On-demand accessibility and results through Software-as-a-Service technological innovation

Software as a Service (SaaS) or On-Demand as it was originally called is certainly part of mainstream thinking today. However back in 2001 when the concept was first introduced it was a relatively new model ideal whereby organizations would pay a fee for using the application versus owning or licensing the software.

What made Virginia’s model interesting is that in the first 4 years of the contract, the vendor absorbed the bulk of the upfront implementation costs. Hungry for business, the vendor accepted the Commonwealth’s offer to be paid a percentage based on the volume of orders processed through the system. This of course provided them with the necessary impetus to ensure that eVA became “effectively” operational as quickly as possible.

- from September 20th, 2007 Procurement Insights post “Yes Virginia! There is more to e-procurement than software! (Part 2)”

The excerpt above is close to 4 years old and its enduring popularity (having been picked up by numerous print and electronic media publications) is significant. The excerpt supports a steadily growing interest in the SaaS model as a viable alternative to the more traditional ERP licensing/consulting model.

The SaaS model enabled Virginia to eschew the commonly “forced” one plan/one mind precept that often anchors and ultimately handicaps the majority of e-Procurement initiatives. (Henry Ford’s proclamation that customers can choose any Model T color they want as long as it’s black comes to mind here.)

This model meant that Virginia did not have to focus exclusively or predominantly on the cost justification normally associated with ERP implementations. In a traditional ERP implementation, the ROI would have been years down the road. Instead, Virginia was able to concentrate on the essential elements of the strategy itself which included open and productive collaboration with key stakeholders. This is a far easier task when the proverbial financial clock isn’t ticking louder with each dollar that is being spent.

However, the SaaS model does require a heightened level of collaboration and project responsibility on the part of the client. The client often needs to take initiative and create and drive the vision. SaaS solutions can (and do) provide the prerequisite level of freedom that is conducive to a far broader and more effective enterprise-wide collaborative engagement of all stakeholders.

Given the success of eVA, it is hard to imagine that other government entities do not possess at least some of the expertise and determination to generate similar results within the framework of an equally effective SaaS cost model. Hopefully the Commonwealth of Virginia’s success will act as a beacon to those public (and even private) sector organizations that are grappling with the challenges of a complex and diversified procurement practice.

Going forward, key things to watch for will be the will and insight of the client to facilitate meaningful dialogue with internal as well as external stakeholders, and the ability of the SaaS vendor to not only deliver a superior technological capability on a cost efficient basis, in addition to ensuring the solution being utilized serves as a support mechanism for achieving both the individual as well as collective objectives of the organization.

The take away lesson for today’s CPO is simple: learn how to truly leverage SaaS capability from a practical utilization standpoint to enable the unique stakeholders within the organization to achieve their specific goals, while keeping an eye on the overall interests of the enterprise as a whole. This holistic view is something I will talk about in greater detail in the next installment in the series titled “Dissolving the functional silos (removing the barriers of collaboration and influence within the enterprise).”

This past week, we had the pleasure of bringing all Coupa employees together at HQ for the 2011 Company Meeting. It’s only fitting that a company who takes pride in helping our customers spend smarter and save would be interested in doing the same internally.

Before the meeting, Steve Sovik (our VP Sales) ran a contest to see which employee could procure the cheapest airfare to HQ. Within hours of the initial contest email, there were 28 (28!) email responses, each better than the last.

The fares started trickling in at $410, then $331, then $314. Then the competition got really intense. An individual who had booked a more expensive ticket changed her departure airport to secure the lead:

OK, because I hate to lose… $275.10 Midway to SFO. Yes, with tax. Yes, round trip. No, not using my miles. No, I’m not sitting on the floor. See you all there!

But it wasn’t quite enough to win. Watch the video to see who won the 2011 Coupa Travel Awards and keep watching to get an inside look at Coupa’s amazing company culture:

Want to join the Coupa team? Check our current job openings here!

(Want to read the email that won “Most Hardcore Response?” Email cyn at coupa dot com.)

“It ain’t easy leading a software company these days. Customers are sick of poor quality, inadequate security, old-fashioned business models, and pie-in-the-sky claims for trends like open source. They just want software that works.” from “Execs Tell Software Makers: Some of You Are Doomed,” by David Kirkpatrick (May 6, 2005)

This article really resonated with me when I read it in 2005, especially since I was just getting over a miserable, over-budget, misguided foray into EDS. My experience with EDS les me to repatriate software development back in-house and back under my own roof. The end product was a far more robust solution that was produced at a fraction of the cost and time.

Tight internal controls and being able to maintain capability and accountability from start to finish was the reason in-house succeeded where EDS failed so spectacularly

But back then, I was blessed with a in-house team with the necessary experience to run an internal development process. Many organizations either do not have this option or do not want to reroute precious development resources from their primary business focus to act a custom development shop. (Or as one senior purchasing official from South Dakota lamented, “Are we in the software business or the procurement business?” after having to dedicate 2 full time resources to making their PeopleSoft application work.) So then what?

Offshore outsourcing? While a good idea in theory, the offshore outsourcing of software development requirements can quickly become a fool’s gold promise. Many companies who outsource indicate they do so to focus on their core competencies, or the absence of the necessary skill sets, as well as budgetary considerations. While these provide a reasonable basis for making the decision to outsource, they are not a Carte Blanche excuse for surrendering accountability for the project’s success.

The emergence of the Software-as-a-Service on-demand paradigm presents another option that is a perfect marriage of technological superiority and business model innovation.

Specifically, and with companies such as Coupa, getting what you want when you actually need it, in a manner that fits your requirements, is no longer an onerous process in which the procurement departments requests are relegated to a “we’ll get to it when we can” response from an over-burdened IT department.

In essence, today’s SaaS solutions are the programming tools of the next generation as individual platforms can be up and fully operational within a matter of hours versus the months or days associated with the consultancy model of the traditional ERP players.

Furthermore, and without getting into the single versus multi-tenancy discussion, SaaS vendors provide a customizable solution — be it in the areas of supplier engagement and management or spend intelligence analysis and utilization — that correspond with the unique and specific requirements of your organization.

Finally, and when you add into the decision-making equation the fact that a company no longer needs to make a significant, up-front capital investment, it is undeniably clear that we are indeed in the throes of an industry that is truly experiencing a high quality, cost efficient transformation that for the majority has been a long time coming.