Category Archives: Vendor Review

The Unique Solution for Travel Procurement

Earlier today we discussed the unique challenges of travel procurement – a nightmare shared by your employees as well as your finance team. After all, when booking a single trip can take an hour by the time you book your flight, rental car, hotel, airport transportation, off-airport parking, and dinner reservations and when finance has to sort through (tens of) thousands of expense reports literally by hand to determine whether their preferred carrier owes them a discount, how could you call it anything but?

Last week I was fortunate enough to see the answer. It’s called the Rearden Commerce Network (rebranded Deem in 2012) For those of you who read Spend Matters regularly, you’ll probably remember Jason more-or-less gushing about them as well in posts such as “Rearden unShrugged”* where he called Rearden the future of “personal” services Spend Management for employees.

Services are tough. They’re calendar-based, time critical, and dynamically priced. There’s a reason there is no Amazon, Google, or Yahoo for services. Even the brightest software engineers cringe at the thought of trying to build a single platform to handle such a diverse array of services. But as far as I can tell, Rearden has done it. Sure the interface still looks Web 1.0, but the capabilities are Web 2.0 all the way. And when they say you can book a complete trip in 10 minutes – they mean it. I saw it – and it works! I’ll tell you one thing – from an applications perspective, few software packages on the market today impress me. Even today, I equate most software applications with undifferentiated organic fertilizer (which is probably why you hear me mention so few companies in this blog – that, or I really am another one of those arrogant PhDs). But Rearden’s solution impressed me.

If you are a mid-size or larger company with a lot of travel related spend, I can not think of a single reason why you should not be using Rearden now! When your employees who travel regularly are probably wasting up to 20% of their time on travel arrangements (instead of a more palatable 5%, or less), when you have no way of easily tracking who you are spending your travel budget on (and if you qualify for discounts) and, more importantly, no way of enforcing that employees are buying against your preferred contracts when possible and sensible when there is this easy to use system that lets your employees do almost everything they need in a one stop shopping experience, allows your finance team to figure out whom you are spending on and in what amount, and allows your procurement team to enforce flexible spending rules. It’s a great addition to your supply chain suite!

Now, I’m not entirely sure whether it will scale up in the future to support all services in a consistent, coherent manner, even though they claim the platform was built to support any service you can imagine, but it is certainly capable of supporting any T&E service you can throw at it, and this is a very significant feat from both a business and a technological perspective. I can’t wait to get some time with their senior technology guys to do a deep dive into the architecture and technology. (After all, I need to use the PhD sometime!) If it’s as impressive as the business capability, I might just be inquiring as to whether or not that Director of Applications Engineering position that they are advertising can be done remotely.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Coupa Charges Ahead!

Yesterday I was fortunate enough to have a long chat with Dave Stephens, fellow blogger (Procurement Central, [WayBackMachine]) and founder of Coupa. We talked about a number of topics (and I’ll post more when I get the chance), including what Coupa is focusing on for their next enterprise release as they slowly grow (and set up shop in their new offices in Foster City, California).

Besides a lot of minor updates (which appear in both the open source and enterprise version), to appease the open source community at large (like better sorting and slicker interfaces), they are making improvements in three key areas – administration (much easier to use), buying templates and (visual) form construction (enterprise-only), and budget-based procurement (enterprise only) – probably the first “killer-app” for Coupa.

One of the problems with most approval-based eProcurement systems is that they don’t take budgets into account – which is very important not just in a budget-based shop where the approver would first have to log into another system to see how approving a large requisition would affect his budget, but in any business as a manager needs to see how an approval affects not only the total budget, but her unit’s spending to date. After all, you don’t want to overspend your (share of the) budget without a good reason, and you want to make sure that non-priority purchases are only made if it makes fiscal sense.

