Coupa Blog

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The role of the CIO in the digital era

Today, every IT leader has to have a strategy for digital transformation. But what is digital transformation, and how do you craft a strategy? What is the role of SaaS solutions? Is it safe to leave the confines of the ERP?   Those were the issues that were top of mind at our CIO panel at Coupa Inspire ’17 last month. Coupa Executive Advisor Kendra Von Esh hosted a lively panel with Coupa customers Bob Worrall, Senior Vice President/CIO of Juniper Networks; Oscar Nafarrate, Director de Procesos y TI at Grupo Herdez, and Paul Tuxford, General Manager and Head of Change, Transformation and Integration at Avaloq. Paul is also the former CIO of the Global Fund, where he implemented Coupa. Kendra: What is your definition of a digital strategy or digital transformation? Oscar: When we talk about digital strategy in our company, it’s about how to help the global team achieve what our company wants to do in the areas of business strategy, competitive opportunities, and risk management. We try to enable the company to do it in a faster way. We talk about how to speed processes, how to make them leaner, and how to get information about the market in a faster way so people take better decisions. It’s about how to do things faster, better, with less people, and make better decisions. Kendra: Bob, what is the digital transformation strategy at Juniper Networks? Bob: We purposefully try not to use that phrase. It's another one of those glorified marketing phrases. I think as was just pointed out very concisely and accurately, it's all about speed. It's how can we bring solutions to customers faster, promote our services and make technologies available to customers in a self-service mode, and how we can do our back office functions faster. Kendra: That means that IT leaders' roles are changing. What do CIOs really need to be focusing on in today's day and age? Paul:   Yeah, the CIO's role is changing, and it's not changing now. It actually changed three or four years ago. What the business is looking for now is a way of enabling new business models. How do I enable my salespeople to collaborate, to enter new markets, to sell new products? That's what they're looking for technology to do, not just to have a safe backup and a good data center and a fast network connection. Kendra: How has software as a service and cloud changed the way in which your organization operates, is staffed and supports your business? Paul: I joined the Global Fund in 2013. It's a UN organization funding AIDS, tuberculosis, and malaria programs around the world. So, very focused on the outcomes in country. IT had never been a priority. When I got there, about 17 percent of the IT budget was running the data center, running SharePoint, running email--all that stuff that I just said that you didn't need to do. The transformation has been to move away from that infrastructure-heavy sort of organization and look at how we could project into the countries and enable business models that were never possible before. One of the things that the CFO and CPO and myself as the CIO realized was that we were putting about $2 billion worth of funding into the countries and tracking it on Excel. We didn't have that visibility before spending was happening, where things were moving, where things weren't moving. We couldn't facilitate that. We changed from “boxes and lines” IT to enabling collaboration in a way that could never have happened without the cloud. Oscar: Software as a service has helped us in not thinking too much about the technical issues, more about the business. That’s the CIO role now--to enable the business thinking about the business, not thinking about the technology. That's one part. The other part is there are some processes like purchasing, for example, that need a lot of mobility. I think it's easier to do this if you have SaaS. Bob: I think with every sort of new iteration comes pros and cons. In the case of SaaS, for me, one benefit is sleep. It's a little bit easier to not have to worry about what's going on with my SaaS providers, so I sleep easier. On the downside, in days gone by, I rested a little bit easier knowing that I had complete control of the data. Now the data's sitting somewhere in Amazon, or Azure, or somewhere else. And yeah, it's probably being supervised and managed well, but my board doesn't care about that. They just want to know, what are you doing to control data spread and access? It requires a slightly different skill set from our infosec team and our data management team to handle these issues. But I think the key benefit is being able to offer solutions to the business much more quickly than we've ever been able to before.

