Cut Your SaaS Costs: COO Justin Etkin on Smarter Procurement

Michael Koenig: Hey, it's Michael. If you've been on a zoom with me lately, you'll notice that you have my full attention. It's because I'm not taking notes. Instead, I rely on Fellow, an AI meeting assistant to take notes for me, along with tracking action items and decisions, handling recordings, transcripts and summaries all in one secure platform. It's like magic. Built with security and privacy at its core, Fallow is the only AI meeting assistant that thousands of leaders and organizations trust to capture meeting notes and recordings while keeping your data safe. They're so confident that you'll love it, they're offering an insane deal to you all, between two COO's listeners. 90 days of unlimited AI powered note taking and recording, completely free. Visit fellow. app forward slash COO to sign up today and experience the AI meeting assistant trusted by leaders everywhere. Hello and welcome to [00:01:00] between two COOs podcast, where we dig into strategies, challenges, and successes of top operational leaders. I'm your host, Michael Koenig, and today we're diving into a world that every business, especially in today's economic climate, needs to pay more attention to. Procurement. My guest is Justin Ekin, COO of Tropic. io, a company that's rethinking how businesses buy and manage their software. In a world where SaaS sprawl is real and budgets are tightening, procurement has gone from being a back office function to a strategic advantage. Justin brings a wealth of experience in scaling operations and navigating the complexities of procurement in high growth companies. We'll talk about the Evolving role of procurement, how AI is changing software buying, what companies get wrong about vendor negotiations and why procurement should be a growth enabler and not just a cost cutting function. If you're a COO, CFO, or anyone dealing with vendor contracts, this episode is for you. Let's get into it. Justin, welcome.

Justin Etkin: Thank

Michael Koenig: you. Excited to be here. Let's [00:02:00] dive right in. How has actually first. You and I have talked before you taught me so much about procurement when I was first getting started with it, give us operators who maybe have not done it before give us the overview. How should we think about procurement?

Justin Etkin: Yeah I think my entry into procurement came with a lot of learning by doing a lot of mistakes a lot of, Bad experiences with companies that didn't do procurement particularly well to tackle procurement. I think the, I think you put it procurement. Historically, if you think about the history. And like working backwards the start of procurement was very much like we need to save money on our jet fuel on our massive kind of spend items that go into the goods that that companies make procurement was first and foremost thought of as a cost reduction mechanism and a way to keep margins. Strong and high for those types of [00:03:00] companies and as businesses have evolved as they modernized and the types of companies have changed procurement has changed dramatically along alongside that gone are the days where a procurement stakeholder. Is solely responsible for managing a few select commodities or goods to keep costs contained and keep margin strong. And instead, procurement professionals have had to become a jack of all trades not just in the types of spend and types of costs that they are trying to contain, but also taking on additional responsibilities, process compliance vendor risk management ESG the remit and the scope has broadened dramatically. To the point where procurement has become very much an operationally intensive function and not just a sourcing and kind of cost containment function. So every business today should be thinking about their procurement because [00:04:00] it's one of the most critical. Drivers of efficiency from early stages, all the way to, enterprise and massive company kind of coverage and footprint.

Michael Koenig: Let's talk about the company profile size that you just referred to. Certainly in, in more of the massive companies, you're going to see procurement functions. early stage, not so much. It'll be done by a generalist or in some cases, the CEO will set up, most of the introductory software and that carries through. At what point are you seeing companies actually start to focus on procurement as a function in and of its own and not just side of someone's desk?

