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  • September 23, 2019
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  • Eric Tan with Tushar Rawal, Srini Konakanchi, and Prasanna Kumar
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  • IT & Technology
Every time I’m with a group of founders, young technologists, or IT leaders, a common question I get is, “How do I scale?” Growing a startup is no easy feat. You don’t have to look very hard to find advice columns about the best ways to scale your energetic young business. But while there’s a lot of good advice around handling people and processes, one thing that often doesn’t get enough attention is just how challenging it can be to scale from a technology point of view.  Last year alone, we at Coupa integrated four acquisitions, tripled the microservices on our platform, and doubled our deployments. The number of lines of code we have doubles every two releases! To date, we’ve surpassed a trillion dollars in transactions processed. So, how do you scale a tech stack to meet this type of growth? While you’re never going to figure it all out in advance, we’ll share three lessons here that we’ve learned at Coupa that we believe will help others who are going through similar situations. Lesson #1 – Be Transparent with Your Customers. You’ll Earn Their Trust. Let’s go back a few years. We had made it through the early start-up phase and were starting to land some major global clients. While we had built a platform that was nimble and fast, we were truly tested when we had to on-board this “new breed” of data-hungry customers. I’m sure many of you can understand the significant uptick in the effort needed to operationally manage terabytes of data vs. gigabytes. Multiply that by another 1,000 and you are in petabyte land! At first, we were hesitant to let our new customers know we were in uncharted territory. We responded in a manner similar to how many vendors respond today: we let a customer raise their concerns, we worked it through support and product teams, and we hoped the issue would be resolved in a timely manner. Guess what? That doesn’t always work. We eventually recognized that the best path forward was having an open dialogue with our customers. Knowing they had deep expertise in handling large volume data sets, we went to these customers and asked them to collaborate with us – our engineering team with their engineering team – to improve our platform to handle their future data growth needs. To our surprise, our customers saw it as a strength, not a weakness, that we recognized the impending challenge and reached out for collaborative help to meet their growing requirements. Lesson Learned #2 – Invest Early in Supplier Relationships. You Will Need Them. We had a decade of experience on-boarding talent and getting them to work off the Coupa toolkit. What we weren’t fully prepared for was when we truly hit scale and in a matter of months we acquired some sizable companies. After years of relying on back-office technology that was 100 percent built on cloud and 90 percent Mac/Apple machines, practically overnight we were faced with questions such as: How do we run data centers with hundreds of virtual machines? How do we effectively manage hundreds of new Windows machines? Who on the team can manage this? For those who have faced such realities, you can appreciate that there is never an easy answer. There isn’t a magic wand or single tool that can fix everything. The solution requires hours of painstaking work decoupling layers, making sure connections don’t break, and bringing different teams together (more times than most anyone likes) to get a clear understanding of what’s going on under the covers. We quickly recognized that everyone had to learn how to work with a broader stack, and we had to do it fast. While we’ve always prided ourselves on being able to always figure things out internally, at this scale we realized it wasn’t the best solution. It took us some time but, eventually, we found reliable and qualified vendors to help us with the transition. In hindsight, we learned an important lesson: We could have responded faster by already having more vetted, trusted vendors in place to help as soon as we needed them. Lesson Learned #3 – If You Don’t Experiment, You Risk Falling Behind. While we encourage experimentation, we’ve traditionally been cautious in keeping our technology stack tight. This was good because it kept the core of our design architecture simple and performance fast. In hindsight, though, there were times when I think we should have taken advantage of newer technology sooner than we did. One such example is with search. For years we were convinced we could stay on MySQL for our search needs. However, we were continually challenged to improve our search capabilities to keep delivering near real-time performance for our growing customers. It took us a while to accept that MySQL had limitations when managing and querying our increasingly large data sets. Querying several million rows of data is