The real SaaS differentiator: Cloud native

Back in the day when cloud computing was new, simply delivering your software as a service from the cloud was a differentiator. Now that many software companies have migrated their solutions to the cloud or created SaaS versions of them, it’s gotten harder for buyers to figure out which solutions will really deliver all the benefits of SaaS—business agility, speed of implementation, ease of use, and continual innovation. What buyers should be looking at are the differentiators between native and non-native SaaS applications. There’s a big difference between existing applications that have been ported over to the cloud, and solutions built in the cloud from the ground up. Tracing paper If you’re developing from scratch in the cloud, you have a blank sheet of paper. You have the capability to design whatever you want, taking full advantage of new techniques and mediums, learning from the works that have gone before. You have an opportunity to reconsider whatever business process you’re designing for, independently of what already exists. If you're rewriting an application to host it and deliver it in the cloud, you're tracing. You’re putting a piece of paper over an existing drawing and recreating it. You might be able to take your pencil and eraser and make a few modifications, or add some new colors, but largely you’re going to be duplicating the same work, with the same limitations. You have to do it that way because you have existing customers that you’re moving along with you. You could say, "Hey, now's the time to look at this differently and develop something unique." But, that’s a risk. That means your customers would have to change in a massive way, and they may not be open to it. You’re far more likely to say, “Let's not go crazy. We can add a few things, but for the most part, let's just duplicate what we have on premise using this new cloud technology."  Built for the power user If you go that route, that means you’re taking something that was developed 10, 15 or 20 years ago and keeping it mostly intact. At that time, enterprise software was being built to meet the requirements of power users in the corporate office, not the average employee who only needs to log in to the application periodically. We didn’t have mobile. We barely had Google. There wasn’t a lot of thought given to ease of use, because the plan was always for these power users to get in-depth training and support from a partner ecosystem. Everyone else who had to interact with the system either they went through one of these specially trained power users, or they found a workaround. Business has changed a lot in the past couple of decades, and rather than having these system gatekeepers, the thinking now is to push the work to the people with a vested interest in getting it done fast and error free. In HR, for example, the thinking today is “let's not send out paper documents for employees to fill out and then send back in, which we then have us key into the system. Let's give them a very simple electronic interface where they can go in and manage their own information.” It's like managing your personal bank account or trading on E-Trade. We don't need to go to a broker anymore. We can do it ourselves. Why? Because the solutions are simple and easy.    As easy as Amazon! Today, everybody wants simple and easy. If you've heard it once, you've heard it a thousand times: Business applications should be as easy as buying something on Amazon. People expect the technology experience that they enjoy as consumers to carry over to their business world. To accomplish that with an older product, you would have to rewrite the whole thing. So, putting it in "the cloud" usually means giving it a prettier user interface on top, but for the most part, it's the same features and functions in a different technology stack. That’s a very different thought process from looking at modern, open source development languages, Amazon Web Services or Microsoft Azure, REST and SOAP APIs and asking "Okay, what can we do here to solve this problem?" You’re taking full advantage of the last two decades of technology innovation, and you’re also thinking differently. Tale of two Ferraris The other thing about older solutions is that a lot of them are rollups. Over time, software companies expand their capabilities by merging or buying each other and integrating their technologies. Moving these rollups to the cloud gets even trickier. You might be looking at a UI that ties everything together on the front end, but there are separate systems with different code and different databases behind the scenes. You don’t have all the benefits of an end-to-end integrated process built on a single code line. It's like looking at two Ferraris that both look awesome from the outside, but one is all Ferrari parts. They all fit together and they all work together.  The other one is just a Ferrari chassis. You lift the hood and you've got a Chevy carburetor, a Ford engine, and Honda spark plugs. So, if something goes breaks and you replace the Chevy carburetor with a   carburetor, and now you've got a problem connecting to your air vent because the Chevy had a square connector and the Ford one has a circle. So, now we've got to replace that piece too. Oh, by the way, if I replace that, then I affect something else. That increases cost and it slows down and limits innovation, which is one of the things you’re buying with SaaS. The product you buy today is not all you’re ever going to have. Every few months, there's going to be another enhancement, integration, partnership or acquisition. It’s much easier to knit these pieces together seamlessly and roll them out in a native SaaS platform. If you think about the upgrade train that you have with Facebook or LinkedIn, or Salesforce on the enterprise side, upgrades on these platforms are rolled out literally overnight. It’s the data, stupid The other problem with rollups in the cloud is that you typically don’t have a normalized database. The reason we're putting in these systems in the first place is for data, data, data. We're digitizing the world and digitalization just means converting everything into data so we can leverage it, analyze it, group it, compare it, calculate off of it and make decisions . . . now . . . like, right now. When you have multiple systems that support an end to end process and they're not built on one code and platform, you now have to go into different data sets and pull information and normalize it. How real time and accurate is that going to be?  If you don't have all the data in one place, you don't get to leverage benchmarking amongst the hundreds of other organizations using the same system. You don’t get to leverage the community. There’s a real difference between products that grew up in the cloud, versus those that moved into the neighborhood later. The only way to tell is to look under the hood, and in my next post I’ll tell you how to do just that.   Kendra Von Esh, Executive Strategic Advisor, Coupa Kendra Von Esh, a former CIO at Veolia, has been a trusted advisor and CIO for the past decade developing value added strategies and solutions transforming businesses with technology. She has experience merging multiple lines of business and rationalizing application portfolios leveraging cloud strategies and solutions, thereby enabling IT to be agile enough to support a constantly changing business landscape. Von Esh joined Coupa last year to leverage her executive experience and active involvement in CIO communities and industry boards to create inspiring dialogue and change strategies cross-functionally.