Justin Etkin: Yeah, absolutely. The evolution of procurement it typically originates as a project that Someone in finance or operations is tasked with solving, Hey, CEO, CFO feels that we're spending too much money or there's some. Singular moments where [00:05:00] we got caught on an auto renewal and ended up spending hundreds of thousands of dollars on something that we didn't want to, and that there's usually a catalyst catalytic event for a smaller company to determine, you know what, we need to get our house in order as it relates to our vendors and how we manage them from what we see, and we, . Admittedly, focus mostly on the tech community. Startup venture backed bootstrapped tech focus companies. Usually around, a couple 100 people are is an organization starting to think about how do we want to be really? Scalably managing our spend efficiently and that initial, exploration usually falls into the the house of finance operations. Sometimes it is a primary stakeholder to, to take on this first foray into procurement and it's usually thought of a side of desk for the organization until the cost and the effort to maintain that cost. Or contain that cost starts to outstrip the kind of part time responsibilities of the people that are managing it. [00:06:00] Like anything in any business, there's an ROI case to be made around. Should we dedicate a full time equivalent to this? Responsibility and the cost of that person have a good return on the, the value that they're generating to the business. If there's a, if there's so usually it's around that point where, we've got millions of dollars that we're managing. And now the kind of the full time. Focus from an individual to, to support that spend can be justified from an ROI case.

Michael Koenig: Yeah, it's really interesting if you think about the catalysts for actually focusing on procurement as a role most of the time, at least in my experience, and I'm sure you have a very different one is there's a runaway cost with something. And you suddenly realize, one of those usage based products, someone committed some code and now it's making 2 million API calls and you just got saddled with a monster bill and you're, Oh my gosh, not just code problem, but there's actually an operational problem there. [00:07:00] The very first guest I had on this podcast, Rich Wallach gave me some really great advice. When I moved into my first COO job a decade ago, and he said go look at your software, you have way too many licenses, you're over provisioned, and the first thing you can do in your first month is save a couple hundred thousand dollars just by doing that type of audit. Back then It was super arduous. You have to go into every single system. How are you guys doing this to make it easier?

Justin Etkin: Yeah, absolutely. So a few different kind of angles that we think about this. A lot of companies, when they start to tackle the procurement problem, it's, they approach it from the outcome that they're trying to work towards, right? We need to get some savings. And so the first. The first thing, the quick win mindset around savings is we got to negotiate our contracts. We got to eliminate duplication, et cetera, et cetera. [00:08:00] And that's all great because I think, for procurement to be successful, it needs to show impact pretty quickly from when it's being invested in. However, what we often see is that those kind of quick win engagements or opportunities Are pretty discreet in nature. The key to building sustainable, strong procurement practices is much more about thinking holistically about what good procurement looks like. And what we see for good procurement is. Kind of three factors. One is centralized visibility. You need a system that allows you to centralize your contracts and your spend. What are we expecting to spend? Who are we expecting to spend it with? And create an idea of what is this kind of footprint ultimately look like? Second, you need to understand, what are we actually spending? We're pulling data from our E. R. P. from our whatever our accounting system is to see where all these costs going on an actual, as expensed basis. And number 3. It's how are we actually using [00:09:00] these tools, right? How, who's got licenses? How are they, interacting with those tools, particularly for tech companies. And the three of those things together really serve as like the triumvirate of the visibility that organizations need to make good decisions. One of the big kind of approaches that we take is we need to pull those three things together into one system. Because you can do so discreetly in each, there's contract management systems. There's I. T. SAS management tools. There's, your accounting system, but having it all on a like for like basis normalized across, these different supply relationships is really powerful to understand what are we expecting to do with this vendor and what does it actually look like? So that's step one, establish the visibility. Step two. Is we need to establish some controls and process governance. Once we know where our spend is going, we need to make sure that everyone in the organization understands the expectations and the kind of procedures and policies that we have in place now process can mean very simple things for an early stage company. It can just mean hey. CFO needs to approve on a [00:10:00] spend item above certain threshold. That's a cultural dynamic and it'll depend by each company, but someone needs to know what's happening around these spend decisions that are being made so that there's a degree of governance compliance that could be enforced. So we have the visibility, we have the process compliance on top. And then finally is when you get to make that impact. Now that we have our house in order, we can create scalable and repeatable impacts by leveraging the visibility we have, the controls we have and layering and data and intelligence that is only possible from a fully networked solution. One of the things that we invested in a tropic was we needed to build a big networked database of pricing and intelligence so that on top of this visibility and control, now we can arm. Finance stakeholders, procurement stakeholders, with all the information they want to know about these suppliers to make good, impactful decisions around what prices we should be paying and how are we actually going to go get there?

