Keep up with the changing finance and procurement landscape by reading the latest articles by thought leaders and subject matter experts on cloud, strategic procurement and finance.
This week: Is there something about the fall air that turns people's thoughts to collaboration? There's always a lot of talk about the need to be more collaborative but there seems to be more than usual of late, at least in the online channels where we hang out. We're seeing some interesting perspectives on the skills needed to collaborate better, who the tops collaborators are and how tools are evolving to support collaboration.
We're perpetually interested in seeing how the cloud computing journey is unfolding, and what new trends are cropping up. As cloud computing moves into the mainstream, adoption remains uneven. For many, there is still a need for some myth debunking to be done before they can fully embrace the cloud. For others futher along on the journey, IT is stepping up its role, which will surely lead to a shift in the way solutions are managed -- and sold.
True or false: Cloud computing is a cheaper, less secure solution to data storage that will eventually make the CIO and IT department redundant. All false! We’re several years in with cloud now, yet certain myths persist. Alistair Banks of Deloitte Australia thoroughly debunks them and offers some much-needed perspective.
The days when business leaders went off and bought their own cloud solutions are rapidly coming to an end. CIOs and IT departments have retooled their skill sets for the cloud era and are now reasserting control. Are they taking over just in time to avert catastrophe, or just in time to get blamed for it?
Can procurement collaborate effectively with engineering groups? The answer is yes, argues Paul Teague in his blog on Procurement Leaders, and empathy is the key. Listening and finding common ground is an essential skill that can be applied to collaboration with marketing, finance, IT and other groups as well.
It seems procurement isn’t the only group looking to work more collaboratively. As companies look to stay competitive, businesses are emphasizing the finance viewpoint in strategic and operational decision making and on collaboration between departments across the board.
When you work online, are you creating a unique artifact or working in the context of a larger platform? If your work can only be shared by passing it around, you are using “digital paper.” Never heard of it? Dan Woods explains its impact, and why the watchword for the next generation of digital tools is . . . wait for it . . . collaboration.
One of the major trends in technology today that mostsparks my imagination is the Internet of Things (IoT). The premise of the Internet of Things is that ordinary devices around us will soon have intelligence and the capability to interact with each other and their environment. Your dishwasher, for example, could be equipped to gauge its fluid levels and take the initiative to text you a message: “Hey, I’m running low on rinse aid – would you like me to place an order for some on Google Express?” You would click “yes” and your dishwasher would place the order.
Your connected toothbrush could transmit data about brushing habits and bristle wear to your iPhone—or perhaps more ominously, to your dentist or dental insurance carrier. There are a lot of possibilities, not just for consumers but for business too, and specifically for things like procurement, sourcing and inventory. We already have procurement automation. Now all we need are connected devices to let us know what we need and place the order. I think this will happen sooner rather than later.
As more and more appliances are outfitted with sensors and connectivity, consumer expectations will change. They won’t find everything the Internet of Things has to offer useful, but they will come to expect a certain capability to automate predictable chores and to get information they can use to improve their lives and spend their time and money more efficiently. As we’ve seen with online shopping, once consumers experience a new level of convenience in their personal lives, they expect the same at work. In fact, IDC predicts that the IoT market opportunity will be over $7 Trillion by 2020 with over 25B devices connected.
The Internet of Things is already coming to business.For example, there are companies building light bulbs that not only tell you when they’re about to burn out, but also act as sensors, collecting and transmitting information about the number of open spaces in a parking lot through a network to business owners so they can reduce energy costs and implement a variety of other applications.
Where I think the IoT is highly relevant to procurement is in the area of tracking and visibility, replenishment and predictive analysis. There a lot of things in a company similar to rinse aid and toothbrushes that need to be replenished based on fixed-term contracts or predictable cycles. Take supplies like paper for example. Companies can order this through an automated system, but someone has to go to the stockroom and see how much there is on hand and place the order, or ask someone else to.
Imagine having a smart rack or pallet that stores reams of paper and can tell by the weight on the pallet when it’s time to place an order. The appliance would notify the office manager and prompt him or her to approve a new order, which it would then have the means to carry out.
Sound far fetched? We long ago solved the problems of creating smart devices, such as printers that can tell you they’re running low on ink or toner. The Internet of Things is the next step. It’s hooking these smart devices up to networks, and we have APIs (Application Programmer Interfaces) that can connect networks, conduct transaction and transmit information back and forth.
