Moving Procurement Practice Beyond Adjunct Complexity (COUPA Profile)

Posted on September 18, 2008

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“Organizations that already have a technology driven program in place or have just recently implemented one still surprise me with their significant interest in the dramatic changes in procurement methodologies and practices.  But rather than focusing learning on new and emerging technologies, today’s procurement professionals seek insights into the actual processes that drive their enterprises.  The impetus behind this change is largely the result of the fallout from the consistently high level of e-procurement initiative failures.  Industry studies for the period 2001-2005 indicate 75-85% of all programs fail to achieve the promised results.  (Editor’s Note: the rate of failure continues today, with some industry pundits suggesting that ERP-centric programs miss the mark as much as 90-95% of the time.)

There is a growing realization that process, and not technology, is the main force behind successfully achieving results in terms of efficiency and spend rationalizaton.  It is through process understanding and refinement combined with the ability to adapt to the real world that credible targets are established and ultimately met.”  

From The Article “Technology’s Diminishing Role in an Emerging Process-Driven World by Jon Hansen (Summit Magazine, Sept. 2006)

 

As complexity dissipates into a picture of clarity and renewed understanding, the lens through which the processes that define the organizational supply chain practice provides the necessary insight to effect positive results.

Adhering to the above tenet, and coming from a position of expertise and experience, the founders of COUPA (who previously, and ironically oversaw the Oracle supply chain discipline), deliver what I would call “simply powerful” solutions.  The greater emphasis on “simply.”

An early mentor’s words expressing the belief that “if you cannot describe the product and/or service you are providing (nee selling) in 20 seconds or less, you do not understand what you have nor how it can help prospective customers” has stayed with me because over time it has proven to be consistently true.  And the very real as well as implied complexity of traditional ERP-centric mega projects give testimony to this basic truth as the high rate of failure continues to undermine the confidence that key stakeholders have in the selection process of their organization’s senior decision makers.  This of course creates an almost insurmountable barrier to adoption.

And while the incumbent goliaths attempt to address this problem through the introduction of Service Oriented Architectures (SOA) and the championing of collaborative programs such as the Mendicino Project (now called Duet), the COUPA methodology and solution overcomes barriers by not creating them in the first place.  (Note: The Mendocino Project is a collaborative effort between SAP and Microsoft to address end-user resistance through the creation of unique interfaces between commonly used MS Office applications and SAP’s ERP programs.  Since one of the main barriers to ERP/e-procurement initiative adoption has been the significant reliance on a compliance or change management strategy, the premise (or theory) is that by leveraging the ubiquity of the Microsoft product, the degree of front line “change” is minimized.  The expected outcome is that by providing users with a familiar interface, they will no longer resist the centrally established ERP platform’s introduction as the enterpise standard.  Unfortunately, the fatal flaw with this thought process is that resistance is not solely tied to the program’s interface, but is also linked to the lack of real-world functionality of the ERP’s procurement modules.)

Or as COUPA Founder and President Dave Stephens, in explaining the company’s “see how it works” tagline emphasized in terms of the vendor’s key differentiator, “COUPA is the only On-Demand procurement solution that’s amazingly easy to use.” 

Are You In The Software Business?

This is a question I had posed in Part 6 of my 7 Part Dangerous Supply Chain Myths Series.  (Note: refer to the Web Resources Section at the conclusion of this post for the link to the series in its entirety.)

The basis for the question was the result of a conversation I had with a senior level executive who lamented the fact that she had to dedicate two full-time staff to the “ongoing” implementation of a PeopleSoft procurement module.

What was most interesting about this particular example is that it is indicative of the rule and not the exception.  Specifically, and I quote, “the vast majority of purchasing organizations are now in the software business as they attempt to adapt their practice to an application they would not have chosen to use in the first place.”  This is a critical observation, in that the majority of supply chain initiatives have their elemental roots in either an IT or ERP-centric finance department strategy.

Also telling, is the fact that the handful of programs that are successful have based their approach on a collaborative understanding of the processes that define their business model instead of seeking gains primarily through the advancement of technology.  One such example is the Commonwealth of Virginia’s eVA initiative. 

Rather than providing the specific details of the eVA Case Study in today’s post (use the link provided in the Web Resources Section to learn more about the Commonwealth’s program), the one point I wanted to highlight regarding eVA is that the Commonwealth avoided the trap of the initiative becoming a software project.  Or in commenting on the benefits of their avoidance of the mega-project syndrome, Virginia’s Director (eProcurement Bureau) Bob Sievert stated that, “we were thereby able to shift the emphasis from an exercise in cost justification to one of process understanding and refinement.”

And it is this understanding of the processes that define the modern supply chain practice that has enabled COUPA to develop and successfully introduce an alternative to the traditionally onerous “solutions” offered as an adjunct to existing ERP platforms.  

Why COUPA?

For those of you who are part of my reagular readership, you already know that an important tenet of the Procurement Insights Sponsorship Program (which includes these profiles) is my total commitment to neutrality.  In assessing the viability of the COUPA value proposition, it will be up to you to determine how they may be of service to your organization.  And as is the case with all sponsors, I will direct you to the Link To Our Sponsors section of the PI Blog to investigate their value proposition in greater detail, and at your own convenience.

Adhering to my 20 second rule referenced earlier in this post, the COUPA offering “provides the solution to deliver superior savings through an intuitive user interface that accurately reflects and therefore effectively adapts to the real-world requirements of its clients.”  Or to be even more succinct, COUPA accurately reflects and effectively adapts to the way in which the users actually operate in the real-world. 

The Marine Science Institute (MSI) is a case in point.  While the Case Study is not yet available through COUPA, Dave did provide me with an advanced release version that is pending their client’s approval.  As such, I will only focus on a few of the key references that pertain to this post.

Established at the University of California in 1969, the Marine Science Institute ranks nationally and internationally as a leader in ocean research.  The complexity of their purchaing environment is on a par with even the most demanding multi-national corporation, as the COUPA program was relied upon to procure supplies for MSI’s “more than 500 active research projects throughout the U.S. and around the world.”  Administering “$3 million in supplies and equipment annually,” COUPA’s On Demand solution, “enables MSI to provide its geographically dispersed users with hands-on access to a central system in order to place, receive, and track orders.”

The above excerpt from the MSI Case Study demonstrates that COUPA has perfected the balance between the centralized head office requirements for accountability and control, while simultaneously meeting the operational requirements of a largely decentralized purchasing team.  And they were able to accomplish this within the framework of the emerging On-Demand or Software as a Service (SaaS) model.  Ease and cost effectiveness is definitely a winning combination in anyone’s books.

But again, do not take my word for it.  Instead take Dave up on his invitation to “see how it works” through the following link; www.coupa.com.  And let me know what you think.

Web Resources:

Yes Virginia! (Resource Library): https://procureinsights.wordpress.com/?s=Yes+Virginia 

Dangerous Supply Chain Myths (Part 6): https://procureinsights.wordpress.com/2007/06/28/dangerous-supply-chain-myths-part-6/

Dangerous Supply Chain Myths (Resource Library): https://procureinsights.wordpress.com/category/supply-chain-myths/ 

Use the following link to learn more about our Sponsorship Program; https://procureinsights.wordpress.com/pi-sponsorship-opportunities/

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