3 big reasons why spend management should live outside the ERP

Back in the early ‘90s, ERP systems revolutionized manufacturing and supply chain management, giving companies an automated way manage the end-to-end process of purchasing raw materials to production to shipping to revenue. Today, ERPs have cemented their place as core systems to manage direct supply chain spending, production and financial results. Because of the millions of dollars of time and resources that companies devote to ERP systems, over the years, ERP software vendors have also tried to address indirect spending—the process for spending on things such as office supplies and basic services that the company needs just to run the business. The thought was that it was a similar process, and with a few tweaks and adds, this functionality could be configured into the existing system. However, after 20+ years of working with these ERP solutions, companies of all sizes and industries still don't have a clue where their indirect spending is going. It’s time for spend management—the end to end process for sourcing, contracting, purchasing and paying for indirect goods and services--to move outside of the ERP environment. This is a separate and unique business process, and we now have the technology to support it as such, and not as just a tweak or an add-on to the ERP. There are three major reasons why this has to happen. 1. It’s generic business process . . . With a few exceptions for industries that source complex services, indirect spending is not an industry-specific or even a company-specific business process. It’s not even specific to the size of the company. And, it’s not rocket science. It’s mostly just people buying the goods and services they need to do their jobs and keep the lights on. When you’re managing direct spending in a manufacturing process, you're buying raw goods, parts or partially assembled components that you're going to make into a final product. If I'm a company making riding lawnmowers for example, maybe I buy blades, or I buy steel and make it into blades. I buy motors, seats and steering wheels. Maybe I build the chassis myself, but ship it out for painting. Everything has to arrive in sequence to meet the production schedule and ship out on time to meet revenue goals. I’ve got to keep track of cost of goods sold and maybe a lot of other data and specifications related to the product for maintenance and compliance. It’s a complicated process, encompassing materials management and production planning, and it is unique to the company. Indirect spending on the other hand looks pretty much the same across every business. Even when buying very specialized services such as contractors for the oil and gas industry, it doesn’t even come close to the level of complexity of the ERP. It’s a process common to every business, the same as human capital management (HCM), customer relationship management (CRM) and order to cash processes.  That’s why we’re seeing so many companies move to SaaS solutions such as Workday for HCM and Salesforce for CRM. These each cover a standard business processes from end to end, can be deployed quickly, and can be leveraged across all parts of organizations globally and in any industry and easily integrated with the ERP. 2. That requires mass participation . . . In a manufacturing environment, the complexity and customization of the ERP system is central to its value. But for indirect spending, these are its downfall. These systems are designed for highly-trained, specialized super-users who are going to be in the system all the time, because it’s their job. But every single person at the company, from seasonal temps to top executives, needs a way to buy indirect goods. ERP systems are horrible for these casual users. By trying to throw this much simpler process into the maze of the ERP system, we've made it difficult for people to find what they need and get on with their job, which is not buying toner cartridges. The upshot is, they go around the system. Then spending is all over the place and the company doesn’t get the data they need to manage it effectively. To get the efficiency, visibility and savings on indirect spend, everyone in the company has to use the system, which just isn’t going to happen in an ERP environment.   