The business benefits of this, I think, are obvious. For one thing, automation of predictable tasks frees up employee time to work more strategically. It also gives you real-time visibility, reduces the risk of loss of productivity or resources due to inefficient replenishment.
Business applications for the IoT are closer than you’d think. Much of the infrastructure is already in place. It’s just a matter of finding the use cases and integrating the actual devices into this network. You can hook a smart device into Coupa today using our API’s, and I look forward to the day when a customer applies Coupa as part of their IoT solution. We’d love to hear your thoughts on Coupa and the Internet of Things.
Darayush Mistry is Vice President, Product Marketing, for Coupa.
Attitudes toward the cloud have shifted over the past several years. Business users were early adopters, pushing forward with cloud solutions, sometimes with and sometimes without IT.
Now IT is getting new pressure to go to the cloud from perhaps a surprising place: the office of the CEO. So said NetSuite CEO Zack Nelson in an article on ZDNet earlier this week. According to Nelson, CEOs are starting to sound more and more like CIOs:
“The CEO is saying things like, 'We've got to go faster' and 'Where's my data center?' The CEO is being pressured by the board who are telling them, 'We've got to create new business models.’
"So they go to the CIO and say, 'We need to reinvent things,' and the CIO says, 'Sure, that will take five years because we're on such an ancient system'. Now the CEO is taking things into their own hands. They're saying, 'That's not acceptable, we've got to get a platform we can experiment on'."
It’s all part of what Nelson says is a shift that he’s seen take place:
"Seven years ago the mind-set was 'cloud never' - we'll never use cloud for anything. Five years ago it was 'cloud maybe'. Now by and large, the decisions is 'cloud first' because everyone understands. Five years from now, are you really going to be buying software to run on premises? No one believes that."
"I think a lot of the fantasies we had from the early days of the internet are coming true. The democratization of the ability to make new business models, that the cloud platform has brought, means you can realise the internet dream. You can make something anywhere and sell it anywhere.
The conservative 'over my dead body' buyer is getting squeezed in the middle. And the body may be dead already."
Is Silicon Valley in another tech bubble? Some say yes, some say no, but it seems more and more people lately are willing to entertain that notion.
Tech IPOs are certainly on the rise and we’re seeing some of the same wild spending by early-stage startups that marked the last bubble. But I don’t want to talk about whether there is or isn’t a bubble.
The pundits will talk because that’s their job. But that doesn’t help me, or other leaders do their jobs. As a CEO of a venture-funded software company, I have to react to this bubble talk, but how? Should I panic?
We can debate all day long about whether we're at a peak or which direction the market’s headed. Undoubtedly there are companies that are spending a bit recklessly, that have overpaid for acquisitions or whose public offerings have sold at inflated valuations. In the aggregate, that could point to a trend, but that’s not a very useful discussion for individual companies to have.
The more important question seems to be,how can leadership actually gauge whether or not their company is overspending or otherwise exposing itself to unnecessary downside risk? The bubble discussion is a call to do a gut-check and make sure that come what may, the fundamentals of your particular company are sound.
To determine the answer, here are three key areas to look at: What’s happening with your customers, your employees, and finally, the investment community.
Are your customers paying and staying?
First, you have to look at what's happening with your customers, especially if you’re in hyper-growth mode. Are your customers paying you? Are they staying with you? And are they paying you more and more as you grow?
One can’t help but agree with venture capitalist Marc Andreessen on this point: A lot of these companies are only spending money. They're not making money. They're just technology projects. They got some funding so now instead of eating pizza they’re eating catered lunches, thinking that means it’s a real company.
You need to have real customers paying you real money to have a real company. The vast majority of them should be staying with you and growing with you, and you should be continuing to get more of them at a steady pace, all the while monitoring your metrics to make sure your growth is solid and sustainable.
Are your customer acquisition costs right for your industry? Are your margins legitimate for the longer term? Are you differentiated enough from your competition to command a continued premium? Is the product sticky and likely to continue to deliver value for customers for the long term? Are your customers successful with your offering?
These are the basics and fundamentals of building a business, and they don't change in cycles of extreme overspending, or underspending.
“Everybody got they cups, but they ain’t chipped in”
You also need to be listening closely to employees and prospective employees and taking the temperature of the conversation. Is everyone talking about going IPO, going IPO, going IPO?
