandex out is introducing yet another complicated tool into their environment. Well, speaking of the tech ecosystem and the tech stack that a procurement person would be interacting with, where does your platform sit within that? So whether it's a buyer or category manager or a supplier relationship manager or whatever their role is, how do they interact with your platform Could you describe what the typical use user experience is?

11:55Yeah, for sure. I mean, our most common way to, we were always like a vendor to, I'll use Dell as an example, because they were actually our first client on this. So we get set up as a vendor like any other vendor at Dell, no different, right? And we do it once per country. And so we get put in their e-procurement tool at Dell, that's Ariba, okay? And so if you worked at Dell in marketing and you needed to buy something, you would go into Ariba like you would for anything else. You would click buy from Candex. And then we have a window that opens up like a punch out catalog inside of Ariba that allows you to start your requisition.

12:33You then finish the normal buying process within Ariba. So you go back into Ariba after you fill out the punch out. You choose your billing information. You attach quotes as usual. It follows their standard approval process at Dell. And then once it's approved, a PO is released to CANDEX and that triggers our process to invite the vendor. The vendor will then invoice CANDEX. We invoice Dell. Dell pays us. We pay the vendor. And so that same process exists in every country, but it's delivered out of Ariba in that case or out of Coupa or out of an orchestration pool. Really, whatever they have is where they start.

13:13and we're sort of just this way to do what they need without having to set these vendors up. Okay, so it's seamless then. It's not, as you say earlier, it's not another thing to log into, but it's all part of the workflow. Correct. And then with our second offering I described, programs, there's usually a very small group of people that log in and manage it or an API from another system that connects to trigger the payments or another sort of control point in an HCP management system or something where we, in a custom way, plug into that program outside of the procurement tool. And one of the options there, they can log into Candex to initiate the payment, but it's not a wide group of people, but a very specific use case that our client has designed for that particular situation.

14:08is um the the program that you talk about the the functionality that's around that would you say that that's a recent enhancement that you're particularly um excited about its capabilities or are there others uh no absolutely i mean i think it's it's it's fairly recent so we've been doing it for a few years um because our clients really wanted it and i think what's recent is sort of the advancements we've had around systematizing it, making it more scalable, being able to go to market with it in a more efficient way and say, we really want to do this. Whereas it always starts as almost like an ad hoc support of a current need.

14:50And then it sort of turns into a standardized product once you understand all the nuance and you have the time to develop it and make it work very well. Okay. So in reverse of that kind of organic growth, you know, you're developing along with your customer base, what do they tell you that is a longstanding feature that is particularly of benefit to them that they say, please don't ever switch this off, even if it's not a flashy feature or benefit, what is it that they say to you they really rely on? Look, in our main business with Tailspin, there is nothing that would meet the description you have.

15:30As I said earlier, it's about the edge case, right? And so it's about always working. It's about always being able to succeed and close out the payment. And it's not about having to cancel it because something's not supported. And so it's just being easy and always working. That is the key. And I think if you ask them, they would say never change that. Like most software companies over time, as they add feature, they make their product more complicated. They make their product do more for the user. Everybody thinks more is always better. And we're very measured in not making our system have feature creep, where the user experience becomes worse and worse and what used to be good becomes bad.

16:22And I think the number one request along the lines of your question would be, don't change that. Don't decide one day you're going to be a procurement tool and start competing with Kupa. don't one day decide that you're all of a sudden going to run sourcing events and you know do that service for us also um because you know that's where you have the future people ask us for things that we don't do because we don't want to complicate that really simple experience that makes people love us yeah and that honesty i think is really appreciated as well especially amongst the procurement community who are always looking for savings and ideas for that value create.

17:07I think having that honest discussion is super important. And speaking, you mentioned measurements there, Jeremy. In terms of when customers are looking to put their business cases together, their value cases. How does your approach, how do you help organizations with that business case, especially connecting their procurement goals with the wider, broader business goals? How do you help them? Yeah, of course. I mean, that varies from customer to customer. And oftentimes they have some idea of what vendors cost them, both on a setup perspective and an ongoing basis, the number they have, some companies have it as high as$3 ,000 a vendor.

17:53Some companies make it low, like$200 a vendor. The ones that are sort of pegging it at a low number often only include very, very direct costs and don't include the time that the business users have to spend working on it, the time where there's another layer in the organization that's been added to do the work that's required from the business side. And so I think the real number is somewhere between$2 ,000 and$3 ,000 a vendor just to set them up. And I think there's an ongoing management. And they also have a problem, which is because their compliance requirements are so high, even on an annual basis, once someone's set up, there's a level of risk and a level of compliance attention that needs to be done annually thereafter.

18:47I actually think we make it easier to add more compliance for the bigger vendors that matter because we get rid of these small one-time vendors that previously were clogging the process. but back to your question about you know roi and and how business cases uh i think we we often do help them do that it's often not during the sales process so we often sell them and a client will start relatively small and it's easy to implement and it's not a big cost and most projects they have are gajillions of dollars and the cfo doesn't want to pay for it ours is just really easy to start and try. And then they feel the benefit, they feel the speed.

19:32And a lot of our discussions around ROI occur after they've been using it for a while, and they really want to expand it, and they're really happy with it already, and it's in a certain number of countries already. And then you have some of those more sophisticated ROI conversations and help them make bigger moves once they've already seen the value of it. And we have a really good reputation within that company. And so we typically start small and see customers grow very consistently for five, even seven years before it achieves the penetration worldwide that they're looking for. Okay, that's interesting.

