Enable a culture of ‘freedom and responsibility’ in procurement.
Enable a culture of ‘freedom and responsibility’ in procurement.
The enduring popularity of Netflix’s “Freedom and Responsibility” culture slide deck seems to validate the employee demand for its core message:
While the “Freedom and Responsibility” message is covered over 38 slides (40 to 78 specifically), here are key excerpts:
Freedom and responsibility in IT
The Netflix culture deck was first released in 2009. The employee demand for freedom has likely grown, particularly with an evolving workforce.
For example, differences by generation in a Forrester study on “autonomy in choosing the apps, services, and devices they will use for work.”
The relentless growth of SaaS has also increased the opportunity for employees to choose tools themselves — with provisioning from an internal IT department no longer required, employees can purchase software directly.
Zylo — a leading SaaS spend management platform — data shows employees select 37% of an organization’s SaaS applications by quantity.
Beyond the obvious problems of unconstrained spend, “shadow IT” creates compliance risk, reputational risk (i.e. data breaches), and operational risk (i.e. bad employee software choices lead to execution problems).
Translating “Freedom and Responsibility” to IT, Zylo advocates using “Freedom Within A Framework” which includes:
Curate a library of best-in-class SaaS tools
Give employees “freedom” to self-select SaaS applications from your library
Increased SaaS governance combined with a more disciplined operating environment in 2023 has caused the percentage of employees expensing SaaS applications to decline from 20% to 15%.
Interestingly, Netflix is a Zylo customer and frames their SaaS policies in terms of “freedom and responsibility”:
“We don’t have a lot of guardrails. And with that freedom, we expect responsibility. What we’re trying to do is more emphasis on the responsibility side. It means educating users and letting them understand what’s available to them, publishing what’s out there, and then even making suggestions. — Netflix IT Asset Program Manager Lindsay Stokes
For a deeper dive on SaaS spend management, I hosted Cory Wheeler (Co-Founder of Zylo) on the Cloud Radio podcast - listen/watch here.
Freedom and responsibility in AI
Generative AI will present unique “freedom and responsibility” challenges — AI will offer meaningful employee productivity gains through guided reviews, smart suggestions, and spend insights but also raise myriad ethical, reputational, and operational risks:
Reputational: Earlier this year a lawyer using ChatGPT submitted a court brief citing six nonexistent cases. Given the wild hallucinations AI occasionally generates, the potential for embarrassment is boundless.
Operational: Generative AI has introduced a range of security risks, including insecure code, increased data breach scope, and the possible leakage of sensitive corporate information.
Ethical: Is an employee under an ethical obligation to disclose a deliverable was AI generated? Similarly, should you disclose to clients if deliverables are AI-generated rather than “handmade”? If an employee automated their entire role using AI, are they obligated to seek additional work?
Freedom and responsibility in procurement
The 2009 Netflix deck calls out “Get pre-approvals for $5k spending” as a “bad process.” This procurement challenge persists in 2023.
Procurement processes exist for a reason — Finance and Accounts Payable teams prefer a more controlled process, through purchase orders (POs) and invoices, to ensure compliance.
However, these processes are slow — the average P.O. takes 4.8 days to process — and are unlikely to be the highest and best use of your employees’ time.
Procurement is also unlikely to be anyone’s favorite type of workflow — a survey showed only 61% of departments are satisfied with their procurement interactions. All your employees really want is the freedom to easily make the routine procurement purchases they need to do their jobs.
Brex, a partner of the SaaSletter newsletter, recently introduced advanced purchase card controls that can enhance employee experience while keeping a “Freedom and Responsibility” culture. Some highlights of Brex’s approach:
Enable procurement spend: Instantly issue virtual or physical purchase cards (p-cards) to every approved employee with per-transaction limits and PO-like approval flows.
Eliminate surprises: Issue purchase cards for business-critical use cases like operational spend — with preset, auto-enforced controls.
Set controls and limits per transaction: Create ultra-specific policies and spend limits for cards — in 40+ currencies — to ensure that every purchase stays on budget and in policy. Examples of bureaucracy-free, PO-like enforcements include a) cards only work for specific vendors, b) cards can’t be charged more than a specific amount per transaction, and c) cards expire the same data as a contract does.
Customize approval thresholds and approvers: You decide which transactions require approval and by whom. Tailor transaction-level thresholds and approvers — by amount, vendor, role, and more. For example, easily alert the VP of Finance to charges over $1,000.
Sync expenses with your ERP: Use direct accounting integrations to sync Brex p-card transactions with your ERP and custom map all your GL codes, categories, and vendor details automatically.
Automate recurring payments: Issue a monthly limit for each vendor and put recurring SaaS spend on p-cards so you’re never overcharged. Or, use Coupa Pay to provision virtual Brex cards to pay pre-approved invoices without leaving Coupa.
Get AI-driven alerts for concerning trends: Brex AI will learn your company’s spend patterns and notify you when it detects high month-to-month increases by employee, department, merchant, or category.
Gain real-time visibility: Easily track procurement spend against the limit and also give every budget member visibility into all card expenses incurred on a budget to promote transparency.
Easily transfer card ownership: Prevent interruptions to recurring spend due to employee departures or org changes by seamlessly transferring cards among team members.
Netflix’s summary of F&R is worth repeating for reinforcement:
From my vantage point, “high performance people” is the critical phrase.
High performers are scarce but valuable assets:
Focus their efforts on value creation + their highest and best use
Do not frustrate + risk losing high performers for the sake of unnecessarily cumbersome rules
This article originally appeared on SaaSletter.com.