2020 is Fast Approaching – What WILL You Accomplish? Part II

Last week we noted that 2020 is fast approaching and asked what you had accomplished, especially given all the 2020 predictions that were made five to ten years ago.

But then we didn’t wait for the answer, we gave it to you because, simply put, most of the vendors haven’t advanced the technology to where it was supposed to be and, as a result, you haven’t really obtained much in the way of new functionality.

We were told that, by 2020, software would be smart. It would do most of our work for us. Tactical would be a thing of the past as process, and, most importantly paperwork, would be completely automated and electronic. But, alas, we’re still in the situation where you have to manually define RFX processes, manually identifier suppliers, and manually build cost models. What’s up with that?

So what can we get?

Continuing on yesterday’s theme, more than we expect if we are willing to go best-of-breed along-side our primary S2P, get good at integration, and better yet at value identification and management. We do have the ability to do the following, with specific platforms in specific circumstances.

Automated Supplier Discovery

Why do you have to manually find, identify, qualify, and select suppliers for each and every RFI you do? When the platform should know the suppliers we’re using? The supplies we invited to bid last time? The suppliers that were pre-qualified as viable options? The suppliers that have registered with the products and services you need? The suppliers in the network platform you use? The suppliers your co-opetition have vetted for you? And so on.

Based upon the RFI, your particular product and service requirements, your supplier history, your community history, and so on, your platform should be able to use machine learning and advanced AI techniques to identify the best suppliers for your AI given all of your needs, the supplier’s performance history, the supplier’s current financial and CSR status, and available community data. But most platforms today can’t even suck in a default list of suppliers? Why … it’s NOT that hard.

RFX Process Automation

Most platforms allow you to define templates that define survey questions, basic cost models, and basic gated flows on registration and participation, but that’s about it. When it comes time to starting a new event, it’s up to you to find the closest template, alter the questions, cost models, and gated flows, double check everything, and drive it. But why?

Why can’t the platform identify the right questions based upon the specific products and services? The right gated flows based upon the industries, categories, geographies, and raw materials? The right models based upon the constituent raw materials, development processes, and level of cost detail available? The right starting data from market indexes? Most of this just requires the right rules, and last generation machine learning. Very little tactical effort should be required in an average RFX process, especially if you’ve sourced a similar product before.

And this is not the end of the road … but not all of this is in your average S2P platform.

2020 is Fast Approaching – What WILL You Accomplish?

Last week we noted that 2020 is fast approaching and asked what you had accomplished, especially given all the 2020 predictions that were made between 2008-ish and 2013-ish when pretty much every big consultancy or vendor had finished their own 2020 bandwagon and created the 2020 parade.

But then we didn’t wait for the answer, we gave it to you because, simply put, most of the vendors haven’t advanced the technology to where it was supposed to be and, as a result, while you got more integrated, streamlined, easier to use platforms with friendlier, and sometimes even mobile, interfaces, you haven’t really obtained new functionality.

But we were told that, by 2020, software would be smart. It would do most of our work for us. Tactical would be a thing of the past as process, and, most importantly paperwork, would be completely automated and electronic. But, alas, we’re still in the situation where you need OCR because many smaller suppliers max out at PDF when it comes to tech, and many in non-tech industries think PDF is scanning a paper invoice and embedding the image in a PDF. And if the platform doesn’t have PO flip, made easy, over a low bandwidth connection (there’s still no fibre [or even copper, they dig it up for scrap] in the middle of the backwoods, especially in developing countries), this is what you get.

So what can you get?

The answer is, believe it or not, more than you expect, if you’re willing to go Best-of-Breed along-side your S2P, get good at integration, and better yet at value identification and management. Because we do have the ability to do the following, with specific platforms in specific circumstances.

Invoice Automation
There are a number of platforms out there with intelligent OCR that can use large, global, supplier databases to match names; address databases to identify algorithms (and match to locations); global banking databases (with known swift codes, branches, etc.) to identify banking information; catalog and service databases to identify what is being billed; and smart code match algorithms to identify corresponding POs, contracts, etc. and identify the majority of relevant information. And, on top of that, some of the better applications have document structure identification capability where the application can be told what information is generally where, will learn the supplier’s invoice structure over time, and extract the information with higher and higher precision over time.

