Business & Technology Nexus

Dave Stephens on technology and business trends

Archive for June 2006

The Time Grows Near

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As we grow closer to Coupa’s inaugural launch of Coupa eProcurement, we’ve been encouraged by early feedback from interested early adopters, partners, and friends. Thanks to all of you who’ve spent an hour or two diving deep on the functionality via your browser, Webex, or in person.

Sharing new product innovations & then honing them through direct customer feedback has long been something I’ve enjoyed. It’s exciting to see our new venture get to the point where that’s possible & happening on a near daily basis.

I admit it’s been tough to keep up the blogging with all the demos and such. This last final push to get the product complete & ready to turn over to the open source community has been a haul. But while super tiring, it is also a lot of fun.

I’m reminded Noah mentioned fellow blogger & open source enthusiast Matt Asay in his post on the World Cup. I read Matt’s blog from time to time and value a lot of his commentary. And I’m definitely a fan of the team he joined over at Alfresco. I’ve been looking at the “history” section on their about us page and using it as a yardstick to measure our progress. They’re obviously a very talented bunch.

Switching back to blogging it seems Debbie Wilson suspects us Procurement bloggers are a transient bunch. I am going to do my best to prove her wrong. At over 100 posts now I’ve still yet to tap the bulk of my Oracle experiences or the breadth of my observations on the power of effective Procurement. And congratulations to Debbie on joining Gartner! But Debbie please don’t make your old posts disappear! Keep them around and freely available. They’ll do nothing but bolster your credentials at Gartner.

Written by Dave Stephens

06/28/06 9:59 PM at 9:59 pm

Posted in Coupa, Opinion

On US Healthcare – Insurance

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Now I’ve always equated “insurance” with “catastrophic” events. The idea is that you pool resources to share risk. But somewhere along the way, healthcare insurers have become “who pays for all your healthcare needs.” Some conservatives would argue this had led to an erosion in our ability to act as consumers and make the natural tradeoffs that occur in efficient markets. Some liberals might argue that the millions of Americans unable to secure insurance through our private system has led to the unraveling of our social safety net & at the same time resulted in higher costs for all. And like most people, I don’t identify wholly with either view.But it is true that insurers in the US system take on very broad role, essentially becoming gatekeepers of care from yearly physical exams, OB-gyn checkups, mammograms, access to specialists, etc.

And this does, from a supply chain perspective, twist incentives in a sometimes counterproductive way. Employers and their employees (who are the “Buyers”) form relationships with intermediaries (the insurers) instead of the service providers themselves. When I hear couples talking healthcare, they are just as likely to ask “How’s your PPO/HMO/EPO” than “How’s your doctor?”

But the insurers, as intermediaries, are a conflicted bunch. As for-profit enterprises, they want the largest possible subscriber base (revenue) & the largest possible margins (profit). As for quality of care? Of course they’ll talk about it, but in the end it doesn’t matter unless it’s so bad that it affects their subscriber base. After all, most insurers compete in the exact same “pool” of hospitals, clinics, and available physicians.

So, in the end, the name of the game is for insurers to use their large subscriber bases to beat suppliers up on price & then to gouge (let’s call it “right-pricing”!) that same subscriber base on premiums to extract the highest margins these firms can get away with. And collaborating with doctors incenting them to deny services altogether is another temptation these firms face constantly.

My view on the insurers goals leads me to look to blame quality of care and cost issues squarely on their shoulders. But one pesky fact prevents me from doing so: take a look at the profit margins of California HMO’s as premiums went through the roof (hint: even though premiums rose profits did not increase)

So the constraining force of a competitive market – meaning plenty of insurers to choose between, seems to be holding profits back. So who’s the culprit? Could it be we are simply consuming more healthcare and “prices” are not spiraling out of control as much as is commonly believed?
Now there is another big problem with the insurers, even if it’s not price gouging. And that problem is the consumer’s “unequal leverage” – meaning that while corporations (acting as customers of insurers) have enough leverage to extract coverage plans for “non-perfect” employees (those who may have a pre-existing condition or a prior surgery, etc) smaller businesses are shut out. And for an individual consumer, forget about it.

Written by Dave Stephens

06/27/06 2:41 PM at 2:41 pm

Posted in Opinion

World Cup Break

with 4 comments

Ever since Dave and I started Coupa, it has been crazy. Ups, downs, some more ups, a couple more downs and so on. Unpredictable and draining. It’s hard to find time for anything but work, sneaking a few hours with the family for dinner and putting the kids to bed…and then getting back to work.