very different than querying 100,000 rows. We eventually looked at alternatives and deployed Elasticsearch because it’s very good at searching small data across a large data set. Since then, as part of improving performance, we’ve been getting involved with newer technologies more quickly, including in the areas of in-memory processing, streaming, and artificial intelligence. The bottom line: while guarding performance, always stay open to integrating new tech into your stack. Change is Inevitable, So Be Prepared for It If you are fortunate enough to be an IT leader who gets into a young, growing company on its path to scale – and perhaps an IPO – the challenges never end. The more success and hyper-growth your company experiences, the more challenges you’ll face. Keep in mind that collaborating with customers can help you overcome challenges – approach customers with transparency and you’ll be surprised at the expertise offered. Invest early in developing the right supplier partnerships, so you are prepared to respond quickly when dis-continuous growth arrives. Don’t let the burden of maintaining the status quo keep you from evaluating and deploying new technology – build fast and iterate, yet be measured and cautious when bringing on new tools into your architecture. Sometimes unexpected realities will arise that must be accepted and dealt with, demanding flexibility and the evolution of long-held principles, methodologies, and architectures. Don’t obsess over what might change. Instead, accept that change will occur and plan for it the best you can. Enjoy the journey of building the stack, the friendships you make, and the lifelong experience you will acquire while scaling to your trillion dollars! Eric Tan, Vice President of Business Services & IT at Coupa, oversees Coupa’s global business technology with responsibility for the internal deployment of Coupa's Business Spend Management products. Prior to Coupa, Mr. Tan served in leadership roles at PwC and EY. At PwC, he founded the firm’s cloud computing practice and was responsible for developing cloud solutions for entry into new markets. Tushar Rawal is Senior Director of Technology & Architecture at Coupa; Srini Konakanchi is Director of Performance Engineering at Coupa; Prasanna Kumar is Principal Data Scientist at Coupa.
What’s the best way for a company to take on digital transformation? If you had asked me that two years ago, I would have said something completely different than what I’m about to tell you now. Two years ago, most of my career experience was at the big consulting firm, PwC, working on transformation projects for enterprises such as Google, Paypal, Apple, and LinkedIn. Now, having gone in-house and focused the past year and a half on digital transformation at Coupa, I’ve been humbled. To be successful with digital transformation in a high-growth company—or in any organization that’s rapidly changing—you need to shorten your time horizons dramatically, narrow your scope, and ruthlessly prioritize your efforts. I learned those lessons through experience, and I’d like to pass them onto you. So here’s what you need to know. Getting organized isn’t the sexiest thing to do, but it’s necessaryWhen I first came into Coupa as the veteran of dozens and dozens of transformations, I looked around and thought, “Yeah, I got this. I’ve seen it all before.” And the first thing I did was look at the data. Coupa had accumulated 10 years' worth of valuable data. But it was dispersed across multiple systems within marketing, sales, finance, operations, and the product organization. We didn’t have a way to aggregate it so that we could identify opportunities for process efficiency. That’s pretty common. If that’s your situation, and your company is looking to use analytics and artificial intelligence to drive growth and control costs—like nearly every company today—getting your data in order should be priority number one. As we got into it though, I realized even that was too ambitious. This wasn’t just about aggregating data in one place, but about the foundational, yet completely non-sexy work of data cleansing and modeling, and there was a lot of data. As a consultant, to solve the problem, we simply would have thrown more resources at the project. This was clearly not an option nor was it right for Coupa. Being a consultant is a lot like being a doctor who’s brought in to do a procedure in a clean hospital room with a full staff and a wide array of tools and instruments. On the other hand, working from inside a company, especially a rapidly changing one, is like being asked to MacGyver open-heart surgery in a warzone—you’ve got to make do with what you’ve got and scrape it together. So, instead of tackling all the data in the organization, my team and I decided to prioritize the data we believed would deliver better, more timely information to an initial key group of stakeholders: Sales, marketing, and finance. Aim small, win big—find the projects that make the biggest impact in the shortest amount of timeOnce we had their data