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!

 

It's Complicated: 3 CIOs speak about their changing roles

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 CIO.com and Coupa.

For a successful technology initiative, never skip these steps

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 Salesforce.com 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 Salesforce.com 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 CIO.com.

The staying warm guide to choosing technology solutions

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.

The View from the Cloud

Back in 2005, while working for Sun Microsystems, I was delivering a keynote at a computing event in Moscow. One of the slides in my presentation outlined how IT would move from being the builder of things to being the aggregator and integrator of things. It was an innocuous sounding argument, but there was a deeper agenda: make the IT professionals in the audience uncomfortable and help them realize that the IT of the future was going to revolve around this thing called utility computing—what we now call cloud computing. The slide helped accomplish that mission. There was a bit of shock and awe from the audience, along with questions and pushback. We were told that this so-called “cloud computing” would never happen – at least not in the way we said it would. But the idea that you could use computers in the same way you could use power coming out of the wall - only paying for what you used - was something we had been envisioning and talking about at Sun for a long time. “The network is the computer,” was the phrase that we used, back in the day. Even if the audience in Moscow couldn’t see this vision, we could. We were watching the rise of Salesforce and other young upstarts in the SaaS world. I recall thinking, “either we're crazy, or the rest of the world is.” I had enough conviction to believe we were the ones who were right. Indoctrinated into the cloudBy the time I left Sun when it was acquired in 2010, there was no longer any internal debate about the shape of things to come - we knew we were right. When I interviewed for my current role here at Juniper Networks I learned that their board had made a strategic decision to move all of the company’s IT operations, including internal corporate applications and data to the cloud. This was in alignment with my belief that the cloud was the way forward. Juniper had already begun to make strides towards its cloud vision and, since joining, I have had the pleasure of assuming a leadership role in both the vision and the execution of the vision of cloud-only solutions. So where are we today? Well I’m happy to report that the transition of Juniper’s IT operations to the cloud is virtually complete. Almost all of Juniper’s internal corporate applications and data have been shifted to the cloud, either as software as a service, infrastructure as a service, or platform as a service. We’re down to a couple of applications left in a small data center that are on track to transition by next summer. Still strugglingMy message to organizations that are still struggling with this transition remains unchanged: there is no longer a debate, the cloud is here to stay. So, get started with your journey. We now have at least three generations of workers in the office - baby boomers, GenX and millennials. When it comes to cloud, it’s best to take a cue from millennials who have embraced the cloud wholeheartedly. There are four dimensions for organizations to consider as they start their journey. The first is cost. Yes, one of the selling points of a shift to the cloud is that it can be less expensive – the caveat being that it has to be planned, budgeted and rolled out in a way that makes it more efficient. The second consideration is security. Some in IT still worry about security in the cloud. One of the benefits of the cloud is that you can gain access to external security professionals in addition to your existing in-house resources. The third consideration is agility. This may be the single biggest benefit derived from the cloud – agility and speed to market. The fourth consideration is the providers. It can feel like a game of roulette where you’re gambling the future of your organization on one of the many providers. There are a number of possibilities, including Amazon, Azure, Google and IBM. The key is finding the right provider to scale along with you as your organization grows. When, not ifThere’s another set of considerations around the “what” and “when” of the cloud. The question of what to move to the cloud has gotten a little bit easier as markets have matured. There are many good choices, and clear winners in many spaces. What every company has to decide is how far down the application stack to go. There’s a case to be made that everything required to run your most common business processes can now be shifted to the cloud. For most companies, it’s not if they will be moving to the cloud, but when. The question of “when” comes down to order of operations. Exceptions may include financial services or security companies, as well as healthcare organizations. These organizations have data and intellectual property that may require them to forgo potential cost savings or agility gains the cloud may offer and maintain those assets in their own data center. Becoming strategicWith the rise of the cloud, IT is being asked to think differently. Historically, all projects were considered ‘in-house’ so there was not a lot of debate whether to build or outsource – the question was more along the lines of the number of servers that would have to be purchased and how large of a data center needed to be built. Today, IT has moved to a more strategic role where they are tasked with evaluating what to do with their organizations most valuable asset: its data. The cloud is a great tool for agility, cost savings, security and scale – but any strategy starts with trust. As organizations explore these considerations, it’s important to align with senior leaders to determine what the appetite for change is – because without a willingness from the c-suite, your journey to the cloud may be over before it begins. Bob Worrall is SVP and Chief Information Officer of Juniper Networks and a member of the Coupa Executive Advisory Board.

