August 7th, 2009

The clouds are gathering for Coupa

Posted by Dennis Howlett @ 6:13 am

Categories: procurement

Tags: E-procurement, Procurement, Coupa, Purchasing & Procurement, Business Operations, Dennis Howlett

Sometimes I read something and it makes me smile from ear to ear, most often because it generates another of those ah-ha moments that keep tech people motivated. Reading Vinnie Mirchandani’s SCARS: SaaS and Cloud Allowance Rebate System was one of those moments. Much as I am tempted to steal the whole post, this piece particularly caught my eye:

An example of bills which I expect will be circulating soon in legislative bodies around the world similar to the CARS initiative in the US…

…Sec 1403.  The purpose of this imitative is to help CIOs understand and calculate the benefits of leveraging cloud efficiencies such as

• •Google’s data center efficiencies
• •Salesforce.com ecosystem of smaller, nimbler SIs (such as appirio)
• •NetSuite’s energy efficiencies
• •RightNow’s leverage of open source components
• •Zoho’s significantly lower SG&A
• •Appirio’s service-as-software mindset
• •Workday’s painless upgrades
• •Coda’s use of force.com as PaaS
• •Amazon’s storage efficiencies

Those are just selected examples in each case. Most of these vendors are delivering multiple such efficiencies. So are many more like Yahoo, Rackspace, Nirvanix and countless others.

It arrived at exactly the right time. Earlier in the day I received a pitch from Coupa, a cloud based play that innovates at multiple levels. The pitch was a follow on from my piece about navigating among the large ERP vendor sites. Coupa’s site is a refreshing change from the corporate stuff I am used to seeing.

Right up front I have customer videos I can view, entertaining cartoons that take the mystique out of procurement and information that directly addresses me as the customer. Innovation comes in many forms. But it doesn’t matter a jot if the service is shallow or not up to snuff. So I scheduled a demo with co-founder Noah Eisner. By his own admission, he’s not a sales guy, which is just as well, because I like to get into the guts of things when viewing a demo. Sales guys get in the way.

Coupa is in the e-procurement business but tries to make it as simple as possible for customers to onboard suppliers and staff. For those new to e-procurement, Coupa provides a walk through wizard which the company claims can get you up and running in less than two hours. I guess that will be true for a small business but once there are more than around 100 touching the system then you’ll be in for some real implementation. A number of the customer videos I saw talk about implementing in less than a month with little technical help. That’s still speedy.

Setting controls can be done on the fly, which allows you to change policy as circumstances demand. In 21st century fashion, Coupa takes the idea of crowdsourcing buying and pulls it into the service through iRequest and iBuy. These allow buyers to step outside central buying agreements when the situation demands but without breaking buying control. It’s a neat idea.

Coupa makes a big deal of benchmarking, which is crunched nightly producing a report which signals where the customer is performing relative to the market as a whole. It’s a bit of a blunt instrument because Coupa has yet to develop segmented market models. Even so, as a first stab, there are plenty of metrics to consider as a starting point for improving processes.

As a bonus, Coupa includes direct out-f-the-box integration to Quick Books and has integration links to SAP, Oracle and NetSuite.

I called up fellow Irregular and procurement expert Jason Busch. He sees it as a reasonable fit for SMEs  and noted that: “Even though Coupa’s prices have risen a lot in the last few months, they’re still well below anything you could get from an Ariba, Oracle or SAP.”

Coupa recently offered to put government procurement online for free (for six months) but as Jason playfully says:

Is Coupa a GSA approved vendor? They weren’t as of 8:35 CDT on Wednesday night when I last checked. To serve the Federal government — or at least to take their money — you’ve got to get on the list. So even if Coupa got a contract (or many) serving Federal agencies and departments for free, they’d still need to figure out how to get on the list to eventually start charging them.

Jason then goes on to explain how messed up US government procurement really is concluding that:

Calling attention to Federal procurement inefficiency from a requisitioning process is like complaining about a drippy faucet in a lavatory on the Titanic. Yes, it needs to be fixed (and maybe Coupa is the one to do it). But the real problem is that the ship is taking on water. And no plumber fixing a frigging faucet in a Walnut-lined stateroom is going to have a solution to that.

Oh well - nice try guys. Even so and with around 100 customers pumping in a minimum of $10,000 pa, I doubt they’ll have too many problems finding takers in this economy.

February 18th, 2009

Bearing Point files for Ch.11 protection

Posted by Dennis Howlett @ 12:34 pm

Categories: consulting, procurement

Tags: PricewaterhouseCoopers Consulting, Bearing Point, Consulting, Outsourcing, It Operations, Business Operations, Outsourcing & Subcontracting, Dennis Howlett

It’s been a long time coming but Bearing Point finally succumbed to the mountain of acquisition fuelled debt it acquired between 1999-2002 and has filed for Chapter 11 bankruptcy protection. Per Reuters:

As part of the prearranged plan, a $500 million senior secured credit facility will be replaced with a new secured, senior credit facility. New preferred stock will be issued, unsecured debt will be exchanged for different classes of common stock and all existing shares will be canceled.

