Forget software as a service and all the other as-a-service fads. The new mantra is value as a service, according to Rob Bernshteyn, CEO of procure-to-pay SaaS vendor Coupa. As he explained to a packed keynote audience at its annual conference in San Francisco yesterday, that means going beyond merely offering a product or service to deliver quantifiable business value.
Big software companies are transitioning to SaaS, to the cloud. We're already past that. We are already talking about measurable value as a service. We're just beginning in this journey while others are still stuck in the past ...
We're not a products company, we're a value as a service company.
On every seat there was an early edition of a 170-page book authored by Bernshteyn called simply Value as a Service, in which he sets out the principles of what he sees as a disruptive trend that is poised to sweep through business. Later I sat down with him and asked him to elaborate on the ideas in the book (by the way, I had already had an early view of the content and provided an endorsement for the book — it's a good read).
Focus on value delivered
Bernshteyn believes the enterprise software industry — even the SaaS contingent — has become focused on shipping functionality without thinking about what customers are actually trying to achieve. He argues that Coupa has stolen a march on competitors by focusing on the value delivered.
What's exciting is, we're swimming in that value as a service pool. Our competitive environment, they're still in that mode of transitioning from product to subscription. 'We're now in the cloud,' that's all the conversation, it's all about delivery model. It's like, OK, we know the delivery model, it's definitely going to be software as a service, we're there.
Now we're in this other world where we're saying, with that delivery model, with the capabilities being delivered, how do we use people, technology and process change to drive value? We're swimming in that world.
I put it to him that while this all makes sense, isn't it simply stating the obvious? Businesses buy technology not for its own sake, but because they want to achieve some kind of business outcome.
Yes. Absolutely. But the obvious is so often missed. I cannot tell you how many senior level executive sales calls or implementation discussions I've had, where there's a lot of detail, a lot of discussion — at the end I just ask the person, what is it that we're trying to achieve with us working together? Almost nine times out of ten, they're not ready to answer.
Even if they are somewhat clear what they're trying to achieve, [such as] we want to get wide adoption so we can get spend under management, they haven't quantified that. How many [adopters], how much spend?
The same thing happens in the other categories. In CRM, what are you trying to improve? Lead time, conversion rates? There isn't clarity. It is absolutely stating the obvious, but that's what I'm trying to get people back to a little bit.
A passage in the book shows where the approach departs from traditional software engagements with customers:
Let's assume we start working together, and consultants get involved, and software gets evaluated. Lots of plane tickets are bought so we can see one another, and lots of meetings are held. Three years pass, and everyone has worked really hard. How will we know whether our joint efforts - your efforts, my efforts, your team's efforts, my team's efforts - have produced something that generated something that has measurable outcome, that has real value?
In other words, what does mission accomplished look like?
Three core values
During his keynote, Bernshteyn outlined three core values that Coupa follows and so when we met later I asked him to elaborate on how each maps to the value as a service model.
The first is exemplified at the annual Coupa event by pictures of customers holding up placards that show the quantified results they've achieved, often in millions of dollars saved. Bernshteyn explains:
The first one is, ensure customer success. By the way, we thought about those words. It's not strive for customer success, it's not focus on customer success, it's not try to — it'sensure customer success. That's very different.
Ensure means that, it's two o'clock in the morning on Saturday and some decisions need to be made, and there's fifty different showstoppers and you say, we're going get this deployed and we're going to drive this much spend through and we're going to save this much money, we're going to give this much visibility. It's ensuring it, no matter what.
The second is, focus on results. The best example of this, says Bernshteyn, is the work Coupa is doing to use the data it's collecting from a growing customer base to establish benchmarks. It's still under development for now but the aim is for customers to be able to compare their own metrics against industry norms, even down to the prices they pay at different times of the year on specific types of item.
The second area around focus on results, for me, we're just at the very beginning of this. Results to me is where the community of people work together to get smarter and smarter.
Think about crowdsourcing now hundreds of billions of spend data and lighting up benchmarks where we're showing literally you next to the other guy. We're showing here, in your company, it takes three weeks to approve something between $200 and $500. And the average is 73 hours! You are a propellerhead, you are crazy. You over-architected processes to the point of nausea. You've lost sight of the result.
The result ought to be, get it with as little touchpoints as possible, with as much control as required, and save the money or become much more operationally efficient. This is one of the strongest examples around that.
Bershteyn turns to a discussion of user interface trends to illustrate the third value, strive for excellence.
There's a big movement in Silicon Valley and enterprise software [towards] a cleaner UI. Almost as if UI is a skin-deep little layer that just sits on top and we can just put a little lipstick on and we can make the buttons bigger.
My line is, have a focus by the development team, our UX experts, to minimize how much users are interfacing at all! The perfect UI is no UI. Get me out of the process. Invoices coming in, automatically mapping against purchase orders, against whether it was received or not. If it's all right, tax codes resolving, invoice payment goes out, no one did anything. Exception case handling.
The idea of writing a book had initially come from Salesforce CEO Marc Benioff, says Bernshteyn.
He said, you really ought to write a book. And I've had it in the back of my mind, since he gave me that advice.
About seven months ago I said, you know we have this conference coming up, and we're getting to a place where we really need to have a broader position paper of how we see things. And I've seen a lot of patterns myself in a couple of decades of enterprise software.
I said, if I could put that all on paper and get it out to folks, perhaps it could help us underpin what we're really trying to do in this market. So I just blocked two hours a week for about three months and we banged it out.
What advice might the book offer to a company like Salesforce, I wondered.
There is a great opportunity for a company like Salesforce to begin to really quantify the incredible value they offer. How much lead time, how much conversion improvement, how much bigger deal sizes? How much wider reach, how much can you reduce contact touch points within an account to sell them, how many less service touch points?
All these things you can begin to quantify and then it's like, wow, we're competing in a whole different world here. It's not just functionality, it's not just that it's delivered via the cloud, it's that it's clearly delivering business value.
Yes it is stating the obvious to say focus on the value you deliver, but it's surprising just how rarely enterprise technology buyers focus on the results they want to achieve. Vendors and buyers alike have fallen into a habit of drawing up wishlists of functions and capabilities while forgetting what was the original purpose of the conversation.
Bernshteyn's concept of value as a service is a wake up call to keep the true goal in mind.