UPDATE March 4th, 2013: According to CNN Money, they have declared a winner in the David vs. Goliath bout between Coupa and Ariba (SAP).
Of course there is no surprise here as I called this fight in the following 2010 Procurement Insights post.
“Bolt-on is an artificially intelligent, comprehensive execution system providing very specific functionality or technology to compliment ERP systems. Bolt-ons employ client-specific business rules to meet unique needs. There are many useful applications of this type . . . including product data management, product life cycle management, customer relations, e-procurement, order tracking, warehouse management, data mining systems, etc.”
From “What Is Bolt On?” post by TMA House in Information Bible (March 26th, 2010)
In late 1998, when I had first began my research into leveraging what the above excerpt refers to as artificial intelligence in the procurement process, I can readily recall the comment by an EDS representative regarding the the possibility of “teaming” with an Oracle or an SAP. Specifically, that neither of those organizations would get out of bed in the morning for anything less than $1 million to start (emphasis on “to start”).
Even though the market was entering the zenith of the dot.com boom and that at the time $1 million was considered by many to be chump change, I was nonetheless shocked by the apparent arrogance under which these organizations seemed to operate.
After all, and while the proverbial chickens coming home to roost in the way of failed ERP-centric initiatives was still several years down the road – although Dale Neef predicted that 75% of all e-Procurement initiatives would fail in his 2001 book “e-Procurement: From Strategy to Implementation,” this was still a pretty ballsy attitude to say the least.
What is interesting is that most ERP-centric software according to the March 2010 TMA House post, had “historically been delivered as an inflexible code,” which was myopically focused on the “originally intended application.” This is what I have always referred to as software development using a rigid equation-based model.
Conversely, the bolt-on applications (and I have always considered the term “bolt-on” to be both inaccurate and even to a certain degree condescending), were structured around an agent-based model utilizing artificial intelligence coding. This meant that these “best of breed” solutions were “easier to manage, upgrade and connect.”
Despite the apparent benefits of the new and highly adaptable “open system architectures,” the “underlying philosophy” of early ERP systems focused more on internal integration versus real-world operability. Translation . . . the business model of the ERP giants was built around a cumbersome and inflexible code that provided a perpetual revenue stream to support a bloated cost model. Introducing bolt-on solutions that could easily accept modifications, additions or linkages to external software, thereby dramatically reducing both the lengthy implementation time lines and corresponding high costs presented a significant barrier to entry for the Oracles and SAPs.
Even with SAP’s John Wookey’s recent acknowledgment that “he doesn’t blame these customers for going out and getting SaaS,” there is still an underlying (there’s that word again . . . underlying) attempt to confine this inevitable transformation to the old SAP platform through comments such as bringing “cohesion to the model, a cure for SaaS sprawl” and, here’s my personal favorite “on-demand orchestration.”
It is truly sad to see IBM’s FUD (Fear, Uncertainty & Doubt) approach, which was once a powerful tool used by Big Blue denizens to unduly influence risk averse belt with suspenders decision-makers to go with the Armonk icon, is now in the context of Wookey’s creative prose more reminiscent of ELMER FUDD. Come on cohesion to the model and SaaS Sprawl?!?
This of course is where Coupa’s timing regarding their announcement that “three leading enterprises, Michaels, Diagnostic Health Corporation and PGi (formerly Premier Global Services), have all deployed Coupa for e-procurement” is impeccable. Especially since “each deployment,” according to Coupa’s senior executives “features robust integrations with the leading ERP systems from SAP, Oracle and PeopleSoft,” thereby “underscoring” the company’s flexibility in “delivering solutions that extend existing enterprise investments to make these systems more valuable to their respective organizations.” Quick, somebody call John Wookey as there is an apparent outbreak of SaaS Sprawl happening as we speak.
While I will leave it to you to read the press release in its entirety, and at your convenience, to obtain all the related details of these latest contract wins for the California-based SaaS software – make that cloud computing – company, one of the more telling remarks came from Coupa’s Jason Hekl when he said, “we don’t even need to contact SAP, let alone engage them in any meaningful way to implement our solution.” They are “not necessary to the implementation process.”
Of course Hekl will be the first to admit that the ERP giants’ solutions will remain solidly in place, a viewpoint that I also happen to share. However, and like the existing foundations of a house, where you have a great deal of flexibility in terms of renovations and new additions to the old homestead, SaaS solution effectiveness is not limited nor governed for that matter by the architecture of an existing ERP application.
Like the Larson Far Side cartoon in which snake parents are bemoaning the fact that they cannot keep their sizable brood confined to an old fashioned, wooden-barred playpen, Wookey’s suggestion that “Customers have come to SAP and said it would sure be nice if you could provide these things on-demand so we wouldn’t have to go to all of these other vendors” has a similar gallows humor kind of tone to it.
Or to quote Freud, the once enormous larger than life egos of an Oracle or SAP who would not stoop to get out of bed for less than $1 million “refuses to be distressed by the provocations of reality, to let itself be compelled to suffer. It insists that it cannot be affected by the traumas of the external world; it shows, in fact, that such traumas are no more than occasions for it to gain pleasure.”
Someone should tell Coupa’s three newest clients that theirs isn’t the future Wookey envisioned.