Michael Koenig: So you're using, because you yourself have the [00:11:00] visibility as tropic to see all the different contracts that people are making or rather negotiating and what those different inputs are. And you're able to see, okay, what is a reasonable price for this? person to be paying for this software. And then is that being made available to the folks who use your system? Exactly.

Justin Etkin: Yeah. So what we do is we democratize that data so that all buyers of technology can access it in the same way for so long, in general the story of procurement is a team that is under resourced and under equipped. To compete with their counterparties, go to market teams, sales teams that are armed with massive amounts of data, massive amounts of investment and tools and systems, and every intense signal you could possibly measure about a buyer that, a seller, a good seller will know. And procurement teams have a mere fraction of this type of tools and. Information available to them. So what we're trying to do is [00:12:00] at least level the playing field a bit. If we can create some networked understanding around what our fair price is to pay and make those accessible to to procurement stakeholders, then at least they have a fighting chance to understand what fair and good might, might ultimately look like. But the only point, the point that's important is that's just a part of the story because you may have all the best data in the world, but if you're not able to leverage it at the right moment. With the right approach and strategy, it's going to be worthless. You can't just go out to a vendor and say, Hey, I know that I should be paying X. Why am I being charged? Why they'll tell you to go kick rocks, but orchestrating that into a story that has credibility and staying power and can actually justify a discussion is really where the magic of kind of holistic procurement comes in leveraging the visibility controls and an impact together as one kind of unified solution as opposed to just going straight for data, expecting it to drive impact.

Michael Koenig: [00:13:00] Let's, what happens next? You get Tropic, you have this amazing data your, let's say, I don't know, Atlassian license is coming up. Atlassian goes through, a VAR, a reseller. Every single reseller is different. You don't really know what's happening. So now I've got Tropic, my Atlassian license is coming up. Sorry, Atlassian, if you're hearing this but you do charge a lot of money. And it seems like it's too much. What do we do? What do we do from there?

Justin Etkin: Yeah. As example, let's say. In Tropic, what you'll see is we have an Alassian contract that's coming up for renewal in four months. We know that it's being executed through a reseller or a VAR, and we know that the opt out for that specific relationship is 30 days in advance, which means that we actually have three months to decide what we ultimately want to do with this partnership. And this relationship while we have any leverage as part of the overall engagement or [00:14:00] the renewal motion. So what we'll be able to do, leveraging tropic is we'll know. Okay. When this renewal day is coming up. We'll be able to know exactly what our spend trajectory has looked like over the last year. Have we added seats? Have we removed seats? Have we upgraded, downgraded, changed packages? All the kind of activity that's happened over the last year based on usage and spend data. We'll know going into that conversation, how is our pricing compared to the market? We'll be able to see, as we're getting into this engagement, is our pricing good? Is it bad? Is it You know, neutral and that can be helpful on its own because let's say we, we have good pricing, but that can signal is great. Let's just pass this through. We don't need to spend multiple cycles, time and energy banging our heads against a wall with a specific supply relationship where we're already being, we're in a fair and acceptable place, but let's say we don't have good pricing. And we now know that based on the data that we have available. Now we want to go into a real sourcing motion, and that means leveraging [00:15:00] the tactics and strategies that we know. are going to be effective with Atlassian when being executed through a var. And, based on what we know, a tropic is, what a bar does is it basically like levels the playing field on the the access of that tool and takes on some of the administrative burden for delivering and maintaining some of those those systems. But we also know is that. There are many bars that are out there, all of whom are working on razor thin margins and winning business from one bar to the next can be a really powerful way to drive pricing down. So what we might recommend in that case is great, we have this deal coming up, we know we have bad pricing. Let's bid this out to the various bars that we know have good relationships and good Atlassian in particular, and we'll maintain a list of that, be able to recommend who we go engage. And get pricing for it and use that competitive tension to stick with our existing VAR if we feel happy about that relationship or to consider a replacement or alternative if we feel that's going to be the best decision for the [00:16:00] business moving forward.

Michael Koenig: Got it. And so let's talk about then some common mistakes here. You mentioned throughout your career you learn things the hard way. I am a procurement I'm a company that is starting to add procurement, starting to take it seriously. Like what are some of those early sort of landmines that, that you can help us dodge?

