Coupa Blog

Coupa is a company of talkers, passionate about sharing tips, tricks and advice for improving finance and procurement and saving companies of all sizes time and money. But we’re not the only people with opinions and ideas. We’d love to hear from you so join the conversation!

 

The surprising truth about humans and artificial intelligence

Artificial intelligence is not new, but suddenly everyone seems to be talking about it. As I explained in my last article, we have hit an inflection point with computing power and data that is finally allowing for commercial applications of this technology, and that’s what all the excitement is about. It’s only going to get faster and better from here on out. Along with talk about the new possibilities, there is also a lot of fear about people possibly losing their job to a robot, or even becoming irrelevant. Should humans worry? Artificial intelligence expert Andrew Ng, the founder of the Google Deep Brain Learning Project and the former chief scientist at Baidu says yes. How much? About as much as we should worry about overpopulation on Mars, says Ng. In other words, any such scenario is unimaginably far in the future. Narrow problems For one thing, the problems that AI is solving now are very narrow. Despite the wow factor of being able to shout a command at Siri or Alexa and have a task performed, when you get right down to it the tasks they are performing are rudimentary. But the bigger reason is that the robots need us. What makes technology good is the fact that people are involved in it. You only need look at the evolution of software up until now to see that humans are essential for AI even to exist, and that our relationship will always be a symbiotic one. As little as ten years ago, a lot of our approach to technology was, "Here you go, that's your interface, get on with it." And you think, "Crikey, how do I use that? I have no idea." And then you give up and move on. For example, if you look at the software we had in procurement back in the late '90s and early 2000s for example, no one really could use it because it took five years to get the system up and running and then you had a whole bunch of screens and you needed a lot of training to do anything at all. It never really worked, because we’re a bit belligerent as a species. We’re not going to use something just because it’s forced upon us. What we have now is much simpler and easier to use, so therefore people use it. How to train your software When you get people using your software, the system gets more feedback, which it uses to make things even simpler. Then more people use it, and it gets even better. That's what's happened with Salesforce, the first cloud-based software to be adopted on a mass scale. Humans taught it how they wanted it to behave, and they continue to do so.   The same has happened in other areas. Back in 2000, before there was Facebook, in the UK there was a social network called Friends Reunited. It was not that much different than what Facebook is doing now. It got up to about 15 million users before it died a slow death. What Facebook did a better job of was learning from humans and evolving. You may think of Facebook as social in that everyone can share and comment on pictures of performing cats. What I think is social about it is that you have a billion people intimately involved in the software development process, not because they’re part of a formalized user group, but simply because their every interaction feeds data back into the process. Fueled by people With the cloud, no one develops software in isolation any more. If you look at all the disruptive technologies that have taken hold, they've been fueled by an ever-growing amount of data from an ever-growing number of people using them. They’re not using them because they've bought them, but because they want to.   There’s a very predictable trajectory to getting to that place where people want to interact with the software. You have an early version with a small number of adopters who accept and then ultimately reject it. The next iteration solves some of the problems of earlier attempts, so it gets more adopters and more feedback, and it gets better, and so on. There’s a chain reaction that happens. Eventually you get to mass adoption, and these technologies just become a part and parcel of peoples’ everyday life, like Facebook and cell phones and Google. There’s a hell of a lot of work and failure that goes into getting to that point, and then you make that leap. But it’s all based on the feedback from the human. Without people, it wouldn’t happen. That's why I don't think humans will ever be out of the picture because no matter how good artificial intelligence is as a technology, it can’t exist in a vacuum. If people aren't engaged with it, you don't get that feedback loop. Not standing still People aren’t going to stand still either. We've been at this innovation thing for tens of thousands of years. When agriculture was invented, people no longer had to hunt and forage for their food and they turned their attention to perfecting farming instead, and that’s worked out rather well. More recently, when automation came to the coal mines in England, people didn’t sit on their backsides doing nothing. They became mining engineers or machine engineers.   For those that are worried about the threat of machines taking over, it's just not going to happen. For AI to evolve and for a business to evolve, it means the people trained in the machine and using the machine will have to evolve too. People will still have massive influence over the technology.   Our activities and skill sets will change. When machines take on some of life’s more mundane, repetitive tasks, human behavior and quality of life goes up. Work life probably won't change for a long time because people still need to talk to people, buy stuff and pay people.   We’re not going to run out of problems to solve any time soon, which is all the more reason we need to free up the creative energy of humans: To work on really big problems such as global warming, disease, and people not having enough food or clean water, and eventually, hundreds or thousands of years from now, figuring out how to live on Mars. Paddy Lawton is General Manager, Coupa Spend Analytics. He is the founder of London-based Spend360, which was acquired by Coupa in January of 2017. Prior to that, he was the CEO of  Digital Union. He holds a BSc in Computing and Software Engineering from Oxford Brookes University. To hear more from Paddy, download our webinar, “Cutting Through the Noise: A Pragmatic Look at Artificial Intelligence’s Impact on Spend Management” 

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.