CIO Insights into the Role of Dedicated BSM Systems in Global Enterprises
Any modern company should have a single source of truth for business data. That vision is central to digital transformation and is part of the foundation that should guide your organization’s efficiency efforts.
Today's businesses are globally connected and ever-changing. In that context, you need to be able to pull disparate data sources together into a single place for normalized, actionable insights.
You might be tempted to tack this objective on as an afterthought, or to load it onto an existing enterprise resource planning (ERP) system.
But internal ERP services may not have the answer you’re looking for. Just because ERP can do something doesn’t mean it’s the best approach. Especially when considering data solutions, you need to think about the full business value of the application. In the critical areas of supply chain management, procurement, finance, and treasury you need something more: a dedicated business spend management (BSM) platform.
- The typical average large enterprise has multiple ERPs, rather than one single global deployment. This is often the result of mergers and acquisitions (M&A), local restrictions, and other complexities.
- BSM solutions like Coupa aggregate data to provide actionable, cross-ERP insights.
- CIOs need low-maintenance, configurable applications to replace expensive custom code.
- Don't overlook your procurement leaders. The partnership between procurement and IT makes more sense than you might think.
Dedicated BSM: The solution for ERP overdependence
It's a common mistake to lump BSM and ERP into the same category. It’s true that ERP vendors have offerings that overlap with BSM leaders. However, you need both categories in order to lower the cost and increase the efficiency of your spending processes.
Bringing global deals into focus
When you’re negotiating on behalf of a global enterprise, you need a combination of high-level insight and super-precise data. With BSM tools, you gain both. Let’s look at software-as-a-service provider negotiations as an example.
It's fairly common to have the same vendors with slightly different names due to ERP differences, languages, or regional and subsidiary conventions. This could lead to situations in which you're negotiating multiple deals with the same global service provider.
Organizing your vendor data via configurable, cutting-edge BSM sometimes uncovers opportunities to leverage your global scale of operations for cost reduction — bigger deals tend to get better rates. If nothing else, it could reduce the resources your organization expends making and maintaining deals.
Coupa’s platform has the power to show you some of your biggest opportunities and gain full visibility into all your providers. With that insight, you can drill down into your BSM data to bring the most persuasive details to the negotiating table, focusing your deals and protecting the interests of your organization.
Reducing complexity of analysis
Another place BSM shines is in reporting. It's common for multiple ERP systems to produce inconsistencies, but you may not have immediate insight into what's causing these issues.
In contrast, solutions like Coupa provide one-time API-based integration over multiple ERP instances to set the stage for sustainable, efficient growth acceleration and quick decision-making.
Handling fragmented viewpoints in ERP
Dedicated BSM brings together fragmented viewpoints by integrating with ERP. Rather than a full replacement, it helps answer the questions you need to grow your organization.
"Have I already done a transaction with this vendor? Do I already have a contract with this vendor? Do we even have an NDA with this vendor? That part is missing when you go with the ERP level because of its sheer fragmentation." — David Berry, Current Chief Information Officer at Boardriders. Cross-industry CIO experience includes Burger King, Lululemon, and Bombardier Aerospace.
Pulling key business concerns into one place isn’t enough. You also need to be able to organize that information in a way that humans can understand and act on. That’s what dedicated BSM does.
Lowering the Cost of Ownership of BSM processes and smoothing M&A
Dedicated BSM software is one of the best ways to reduce the total cost of ownership of managing business spend.
BSM solutions can also lower the complexity and cost of mergers and acquisitions (M&A). During these processes, you often face high costs and delays due to ERP integrations and migrations. With BSM, you rapidly gain visibility over the integrated company without costly, time-consuming migrations.
Don't sign your resources over to ERP management
Expanding the role of ERP can drain your resources. While using a single system can seem attractive at first, the truth is that BSM provides better business value for spend-management applications.
BSM also supplies ERP with high-level metrics and critical transactional events — letting ERP do what ERP does best. This level of integration means that you can always choose the best tool for every business application.
And here's the bottom line: BSM software is the most appropriate tool for gaining visibility into and control over spend. Utilizing it often leads to lower-cost spend management and a higher level of operational efficiency across the organization.
Creating a more efficient IT culture: Configuration over customization
There’s a lot to love about software. Unfortunately, once you get to the CIO level, the engineer’s urge to build and customize rarely translates into efficient organizational practice.
A culture of uniqueness by habit
Tech departments often have a culture of uniqueness when it comes to solutions. Tech people love to fix problems, optimize services, and build the perfect solution for every application. However, that doesn’t always translate into a good business practice. It is usually more valuable to have a solution you can easily configure and deploy easily rather than one you have to build from the ground up and maintain.
Overcoming this culture of customized solutions is going to help in ways you might not have imagined. For example, it can help you move people from one country to another without having to retrain them on regional or division-related ERP software customizations.
Pushing for deployment by configuration
Getting a BSM solution that focuses on configuration over customization helps meet the core objectives of the CIO's office. It helps you avoid developing processes and roles focused on custom code that will soon be obsolete.
"The downside of customization is you pay it 14 times over. Every time you do an upgrade — every time you do something to the system — you've got to go back in and make sure that custom thing you did five years ago still applies, still works." — David Berry, Current Chief Information Officer at Boardriders. Cross-industry CIO experience includes Burger King, Lululemon, and Bombardier Aerospace
If you’re trying to satisfy a perceived need to build and maintain custom code, you’re doing it wrong. There are already cost-effective solutions out there that have teams of specialists supporting them.