Justin Etkin: Yeah, absolutely. I think that one of the things that I've seen most consistently for companies starting a procurement. Practice won't call it a function because maybe they're not hiring a person, but they want to start doing procurement. It's there's like a barbell experience. Either they go too hard and too complex too quickly and lose the lose faith across the organization to actually adopt whatever is being put in place, or there's not enough top down enforcement from leadership to say this is something that's important. It's usually one of those two things. And the goal is to try to Nail it right in [00:17:00] between the two to right size, the complexity and the approach to how we're going to do procurement as organization that fits culturally with what that organization is all about. We work with some companies where they want to put in place procurement because they want to think about efficiency for the future. But the goals today are not about major savings. For that type of organization, what's important is we want to make this something that all of our stakeholders across the organization will actually use and adopt, and therefore it needs to be super simple and streamlined. That means we can't do, we can't be overly aggressive around approvals. We need to be very, we need to Allow for our stakeholders to have ownership around their relationships and tools and arm them with data, but not try to centralize too much of the actual process into, let's call it the finance or operations function. So keep it super easy, keep it super streamlined and and just get some system and process in place. You may be walking into another organization, private equity [00:18:00] company, just got taken private. Or, the new investors come in and number one priorities. We got to cut costs. And what that's going to look like is we need to take a different approach for how what types of controls we're putting in place in that organization. More visibility from leadership, more specific targets to orient around and making sure that we're orchestrating our expectations with the company. Top down enforcement to make sure people are following the process that we put in place. So I think like the biggest recommendation I have for companies that are standing up. Procurement is to make sure you know what kind of goal is you're achieving. And make sure that you are communicating and setting expectations across the organization for what those stakeholders need to do and be prepared to enforce them. Because one thing that's universally true, no one in the organization, no stakeholders in the organization like doing the procurement process. It's a necessary evil to keep, to, to follow through on what what is necessary for efficient [00:19:00] spend across a company. If you're out in the business, you're focused on growth, you're focused on closing deals. The last thing that you want to do is follow. A bunch of hoops that you have to jump through to get this critical supply relationship that you work with approved and renewed or whatever it might be so that you can focus on your clear growth goals.

Michael Koenig: Let's talk about that. It's a lot of belt tightening right now and it is probably more difficult than ever to. No, I lie. 2008 was probably pretty rough but it's very difficult right now to get companies to buy software that doesn't necessarily contribute to top line revenue. How are you all approaching that? What are you seeing and, , how, if I'm a procurement person and I want to get off of spreadsheets and I want to get into a system like Tropic, like, how do I go about doing this?

Justin Etkin: Yeah, absolutely. I think that, we sit on top of tons of data around how companies are spending money and where things are going. And you're totally [00:20:00] right. The last couple of years have been a massive kind of cost cutting efficiency. Driving exercise, particularly because we were coming off the heels of 21, 21, 22 growth was happening in every corner. And what that led to was a lot of opportunity for consolidation and redundancy that existed and removing excess bloat in organizations. And in 2025, as companies are coming out of the. The very focused belt tightening that we started, that we saw through 23 and 24 now, when we talk to companies thinking about procurement, they are very focused on, we want efficient spending that we can rely on and scalably achieve over the foreseeable future. And in some cases that means, yeah, cost cutting, it means eliminating redundancy, but in most cases, what it means is we want to be set up well for the future. So we don't repeat mistakes that we made in the past. Everyone's got scar tissue from, the 2021 2022 days where everything was green [00:21:00] lit. And then all of a sudden costs were totally out of control. So there's a lot more focus on efficient growth and making sure that we are making the right decisions for organizations that are gonna. Support us into the long term as opposed to answering the growth at all costs call that many were propagating a few years ago. So for us, what that means is and for any, solution is the demand for unification Around data around process around engagement with stakeholders has never been greater. We see across a lot of different categories that have been subject to point solution proliferation is the push to platform, right? Maybe we're willing to sacrifice, some features in a really powerful point solution over here, because that point solution doesn't talk to this point solution and we use both of these as part of our function. And that creates. Swirl and it creates spoilage and it removes efficiency in the organization. So many companies, as they're thinking about their technology strategy are thinking more about [00:22:00] how can we consolidate into a platform approach where we have a singular solution that's covering multiple. Use cases or needs and we're doing, we're using that solution as efficiently as possible because of the cross pollination of data and visibility and information that's being translated across these different use cases. So what you're seeing in the world of procurement is a lot of consolidation of different types of of activities. You had an entire SAS management category that was specifically focused on SAS tools. That's now being folded into procurement. Used to have. Contract management that was solely focused on managing contracts that's also being pulled into procurement risk management. Another example. So all of these kind of different components of the procurement journey that have had, massive point solution growth are all starting to be brought into the fold into singular platform based solutions that answer the call on many of these specific areas.