3. And needs to evolve at the speed of consumer technology Any time you implement an ERP, you need to take a deep breath and hold it, because you could well be running that project for a year or more, stabilizing it, addressing the problems and getting into a steady state. Any time there's new technology that you would like to leverage, you have to go through a rigorous upgrade process, convert all of your customizations, or get rid of your customizations, or re-implement the system out of the box in some cases and start over. There has to be a pretty darn big business case to go back and ask for another few million dollars to go through that exercise all over again, so ERP is one of those core systems that just doesn't get upgraded much. And it shouldn’t need to be. It’s a system of record. Meanwhile, the consumer experience for shopping--which is all indirect spending is—continues to evolve rapidly. For example, Amazon is constantly making it easier and easier to buy products online. First it was just online shopping, then Amazon Prime, then one click ordering and now voice ordering through Alexa. The end game is to have no user interface at all. One day your smartphone will be able to figure out based on your habits what you’ve run out of and it will ask you if you want to order it. Or it will just go ahead and do it for you. In services, it wasn’t that long ago that you had to go through an agency to find specialized professionals; now all kinds of marketplaces are popping up where you can shop for contractors in any number of fields. That’s where we’re heading, that’s what people now expect, and you're never going to get that kind of user experience out of your ERP because of the way that those solutions have been designed. SaaS business tools are pushing out upgrades two or three times a year and doing a much better job at technology innovation. ERPs remain essential for supply chain and materials management, production planning, detailed construction and core financials. But the concept of the ERP megasuite that covers every business process is dying. We’re seeing that for standard business processes, configurable SaaS solutions that everyone can use do a better job of capturing all transactions, and with them, critical data that can be used to optimize the process. Like HCM and CRM, spend management is a complete business process, one that touches the ERP but should not be bound by its constraints. These other processes have moved outside of the ERP environment, and it’s time for spend management to do the same. Kendra Von Esh, Executive Strategic Advisor, Coupa Kendra Von Esh, a former CIO at Veolia, has been a trusted advisor and CIO for the past decade developing value added strategies and solutions transforming businesses with technology. She has experience merging multiple lines of business and rationalizing application portfolios leveraging cloud strategies and solutions, thereby enabling IT to be agile enough to support a constantly changing business landscape. Von Esh joined Coupa last year to leverage her executive experience and active involvement in CIO communities and industry boards to create inspiring dialogue and change strategies cross-functionally.

8 Ways IT will grow and mature in 2017

What will 2017 bring for IT? We asked some of the smartest CIOs we know--Frank Yanan, Victor Tung, Paul Tuxford, and Kendra Von Esh--to weigh in. They see IT evolving into a much more strategic function as technology advances. The march toward the cloud will continue, as will the drive to innovate with data. These are not new trends, but as they unfold, they are creating challenges and opportunities that will take IT in new directions. Here’s what our experts think companies should look for and strive to capitalize on as we begin the new year. 1.    Blurred lines between business and IT The lines between the business and traditional IT are going to continue to collapse. Technology skills are fast becoming a core component in any type of role. We’ll see fewer people who are pure technologists or pure business leaders. Business people are going to become tech-savvy and people who are technology-savvy will be business-savvy. This will happen naturally as people that have grown up with enhanced access to data and mobile and the internet of things (IoT) enter the workforce.  2.    Embracing shadow IT As these lines blur, so-called shadow IT—business people buying and running their own tools, or maintaining a secret server under the desk—will continue to grow. This has always been a difficult element for IT to contend with. The demand has always been there, but SaaS has created a new ease of procurement and management that lead more people to operate in the shadows. However, even the most tech savvy business people are usually untrained in governance, infrastructure, architecture, system performance or security, and may unknowingly bring risk to the organization. Nobody likes the term governance, but IT has to find ways to help employees understand the risks and tradeoffs, and find ways to partner with them to bring them into the fold where security and compliance can be managed effectively.  3.    Streamlining security With so many data breaches in the news, security is naturally a big focus, and the security product world is going crazy. A lot of organizations are getting to a point where they have dozens and dozens of different tools, and that can become a security risk itself. It’s too many tools to try to support and patch and manage access for. Similar to what we’ve seen in the application and infrastructure areas over time, in order to become more cost effective, the security tools landscape will likely need to condense as well to more of a complete, suite-based approach. 