But since June 9th, I have taken a few hours each day to watch World Cup soccer. It’s the game that I’ve played since I was 4 years old. And although I play some hoops and hack around on a golf course occasionally, soccer is my true love. If a big game is scheduled with teams that I like – US, Brazil, Argentina, England, Netherlands – I try to head over to Rudy’s Pub in Palo Alto to watch it on the big screen. If the game starts early, like 6 or 7am, then there are only a handful of us. For the US-Italy match, there were probably over a hundred. Sweet HDTVs, cheering fans, good food. Now, nothing compares to being at a World Cup match, but since I’m not in Germany, Rudy’s is my place. As a matter of fact, I’m there right now…wireless access is a wonderful thing.

As I’ve watched probably 50% of the games so far, I wonder how much soccer is changing with time. Purists would say that it doesn’t need to, but I’m not convinced. The game is pretty much the same as it was 20 years ago. Athletes are training better – becoming stronger & faster. But the game itself is stagnant and that’s going to affect popularity. Now, of course, there’s a huge fan base to begin with. But could soccer be doing more? Without question, there will be more distractions / other things competing for the interests of kids in the next generation, and it would be a huge mistake to take this fan base for granted.

Let’s start with some of the easy things. There are so few goals, only 2.3 per match in this year’s World Cup. If a ball enters the goal, it should be a goal. Tell that to the French team that obviously scored against Korea, as the goalie knocked the ball out while standing a good 2 feet inside the goal. The ref couldn’t tell, so no goal. France would have taken a 2-0 lead, an almost insurmountable lead…instead they ended up with a 1-1 tie. Would it kill them to put a camera on the goal line?

Offsides is one of the most difficult to call, but a very common violation in soccer. The linesman has to watch when a ball is passed (possibly 80 yards away from him) and then immediately check to see that no offensive team member is in an offsides position. But the offensive player is trying to time his run perfectly which complicates matters. And to make matters worse, an offensive team member could be interpreted as “not involved in play” bringing in the passive offsides rule. I would say that the best linesmen probably miss 2-4 calls per game. Could RFID on the player’s cleats help out? Possibly.

Let’s talk more about the refereeing. I’m not going to complain that the US got screwed, but I do think that FIFA (soccer governing body) needs to look at the way games are handled. You’ve got one referee out there. True, you have 2 linesman / assistant referees that mostly call out-of-bounds and offsides. But the main ref makes 90% of the calls on fouls. Is he/she able to watch the 22 players on each side, keeping up with some of the finest and most fit athletes in the world on a field that is much larger than a football field? Football has 7 or 8 officials on the field for 22 players, plus the instant replay guys in the booth. Baseball has 4 umps (6 for the playoffs) in a game that is so static, you could probably reduce the number. Basketball now has 3 refs for 10 players, while hockey has 4 refs for 12. The amount of grabbing and holding in soccer is killing the offense in the game.

Is FIFA doing enough to change the game? You can be the judge by the latest rule changes back in early 2005. They agreed to test a system to verify if the ball crossed the goal line. But it won’t be in place for this World Cup 18 months later. They clarified the offsides rule, which clearly isn’t working. The other changes involve the number of substitutes a team can have, limiting when the referee can change his mind and saying that defensive players need to be at least 2 meters away from the thrower on a throw-in. Not exactly earthshaking. They introduced a new ball that acts a little like a beach ball on a windy day. Makes the long shots more interesting. Good start, but it’s time that soccer does some more tinkering and innovating to improve the flow of the game.

What is soccer going to do to make the game more fan/TV friendly? An activity like poker probably did a ton of things, but the most obvious is introducing a hole camera. Poker now gets huge ratings on ESPN, despite not being live action. I’m sure alot of the poker players didn’t want the TV audience and (after the event) competitors seeing how they played their cards via the hole cam…but in the end, it’s good for the game. I certainly don’t have all the answers for soccer, but they need to figure out a way that major populations pay attention to the sport more than once every 4 years.

I don’t think that Dave thought I would hijack his blog to talk about soccer, so I’ll throw out something gratuitous statement like software companies need to innovate for their customer base or else risk alienating them. :-)

PS. If you are one of those few people with a combined interest of business applications, open source software and soccer, you might want to check out Matt Asay’s blog. His prime focus is the open source enterprise content management firm, Alfresco, but he throws in several posts about his love of soccer and Arsenal. Matt probably fully disagrees with my post.

Written by Noah Eisner

06/26/06 8:48 PM at 8:48 pm

Posted in Opinion

Hiring the Best

with 2 comments

At a software startup, the most critical mistake that we could make is to hire the wrong people. If your company has 1000 employees and you make a mistake, it's bad but not the end of the world. When your company is under 10 people and you screw up, you may go out of business.

There are many aspects of the hiring process, preparing the job post, finding resumes, sifting through the resumes, doing phone screens, interviewing the candidates, reference checking, getting approvals. By no means am I an expert in all of these things. But I think I've learned one thing that has led to successful hire after successful hire. And it surrounds the "pre-interview homework".