Michael Koenig: Got it. So we're talking a lot about efficiencies. That's been the through line since the, we first started this [00:23:00] conversation. We talked about efficiencies through visibility, efficiencies gained through controls. What are some other areas that we need to look for efficiencies within procurement?

Justin Etkin: Yeah, it's impossible not to talk about efficiency without talking about ai. And. There's a lot of energy and excitement and in unsexy categories where I can make a big difference. You hear a lot about it in accounting, a ton of accounts that are out there doing a lot of manual work to. Close books to reconcile invoices and AI has been, been pointed to as a major opportunity for efficiency gains. Their procurement is a, as a similarly massive opportunity. Lots of organizations, big organizations have tons of procurement individuals that are there to help support administrative responsibilities in the world of procurement, creating POs, matching invoices to POs, extracting metadata from contracts, populating one system over here with data from the system over here, this type of work is is pervasive in kind of larger scale [00:24:00] procurement organizations and is right for the type of thing that I can take on. And so what we're seeing and we're really driving as well is how can we start thinking about AI as a procurement agent that takes on the work of some of the kind of the lower level administrative actions and activities that are necessary to make procurement work at organizations and use intelligence, use a I use large anchored models to take on that work and automated for those organizations. That those dollars can be deployed elsewhere. We talked about procurement becoming a growth lever. This is the kind of area where, you know, by removing some of the overhead that might exist to, to make procurement work, redeploy those dollars into growth areas and expansion initiatives and and tools like AI and. And products that leverage AI effectively are going to be major drivers of that.

Michael Koenig: So much of procurement aside from, there's the unsexy aspects of it. We're talking about the organization. We're talking about [00:25:00] approvals and controls and the inner workings on the other side of it. A huge and probably the bigger part of procurement is effective and efficient negotiations. I've worked with a lot of different procurement people. I have my all time favorite, I've got to give her a shout, Jen Bradley. Jen opened up a negotiation by saying, Listen, we're going to hug at the end of this. But you're going to hate me throughout it. And you're going to give me everything I want. So let's just move on. There is that person to person aspect to this. You're talking about agent. Will it be at some point my procurement agent, my, and now I'm talking about agentic AI we'll talk with, your seller. At some there is that nuance of the relationship and sort of the chess that you're playing within a negotiation, what does that look like?

Justin Etkin: Yeah, absolutely. I think [00:26:00] we thought a lot about this. We are of the mind that. There is no near term future where the entirety of the kind of procurement supplier relationship can be taken over by AI for a few reasons. As you mentioned, like in any massive buy sell transaction, the human element of it plays a role. Relation people buy from people you see a lot more of the heavy lifting and the work being automated and taken on by by systems and disremediated interaction. However. The human still plays a role for the biggest and most complex purchases, people will say what about Carvana? What, what, car buying always used to be a a human to human interaction. That's a big price item. But one of the, one of the big differences is that something like Carvana. Cars and physical goods. They are very standardized commodities. And so removing the human element isn't as far as difficult to imagine as complex technology [00:27:00] purchases or software purchases, where part of the whole discussion is the unique customization that can exist from what a buyer needs and what a seller can offer and finding what. You know what? Meeting in the middle ultimately looks like. So from that standpoint, our belief is that for your strategic spend for large priced, major investments. We believe there's gonna be a role for humans in the foreseeable future. Now, in the world of procurement, we talk a lot about the concept of long tail. Procurement and spend within within organizations typically follows the Pareto principle, right? 20 percent of your vendors makes up for 80 percent of your spend. And so when you think about the 20 percent fathead that's making up 80%, that's where I think the humans will always play a role. Now, for the 80 percent of vendors that make up 20 percent of spend, the long tail, there is a lot of opportunity for automation because the impact and the results of each individual deal is less, less meaningful. To the overall story, then it is in the 20%. So we [00:28:00] see lots of procurement teams that might be willing to sacrifice the very best outcome that would be human driven for something in the long tail in order to automate or to prioritize efficiency to accomplish that outcome rather than deploying expensive strategic human resources to, to have the same impact. To summarize, fathead, human driven, that's, we expect that to stay the same, long tail, automate, and, AI driven negotiation, I think you could very well see. The loop of AI sales reps talking to AI procurement, agents trying to hash out a deal. And I'm sure we'll see plenty of good clips of that happening in the future.