Moreover, the intelligent algorithms will only ask for confirmation of data that doesn’t pass a confidence interval, which will increase over time. So, even if you have hundreds of thousands of invoices, within a few months after roll-out, you won’t even have to look at 100 of them. Long gone are the days of EDI only. When you go from having to evaluate over 15% of invoices manually (which is the typical error rate) to less than 0.2% (as the platform can automatically identify, and correct, errors or bounce back invoices that can’t be matched), the time savings is phenomenal

Supplier Identification
Once upon a time, if you needed a supplier, you look at who bid last time, who sent you catalogs, and who your buddy recommended. Not very good. Then you got e-RFX and supplier portals where they could self register, but then you had an avalanche of supplier (catalog) data to go through that made looking for a needle in a haystack easy. Then you had networks which classified by high level category or product classes, but when you had specific needs, custom manufacturing requirements, raw material limitations, etc., it didn’t help much.

But now you have platforms that can use AI technologies and community feedback to identify suppliers that provide the products you are looking for, using the production techniques you are looking for, in the locations you are looking for, with the quality and reliability you are looking for, and the status/certification you are looking for, ranked according to most likely to be selected to least likely. This type of supplier discovery and automatic qualification using 3rd party platforms and community intelligence can often save a person-week of time on an RFI.

And this is just the start … but not all of this is in your average S2P platform.

2020 is Fast Approaching – What Have You Accomplished? Part II

As per our last post, it was just five years ago that all of the big consulting houses — PWC, Accenture, Deloitte, etc. — were talking about the future of procurement in 2020 and how it was going to be nothing like what it was then, or should I say, what it’s like today because, to be frank, it really hasn’t changed that much in the past five years.

We ended yesterday’s post asking you what today’s Source-to-Pay have that yesterday’s applications didn’t have. To answer this, let’s consider the typical Source-to-Pay platform capabilities:

Analytics: Take out the AI classification (which takes a lot of training and can’t always outdo a human despite claims) and there isn’t a single platform out there today that has more raw analytics capability than BIQ did almost 10 years ago. Better UX? Yes. Better capability? Not really.

RFX & Auction: There’s nothing new. Better interfaces. Tighter integration. More support for third parties. But nothing new.

Optimization: Trade Extensions was the most powerful platform then. It is now. Jaggaer/SciQuest CombineNet and Jaggaer/BravoSolution (VerticalNet (Tigris)) were the close runner ups then. And they are now. And about the only new capability is greater infeasibility and sensitivity analysis. But these capabilities were in their infancy then.

Contracting: The only real improvements are in deep semantically driven contract analytics — and they only appear in specialist vendors like Seal Software or Exari (Adsensa). Not in traditional CLM platforms for Source to Pay.

e-Procurement: Catalog Management. Guided Buying. Requisitions. Purchase Orders. The song remains the same. Nothing new.

Invoice Management: e-invoicing. m-Way matching. OCR and meta-data match. The tech has become a bit smarter, but nothing different.

The fact of the matter is that we’re not that much further technologically then we were five years ago, and that’s probably why Procurement has not really progressed much in the last five years (and why it caused many to Proclaim it dead because, if something stops moving for long enough, you pretty much assume it’s dead).

And that’s why we’re asking what have you accomplished? Because it’s certainly nothing close to what all the big firms told us you would accomplished. But then again, knowing that most of these firms are all bark and no bite, what would we expect?

2020 is Fast Approaching – What Have You Accomplished? Part I

It was just five years ago that all of the big consulting houses — PWC, Accenture, Deloitte, etc. — were talking about the future of procurement in 2020 and how it was going to be nothing like what it was then, or should I say, what it’s like today because, to be frank, it really hasn’t changed that much in the past five years.

Despite all the recent talk about Cognitive Procurement and AI hitting the mainstream, Procurement platforms haven’t changed much. There’s only a few offerings outside of very point-based Contract Analytics offerings, like Dhatim, LevaData, and Xeeva, that have anything that’s truly cognitive-borderline, but even these platforms only work on a very narrow range of categories in one or two industries.