in order, we were able to start identifying the places where it made sense to automate. We came up with two possible projects. The first was: We had sales orders consisting of a lot of fields that had to be manually keyed in, in several different places. It definitely would make sense to automate that to free up people’s time. The second project had to do with sales orders: It was taking too long for them to be approved. This was really slowing the organization down. A bunch of people needed to sign off on each quote, and it was all being sent and tracked by email, sequentially. How would you choose which project to work on? The first would’ve been rewarding, but when we looked at the resources on our team, we saw the time it would take—about six months. Regarding the second project, there were complaints about the sales quotes issue coming in from several groups, and by solving it, the impact would be pretty big, so it wouldn’t be hard to get buy-in, which meant a lot less time, and a lot smoother effort. We chose the second. And I’m glad we did. Because what I didn't realize was how much was going to change—fast. Anticipate changes, and let that guide your decision makingImagine trying to plant a flag while the ground is always moving beneath you. Coupa, like any successful startup, was growing by leaps and bounds. In just one year, the number of employees grew 76%, to 1000 people. Ticket volume doubled. There were four acquisitions, requiring a lot of integration work. And three new C-suite executives joined: A CMO, a CRO, and a chief customer officer, each bringing new ideas. Had I chosen the first project, and put our team on it for six months, it would have been irrelevant by the time we finished. Things move fast at a startup, and priorities and needs move with them. When you’re running an IT organization, the demands on your team’s time will always exceed your supply, so you need to pick your battles. Though I found digital transformation dramatically different in-house at a small company than as a consultant to large enterprises, I do think there are a couple of truths that cut across all organizations: Don’t start with the technology, start with people and processes first. That might sound crazy coming from a technologist, but after having 20 years of experience seeing every type of technology come and go, I’ve realized that if you get the right people in place, who are smart, agile, and flexible, and get the right processes down—you’ll have the gumption to make things work. If you start by buying technology, thinking that it will automatically solve all your problems, you’re just going to own some expensive technology that no one's going to use. The other thing to keep in mind is that digital transformation is a never-ending journey. Expect a lot of learning opportunities (a.k.a. mistakes) along the way. I certainly had my share. That’s why, now, when I see a six-month IT project, it immediately strikes me as too long—there’s so much that can change even in that short window. So definitely throw out those five-year IT roadmaps! I made a one-year plan, and it was good for about one month. The secret to success is to deliver the most value in the shortest time frame, evaluate your new position, and then do it again. Finally, have fun with it!
IT and procurement have a long-standing relationship, since IT is one of the biggest categories that procurement is managing in most organizations. And, as finance becomes more strategic and the CFO’s tech portfolio grows, the IT-finance relationship has increased in importance, and the IT-procurement relationship has changed. Implementing business spend management technology is where all three functions converge. In a customer panel at Coupa Inspire, Ronan Kerouedan spoke with three senior technology professionals that have been deeply involved with business spend management transformations about the impact that has had on the relationships between the three functions. Mark Settle, CIO at Okta, George Logothetis, HR and Finance Global Technology Lead at Aon, and Oscar Nafarrate, CIO of Grupo Herdez (pictured from left to right) candidly shared the challenges, pitfalls, and best practices they’ve discovered in engaging with procurement and finance during times of both transformation, and business as usual. We’ve excerpted their conversation here. Ronan: What is the best kind of relationship you’ve had with procurement and finance, and the worst? Mark: There are still organizations where procurement is a completely separate function, and IT brings over procurements that they want to pursue, and it’s given to whoever in the group has time or a little bit of background. They don’t understand the broader investment strategy that you’re trying to pursue. Where I’ve had the most success, and what I try to do now is set up a vendor management office within IT. That individual attends staff meetings, sits in on project reviews, and develops an understanding some of the strategic initiatives that are happening within the organization. George: I