Michael Koenig: That would be very interesting. So in the here and now, though you talked about LLM these are great with structured, structured language, right? And what could be more structured than a sales contract? How are you guys actually? Looking at this, applying LLMs with the contracts, is this something that you're doing now?

Justin Etkin: Yeah, a hundred percent. So [00:29:00] what's interesting is a contract is on the scale of like structured documents is actually quite unstructured because it can be very highly variable from one supplier to another. And so when you think about structured documents, what you're looking for is consistency. And the format the framework that it's being used and contracts can be highly variable, invoices on the other hand, receipts like things like that. Those are highly structured documents. They all follow the same trend and the concept of like invoice automation has long existed even before the explosion of LLMs now for contracts. We are, we're a hundred percent using AI and LLMs to extract the metadata from those contracts. The harder part isn't just the extraction. It's the normalization of that data into a standardized format that can be compared on a like for like basis. Because what I need to know is when I'm talking to Salesforce, what's the unit of measurement that's comparable across all [00:30:00] Salesforce contracts? And how can I build a data model that uses a similar structure? When I'm talking to Snowflake, Snowflake also has a unit cost that needs to be compared on a like for like basis across all Snowflake contracts, and you extend that out to the thousands and thousands of vendors. It starts to become a really challenging data normalization story. How can we build a data model that's consistent enough to be able to compare like for like across these highly variable like for like across these highly variable Suppliers that have massively different pricing structures to build into a single database that can be accessible and leveraged by machines to draw insight and then translate it back to humans, massive problem. We've invested years and, thousands of hours into this to come up with our approach. And that's part of what feeds this. Kind of network database of price points and benchmarks as we can now take those learnings and apply them across this, wide range of suppliers that we have access to.

Michael Koenig: So interesting. And certainly there's also even just lower level AI. [00:31:00] Assistant capabilities of, Hey, you have this contract. You talked about time, right? Time being one of the ultimate levers in negotiations. And having that three month or four month period with the opt out window, whatever it may be. Is this a way that you all are going as well with LLMs?

Justin Etkin: Yeah, I think the, what we believe the kind of ideal state for your AI procurement agent. In the near term is less about we're going to have this agent negotiate for us, but instead is your. AI procurement agent sidekick, which is like your coach, your guide that can be riding shotgun with you as you're going about running your process, and that will take into account all the different factors that matter for a specific supplier engagement timing being one of those historical context and the longevity of the relationship, how things have been used sentiment. All these things can be thrown [00:32:00] into an AI model. To craft a strategy and an approach for how negotiation can be most effectively deployed with that specific supplier. And you give that as a, as a sidekick to any procurement professional and they become. massively more efficient and impactful in the work that they're doing. That's a, we're very bullish on that concept of how we can leverage AI from a procurement agent standpoint, less so about the actual automation of the back and forth in the discussion. Because cause at the end of the day, the dollars that matter most are those big ones in the fat head and the more that we can help influence and guide those with. With tactics, strategies and intelligence, the better off our customers will be.