I was fortunate enough to see the work in progress on the enterprise edition, and it’s looking really good. The admin functionality, and functionality in general, has advanced nicely since 0.1 (and to some degree, since 0.2) and the form-based templates, definable and customizable at will by the system administrators, will give Coupa a great boost as it will now be perfectly suited for not only your office supplies, spot buys, and other odds-and-ends MRO spend, but also for your services spend as well. One-time legal services or consulting project spend, special advertising, promotional, or print spend, and other odd purchases (such as visa or passport application fees) will now all be able to be processed through the same system. This is VERY SIGNIFICANT. After all, Aberdeen has found that MRO is 26% of the total spend of a company (on average), and can be as high as 63%! Even if you’re not able to negotiate significant savings into your contracts, the presence alone of an eProcurement system, like Coupa, will save you bundles of cash since you’ll be able to virtually eliminate maverick spending with the built in compliance – one of the most significant costs to your organization!

I’ll post more later when I have the time, including some of the benefits of their forward thinking architectural choices, but for now, I suggest you download it and check it out. It might still be a pre-release, but there’s enough there to start giving it serious consideration – after all, it’s the early supporters and adopters that will get to guide its development over the next year or two, since open source projects build their roadmap based on customer feedback, not what an arbitrary executive or investor thinks is the right solution for the marketplace. Plus, they have documentation now!

Cambrian House: Crowdsourced Software

Not long after my Crowdsourcing post in the Purchasing Innovation series went up over at e-Sourcing Forum, JR posted a comment letting me know that a company up here (North of the Border) was already doing it commercially, in one of Canada’s IT hotspots (although you might not know it if you visited during stampede week). Cambrian House, located in downtown Calgary, has been up and running since February and has already turned out some revenue generating products. To date, they have launched CVR for Parents, AdWord Alerts, Pod Blast Video, Prezzle , Renoworks Homeowner Edition, Desktop Playground , and Cambrian Code.

It’s true that a couple of their projects have already been suspended due to lack of interest, but its also true that some are going stronger than ever. One of the advantages of the crowdsourcing model applied to software is the ability to greatly accelerate initial development lifecycles and get working betas to market really quickly. Instead of waiting months or, more often, years to find out if a new product idea is going to fly, you can now have the answer in months, or sometimes even weeks!

Furthermore, they’ve also proven that when crowds of like minded people get together, they can have an impact on communities, locally and globally. They’ve already made charitable donations as an organization, including one to the local Mustard Seed (a non-profit, Christian humanitarian organization that responds compassionately to the needs of the inner-city’s less fortunate) and fed Google worldwide.

So how does Cambrian house work? It’s simple. An idea is submitted, be it from an employee, an advisor, or a random individual who stumbles across the site, the best ideas (as judged by the team) are thrown out to the crowds (through the world wide web) to test and comment on, those that get traction are then built by development crowds constituted of those individuals interested in seeing the product brought to market, Cambrian House handles the sales and marketing, and those who worked on the product (including the idea generator) get royalties. And for those who like graphics, Cambrian House has a nice assembly line graphic (Flash 8 required) for you.

Right now, most of the projects are pretty small – but there’s nothing stopping crowdsourcing from working at the enterprise level. After all, viewed the right way, it’s just a logical extension of open source development, the difference being that the contributors get paid (allowing them to develop the software they want to work on full time, instead of in what hours they have left after fulfilling the requirements of their full time job, since we all need to pay the bills) and there is a support organization to help them market and sell the product, allowing them to do what they do best – develop great products!

In my crowdsourcing post, I predicted that “the view of sourcing will slowly shift from that of a reactive business unit that aggregates needs and demands into a proactive business unit that is looked upon as an enabler, problem solver, and even forecaster of future trends and consulted by the other units of the business“. In software terms, where many professionals now work as contractors and independent consultants, I believe that the innovative organizations will shift from outsourcing projects to big traditional consulting firms that throw whatever warm bodies happen to be on the bench at the time at the project, with varying degrees of success, to using crowdsourcing firms that specialize in large-scale and distributed project management and bringing together the right resources for the task under the crowdsourcing model.

Coupa Cabana Cafe: Open For Business

And to celebrate, they’re having the sale of the century! They’re practically giving it away. You can try it for free! You heard me! For Free! Now that’s a price that can’t be beat!