think there’s a marked difference when procurement operates as a function versus a strategic platform. For example, as Aon grew through acquisitions, we enshrined processes across different business units into our older legacy platforms. Procurement was not really working with us to create global processes or a global strategy. As we’ve transformed in the last few years, developing a global strategy has not only led to the adoption of Coupa and saving $60 million in spend in the first 12 months, we’ve also simplified everything and enshrined the workflows into Coupa as a global process. Oscar: We have learned that everyone has to put all their interests out on the table, to find a convergence point, because when you start, you’re looking at procurement to save money. The you realize finance is very focused on compliance and internal and external audit. For IT, we want to be able to meet certain milestones. When you don’t have everything well-aligned, there are bad relations. Ronan: What is the right timing for involving procurement with IT decisions? Mark: I’ve seen this movie more times than I care to remember: There’s a significant procurement for a business critical project and the group that’s driving the project is falling in love with some technology. They think they’ve done all the necessary homework; they’ve got the price sorted out, they’ve got a delivery date, and then they dump it on procurement’s lap and drama ensues. Every time there’s a catastrophe of this nature, we all join hands and tell each other we’re going to get procurement in earlier. But, businesses interactions are happening all the time between members of my staff and different vendors. There are not enough procurement people to be in on all of those conversations. What I try to do now is focus on educating and inculcating discipline within the technical staff to make sure they understand the ground rules of engaging with vendors. It’s perfectly fine to talk about list pricing or discounts that would be appropriate for a business of our size. A ballpark range is probably sufficient to run a business case and obtain approval to move forward. Then you should get the professionals involved. It’s not all procurement’s responsibility to show up early. There’s a responsibility on the part of the technical staff to follow common sense ground rules. Ronan: Let’s flip it now and talk about how procurement and finance should be engaging with you. How does that work in your business? Oscar: IT is involved in all software acquisitions, but we don’t take those decisions unilaterally. We have already learned that if we don’t have everyone aligned, something is going to be missed. Some business areas will just adopt solutions when they don’t have to integrate them. But once you have to integrate, even with SaaS, we need to be involved. George: Because the business can go out and purchase their own solutions, IT is having a bit of an identity crisis, if you will. We’re not developing any more. We’re often not even developing integrations across platforms either as these are more out of the box or commoditized in some other way. As we continue to evolve, most likely we will continue to serve as a sort of architecture and solutioning function that connects disparate solutions to solve complex problems. We’re becoming an internal consultancy. Ronan: What type of success metrics did you define during your selection process for Coupa, and what are you measuring on an ongoing basis? Oscar: When we started to evaluate Coupa, we defined our success metrics on purely savings. But now we’re measuring spend under control. George: We have to talk about savings, and as we extend the system globally we’re getting to almost 100 percent spend under control. But, how much time is the user spending in the system is a key metric for us because that’s less time and less money we have to spend on change management. Intuitiveness is important, so tracking the number of clicks, and the support tickets that have been raised has also been important for us. Mark: George touched on an important point with regard to usage. Everybody focuses on price, and sometimes, unfortunately, people lose focus on non-financial metrics, such as terms. I spoke with our vendor management office leader a few months ago about what metrics we were going enshrine as part of this implementation. His take was that we’re growing so fast that there are not going to be tangible savings that we can point to. Expenses are only going to grow. So, usage is incredibly important. Ronan: There’s a lot of buzz around artificial intelligence and big data. In the context of procurement and finance, who’s driving this within your business? George:A lot of what we’ve done the last few years is getting back to basics and being able to leverage the capabilities of a technology like Coupa to get spend under control and governance approval workflows in place, knowing that we have this treasure trove of data available to us so that we can eventually utilize. Frankly, we’re not where we want to be