Michael Koenig: You mentioned something super interesting now, which is sentiment and sentiment analysis using AI for this within a relationship. And if you're someone who's done a lot of negotiations, you have certain folks that you are hugging it out. Like John said at the end and are, it's a really good [00:33:00] relationship. And then there are others where it can get pretty contentious. These are different signals though, that I would imagine exist outside of a procurement system. Now we're talking about voice chat. We're talking about transcripts. We're talking about emails, things of that nature. Where are you pulling those signals from? How are you thinking about that?

Justin Etkin: Yeah, the notion of kind of call recording. Software is basically ancient history on the sales side at this point, right? Every sales conversation for any kind of tech enabled team or even out in the field team is now recorded in some way. And you've got plenty of players that are out there applying sentiment analysis and what's, what are the vibes in the conversation to know what direction we think it's going to, it's going to go. And so that's a very known quantity. But again, I think that fact represents the clear disparity in terms of investment that's gone into go to market teams versus procurement teams. No, procurement teams aren't getting that same level of investment on their call recordings and and their analysis into [00:34:00] what the sentiment looks like and implies from a, a willingness to discount or a willingness to change or, or whatever. We have become very interested in how can we again, we're interested in leveling the playing field for technology buyers. How can we arm them with the similar types of tools that allow them to, leverage at in mass, a I to help understand those types of qualitative things like sentiment and text analysis, speech analysis, because at scale, you see the same thing with procurement teams as you do sales teams, a bunch of different procurement managers, managing individual categories with varying levels of experience that need varying levels of coaching and guidance with managers that have experience and kind of pattern matching on top of them. The amount of, we, we have Our head of procurement strategy Michael Shields came from Qualtrics and he would do you know, war games with his team to simulate this environment. Let's do a live demo or a live kind of practice call. Because the concept of recorded calls and being able to leverage that [00:35:00] as part of coaching just hasn't existed, but I guarantee it will in the next couple of years because Because the kind of investing community has woken up to the importance of procurement and lots of dollars and and insight is going into how can we make these teams more effective and the tools that power them more effective.

Michael Koenig: Yeah. Certainly with, with sales, it makes a lot of sense, you're bringing in big dollars. That's really powering the growth of your company. And this is what we talked about previously, which is, spending on SAS and tools that don't contribute to top line growth but do impact the bottom line. I'll write a check all day long. If you're telling me that it's going to increase my sales by 10%, much more difficult to do if you're telling me that you're going to save 10 percent by getting this. I do suspect though, and I'm kind of monologuing here, is that as the foundational LLMs, start to be commoditized, we're seeing it in real time costs come down and these things start to become more of a reality for a tool like this.

Justin Etkin: Yeah, right way to think about [00:36:00] this. I think that the the technology is less of the challenge as it is the budget to go get the technology. And cause I think in the world of go to market technology, you go to market team is willing to test some. Unproven solution for 50, 000 a year. If there's a chance that it might generate a three X ROI cause it's gonna, that 150 K is good. You take it to the bank that contributes to growth. Procurement teams don't have that same experimental budget to be able to deploy on on efficiency related. They're starting to I think you're starting to see more of that happening, but by no means anywhere close to go to market teams, which is why the kind of evolution and innovation is slower because the way that those procurement teams get to test and deploy that type of technology and functionality is it has to be part of the broader platform ecosystem that they're already engaged with, right? It's much easier to go to the CFO and say, Hey, we work with Coupa. Coupa just released a A call [00:37:00] recording and, AI transcript, module would love to test it because it's going to integrate with X, Y, and Z. And it's going to drive a lot of savings. That's a much easier call and justification to make than to say, Hey, this brand new startup that's piloting some really innovative tech. Is trying to help support X, Y, Z. It's it's been, it's, it, that type of conversation up until a year or two ago was never happening in the office of the CFO. Now you start to see like it's catching on and the procure tech industry has grown and expanded pretty meaningfully. But but by no means to the same extent as go to market. So I think that we will see more of that innovation. It's just been slower going because of the way that those budgets get deployed and testing can really happen in procurement teams.

Michael Koenig: Going back a bit we talked about all of those point solutions. You talked about more platform solutions. When we think about procurement ops, there's just in general, you've got your contract management, you've got your your [00:38:00] visibility on, on what you have seat management, license management. There's the financial aspect to this. There's the legal aspect to this. There are so many different moving pieces here. What is. Good look like when there are so many moving pieces just because it has to cross so many hurdles and all of those hurdles have to be interconnected in some way for this to be at all efficient.