The reality is that Closed systems are dead. From software to supply chains, open is the new standard. And Coupa is making it reality, with the first open source eProcurement system designed to revolutionize your procurement process.

As printed in this month’s issue of Wired, it’s an All-Access Economy. Openness is a fundamental business principle. It’s what the internet is built on. Progressive software companies are taking the software-as-a-service model to the next level by exposing the API’s. You can tap into Amazon.com and eBay servers to create your own storefronts, Google to create your own maps, and Flickr to create your own montages.

And now, in addition to rolling your own Content Management System (CMS) with OpenCMS and Customer Relationship Management System (CRM) with Sugar CRM, you can roll your own eProcurement System with Coupa with its built in catalog management, adaptive “tag-cloud” indexing, and zero-click shopping cart. (Beat that Amazon!)

For those of your following along, I offered a glimpse of what was to come in my Procurement Independence at the Coupa Cabana Cafe post earlier this month. In this post, I’m going to dig a little deeper, but try to keep it short since you can now check it out for yourself at www.coupa.com.

The new site is pretty slick – and the one minute introduction video is all it should take to catch your interest. The video highlights ten key features of Coupa. I discussed half of these last week, but I’m going to list them all because most of them are innovative.

RSS Feed for the latest news from the procurement department.
Every news site and blog should have a RSS feed!
Toolbar that ensures all actions are a click away.
Ask an Expert … where answers become part of a dynamically evolving FAQ.
Dynamic Adaptive Tagging.
After all, no static classification scheme is ever complete. This allows the classification scheme to evolve into what you need, not what someone else thinks you need.
Catalog items are accompanied by average employee ratings.
This is awesome. When I go to Amazon or eBay, I do not care what John or Jane Doe think, I want to know what like minded people think … and in business, I want to know if it works for my like-minded co-workers.
Enterprise Policies are included in search and always available.
Drag and Drop Buying.
This is the most intuitive shopping cart I’ve ever seen – as it captures the real-life usage of a cart.
Automatic population of ship to address and account information.
Graphical Approval Chain so a buyer always knows what the process is.
Attachment and Supplemental Document Support.

In addition, the web site points out the following capabilities:

Self Service Requisitioning
Goods and Services Support
Local Catalog Management
CSV Data Upload
Powerful Global Search Capability
Punch-out Support
Email Notifications and an on-line inbox
Requisition History
A How-To-Buy Policy Framework for integrated user education and always up-to-date document access
Contract Creation and Maintenance
Flexible PDF Purchase Order Generation
ERP integration APIs

And if you are willing to shell out a reasonable amount for the enterprise system, you also get:

role based access control
power user direct requisition entry forms
business groups
quickforms for special requests
REST ERP synchronization methods
no click requisition email templates … Beat that Amazon!

Essentially, employees use the interactive web interface to select items and submit for required approvals – the system determines the best price, the preferred supplier and the right contract, and then sends the purchase order electronically to the supplier. The company gets a standardized solution, which saves money and improves compliance, and employees get a system that they can actually use to get their work done.

In addition, Coupa provides support and implementation services. Open source users can buy per incident support packs and enterprise users get a full-featured support package that includes:

issue determination and bug fixes
updates, maintenance bundles, and patch support
issue diagnosis and resolution
performance tuning advice
exclusive support forums

In addition, Coupa offers implementation services, primarily through integrators and value-add resellers, that include eProcurement Deployment Best Practices, customization guidance, and integration assistance.

But let’s get down to business. This is an open source solution, being released to the community, which will, hopefully, improve upon it and return the improvements to Coupa and their customer base through the LGPL license. Coupa is starting off on the right foot by having a Wiki and a Forum, partitioned into general topics, open source, enterprise, and developers all ready to go from the beginning.