but we’re now at the precipice. We’re creating an ecosystem in AI where we’re willfully spending small amounts on different AI technologies and seeing what sticks. We put out data sources from Coupa and Workday and created “innovation teams” within the company to see what they could do with them and what insights they can derive. Once we’re done with the global deployment, we are going to have more of a laser focus on that, but right now it’s more of a startup culture. Ronan: How do you strike a balance between compliance and maintaining flexibility in your business? Mark: A lot of the conventional reviews that we would normally have are easily subverted in the SaaS world we live in today. Everybody needs to understand there’s going to be a security review, and a legal review. There’s a fixed amount of time and paperwork that’s going to be required. That’s just a given. When people think that they can do it all on their own and drop it on IT at the eleventh hour, that’s when governance starts to break down. George: When I think about IT governance, I think about how technology can lead transformation and how governance can follow suit. This has really challenged us because we came from a hosted environment where a lot of our platforms could not be changed outside the yearly upgrade, so everyone had to get on that train Cloud solutions have challenged us to truly be a more agile shop while still being SOX compliant, and have the kind of controls you always have to attest to. We have, number one, put in place global service owners from all our functional areas, and on our side we’ve identified their solution counterparts. We facilitate the governance mechanisms. If you need a set of configuration changes, as long as it ties back to the strategy that you as the global process owner are pushing forward, we now do that on monthly cycles. We’re able to get a lot more value out of the process because we no longer have the tax of being tied to the expensive cycles of maintaining hosted solutions. Oscar: We still do this ourselves, but we are gradually pushing it to the business. We are in the process of figuring out where we need to be involved, and where the business can be more autonomous. Ronan: What’s keeping you up at night? What’s worrying you when you’re running so many cloud solutions? Mark: One is duplication of functionality. What’s really difficult in the SaaS world is the business has lots of small bolt-on tools that don’t add up to a lot of money, and you have to spend political capital to try to get them off of those and to use the main platform, whether it’s Salesforce or Marketo or NextLead or SAP. You really have to think about whether you want to use your political capital that way. Also, you want to indemnify yourself against fluctuations in usage to really make sure the way that you’re consuming the product is reflected in the contract that you have. I’m willing to pay more for a super user or frequent user, but I don’t want to pay the same for somebody who logs on once a quarter. The third is integrations. There can be kind of a long tail to some of these SaaS tools. It sounds like it’s cheap until it shows up and then it’s got to play nicely with these other tools and it turns out that it doesn’t. George: With these frequent upgrade cycles and the hunger internally to turn things on, we have to remember that a lot of these users are not going into our platform more than probably three to five times a year. So, as much as you don’t want to have change governance around cloud platforms because they should be straightforward, that’s not always the case, so how do you run a change management process to keep users abreast of what’s available to them? I think the second thing is, as you’re deploying these, there’s an impression that some of the IT workload can be optimized, or put elsewhere, which may or may not be the case. What we have to continue to recognize as we continue to bring more automation is that we’re also moving around little pockets of work around. So, you have to look at, when this thing is live, what has it done to IT? How has it transformed us? And, as we free up capacity, do we want to apply it towards artificial intelligence? Do we want to apply it towards less technical work and more business intelligence work, for example? You have to pause and have a reflection period to see where you stand. Ronan Keroudan is Vice President, Global Value Solutions Consulting for Coupa, Mark Settle, is CIO at Okta and author of “Truth from the Trenches: A Practical Guide to the Art of IT Management. George Logothetis is HR and Finance Global Technology Lead at Aon. Prior to that, he was a senior manager at Accenture. Oscar Nafarrate is Director de Procesos y TI at Grupo Herdez. Prior to that, he was Director de Practica at Sintec. Want to hear more from Mark Settle, CIO at Okta on this topic? Join him on Wed, June 20 at 11:30AM PT / 2:30PM ET for "Managing IT Business Spend: Thinking Strategically While Executing Tactically," a live webinar in partnership with and Coupa.