4.    Adding a new customer IT has traditionally considered its customers to be internal, but as technology moves to the cloud and becomes more self-service, the focus will shift to external customers--the people that are paying your company for its goods and services.   IT will increasingly support the front-end, revenue-generating part of the business by presenting customers by delivering data at the right time and in context. Simple things, such as using technology to be able to tell customers where their delivery is, or helping them find things more easily in a store, will become a basic expectation of IT. 5.    Managing more data IT will have a wealth of data they can draw on to service their new external customers. SaaS providers are sitting on a mountain of data that they can share with customers. The number of ‘smart’ devices is booming. Everything from coffee machines to jet engines are now nodes on the IoT transmitting data back to their owners. Data from the web and social media, and from many new public and private sources can be brought in to find insights from which to develop value added offerings. 6.    Growing data maturity The discipline of using data within an organization will continue to mature. As the hype around big data dies down, organizations are recognizing it's not about how much data you put in a data lake, or in a Hadoop environment, or how much data you purchase. It's about picking the right data to focus on, and bringing the right people or technology into the organization to do data analysis. Some devices will generate data that is assessed and discarded, others will generate data that is stored and analyzed. Increasingly, these generated data points will be assessed by cognitive software robots. Artificial intelligence (AI) is now at the cusp of acceptance into industry, and will change both the nature of IT work and the nature of many white-collar roles in large industries. If you can provide a computer with the information to make a recommendation and take an action, why pay a person to do it? The one person that every company needs: A data scientist. The true data scientist can engineer the data to be relevant and focus on the right things. They understand the metadata and how data structures are created, versus people or machines preparing or combing through data without a holistic understanding of how all the pieces fit together. 7.    Rethink the organization Technology within the organization is moving from being centralized and controlled, to decentralized and more loosely controlled as increasingly vendors come to market with end-to-end offerings that address a business process with a mix of technology and services. This lets IT organizations rethink their enterprise technology and supporting technology. That in turn leads to rethinking their data and what they can do with it, how they staff the department, and how it all fits with the business. The outcome is likely to be greater use of cloud solutions to push support, innovation and upgrades outside the organization, so internal IT can focus on the data and the customer. 8.    Evolution of the CIO The role of the CIO will continue to change. Traditionally, the CIO role has basically been managing a P&L and resources. The CIO of the future will be focused more on innovating to create competitive advantages for the company, versus running a technology operation to support the business. As more of the commoditized plumbing gets outsourced, the CIO’s focus will be more on strategy and enablement. We’re already seeing that reflected in titles such as chief digital officer and chief innovation officer. So much of what IT does is utility-related, and all that still needs to get done, or people are going to pick up the phone and call you, but there isn’t a lot of value added. The new breed of CIOs have to find a way to get all that done, and will need to add partnership and collaboration skills, plus thought leadership and a bit of an entrepreneurial mentality for solving business problems. They will need leadership skill to bring the organization together, to digitize everything, to leverage data and figure out how these end-to-end business services are integrated for the best internal and external user experience. Frank Yanan is Global Head of Security Services for Zurich Insurance. Victor Tung is CIO, Corporate and International at BMO Financial Group and a member of the Coupa Executive Advisory Board, as is Paul Tuxford, an independent IT adviser and former CIO of The Global Fund and Credit Suisse. Kendra Von Esh is Strategic Executive Advisor at Coupa, and the former CIO of Veolia.

