Yesterday, I co-presented a web seminar with Dave Howard, Director of Central Purchasing at Reebok-CCM. Dave shared how he took matters into his own hands to get non-product spend under control. What makes his story particularly interesting is why he had to take matters into his own hands. First, there was a compelling event – an audit determined that the division’s spend controls were inadequate. And second – the alternative solution to Coupa was not viable. He determined he could not afford to wait for IT to implement the procurement modules, and that those modules, frankly, wouldn’t satisfy his needs anyway. In other words, he had to go rogue.

This is a common theme – legacy ERP applications that cannot keep up with the fast pace of business. The timing for our event was fortuitous, because in the last 24 hours I’ve seen a ton of coverage and commentary on the incredible challenges the CIO faces with their ERP investments. Two in particular caught my eye.

1. The CXO ERP Xmas Letter laments to Santa how his company’s ERP vendor “said that we had to upgrade to their current version as they were dropping support for the version we’re using” (which seems to be a common refrain from customers of the largest spend management vendors too).
2. My new colleague on Coupa’s marketing team (welcome Jeannie!) pointed me to article on CIO.com about ERP’s Paralysis Problem and the Repercussions for Businesses Everywhere, which argues we should “deep-six” the term ‘ERP’ “to ensure that there is no future association between next-generation business applications and the long-standing failings of monolithic ERP software deployments.” There’s a lot of angst in the IT community around their ERP investments and initiatives.

Which got me to thinking about inertia.

Procurement, Finance and IT are all aligned behind a common set of objectives to cut costs and operate more efficiently. That should make it easier to move forward with smarter spending practices and broad cost savings initiatives. But inertia holds them back.

In the web seminar yesterday with Dave Howard at Reebok-CCM, I compared the situation facing so many companies to what Webelos (i.e. Boy Scouts) must go through trying to solve the Inertia Experiment to earn their science badge. On one hand, the weight of burdensome ERP applications weighs down on Procurement’s smarter spending platform; and on the other, lack of buy-in at the executive and end-user levels makes progress hard. So when the procurement organization pulls on the string to move their initiatives forward, they can only go so far before the board rolls off its juice can ‘wheels.’ If they pull too hard, the string breaks. The inertia of the ERP is far too great.

Now this is where it gets really interesting. When Dave Howard ran into this problem at Reebok-CCM, he experienced a compelling event (an audit) that made his desire to pull the cart forward all the more pressing. He also knew that organizational and technology inertia were impediments too large to dislodge quickly. His solution – leave the existing cart where it is, and build a new spend management platform for non-product purchasing on top of Coupa. He carefully recruited executive support, selected a low-cost solution that he implemented without IT resources, and deployed slowly in phases, all the time building more internal support for his initiative and proving the value to the organization. It’s been a courageous effort, and testimony that one dedicated purchasing professional can in fact have a large impact on his or her organization’s ability to save money and operate more efficiently.

But not everyone has that much courage, or a compelling event to spur action. The question, then, is how to solve the inertia problem with the full support of your CIO and executive management team. In a phrase, “option value.” Stay tuned for more on that…