As of September, assets were about $1.76 billion and liabilities were about $2.23 billion, according to court documents.

Bearing Point’s troubles have been well known in the consulting industry. Earlier this month my Big 4 governance colleague Francine McKenna predicted that unless it was bought quickly, there seemed to be no hope for the company.

The more substantive point is what happens from here. We know that the latest action only affects the US operation. According to Washington Business Journal:

“Our day-to-day operations will continue uninterrupted and we want to assure our employees and customers that we remain committed to serving our clients and to providing world-class consulting solutions,” said Ed Harbach, the chief executive officer. “This restructuring is an important step to secure a better and stronger future for BearingPoint and we expect to emerge from this process in an expeditious manner.”

That’s market calming language but in reality the company could just as easily wither. Consulting contracts often contain get out clauses and Chapter 11 would be a trigger event. Most likely, the company has been approached by at least some of its major customers and worked out a deal to ensure that ongoing contracts are not the subject of massive disruption.

Francine talked a plenty about the potential for PwC to wade in and do a deal but as she pointed out, there are many barriers to PwC, most centered around potential conflicts of interest with audit clients. That despite the fact PwC wants to extend its consulting business. There would be other problems. PwC itself is heavily embroiled in regulatory issues arising out of its involvement in the Satyam debacle. Such a move might not therefore work in its favor. Of course, they could have been sitting on the sidelines waiting for a firesale.

It will be intriguing to observe how Bearing Point weathers the immediate storm, especially in its international operations. Past experience tells me that when a large unit fails, the ripples spread rapidly around the world. It is inconceivable there won’t be at least some disruption in the non-US operations.

October 14th, 2008

SAP's EcoHub, here's the rub

Posted by Dennis Howlett @ 7:54 am

Categories: Enterprise applications, pricing, procurement

Tags: SAP AG, EcoHub, Pre-sales, Marketing Research, Marketing, Dennis Howlett

SAP has created a marketplace for its own and partner solutions called EcoHub. Pre-sales are handled by SAP, with content created by the partners. Comments can be left but there are a number of questions about how this operates. The good news is that SAP spent time with users from the SAP Mentor community at TechEd Berlin to get immediate feedback. Zia Yusuf, EVP for its platform ecosystem said: “I think you’ll see EcoHub in a kind of permanent beta - it will develop over time - this is really the first iteration.” Currently on the agenda:

• There is no current link to a ‘business card’ so readers have no direct means of telling whether a person is providing a genuinely objective or valuable opinion.
• The rating system is a simple ’star’ system. For many, this will be seen as too simplistic.
• It is unclear how comments might be used in a marketing context. Leaving comments is one thing but the use to which they are put is another. For instance, I would not like to think that comments were being used out of context or as part of blanket marketing programs.

EcoHub is a step in a fresh direction for SAP which has been perceived as a company that doesn’t sell products that are ‘not made here.’

August 27th, 2008

Now that the HP-EDS deal has been consummated

Posted by Dennis Howlett @ 5:15 pm

Categories: implementation, procurement

Tags: Hewlett-Packard Co., Electronic Data Systems Corp., Mergers & Acquisitions, Outsourcing, Investment, Finance, It Operations, Business Operations, Outsourcing & Subcontracting, Dennis Howlett

The Irregulars draws its ‘crew’ from a wide and varied group of technology interests. One is Charlie Bess, an EDS Fellow. These are the brightest of the brightest among EDS thinkers and we are honored to have Charlie’s insights. Now that the HP-EDS deal has been consummated, Charlie felt free to comment on how he sees the merger and its potential. With his permission, I have lifted his eloquent post on the topic for reproduction here:

For about 10 years, I played trombone in a circus band for about a month out of every summer. One of the things I witnessed every year was the trapeze. In this act, there are catchers and flyers. Catchers catch and flyers fly. The flyer needs to let go of the bar and not focus on catching but on launching themselves into the gap, in order to achieve greatness.

EDS has historically been the catcher. In this merger with HP, EDS needs to change its mindset and become the flyer. It’s not an easy thing to do. The bar may seem like a safe place, but it prevents you from reaching your potential.

There is a quote from Marilyn Ferguson that comes to mind:

“It’s not so much that we’re afraid of change or so in love with the old ways, but it’s that place in between we fear. There’s nothing to hold on to.”

From the limited interaction I have had with the folks working on the merger activities, the HP-EDS team should have an advantage. EDS transitions people into the company all the time - that comes with outsourcing. EDS is made up of people who have had to let go of the bar before. After all, catchers can only catch people who let go of the bar. The company consists of people who have flying experience. The HP-EDS team needs to seek out the “fliers”, listen to their perspectives and the merger will be successful.

