Daily Archives: August 30, 2006

The Sourcing Innovation Series: Part VII

Yesterday was another busy posting day. David Bush of eSourcingForum posted his thoughts on The Future of Sourcing? while Jason Busch tackled Sourcing Innovation: Next Generation On-Demand. Not long after, Tim Minahan jumped back into the fray in response to Jason’s post with What’s Next According to Busch: Supply Skills Networks.

David posted his contrarian view based on his observations in sourcing and eSourcing over the last seven years. In addition to noting the emerging desire for decision optimization and complex modeling capabilities in eSourcing platforms, David notes that the future will be forged by process improvement and enhanced corporate understanding of how to use technology since there are fantastic platforms available now that did not exist 10 years ago. After all, especially from the technology side – it’s not done. Once a tool is brought into the process, you will have some functionality that will help immediately but there is a maturation process that vendors and customers alike are going through to find the best fit and features. This is a very fluid process and every release of an application will address more issues but they will never be complete. The software can help any organization with weak areas but this always should be supplemented with personnel improvements and new innovative ideas.

Jason blogged about on-demand, this year’s hot topic (and the subject of my first weekend series over on eSourcing Forum: The Good, The Not-So-Bad, and The Coming Pretty). Jason, who previously blogged that on-demand approaches will embed external content and insight as a fundamental part of their value proposition predicted that the real power of On-Demand will come when providers learn how to leverage the user network as the strategic advantage of the application itself. One early example Jason gives is Open Ratings that aggregates supplier financial, operational, and performance data from many sources to better predict supplier financial viability. Jason also notes that while Open Ratings collects, centralizes, and analyzes information, that next generation approaches will probably rely on decentralized information query, retrieval, and analysis and points to the new agent-based search approach of Vinimaya as an example.

Jason also reminds us of his earlier prediction on how next-generation on-demand solutions will enable a new type of decentralized service delivery where an On-Demand platform could enable the creation of virtual shared services teams between organizations based on processes, skills and availability and that this is where he thinks the real value will be. In his view, 99% of first generation (i.e., current approaches) On-Demand models only deliver value through reducing the cost of ownership for member participants of existing types of technology offerings — or customers — rather than offering a new value proposition entirely.

In response to Jason’s claim that an On Demand platform could enable the creation of virtual shared services between organizations based on processes, skills, and availability, Tim notes that considering the talent crunch for skilled commodity and sourcing experts, Jason’s concept is particularly intriguing and well-timed. After all, recent studies from Purchasing Magazine, ISM, and Denali Consulting place talent recruitment and retention among a supply management executive’s top challenges.

But then Tim Minahan suggests another possibility … Jason’s shared-skills concept could also present new opportunities for top-performers to turn supply management into a revenue-generating profit center since some companies are already ’sharing ‘ their sourcing and category expertise and operational procurement capacity and systems infrastructures as part of new for-fee procurement outsourcing offerings, such as IBM. If this becomes a very profitable offering, then we probably will see Jason’s next-generation on-demand platforms sooner rather than later.

Since these pieces are very well written, and since I do not have anything to add as-is, I’m not going to elaborate on them but instead will ask what would happen if we try to merge them into one prediction? A first attempt tells us that it will be a process-oriented future driven by next-generation on-demand technology that will make critical information more accessible and usable for tomorrow’s knowledge workers, but what does that mean? As I pointed out in The Coming Pretty, I think the answer is that next-generation on-demand will be based on enhanced business process management (BPM) that will allow for workflow applications that can be customized on-the-fly to incorporate modified processes and workflows that not only allow for the construction of more versatile and configurable applications than before, but also allow trained business users to define their own workflows through a visual environment. In other words, platforms that evolve with your processes!