It’s natural for people to be enthusiastic about the prospects of the company, but that needs to be balanced with excitement about what they’re doing. Is the role they hold at the company a win both for them professionally, and for the company? Are they truly eager to contribute now and over the longer term? Are they sober about what it takes to build a great company, or are they looking for a cheap ticket to an early retirement?
If it starts to feel like too many people are just looking to hop on a gravy train that’s a problem. It reminds me of a line from the song “Gin and Juice” by Snoop Dogg: “Everybody got they cups, but they ain't chipped in." In other words, there are a lot of people who want to come to the party and drink up, but don’t really want to help contribute to the cause.
If you’re a fast growing company, of course you're going to attract some freeloaders. You need to watch for this kind of attitude across the company, and, you need to react quickly to it when you see it and either acculturate these people to your company values or show them the door.
Checkbooks are open
Certainly there's an incredible amount of excitement in the investment community right now. I recently attended a couple of pre-IPO conferences put on by Morgan Stanley and Deutsche Bank for the purpose of connecting growth-stage companies with public and private institutional investors.
I was amazed at how willing and interested people were to get involved with the company we’ve been building, in some cases with very little knowledge about the company or industry. That to me is clearly a warning sign that perhaps we are on the edge of a bubble, and our company could be part of that—if we chose to be. Checkbooks are out and pens are poised. But we're not yet ready or willing to take any of that money, or go faster than we feel is prudent.
The thing to ask yourself in times like these is, are you just trying to take money because it’s there for the taking? Or do you have a well-thought out plan for use of those funds, one that will deliver handsomely for those investors over the long term?
If you’re willing to take lots of money without clarity on how best to spend it, or on the flip side, if you’re willing to write a big check with a relatively vague idea of where the money is going, you’re getting caught up in the frothiness and perhaps starting down a path toward a loud pop rather than building a sustainable company.
Where do we go from here?
It should be expected that when a company reaches a certain phase in its growth, it needs to spend more money to compete for talent and meet the expectations people have of a more established, successful company. That might mean a nicer office and a more professional environment, better food and a nicer holiday party.
There’s nothing wrong with spending some money on that; it’s part of the company’s maturing process and you should be celebrating your successes—to a point. Better office furniture, yes. Aeron chairs for everyone, no. Bringing in lunch a few days a month, yes. Having it catered by a five-star restaurant… not so much.
If you’re starting to see a lot of this happening inside your company, or finding yourself spending a lot on keeping up with the Joneses instead of investing in product and customers and core values, you might be headed for trouble. As a leader, you need to be scanning the horizon for these kinds of signs.
To lead your company and guide it through the storm, you need to maintain laser focus on the fundamentals, while at the same time keeping your eyes and ears open and reacting quickly to forces that might throw you off course. If there is indeed a bubble we may all hit some rough water for a time, but those in sound vessels should sail through just fine.
Through Coupa's cloud platform, we track hundreds of metrics to both continually improve our platform and help our customers be successful. The annual Coupa Benchmark is designed to help companies by sharing our data on key finance and procurement performance indicators.
The 2014 Benchmark includes metrics about ten critical areas where we commonly find that companies can easily improve in once they gain insight into what is possible. Today we're focusing on POs transmitted electronically by EDI (Electronic Data Interchange) and cXML (Commerce Extensible Markup Language), rather than via email or hard copy.
Email, while electronic, still requires manual intervention to enter data and move documents through processing systems. EDI and cXML allow for touchless processing. Buyers can transmit POs directly to supplier processing systems and suppliers can send invoices back, directly into buyer processing systems.
Many companies, large and small, are taking advantage of these electronic commerce methods. This metric is offers insight into how widespread that adoption is.
Year over year, our Benchmark shows adoption of these technologies increasing rapidly. Larger companies still lead, but medium and small businesses are closing the gap.
According to our 2014 data, the average large company (over $1.5B in annual revenues) transmits 39 percent of POs electronically, up from 27.5 percent in the 2013 Benchmark. At medium-sized companies ($250M to $1.5B in annual revenues), electronic transmission was 35 percent, up from 22 percent last year.
Small companies (below $250M in annual revenues) still lag, with just 23 percent, but growth has been rapid--last year adoption of cXML and EDI in small companies we studied was just 2 percent.