The wiki, which tracks updates, documentation, the coupa roadmap, and technology choices, allows you to report issues via tickets, which can then be searched using Coupa’s powerful search technology, or reported on using any one of the following reports:

Active Tickets
Active Tickets by Version
All Tickets by Milestone
Assigned, Active Tickets by Owner
Assigned, Active Tickets by Owner (Full Description)
All Tickets By Milestone (Including closed)
My Tickets
Active Tickets, Mine first

Coupa is built using Ruby on Rails and designed to work with just about any standard relational database (MySQL, SQLLite, Oracle, SQL Server, PostGreSQL, and DB2), web server(LightTPD, Apache, Mongrel, and IIS), and web browser (IE, FireFox, and Safari so far … I’m hoping Opera, which was the first to introduce many of FireFox’s key features, although it is not open source, is next) and runs on Mac OS X, Windows, and Linux operating systems.

Dave Stephens explained why Coupa Technology uses Ruby on Rails in a recent post on Procurement Central [WayBackMachine]. And for the most part, I agree with the choice. An open-source project needs to be built on efficient open-standard technology that is easy to use, penetrating the market, and appropriate to the task at hand. For the most part, Ruby on Rails fits those criteria.

However, I should note that I do not agree with Dave’s assessment of Java. Although Java is not a suitable choice for UI development (let’s face it, Swing is a real pain in the backside, JSP is a mess, and JSF is not intuitive to even a relatively experienced Java developer), I would still strongly consider Java for the application backend of an enterprise application. Java’s extensive libraries make the development of complex business logic, data structures, and persistence layers relatively easy. Java’s JIT compilation makes Java code as efficient as C++. Furthermore, XML, which is supported in Java by DOM, SAX, and JAXP, is development language independent and supports your language of choice for front end development. (And even though Dave is right in that many IDEs are bloated and overkill for many tasks, some, such as IntelliJ, actually make developing in Java a simple pleasure.)

All in all, Coupa has set the bar high for eProcurement applications.

Supply Risk Management IV: WisdomNet’s Point of View

As mentioned in Jason Busch’s recent post Another Perspective on Supply Chain Risk* on SpendMatters , WisdomNet recently published a whitepaper that serves as a good introduction to Supply Chain Risk, and a good companion to my introductory posts on Supply Chain Risk (An Introduction, Risks and the Need for Resilience, and Managing Risk) that ran this weekend on e-Sourcing Forum [WayBackMachine]. Although I agree that there are not any breakthrough findings or thoughts in the work, I also found it to be quite a worthwhile read — a perfect supply risk management 101 type of study, if you will. As such, I’m going to highlight the key points made by the author as a comparison and contrast to the key points that I made this weekend (in an effort to encourage you to read more).

According to the white paper, five key factors have an impact on supply chain resilience:

Supply Chain Design
Business Process Management (BPM)
Demand and Supply Visibility throughout the Supply Chain
Supplier Relationship Management (SRM)
Culture

Supply chain design is the primary driver of resilience, and the level of risk in a supply chain is affected by process structure, level of vertical integration (that results from make or buy decisions), the location of supply, the concentration of capacity, and inventory decisions. Process structure is dictated by the choice of make to stock, configure to order, make to order, and design to order. The extent to which suppliers that cannot be easily replaced perform critical steps in the vertically integrated supply chain increases the level of risk. Sourcing outside of the local market in which the goods are to be sold adds considerable transportation and delivery risk. Concentrating supply to a single region, country, or city adds considerable risk and risk (which includes obsolescence, quality, shelf-life, and loss) increases with the number of inventories in the chain.

Resilience can be added to the supply chain design by:

using common components and configure to order processes whenever feasible,
avoiding sole source arrangements,
reserving capacity, implementing maintenance and spares strategies when single sourcing must be used, and allowing for process redundancy,
distributing supply among multiple cities, countries, and regions
centralizing safety stocks regionally,
holding inventory in unprocessed states for flexibility,
consistently and regularly measuring and improving forecast accuracy,
rationalizing product lines,
building rapid re-supply provisions into supplier contracts,
collaborating with customers for “early warning” of potential needs,
using performance-based contracts with Service Level Agreements, and
sourcing locally within your target market to facilitate site visits, minimize cultural differences, and increase manageability.