20:12So yeah, definitely start small scale. scale and this this totally differs by the way from most software companies where you know they make you buy all the licenses up front and then it's sort of on you to get them to use it while you're paying for it you know ours you start small but you don't pay for it because it's all our revenue is all in the transaction fees and so we do well and we make money when everybody loves it and they're using it and and the value is being provided and it's very clear. And I think the old software model is kind of breaking now, even with AI breaking a little more, where people don't want to pay for every user immediately, and then be forced to try and get them to adopt and have some vendor explain to them why it's their fault they're not attempting, not the vendor's fault, and their fault that this doesn't work and not the vendor's fault while they're paying for it.

21:07And I think that's one of the things people really appreciate about us. And then it turns into a therapy session, doesn't it? In terms of, you know, let's all give each other some comfort here. So in, I guess, in contrast to that, then if an organization is looking to your solution or looking at some sort of fix to a current issue that they've got, what advice do you give them to help them with a smooth transition? And I appreciate that you you just explained there that you start start with something and start small um but what does a smooth implementation look like for a new customer of yours um before they move into fully expanding either additional countries additional business units whatever that looks like what does that look like yeah so there's two ways you can implement it i'd say the most common approach is sort of covering a broad swath of categories and letting the user sort of use it and have it available for many things.

22:11And another alternative approach, which we see is to start with a smaller number of categories, two or three or one, whatever it is, that has a really big need that's urgent and really do that quickly and focus on that and make that successful immediately. And so it could be the marketing department has a huge need or the HR department has a huge burning need. And then with that success to expand it more widely. And so we see both methodologies succeed. You know, once you decide to roll out Candex, it takes about 12 weeks to get it active and live. It's, we call it like a mini project. That mini deployment project has to be done once per country.

23:01So we do it in waves. So a client might start in two countries to try it out. That's going to be a 12-week wave. At the end of 12 weeks, it's live and ready and tested. Then you push training based on how you want to roll it out and who you want to get started. And then they start putting through transactions and the momentum and success of the program build from there over the course of the next three or four years. If it's a giant multinational like Dell or Cisco or L 'Oreal, you would then work together to do waves of new countries all over the world. And we try and limit it to seven countries at a time.

23:42We've, for a few people, done 20 to 25. And it never seems to work when you do that many at once because of usually

23:53they think they can handle it on their side, but then it's sort of the complexity and nuance of doing 20 simultaneously just makes it not work as well. And so it's fairly easy to do seven at a time in 12 weeks, get it live, do the next wave, get it live, work on the change management, and you're able to sort of cover the world in three to four years. You can cover the whole world in that in that manner and like you said at the very top it's easy you know it sounds like it's easy yeah and the hardest part is always change management right so um in the end it's it's very hard to get started it's people are like oh we're going to turn this on and a ton is going to happen it doesn't work like that you turn it on and if you don't do anything nothing happens and so you you have to do the initial trainings you have to find the larger users of it where you think it'll really help them and target them and then they do it and then they succeed with it and they love it and then it spreads and you sort of work together to get the word out and to push more and more through there and it does get easy once you've activated in 30 to 40 countries you have enough going through it the leadership really um likes it at that point and it becomes very easy to do big things all over the world simultaneously which is sort of unheard of at companies.

25:15Usually it's like this annoying thing to do, but hey, marketing, you can use this and it's going to work in 45 countries. Wow. And also learn from marketing in terms of how to market the successes, the success story. So just as we're about to wrap up, I've got a couple of last questions for you. And that is, what are the biggest opportunities you see for procurement technology. You mentioned how, I guess, software vendors and the traditional model is changing. But how do you see, what are the biggest opportunities in the next, say, 12 to 24 months? And what can Dex customers expect from you? Look, I think clearly AI is the wave in software in every department, including procurement.

26:00And so there's a new sort of group of companies in orchestration, which is sort of coming into the procurement world. We don't want to do that, like what we talked about in the beginning, that feature creep problem. But I do believe that these companies, everybody's trying to simplify. Everybody's trying to make the process better, an end user experience for buying better. And I think our clients that are experimenting with it are finding it very successful to have those orchestration companies push the right types of transactions to us so that those vendors can't don't have to go through an onboarding process and clog up their systems and so i think as people figure out new ways to do sourcing new ways to find new vendors that are specialized or less expensive it will drive even more of a need for a provider like candex that will help manage this tailspin and make it faster.

26:58And so we're excited to go into this next chapter. And I think it'll be interesting to see how some of the older procurement leaders like Kupa and Ariba react to this sort of this new wave. But I do believe the new wave is very real. And it's very exciting. And I think it's capturing the attention of the procurement executives around the world. Definitely. And it's not a case of watching this space. Now we are in this space. It's more a case of actioning in this space, isn't it? Definitely, for sure. Yeah. One final question, Jeremy, and that is, where can listeners go to find out more and how can they explore whether your solution is the right fit for them?

27:41I mean, we'd be thrilled to speak to people. So if they go to our website at CANDEX.com, there's easy links to reach out to us a few emails sales at candex.com someone will reach back to you and we'd love to explore um whether our our our solution could could help your organizations nice and easy nice and easy brilliant all right thank you jeremy well thank you for this opportunity to learn more about you and about candex's impact and unique value proposition and thank you to everyone who joined us to learn more. Take care, everybody. Thank you, Jeremy. Take care, everybody.

28:21Jeremy Lappin: Thanks for listening to this episode of ProcureTech Insider. If you found this conversation valuable, you can subscribe to our ProcureTech specific newsletter, The Stack. Every Thursday, you'll get intelligence on ProcureTech companies, market developments and insights from practitioners delivered right to your inbox. To subscribe, go to artofprocurement.com slash subscribe. That's artofprocurement.com slash subscribe.