Value optimization is the ultimate promise of SaaS

SaaS is not just changing the way software is delivered. It’s changing the way software vendors and customers work together. What’s changed the game is data. Vendors, with visibility into performance data across their whole platform, now have opportunity to understand the best practices of successful customers and create performance benchmarks for different customer types and industry segments. They can use these data insights to help all of their customers get the maximum value out of their software implementations. And, they have the motivation to do so. Because of the time-based subscription model, vendors have an ongoing incentive to make sure customers get continued value. With on-premise software, account management often consisted of reactive customer support and efforts to sell add-ons and upgrades. Now the function has been transformed to Customer Success, a more holistic effort where the vendor and customer jointly share the responsibility for achieving value throughout the product lifecycle. This is still relatively new for both customers and vendors, but as SaaS companies mature and collect even more data, customers’ expectations around the value they can get from enterprise software are starting to change, and vendors must respond. In the early days of building the Customer Success organization at Coupa, if a customer said, "Hey, I'm having trouble," I wanted everyone who could to jump in and help them out, because there’s no higher priority than customers. Now, there's still no higher priority than customers, but as we and other SaaS vendors scale and build out dedicated teams with a roster of position players, we need to create an integrated customer management framework to ensure that measurable value remains front and center across the handoffs that take place in the early phases of the customer’s deployment. This will vary from vendor to vendor depending on their offering, but here’s roughly what that should look like. Value discovery It starts when a customer is in a selection phase, and the goal is value discovery—figuring out the specific business value they're trying to achieve with the software. This is already part of the process in most enterprise software sales. What’s new is the degree to which SaaS vendors have data to help customers hone in on very specific goals. Some customers already have one or two goals in mind, but more often they just know they need a system to do things better, but don’t have a clear definition of what “better” looks like. In this phase, the solutions consulting and business value engineering teams use benchmarks and platform data to help the customer define between three and five specific outcomes that will be the focus of the first year or so of the deployment. For a Coupa deployment, examples might be, save 15% on indirect spending in the next 12 months; cut accounts payable costs by 23% in the next 18 months, and realize savings of $5 million by leveraging early pay discounts. There’s a wealth of information that comes out of this process, but there might be a lag of several months from when we reached an agreement on our value targets to when we finally move into implementation. During that time, everyone goes away and works on different projects. So, the deliverable for this phase is to have the information and agreement packaged up nice and neatly to hand over to the services team. Value realization Once we move into implementation, the professional services organization starts putting together a configured solution designed to realize the value targets outlined in the discovery phase. The key deliverables for this phase are a handoff document that's shared between solutions consulting and professional services teams, and a transition call between the selling team, the solutions consultants and the professional services teams to get everyone one the same page. There’s also customer implementation kickoff meeting, with the solution consultant presentation to make sure that value thread makes it intact into this phase. Again, most enterprise software vendors attempt to do this in some fashion. We also encourage every customer to attend a success metric workshop where we use data and benchmarks to help the customer take the high-level goals from the value discovery phase and break them down into incremental operational metrics. This workshop might be done in month one of an implementation, and the Customer Success Manager may not get the customer for several more months. It’s important at that handoff to be able to say, "I was with you six months ago in this meeting, and I know what your success metrics are,” and for the outcome of the workshop to be packaged up and available for everyone’s reference. Value optimization Once the system goes live and is in production, the focus turns to value optimization. Now it's up to the vendor and the customer to work together to optimize the system and processes to achieve the success metrics agreed upon during value discovery and value realization, and set new ones as you hit the initial ones. There’s potentially no end to this phase. Value optimization is the new frontier with SaaS. With on premise software, vendors simply did not have the visibility into the data to be able to see if the original goals were met, much less help the customer fine tune their performance on an ongoing basis. With SaaS, we do. Value coaches? As SaaS organizations mature, Customer Success will become more and more data driven. Account managers will be empowered with simple dashboards where they can match actual performance data against what’s been laid out in the success roadmap, and a playbook so they know what actions to take based on whatever data insights they see. They’ll be more like partners or coaches than sales people pushing upgrades. SaaS companies need to be thinking about the data and tools they need to support that effort, and they need to be building an internal customer management framework like the one I’ve described for pulling it all together and creating that partnership with the customer. Each SaaS organization has different dynamics and variables, so this framework isn’t one size fits all. The target market, the sales process, the size of the sale and the customer lifecycle will all determine what your company’s framework will look like. Does this take a little bit more time than just closing deals and implementing them? Sure, in the beginning. But once you get the framework in place, it keeps everyone on the same page, focused on the same goals, working in tandem to prioritize and optimize for defined value, not just “something better.” Ravi Thakur is Senior Vice President, Services, Customers Success and Adoption at Coupa. Prior to joining Coupa, Ravi spent over ten years at Oracle building and leading a variety of teams in the applications product line. He was instrumental in leading a number of cross functional teams to streamline the product management and development processes after the Peoplesoft, Siebel, and JDE acquisitions.