Although IT leaders take great pride in maintaining existing systems, enhancing critical applications and responding to the requests of their end users, their greatest sense of personal satisfaction comes from technology-enabled initiatives that deliver strategic business value. Every IT leader is a technologist at heart who fundamentally believes that their company could achieve competitive advantage through the strategic use of new, emerging technologies. Although most IT execs have learned what it takes to implement strategic initiatives, we are all guilty of skipping key steps in the planning process in the interests of getting underway before budgets are cut or business enthusiasm wanes. Skipping or shortchanging the essential negotiations outlined below may cripple an initiative, no matter how popular or well-funded it is at the outset. Technology is only one component of a strategic IT initiativeStrategic initiatives are all about finding ways of breaking with the past and doing things differently in the future. All too often these efforts become technology-focused when in reality their success or failure is largely predicated on changing established business processes, altering the roles and responsibilities of specific individuals, or restructuring existing organizations. People, processes and technology are critical elements of any truly strategic IT initiative, even if it gets named after a specific piece of technology for convenience — such as “the Workday project.” The most dangerous way to launch an IT initiative is to have a business executive announce that he or she wants to roll out a specific piece of technology. Although it’s easy for IT leaders to get excited when a business executive proclaims “I want to launch at next year’s kickoff meeting” or “we need a new mobile application for our millinneal customers,” these simplistic, technology-focused objectives do not by themselves constitute the makings of a strategic IT project. In their seminal book Getting to Yes, Roger Fisher and William Ury, leaders of the Harvard Negotiation Project, advise against negotiating over positions — such as “we need to implement next January” — and encourage business leaders to focus on common interests instead. The common interests of any truly strategic partnership between IT and business leaders should be a set of business outcomes, not just the implementation of a cool new tool or system. Unfortunately, outcomes can get lost in the enthusiasm surrounding the launch of any major initiative as a company gears up to spend a lot of time and money on a new technology. Failure to establish explicit business expectations at the outset of a major initiative will ultimately compromise its success — and may be career limiting for its leaders as well! Let the negotiations beginIf you and your team are embarking on a strategic initiative in 2018, make sure you’ve explicitly discussed the following three questions with your business partners and have reached a clear (and hopefully documented) agreement. 1) What business outcomes are we trying to achieve? It seems a little crazy that the IT leader of a major initiative might have to force his business partners to explicitly quantify the outcomes they are hoping to achieve. But in many instances business executives operate from intuition and the intended results of such initiatives seem obvious to them. Instead of assuming that you’re both on the same page, negotiate a clear statement of anticipated business outcomes with associated success metrics. And don’t let your business partners get away with defining success solely in financial terms. Strategic initiatives typically impact key operational metrics such as store traffic, inventory turnover or customer satisfaction. Improvements in operational metrics will ultimately translate into financial results. Make your business partners explicitly define these metrics, and then connect-the-dots to the financial results your CEO and CFO are expecting. 2) What technologies do we need to accomplish these outcomes? There are a wide variety of considerations involved in selecting the technologies needed to enable desired business outcomes. Vendor selection criteria commonly include product functionality, service level commitments, adherence to company technical standards, compliance with company policies, support capabilities both at home and abroad, referenceable customers, pricing and warrants. Equally important (but less commonly discussed) is the business horizon you are addressing and the degree of differentiation you are seeking relative to your competitors. For example, is the mobile app you’re developing for your millennial customers intended to drive more traffic to your brick-and-mortar outlets — or are you trying to boost online impulse sales by offering more personalized product information to smartphone users? If the former, you may want to invest in inventory management tools that optimize the timing of product discounts to increase store traffic and simultaneously improve inventory turnover. If the latter, perhaps you need to invest in machine learning technologies that will define the personalized information individual consumers need to make an impulse purchasing decision. Challenge the business leaders behind your initiative to clarify the extent to which they are trying to futureproof the technology solution you’re constructing and whether they’re trying to leapfrog the competition or just achieve parity. These