Everyone I’ve talked to views this as a great opportunity. EDS and HP have strengths in different areas, through this diversity of perspective it will be stronger than either organization would be alone.

People have been asking me why I don’t comment on the merger in the blog, and that’s because generally I don’t think I have anything unique to say, but this is an exception.

Earlier in the year, Vinnie Mirchandani had this to say:

HP could use a better services arm - while it has some marquee clients like P&G, it is inconsistent in most outsourcing deals. EDS could use a layer of cover. The company which just about defined outsourcing has been running hard to stay even - flat growth over the last decade…

…If I was Mark Hurd, I would spend $ 5 bn towards a smaller infrastructure player like ACS (or even better one with footprint in emerging markets) and spend the rest (plans to spend $ 12 bn on EDS) on a BPO and an application outsourcing play. In fact around infrastructure, I would think even smaller and buy a cloud computing player and use HP’s vast channel to build market on top of it.

So now there are two perspectives from within the Irregular camp. There is a third.

HP does have money. Organizations that can finance change can support clients in a quite different fashion than one that only has good intentions and a proven track record of taking on large and complex problems. Even if that is not always with the success EDS would have liked to see expressed in the public domain. EDS could do that kind of thing in the 90s but between the lack of financial skills and the decline of industry focus the company lost its way. Under HP’s stewardship EDS will have a chance to get back on the road its clients need. That, I suspect is the hope of all those transitioning to the new environment. Anything else would be a wasted opportunity.

December 3rd, 2007

Africa - not fit for sourcing business?

Posted by Dennis Howlett @ 6:00 am

Categories: Enterprise applications, procurement

Tags: Sourcing, Africa, Dennis Howlett

My Irregular colleague Jason Busch - who is an acknowledged thought leader on sourcing stepped on a landmine (metaphorically speaking) in writing off Africa as a continent with which to do business:

In my view, we would all do well to invest our tourism dollars in a continent as beautiful as Africa, not to mention our charity donations for medical care, safe drinking water and nutrition programs — among other causes — in the region. But Africa is about as far away from becoming a leading low cost supplier as it gets, unless, of course, you take the colonization and mercantile approach that China has adopted in the area (which, fortunately, is something that Western companies and countries can no longer get away with).

Ouch!  I know Jason well enough to believe that he wouldn’t make such statements in such glib fashion. Unfortunately, like many others, he demonstrated a sizeable glob of misunderstanding about the region characterizing it as a corrupt, disease ridden charity case. Fortunately, Thomas Otter - another Irregular and of South African upbringing - came to the continent’s defense in detailed and robust fashion. 

Among other things, Thomas noted:

Let’s take the automotive industry as an example. South Africa plays a major role as a supplier to the automotive industry.11% of the world’s catalytic convertors are made there. (see more about Fiat here)

The world’s largest Titanium mine is due to come online in Mozambique, a country until recently ravaged by war. The mozal Aluminium refinery in Mozambique is one of the lowest cost producers in the world. Expect to see more refining moving to Africa.

Former parts of the French colonial empire are developing their call centre businesses too. Between 2001 and 2004, 55 French language call centres have been set up in Morocco, employing 6,500 people and generating total revenue of euro 85 million (US$105 million).

I could go on but you get the picture. In the run of comments to Jason’s post, James Farrar took on the tricky topic of corruption:

We should remember that corruption is a two way street and it is my experience that foreign investors contribute to the problem on the supply side because they come to the market with a defeatist attitude and pre-subscribe to a view that corruption is an inevitable cost of doing business. We must not perpetuate this myth further. Foreign investors have huge influence and need not be in actuality or play victims. It takes competent management skill and determination to operate in these markets but it is eminently feasible.

Going forward, Africa will be one  of the principle markets for the so-called $100 Laptop. It is expected that the lack of traditional ‘copper’ telecommunications will mean that mobile applications will take on far greater importance. And as the world runs out of low cost sourcing locations, investors’ eyes are bound to look at Africa and ask whether it is possible to create the infrastructure to support viable sourcing industries. Given the cost base in many parts of the continent, it should be a no brainer.

Jason has promised a response for the coming week but in doing so I’d suggest he thinks again about the problems he identifies. They may be on a grand scale, in certain locations some problems may be insurmountable. At least for the time being. But Africa is far from being a basket case.

When I hear Simon Griffiths, another Irregular colleague in South Africa celebrating the biggest software and services deal he’s ever done for SYSPRO - then I know there is more than hope. There is the potential for a bright future.  People of goodwill need only look the problems square in the face and instead of shrugging, look for solutions. They are there to be found if we have eyes to see and the willingness to lend a helping hand.