Before I can get to the "homework" phase, I need to cut down the field. I don't have time to phone screen every resume, so usually the top 10 or so get a call. After the phone screen, I'll select the 2-5 best candidates for in-person interviews. That's when I call the candidates up and give out the homework.

I'm not a huge fan of surprising candidates with really difficult questions that they'll probably screw up. Others probably disagree, but the ability to think quickly on one's feet is not the main factor for success in 90% of the jobs out there. For a software company, some people in the field need that quality and executives do…but the rank and file indiidual contributors? It's just not how work gets done, so why should I use that to pick my new hire? As someone who has led product management teams, I can say that I've never asked anyone to write a design document in the next 30 minutes sitting in front of me. But there are ways for me to know that I'm hiring a good product manager or a good product marketing person through the homework phase.

My favorite example was hiring a product marketing expert at Oracle. I asked the final 3 candidates to look over the current datasheet for one of my products and, when we met in person, suggest how to improve it. I wasn't very proud of that datasheet and I told the candidates as such. I wanted them to be as critical as possible. There was a good week or so for them to do this prep work and it should have only taken a few hours of thought. If a candidate can't put in 2-8 hours trying to get a job, then I don't think he/she will put in the extra effort on the job.

Candidate #1 put together a nice list of things that were wrong with the datasheet, but it was like pulling teeth for recommendations on what should be there. Candidate #2 had a super resume and great work experience, but he had some vague recommendations, a lot of consultant-speak. Gave me the sense that he felt overqualified to be doing a datasheet. Candidate #3 came in and hit a home run. He talked about why the structure of the current datasheet was wrong and what needed to be done. But he didn't stop there. He had actually un-PDF'ed the datasheet and rewritten the first 1/3rd of the document. Clearly, he had a passion for the type of work that he was going to be asked to do on the job. Needless to say, Candidate #3 passed the rest of the interviews with flying colors and we hired him. And he became a super valuable team member at Oracle. When Coupa gets large enough to afford a product marketing expert, I'll try to convince him to join.

I told my mom about this technique when she was hiring someone for her PR group. She tried it out and had the candidates write a press release as interview prep. It worked for her, but you may be wondering if it can be applied to your role. I think it can. You want to come up with a task that is extremely relevant to the job. If you need a UI designer, don't ask them to write documentation. It should also be possible to accomplish in a relatively short amount of time and not need "insider" knowledge or access. Some examples:

– QA engineer: Have them write some automated test scripts for doing tests on a site like Google or Yahoo!. There are plenty of open source test automation tools out there that they should be able to handle this without a problem. You are looking for how well they approach the testing process.

– Strategic buyer: Have the candidates create a small RFP/bid package and how they will analyze the results.

– Contracts specialist: Ask the candidates how they would change a contract (choose one that is weak) to meet specific objectives.

– Product manager: Have the candidates write a short design document on a common feature (don't pick something arcane). Maybe it's a design on the login process.

You probably have better examples, but I'd encourage you to try it out. We'll be doing it at Coupa!

Written by Noah Eisner

06/25/06 11:47 AM at 11:47 am

Posted in Opinion

BloggerCon “Users” Discussion

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I found this interesting. It's an MP3 of a session called "Users in Charge" from BloggerCon. Click on #4 on this page if you have the time.

It's fantastic to hear a session like this – where developers are held in check as users make their requirements for functionality and ease of use plainly understood.

I certainly believe we have entered a different era of software, whether for the enterprise or for the consumer, where users call the shots. And that's how it should be.

Written by Dave Stephens

06/23/06 8:56 PM at 8:56 pm

Posted in Opinion

On Healthcare – Strange Trend on Out of Pocket Costs

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In my last healthcare post I introduced a commonly known fact – that healthcare costs in the US have escalated at an alarming rate as a percent of GDP. An interesting and somewhat surprising related trend is how the percentage of total costs individuals pay for their healthcare has changed over time. Take a look at the following chart from p25 of the RAND study I cited last time:

This is fascinating, as what the trend clearly shows is a US consumer spending more and more on healthcare while paying less and less % of total costs out of their own pocket.

And yet most people would tend to believe just the opposite. The reason is  because consumption of health care here in the US is skyrocketing – so even though the % of out of pocket costs are down, the overall out of pocket costs are rising. 

Written by Dave Stephens

06/23/06 3:17 PM at 3:17 pm

Posted in Opinion

Introducing Noah Eisner

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Noah Eisner and I have been working together for many years now. He ran Procurement product management for me at Oracle. It's fair to say I respect and admire his work a great deal. After all, he and I co-founded Coupa.

If you're a regular reader, you'll remember I've included comments from him previously here at Procurement Central within my own posts. But Noah has a lot more to offer than a pair of double quotes allows…

So I've handed Noah his own microphone so he can post right here from time to time. I hope you enjoy his writings and opinions as much as I do.

Written by Dave Stephens

06/23/06 2:04 PM at 2:04 pm

Posted in Coupa