Justin Etkin: Yeah, absolutely. The, what good looks can very much depend on the size of the stage of organization that you're a part of. Let's say that you are relatively. Early stage, a few hundred people a thousand people, and you're really in the early stages of setting up procurement as a bona fide function. Often what happens is You know, the legal team may mature and grow faster than procurement and the security team, especially now cyber security risk. And, it has been a massively growing category. And with that means more heads, more people coming into companies [00:39:00] earlier and earlier. So you see the growth of these different functions that are adjacent to procurement. But not specifically, whose remit is procurement in the same way when you make that procurement higher and you say, great, now you're gonna bring your tool on that. Procurement person often has to figure out. How am I going to bring on something? That's going to play nice with all these different tools that already exist as part of the vendor management process. And so what we see is the growth and Development as a procurement orchestration being a major factor for some of these decisions orchestration being how can we build a process that does properly, centralize visibility across all these disparate systems that aren't going anywhere, right? Like your security team isn't gonna willingly, release their tool that makes them so effective what they do. Legal team's not going to release their tool. And so procurement has to come in and figure out how am I going to fit within this web of solutions? And and most good procurement platforms today are focused on [00:40:00] orchestration as a primary capability. How can we. serve as a source of truth while pushing information out, pulling information in from these other sources of truth that are functionally important to those stakeholders, but but aren't aren't my own tools. Orchestration, huge, massive importance. The further up and bigger you get, companies starting to. Go full platform, full suite, source to pay type solutions. And you see the Koopas and Aribas and companies that have been around for a long time that have the credibility of enterprise readiness and can answer more of the call for these different solutions from one software suite. But obviously with that, you sacrifice a lot of the nimble kind of flexibility and intuition you get from the early stage, earlier stage companies.

Michael Koenig: This has been absolutely phenomenal. One of the things, you know, this was a crash course on procurement. Less about your functions as COO. We haven't even really [00:41:00] discussed that at all. But perhaps a round two at some point. Justin, it's time though for my favorite question, which is, we have all been in these seats and the weirdest stuff. Tends to come up to us every now and then we see something where just like that is, I can't believe I'm, I'm, I'm dealing with this right now. Do you have a, one of those that you can share?

Justin Etkin: Oh, man, that I can share, whoof share, that's a

Michael Koenig: big, that's a big caveat there.

Justin Etkin: I was just today it's too timely where just today coming from our office that we are that we're moving away from as we move into a different space and, as we're looking around to figure out what's our office move out. Going to look like and I'm looking around, I guess that falls on me and I have to figure this whole thing out. So that means sitting in the office and painting walls white today as we're preparing to hand the space back over to the the owner of the building. So I got a fresh one just today, where [00:42:00] Hopefully I didn't get any white paint all over my clothes.

Michael Koenig: And I've done it. No, I have a white stripe on one of my favorite Patagonia fleeces. And it is from an office move out back in 2017. It's real. It happens. You end up sweeping the floors and painting the walls. It's just one of those things. I love it. There you have it. Justin, thanks so much for joining me. Where can people go to uh, keep up with you and Tropic?

Justin Etkin: Yeah. I'm on LinkedIn. You can find me there. I I'm waxing philosophic on all things, procurement and data and intelligence. So you can check us out there and our website at tropicapp. io. If if you're in need of elevating your procurement function, we're here to help. For sure.

Michael Koenig: For sure. Thanks so much everyone for listening to Between Two COOs. I'm your host, Michael Koenig, and a very special thank you to Justin Etkin for joining us. Tune in next time for our next COO chat on Between Two COOs and be sure to subscribe on Apple Podcasts, Spotify, or wherever you listen to podcasts so you never miss an episode. Just visit BetweenTwoCOOs. com for more. And if you have a minute please [00:43:00] leave a review on Apple Podcasts and tell others about the show so they can get great advice from phenomenal COOs like Justin. Thanks for listening and Until next time, so long.