A focus on business process management can enhance capability through the supply chain. Participants whose processes are controlled and reliable are less likely to induce supply chain disruptions internally than those whose processes are not under control. Operations where statistical process controls and improvement programs, such as Six Sigma, are in place tend to have more predictable processes and introduce less variability when compared to those operations without such controls.

Resilience is the result of business process management that includes

using fact-base process improvement and control techniques like Six Sigma,
working with partners to build the same process disciplines into their operations (as your supply chain is only as strong as your weakest link),
focusing improvements on reducing economic order quantities to increase flexibility, and
building the ability for flex capacity.

Enhancing visibility through the supply chain improves your ability to deploy appropriate levels of resources where needed and reduces the risk of internally generated disruptions. Also, the more open the participants are about providing early warnings about (potential) disruptions, the more likely the chain can either avoid them altogether, or at least reduce their effect and duration.

Resilience results from increased visibility when you

implement collaborative forecasting, planning, and replenishment,
use partner agreements to provide inventory visibility,
implement systems that integrate data feeds in (near) real-time, and
(contractually) require suppliers to provide immediate and specific notification of (potential) disruptions as soon as any event of significance occurs.

Competency in Supplier Relationship Management is the key to building and maintaining a strong supply chain team. SRM skills enable an organization to reduce supply chain interruption risk by strategically spreading business among multiple suppliers and multiple locations. SRM techniques include good performance measurement processes, collaboration and supplier development, and solid category management programs wherever sole sourcing is required.

With regards to performance measurement, it is important to establish clear expectations, provide timely feedback when performance falls short, and manage consequences. Reward suppliers that succeed and penalize suppliers that fail. Performance is increased when joint efforts with strategic suppliers are undertaken to optimize cost, inventory, processes and flexibility. Manage key categories with a sound understanding of the underlying commodity markets and devise substitution options when you foresee an impending shortage or crisis.

Resilience results from Supplier Relationship Management when you

establish supplier performance measurement processes and apply them consistently,
invest selectively in strategic supplier development,
manage categories for strategic and single-sourced components,
use supplier segmentation to guide relationship management, and
move toward performance-based contracts that build risk sharing into contract pricing.

Culture is used to refer to the level of trust, delegated decision-making structure, and rapid information movement. In order to build resilience:

participants need to share information about demand, inventory positions, capacities, and vulnerabilities,
lower levels of the organization need to be empowered to sound alerts regarding problems or potential problems (as the sooner a problem is found, the cheaper it is to fix, and the smaller the duration of the associated disruption), and
processes should be in place to enable timely information flow.

In addition to the steps that have been outlined above to improve resilience, there are actions that can, and should, be taken by an organization to prepare for a disruption. These are:

Identify potential risks, possible ramifications, and associated likelihoods.
Explore risk-reducing measures and decide on actions to mitigate risk, investing more in plans and processes to mitigate high likelihood and high impact risk scenarios.
Prepare business continuity plans that address both emergency response and plans for business resumption.
Practice drill the continuity plans against different scenarios to uncover and address potential weaknesses before a crisis happens.
Work with critical suppliers to make sure they are prepared and have business continuity plans in place.
Update plans regularly and as conditions change.
Respond to disruptive events as they occur.

In addition, the business continuity plans should include:

event impact analysis,
organizational roles and responsibilities for crisis management,
crisis communication plans,
well defined procedures for the evacuation of personnel,
consideration for means to provide food, water, shelter, clean air, security, and basic medical, and
secure back up of key business data and systems required to run the business and service your customers.

Events that cause supply chain disruptions are inevitable. The impact of these events, however, can be minimized by proactively taking steps to build a resilient supply chain and by preparing for disruption. For an in depth discussion, I refer you to WisdomNet’s white paper “Managing Supply Chain Risk: Building in Resilience and Preparing for Disruption” (registration required).