How to Evolve to Two-speed IT

It used to be that IT had one set of customers, and they were internal, and one system to maintain: The ERP. Fast forward 10 years and people are using mobile applications in every aspect of their daily lives, using social media to communicate more with pictures than words, and expecting the same kinds of experiences at work. IT is increasingly being asked to help enable new business models to serve these changing needs – often via the cloud. In the face of that challenge, we’ve come to realize that the ERP is in many cases not up to the task of supporting the speed, mobility, user experience and self-service capability external customers now expect. So, we’re moving to what Gartner calls it two-speed IT. As we go through this evolution, IT professionals need to keep an open mind. We need to stop reflexively looking to the ERP for everything, and stop identifying ourselves as “an SAP shop,” or an “Oracle shop,” and refocus on finding the right balance between traditional systems of record and these new systems of differentiation and engagement. Becoming a convertI’ll be the first to admit that when I was CIO at The Global Fund a few years back and we needed an ordering system, I immediately thought, why not do it through our Oracle system? The volume and structure of information that we needed clearly belonged in an ERP system. But as far as the ordering function went, we needed to do something that offered the user a more consumer-like experience. And, it couldn’t be something that we had to train people for. With high turnover a fact of life for our external stakeholders, we needed to deploy applications that were intuitive. I kept an open mind, and we did a rigorous analysis of three different scenarios before choosing Coupa. I realized we could build the best ordering system in the world, but if nobody can use it, or wants to use it, the business process wouldn’t work. We still integrated it with the ERP, to manage all of the financial flows and to control the spend. This CIO was converted. This is a perfect example of two speed IT. Speed one is for systems of record, where you’re running your core business processes--accounting, product planning, etc. Speed two is for systems that run processes where you’re looking to reach out to customers and interact with them. ERP is the engine, but you put something more modern that supports self-service and mobility on top of it to build today’s business models. New business modelsFor example, if you were running a service center 10 or 15 years ago, it would probably have been a remote call center. A customer in California would call and talk to someone in Kansas who would arrange for a service technician to come out and fix their washing machine. That’s now a very outdated model. What the customer does now is open an app, take a photo of the barcode on the back of the machine, type in the problem and send it off. From there a ticket is created and sent to a service center, and a service technician is dispatched electronically, directly to the location. Another example: At the moment, I’m working with a lot of banks that would never have considered having an e-banking solution. Now they’re coming to us and saying, “Our customers are demanding e-banking.” If we had to build things like these 10 years ago we would have said, “We need a six-month project to change the ERP to do this,” and what we built still would have been unsatisfactory. The ERP is not a system that thousands of people want to interact with. The two speedsWhen ERP went in, there was no notion of someone taking a photo on a mobile phone and uploading it, or of a process that didn’t require human interaction. This is the pressure that our internal customers are under. They’re looking for solutions to address the changing needs of their customers. They’re having to change the way that they do business, so we do as well. You can see why we need a second speed. As a CIO, you’ve got to continue to maintain your ERP, which requires about an 18-month cycle time to change. That’s okay. If you’re running payroll or your financial closing or your planning, you don’t want to be changing that all the time. You also want to be able to adapt quickly to new business conditions and extend the ecosystem without touching the core. For systems of engagement, you want is speed and simplicity. People don’t need access to all the financial accounting structures. You need to give them a way of providing you the data you need to drive your financial accounting structures, while allowing them to do their job quite quickly and simply. Keeping an open mindThe big idea is to have the right tool for the right job. There’s still life in the old ERP yet, but you have to realize that the demands of the external market require more agility. IT leaders have to figure out the best way of structuring the organization to solve problems in the short-term, but also for the long-term. That will probably end up being a mixture of ERP and systems of interaction or differentiation. Above all, it is imperative to keep an open mind. Most CIOs have had some degree of this type of change forced on them over the past decade. If you say no too often, if your knee jerk response is always to look to the ERP, people will go straight to the market and buy their own solutions. What you’re doing then is diluting your organization in terms of information, security, and governance. It’s much better to be leading the charge. So, as you consider these requests to support your new, external customers, ask yourself: Can you do it better internally? And, can doing it better internally give you a critical business advantage? If not, outsource it, integrate it, and focus your efforts on adding value to the core.