business considerations should be key factors in any technology decision. How should we make our technology selection decisions? The 1968 Paris Peace Talks, which were focused on ending the Vietnam War, got off to a rocky start because the parties involved could not agree on the shape of the conference table they would use to conduct their negotiations. Hopefully, IT and its business partners can avoid debates about administrivia, but it’s important to reach agreement on the process that will be used to screen prospective technologies — and the roles that different stakeholders will play throughout the evaluation process. The scope and depth of vendor evaluation activities such as briefings, demos, reference calls, proof of concept exercises, etc. need to fit your specific needs. The internal subject matter experts who need to be involved in these activities must be explicitly identified and committed as well. Senior management needs a steady stream of progress reports to ensure that they aren’t presented with a forgone conclusion at the end of the evaluation period. Last, and perhaps most importantly, the evaluation process should have a deadline to ensure the timely achievement of anticipated business outcomes. Those outcomes are the reason you’re going through this whole exercise anyway! Don’t forget that business executives typically get involved in major IT initiatives every 3-4 years, so don’t assume they will necessarily remember the framework you employ to manage the evaluation process. Strap on your armor and prepare to do battleThe famous British economist John Maynard Keynes once said: “the difficulty lies not so much in developing new ideas as in escaping from the old ones.” He could easily have been referring to any truly strategic IT initiative. Like it or not, strategic initiatives are all about getting a lot of people to abandon old ideas about how business should be conducted. The vast majority of employees support strategic initiatives in principle. They believe their companies need to continually respond to the challenges and opportunities that exist within their industries. They’re convinced that strategic initiatives are essential survival tactics for their employers, ensuring future growth and prosperity. Paradoxically, most employees are equally convinced that the greatest strategic needs within their companies exist outside their own functions. Most believe that their functions are operating as effectively as possible under present circumstances and they’re not particularly interested in altering their daily work routines, thank you very much! By definition, strategic initiatives are complex, costly, time-consuming crusades in change management that are designed to alter conventional ways of doing business. They can go wrong in so many different ways. Executive sponsorship may change over the lifetime of the initiative. Enabling technologies may not deliver the functionality that was promised by the vendors, or they may not play nicely with pre-existing tools and systems. Key activities will undoubtedly take longer than planned, leading to schedule slips and budget overruns. Employees, suppliers and customers may successfully resist making significant changes to established policies or work procedures. There are so many ways that major initiatives can fail that it’s remarkable IT and the business are able to come together on a regular basis and launch new ones. To successfully overcome these many execution hurdles, it’s essential that business and IT executive leading major initiatives are fully aligned at the outset of their crusade. Explicitly negotiating intended business outcomes, technology selection criteria and technology evaluation procedures prior to launch may not necessarily guarantee success, but it can significantly reduce the of failure. Mark Settle is a seven-time CIO with broad business experience in the information services, enterprise software, consumer products, high-tech distribution, financial services and oil and gas industries. He has led IT organizations that supported the global operations of Fortune 500 companies, maintained the R&D infrastructure required for software product development, and hosted customer-facing delivery systems for commercial products and services. Settle serves on the advisory boards of several Silicon Valley venture firms and pioneered the adoption of service management and cloud computing technologies in several large enterprises. He currently serves as the CIO of Okta, a provider of cloud-based solutions for identity and mobility management, and a Coupa customer. A version of this article previously appeared on
Since the Great Recession, mid-market companies have come into their own, on average recovering and growing at a much faster clip than big and small businesses. According to research from the National Center for the Middle Market, for the year ended July 2017, mid-market companies grew revenues 6.7 percent on average, versus 4.8 percent for the S&P 500. These companies have strong bias for reinvesting cash, with 67 percent saying they will invest to add equipment, make acquisitions, and train or hire employees. They also recognize that simply adding more people isn’t scalable, so they’re looking to solve problems with technology. The problem is, when you’re running that fast, there’s a tendency to be myopic with software choices, often looking to point solutions to fix a specific problem as quickly as possible. That’s not necessarily