The advantages of SaaS
The issue of customizability brings us to SaaS solutions. One of the biggest payoffs of SaaS BSM solutions is that they allow you to extract insights with little upfront setup. That means you can avoid the runaround of hard-coding common analytics functions for accounts payable, supply chain, and procurement into a fragmented system.
A simpler setup not only lowers your costs for getting the information you need, but it frees you from becoming dependent on any single ERP solution. It also helps prevent you from falling into the sunk-cost fallacies that tend to plague high-level decisions about upgrading or migrating providers.
Dedicated BSM software like Coupa plays well with any ERP. It frees you up to make the right choices for your organization’s future — without worrying about the past holding you down.
Global enterprises rarely get a single end-to-end ERP
It would be nice to get a single end-to-end ERP solution in place for your organization, but making that a reality may never happen at scale. It is even less likely to happen during certain growth periods and is often difficult to sustain.
There are a variety of reasons ERP systems and outputs become fragmented across enterprises. Local requirements, acquisitions of and mergers with organizations that have other ERP solutions, and prohibitively high costs of replacing smaller ERP deployment with your organization’s global standard are all factors.
The dinosaur effect
The most basic reason that you should never lean into software customization is that tailor-made software goes extinct. You don't want to build a dinosaur of a system.
"Several years ago I ran an environment in Europe, and 50% of the custom code was no longer being executed five years after we built. It cost 8 million bucks to do this. Eight million to build all this stuff, and, five years later, 50% of it was no longer being executed." — David Berry, Current Chief Information Officer at Boardriders. Cross-industry CIO experience includes Burger King, Lululemon, and Bombardier Aerospace.
Extinction-level events happen every couple of years in the software development world. While there are teams out there staying ahead of this curve, if BSM software isn’t one of your core services, it makes more sense to find an out-of-the-box solution that also provides meaningful customer support.
Procurement and IT: A strategic partnership
There’s a clear need for a big-picture view of business spending. Putting the tools in place is your responsibility as an information technology leader.
One big mistake that CIOs make is trying to do everything themselves. There are other people in your organization, namely in procurement, who are just as invested in BSM — and arguably better at certain aspects of acquiring and implementing solutions.
BSM as an organization-wide concern
The first thing to remember is that BSM software is going to be an integral part of decision-making for leadership teams across your organization. Bringing in other stakeholders for the initial stages is about more than just getting the best deal.
Complex collaboration also accelerates adoption and brings new ideas to the table. Get key players excited about your new system, and you’ll have already overcome many of the migration and integration challenges companies usually face.
How often do you do an Oracle or Microsoft deal?
When you are considering a specific part of your roadmap, it's important to understand you might not have the entire picture. That is especially true when it comes to the world of SaaS business solutions.
"I deal with people who believe that, because they did a negotiation three years ago, that they have enough facts at hand to do it again. Meanwhile, the market has completely shifted." — David Berry, Current Chief Information Officer at Boardriders. Cross-industry CIO experience includes Burger King, Lululemon, and Bombardier Aerospace.
The CIO’s primary responsibility is to manage IT resources efficiently. There's absolutely no shame in having some knowledge gaps when it comes to negotiating with strategic vendors.
While you’re probably a competent dealmaker, can you really say you’re an expert? How many times do you make a deal with a big vendor? Is it every three years — or five? This is where procurement plays a role.
The real value of having a procurement expert at the table
Bringing procurement into the conversation helps you fill your skill and knowledge gaps. These are people who make deals for a living. They are always building contacts, polishing negotiation skills, amassing market knowledge, and closing the contracts that power your organization.
Combine your granular, working understanding of your organization’s information needs with their up-to-date knowledge of the services available on market, and you have a winning combo. You can work together to find and secure solutions that will make a real difference in how you get operational insight across the company.
Assigning ownership of decisions for better outcomes
Bringing complex collaboration into efficient practice takes work. Part of that work is setting up a clear structure.
Decision-making and deal-making are processes. They have relatively standard steps that each require a unique mix of skills, knowledge, and experience. Following a structure helps you get the best results while simultaneously freeing up the valuable time of your leadership teams.
"We have step-by-step responsibility of what decisions are made at what level, and many companies don't do that. They just go out and have a beer with somebody and say, "Right, let's do a multimillion-dollar deal." And they think they're getting a good deal." — David Berry, Current Chief Information Officer at Boardriders. Cross-industry CIO experience includes Burger King, Lululemon, and Bombardier Aerospace
If you consider yourself the organization’s best closer, then take responsibility for that final meeting. If not, you can share the function with another office or individual.
Moving from tactical operations to strategic planning
Setting up a decision-making process is important. However, tactics and structures only go so far when you are talking about core information systems like your ERP and BSM software.
Focusing too much on operational details could prevent you from seeing some of the opportunities that would benefit your organization the most. That's why it’s important to leverage complex teams, be open to new ways to approach challenges, and use the right tools for the job. Remember the big picture: you're pursuing a strategic business objective, not trying to hammer a specific process into functionality.
Making BSM software a reality for your company
BSM is rapidly becoming a critical part of the enterprise management stack, alongside CRM, ERP, and HCM. Overdependence on your ERP system might be holding you back compared to the more holistic, agile overviews your competition is getting. Contact us at Coupa to learn more.