Faster, more accurate processing
Eliminating manual processing and entry of purchase orders reduces processing errors
and supports faster turn-around times. Buyers and suppliers both can decrease their
transaction time, making for a more streamlined, agile process and saving
everyone time and money.
Begin the transformation by identifying your high-volume PO suppliers. Find out if they
support cXML or EDI. For those suppliers that don’t support cXML or EDI today, request
that they do. It isn’t expensive to implement and there are many companies that help
suppliers set up this capability. The supplier will reap great benefits, as they can reduce
manual order processing, reallocate staff, and process orders faster. Plus, they can use
electronic ordering across all of their customers.
Small companies cannot match the vast resources of their larger counterparts, so this may be a more difficult request. However, even smaller suppliers have the opportunity to simplify transactions by connecting with buyers via networks like the Coupa Supplier Network, with a minimal investment of time and money. Note: Transactions through the Coupa Supplier Network were not included in this study.
Ravi Thakur is Vice President, Customer Success for Coupa.
About The Coupa Benchmark
This data was extrapolated from customer usage metrics on the Coupa cloud platform, comprising hundreds of thousands of global users, over 750,000 suppliers, millions of transactions and billions of dollars of spending. The performance metrics are based on aggregate data; no individual companies are identified.
To avoid skew from very small organizations or those that are very new to Coupa, we've only included customers that have accrued a year's worth of spending and at least $5 million in PO spending through Coupa. For reported averages, the extreme outlying data points are eliminated to normalize the data. To learn more click here.
As CFO of Coupa, a high-growth, pre-IPO Softwareas a Service (SaaS) company, I frequently have conversations with finance groups at customer and prospect organizations who want to make sure that our company will be around for the long term. It’s a reasonable conversation to have since they’re investing in our solution to support critical business processes. One only need look at the pre-IPO financials of any SaaS company to understand how for those uninitiated into the SaaS business model, this conversation can sometimes be challenging.
The most challenging conversations are with organizations that have decided to rely on the Altman Z-Score as their test of vendor viability. The Altman Z-Score is a measure that was developed in 1967 by Edward Altman, then an assistant finance professor at NYU’s Stern School of Business, to predict the likelihood
Through Coupa's cloud platform, we track hundreds of metrics to both continually improve our platform and help our customers be successful.
The annual Coupa Benchmark is designed to help companies by publishing data on key finance and procurement performance indicators. The Benchmark includes metrics about ten critical areas where we commonly find that companies can easily improve in once they gain insight into what is possible. Today we're focusing on metrics for PO spend on contract percentage.
This metric indicates what percentage of all PO-based spend is tied to vendor contracts. Typically, larger companies with more resources and processes in place have more
Are you on Al Gore's list for destroying more than your fair share of trees? Wish you had robots to handle all the repetitive daily tasks that fritter away talented people's productivity? Is checking inventory like a game of "who's on first?" Do you constantly have to badger employees to use your current software systems?
It doesn't have to be that way. Using better software can drastically reduce your paper use and provide your employees with better, more up to date information that's always accessible. If you can answer "yes" to eight or more of these questions, maybe it's time to think about making a change.
After transitioning into sales from leading a CustomerSuccess organization for several years, I’ve gained some unique insights about what makes an enterprise software project succeed or fail.
Many customers think that success begins at the start of an implementation, or on day one of go live. In my experience, success starts at the very beginning, the moment you realize you have a problem and begin thinking about your project and talking to vendors.
Having watched hundreds of customers on their success journey, a handful of similarities stand out as leading indicators of success or failure. These are usually present from the outset, so much so that I’ve gotten to where I can almost predict by the priorities presented in the first meeting what the project is likely to look like in 12-18 months. Will it be delivering
As much as we love the cloud, the ComputerWeekly.com. If cloud and on-premise applications are not connected, organizations are forced to resort to manual intervention which wastes time, can introduce errors and dilutes the value of both systems.fact of the matter is that today's cloud solutions need to live side by side with legacy applications. Simple integration models are key to getting more value out of both, writes Lindsey Clark in
Surprisingly, the majority of companies using cloud applications do not closely integrate them with on-premise systems. Clark cites a study from Ventana research, which found that 56 percent of organizations use spreadsheets or data exports as a means of integrating systems, while 39 percent rely on custom coding. That may be because they don't realize what's possible with the cloud.
Users are better off with what Alastair Bennett, a solution architect at Coupa, calls a “light touch” approach to integration. This simpler, more streamlined integration allows the