scalable either. There are a lot of great solutions designed for the mid-market, but in many areas, companies may be better served by broader software platforms that can expand and grow with them, eventually addressing the entire process the current problem is part of. It’s kind of like when you’re a litle kid and mom insists on buying your winter coat one size too big. You probably want the cool coat that fits you now, but mom knows you’ll be bigger next year, and that coat isn’t going to fit you anymore and will probably be out of style. That’s the situation mid-markets tend to get into when buying technology. The moles always win Why? Because solving problems one at a time with point solutions leads to a game of technology whack a mole that will eventually be won by the moles. For example, a typical problem that crops up in a fast-growing company is that accounts payable is drowning in paper invoices. So, you go out and buy a paper scanning OCR solution. Now that you’re getting invoices into the system faster, you realize that your invoice approval process is slowing you down. So, you get some workflow software and integrate it to your scanning solution and your accounting system. That starts to reduce some AP team time which shines a light on the enormous amount of time you’re spending processing expense reports. So, you go out and buy an expense management solution for that. And so the cycle goes. Every core business process—customer relationship management, business spend management, human capital management—can be broken down into set of non-optional activities that will all have to be automated at some point in time. You may not be ready or able to automate all of them at once, but it’s not hard to see the writing on the wall. When you do them one at a time, without thinking about the bigger picture, you eventually end up with a bunch of disconnected processes and data silos. At some point, you’re going to have stop and fix it with new technology that consolidates your systems and fits the business you are today. That’s really going to slow you down. Why not find a solution you can grow into? Cold wrists Yes, it takes longer to evaluate end to end solutions, and it’s harder to make the case for a solution with capabilities you don’t need at this very moment. What you have to realize though, is that a significant investment of time and money goes into every solution you buy. You still have to divert resources to run a selection process. Depending on what you’re buying, there could many steps in that process, carried out over a period of months. There are people, and politics, to deal with. And that’s just to get to a signed contract. Implementation and change management are even more disruptive, time consuming and costly to your organization. And, depending on how fast you’re growing, you’ll probably outgrow the technology in a few short years. Then you’re left with a situation where the sleeves of your coat are too short. You can no longer zip it up past the waist, your wrists are cold, and you have to go coat shopping again. As much as you hate to admit it, mom was right. So, you run the whole process again and redo what you already have, in the next size up. And the cycle continues. This is a classic mid-market problem, compounded by the explosion of point solutions on the market. In a company devoting a lot of resources to growth, there’s a strong incentive to put a band-aid on problem areas now because it's seems cheaper and faster to implement in the short term, and put off thinking about or dealing with the big problem until you absolutely have to. However, that big problem is going to be even bigger when you try to solve your problems with a point solution approach. Making the leap Eventually there’s a realization that you’ve got to think not just about the immediate problem and how to solve it, but where you want to be in two or three years, and whether that solution is still going to work for you then. The faster you can make that maturity leap, the better. That doesn't mean that you should try to solve every problem at once. But you should have a plan, and the technology solutions that you bring into your organization should be ones you can grow into, because they are able to address those next problems when you're ready. Selecting the right solution Look for cloud-native solutions that both enterprises and mid-markets are using, but avoid solutions that are one-trick ponies, or enterprise solutions that have had been stripped down to create a mid-market version. The latter won’t easily scale up when you need them to. The right solution should be able to meet your existing needs and get you started quickly while also giving you the flexibility to eventually cover your end to end process, and even related processes. It should integrate easily into your existing infrastructure, and it should be easy to update the integrations as your infrastructure changes. Picking a solution that can grow and expand with your business leads to much bigger benefits, and with configurable cloud technology, it isn’t necessarily going to be more expensive or have longer implementation times. It will likely end up being less expensive in the long run, because people don’t usually consider the cost of business disruption associated with buying and deploying software, and the rework costs of replacing short-term solutions. In a fast-growing company they absolutely should. They should take mom’s advice and buy the bigger coat.