Daily Archives: November 9, 2007

the doctor Declares Open Season on Barney!

We all know about Barney – the “love“-filled purple dinosaur that could convince even the most gentle of pacifists to pick up a sawed-off and let loose a few rounds of buckshot. What we may not know is just how far the “barney deal” and the “barney presentation” has infiltrated our profession. How many conferences have you been to lately where the presenter talked about how the software implementation was a complete failure? That’s what I thought.

Over 70% of IT-related projects are at least partial, if not complete failures. So why aren’t conferences filled with presentations on “This is how we failed. This is why. And this is what we should have done.” Well, we know the answer. It’s because your average decision maker is too timid – or maybe that’s too stupid – to own up. Especially after millions of dollars have been spent. And even if he did, no conference organizer would want to headline a conference with a speaker from an organization that failed.

Everyone makes mistakes sometimes. And the reality is that most of us learn more from mistakes than from successes. And a mistake not communicated is one that is doomed to be repeated again and again and again. The reality is that no system works the first time – that’s why we have design cycles, release cycles, and quality assurance. The point is to learn from the failure and do it right the next time. Instead what we often get, as Alan Buxton pointed out, is:

  1. The decision is made to buy a tool that does X.
  2. An RFP, complete with a requirements list, is sent to a vendor.
  3. The vendor promises that the software can do everything and more.
  4. A consulting partner, and implementation specialist, who backs up the vendor, is found.
  5. Implementation Begins.
  6. Everyone realizes that the requirements in step 2 weren’t enough.
    Then they realize the software couldn’t even do what was promised in step 2.
  7. More money is spent for more modules and “customization”.
  8. The requirements are weakened.
  9. A “live” system is eventually declared.
  10. The system is benchmarked against original objectives. It performs miserably.
  11. The objectives are revised. The system now performs almost acceptably.
  12. Joint press releases are issued declaring the project a grand success!
  13. Everyone returns to step 1.

And it’s ridiculous. As a result there are dozens, if not hundreds, of vendors selling systems for hundreds of thousands, millions, and sometimes tens of millions of dollars everyday that do not meet their customer’s needs and buying organizations making the same mistakes again and again because no one is documenting previous failures and insuring the lessons learned are there for the next generation. But it stops now!

If you were involved with a project that was a partial or complete failure, you know why, and you want to tell the world about it (anonymously) – this will be your forum. I’ll be glad to publish your story so that others can learn from the mistakes of the past – and so that you can learn from the mistakes of others. There’s no crime in making a mistake if you didn’t know better. The point is to not make the same mistake twice.

Does Procurement Need to Be Saved From Itself?

Last month, Strategy+Business ran an article on Saving Procurement from Itself that started off by saying that it’s time for chief procurement officers (CPOs) to stop relying solely on functional depth and start increasing functional breadth.

According to the article, the emergence of strategic sourcing was a defining moment for procurement, with the potential to transform it from a primary administrative function to a powerful new force for competitive advantage, but that, as of today, the reinvention has stalled in many businesses. The article claims that CPOs today are increasingly focussed inward, implementing sophisticated ways of improving procurement itself but neglecting coordination with the wider organization. This focus on cost reduction fails to address the significant potential for creating value generated when procurement engages the rest of the business and its suppliers.

The article continues by stating that more complex business models requiring more sophisticated skills from procurement leaders are required to generate revenue and eliminate costs and that procurement, uniquely positioned to reach out across the organization, needs to step up. CPOs need to start the process by developing a close working relationship with finance, managing cross-functional trade-offs, collaborating on the joint supplier-customer value chain, gaining preferential access to innovation, and designing-in network resilience. This will make sure that they get invited to the table before major decisions have been made.

I have to agree that procurement needs to take a broader role as time goes on – it’s something I’ve been preaching for a while – but I’m not sure that procurement needs to be saved from itself or that depth can be ignored. In the more progressive organizations, the leaders of tomorrow already recognize that they need to do more and they are taking steps to do that. They may need a little help, but the point is that they make the first step along the journey of transformation. Furthermore, just how do you expect to develop and maintain a closer working relationship across the supply chain without solid collaborative technology? How do you gain preferential access to innovation without demonstrating a commitment to innovation yourself? And how do you design-in proper network resilience without best-in-class network modeling, simulation, and optimization tools?

It’s true that procurement needs to go broad, but this breadth cannot be achieved in any way that also sacrifices depth in key areas. Success lies in the proper balance between breadth and depth. It’s true that your average organization probably needs help achieving this balance, but I don’t think procurement needs to be saved from itself. I’d like to see faster progress, but the fact that you’re reading this means that you’re trying to improve yourself and your operation, and that tells me there’s some forward thinking going on. And that’s what it’s all about.

Now that the question’s out of the way, let’s focus on the tips the article had to offer that were pretty good.

  • Procurement needs the ability to report on performance in a manner that reflects the CFO’s definition of profitability. This will require the ability to provide timely and accurate spend data.
  • Procurement needs to facilitate sharing data up and down the chain to allow for the generation of better forecasts at each link.
  • Procurement needs to be the party that brings the economic insights required to build a picture of the joint value chain that all parties can agree, and work together, on.

Winning over the CFO is key to becoming a critical player on the senior management team, an in-sync chain is less costly and more profitable than an out-of-sync supply chain, and only procurement is capable of seeing the full picture. Good advice.