And sourcing platforms haven’t changed much either … very few have any capabilities whatsoever that didn’t exist five years ago. The biggest change is that you have more S2P suites, partly as a result of the M&A frenzy and partly as a result of PE firms investing deeply in platforms with the capability to be leading S2P platforms. Whereas a few years ago you really only had Ariba, Emptoris and Jaggaer (known as SciQuest) — although, five years ago, Jaggaer was more a collection of applications that would eventually become a platform; Emptoris was much stronger in Source to Contract than Procure to Pay; and Ariba was just acquired by SAP, which stagnated development for a few years.

But today, we have eight major S2P platforms, which are included in Spend Matters Q4 Solution Map: Coupa, Determine, GEP, Ivalua, Jaggaer, SAP Ariba, SynerTrade, and Zycus. Coupa, which was a leading P2P platform, acquired Analytics, Optimization, and Risk; built out contracts, and now has a complete S2P platform using a classic definition. Determine, which resulted from Selectica’s acquisition of Iasta and b-Pack and replatforming of everything on the b-Pack platform. GEP, which acquired Enporion in 2012, integrated, built up, and built out and now has S2P. Ivalua, which just acquired DirectWorks (formerly Co-exprise), has been building out end-to-end since the early days and now has pretty much everything except optimization from a classic S2P perspective (and is getting deeper in direct capability as a result of DirectWorks). Jaggaer integrated everything through a common data layer and had S2P, and then acquired BravoSolution last year (which also just achieved S2P from its Puridiom acquisition), and now has 2 complete S2P platforms as well as deep direct sourcing capability (from its Pool4Tool acquisition). SAP Ariba (which acquired Procuri years ago) has been developing extensively, replatforming its analytics on SAP Hana, simplifying implementations and supporting the mid-market through partners with SNAP, deepening its risk management to go head-to-head with best of breed, and so on. SynerTrade, like it’s counterpart Ivalua, has been developing an integrated platform for almost two decades, which started out as a collection of “apps” (like Pool4Tool started out as a collection of modules), and has everything one would expect as well as integrated optimization — it’s the best platform most of you haven’t heard of. And then we have Zycus — once the “dollar general” of S2P platforms, it’s come a long way and is starting to hold its own with the best of them (and with it’s new iRequest module, it’s bring S2P visibility to the masses).

But when you think about it, what do they have that past platforms didn’t have?

We’ll let you dwell on this for a day …

SolutionMaps – A Badge of Honour for All!

Spend Matters recently saluted the value leaders — SolutionMaps Best Performers — in the recent release of Q3 Solution Map. But as the Consulting Lead Analyst for the majority of SPT, the doctor wants to make one thing clear. SolutionMaps are a badge of honour for all those that participate.

Solution Maps are not your typical tragic quadrant or grave reports, chronicling arbitrary notions of “market leadership”, “vision”, or “revenue giants” of days gone past, with fuzzy definitions of fuzzier metrics highly dependent upon analyst interpretation of both vendor capabilities and customer feedback, and fuzzier definitions of inclusion criteria that can change from report to report.

They are highly objective technical analysis of very specific technical requirements with pre-defined scoring scales that allows analysts to objectively rank all vendors on the same scale crossed with raw, unfiltered, unbiased, customer feedback where raw scores are averaged by vendor — and then all these cross-products are mapped against each other using the center point on each of the two dimensions as the average.

And when you consider that the technical scores can be composed of anywhere from 100 to close to 1000 data points (depending upon whether a vendor is doing a single map or the entire set of S2P maps), you can see this is a monumental effort. The capabilities associated with every question must be clearly documented (and this can take a paragraph or two per question), exhaustively demoed, and the details maintained over time … because the analysts verify each and every claim of significance. Each and every claim. (In fact, some vendors claim responding to one of our RFIs can be more intensive than responding to an RFI from a fortune 500.)

And considering that three of the RFIs were written by the doctor, and a fourth co-written by the doctor and the maverick, you can rest assured that these questions are not broad high-level capability requests but detailed technical requests that must be answered with precision.

So, yes, all vendors who appear in a SolutionMap quadrant — be they solution leaders, customer leaders, or value leaders — have earned a badge of honor, and you should feel free to hail them all.