Publisher’s note: It should be noted that late last week, Coupa filed a Form S-1 with the SEC that begins its formal plans to conduct an IPO. This is big industry news. We will look at the implications for the company and the supply management technology market in a future article.

Last month, I sat down with Rob Bernshteyn, President and CEO of Coupa, the California-based provider of spend management solutions for the cloud, for a wide-ranging discussion spanning his career, tenure at Coupa, and, most importantly, his new book, Value as a Service: Embracing the Coming Disruption. In his book and our conversation, Rob offers a fresh perspective on the state of B2B technology solutions and highlights the new model where solution providers become strategic partners with their customers and work jointly to define, and ultimately, deliver greater value. Part 1 of our conversation is here. Part 2 follows below.

Asking the Right Questions, Changing Perspectives to Find Value

As Rob sees it, part of the problem, particularly for buyers of enterprise software, like Chief Procurement Officers, is that they remain fixated on how their teams can get more value, rather than what the best practices and technologies are that can help them achieve value; and what it is that they are trying to achieve. Is it enhanced compliance, lower risk, or improved savings? He feels that asking “how?” can be a nebulous question; that it beats around the bush looking for a process-driven answer that misses the point. But asking “What?” gets right to the point.

Enterprises looking to adopt solutions need not outsource the process of defining value, said Rob, nor should they own it entirely. From the outset, buyers, solution providers, and implementation/deployment teams need to have a “spirited partnership” in which the company’s culture, needs, and nuances are considered, along with traditional measures of value. Only then can a fair and fruitful discussion be had as to how to quantify value for that particular enterprise.

Chief Procurement Officers also need to change their perspective on technology from being enablers to value drivers – tools that will help them achieve the what. More features that enable users to perform more tasks do not necessarily equate to better performance. Rob admits that this is a hangover from the 1990s when technology companies raced to outfit their solutions with the newest bells and whistles, regardless of whether or not they were useful and drove value. Eventually, most enterprises will migrate to the Cloud, one of the latest trends in B2B software. But it will be on them to find and quantify value rather than trumpet that they are on the Cloud with the rest of the business world.

Disruption is Already Happening

The subtitle of Rob’s recent book, Embracing the Coming Disruption, speaks to the wave of innovation that is sweeping across industries today, including the rise of Big Data, the commercial Cloud, connected devices, and other innovations, like artificial intelligence and machine learning. Most organizations have not begun to feel the full impact of the shift; but some have, and they are grappling with the long-term repercussions of their decisions. Generational shifts are also occurring in that the Baby Boomers have begun to retire or are preparing to retire. From Rob’s perspective, many of those that made yesterday’s purchasing decisions are leaving today’s and tomorrow’s decisions to the next generation of procurement professionals. Others have decided to cement their legacy as progressive leaders and are embracing the latest and greatest technology innovations ahead of the “New Guard.”

Another major disruption occurring today is that organizations have begun to continuously evaluate how much value they are receiving from their suppliers, including technology providers. The focus and interest from the buyer’s perspective is becoming less about contractual performance and SLAs and much more about outcomes or “value.” In the technology realm, this shift has been accelerated by the rise of cloud solutions, which are used on a subscription or pay as you go basis, and the move away from perpetual licenses.

As enterprises more fully adopt a subscription-type mindset (in a time where continual improvement is already a way of life), this requires solution providers to become more competitive with their solutions, what they can deliver and how they are packaged. The customer relationship is no longer based upon a single, large sale software. Solution providers have to renew their customers’ subscriptions and as such have to consistently perform throughout the relationship, they have to earn their customer’s business. In the meantime, this newly-fostered competition in technology markets, creates a boon for buyers; now, they must take advantage.

Final Thoughts

The primary reason that Rob wrote his book, Value as a Service, was to start a conversation within the supply management industry and to share his and Coupa’s vision for the future of the space – how it drives value as a service and where they see it going. It was borne out of Rob’s intellectual curiosity, as well as his desire to engage in an ongoing and respectful debate with contemporaries in the enterprise software space. He admits that it is a hard thing to do – to carry on a conversation among vendors and users – but it is one that Rob regards as central and that we have normalized in our everyday lives anyway. What Rob really wants to know is, “are we creating value or are we going through the motions?” It is a question that we should regularly be asking.

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