In our last installment of the 2008 Sourcing Maniacs Vendor Road Tour, the maniacs had just finished talking with a somewhat contemplative looking gentleman from GDM somewhere near Denver, Colorado. We rejoin them shortly after their conversation with the somewhat contemplative looking gentleman from GDM.
|Yakko, Wakko, & Dot|| We dig dig dig dig dig dig dig
through our data the whole day through
To dig dig dig dig dig dig dig
is what we really like to do
It ain’t no trick to get rich quick
If you dig dig dig with a shovel or a pick
In a large data mine! In a large data mine!
Where a million diamonds shine!
|Wakko||I think it’s called e-Sourcing Place now.|
|Dot||Any more G’s?|
|Yakko||Lots of services companies! Global Procurement Group. Global Sourcing Specialists. Greybeard Advisors.|
|Dot||Can you think of any technology companies?|
|Yakko||Besides Google, not today.|
|Dot||So on to the H’s then.|
|Dot||SRM. Hmmm … let’s file them under services for now.|
|Yakko||I guess we’re skipping the H’s too this time around. Where do we start in the I’s?|
|Dot||I seem to remember this punky little upstart by the name of Iasta from our Ariba days.|
|Yakko||I heard they were just 4-guys in a garage with a simple e-RFX tool.|
|Dot||Well, that’s what we used to say they were. But when was the last time we actually paid any attention to them …|
|Yakko||Uhm … err … I can’t remember.|
|Dot||Neither do I! Should we check them out?|
|Wakko||Well, I seem to recall the doctor mentioning them quite a few times on SI … there must be something to them.|
|Dot||Might as well go for it. And with our e-Sourcing background, maybe we’ll even understand what they do!|
|Wakko||So where are they?|
|Yakko||Indianapolis, I believe!|
|Wakko||Race car city! Cool!|
|Wakko||Wakko breaks out his best rendition of Super Overdrive by Billy Idol.|
|The maniacs head off towards Indianapolis, on the scenic route. We catch up with them again a few days later.|
|Dot||This is it. I hope they talk to us!|
|Yakko||Their CEO is a blogger, and they sponsor the e-Sourcing Wiki, which hosts some of the best wiki-papers in supply management that you’ll find anywhere. I’m sure they’ll talk to us.|
|Wakko|| Wakko breaks out his mini-mallet.
Let’s find out!
Wakko taps on the door.
A minute later, a smiling man with a moustache steps out.
|Wakko||Who are you?|
|Smiling Man||I’m the CEO of Iasta.|
|Yakko, Wakko, & Dot||And we’re …|
|CEO||The Sourcing Maniacs.|
|Yakko, Wakko, & Dot||You know of us?|
|CEO||Yes. I’ve read about your exploits, and Eric Strovink from BIQ warned me that you were making the rounds.|
|Dot||Well, hopefully you’ve only heard good things about l’il old us!|
|CEO|| Checking that the door behind him, and more importantly, to the server room, is locked (see Where Pinky and the Brain Devise a Plan to Market Their Strategy for a reason why).
What I’ve heard varies. How can I help you?
|Wakko||What do you do?|
|Dot||looking very bored|
|CEO||Yes Wakko, we do strategic sourcing decision optimization … and we think it’s one of the best solutions out there. And we do Contract Management …|
|CEO||and we’re in the process of preparing our first Supplier Relationship Management release, better known as SRM.|
|CEO||Really. And when you add in our built in project management and our Smart Analytics solution, based on BIQ‘s leading spend analysis product, you see that we have one of the most complete end-to-end e-Sourcing suites on the market.|
|Dot||So you go head to head with Ariba and Emptoris?|
|CEO||All the time!|
|CEO||More often than you’d be led to believe!|
|CEO||Let’s just say that we have well over 100 global customers, many in the Fortune 500, and that both our annual North American User Conference and our annual European User Conference are very well attended by happy customers who enjoy learning how they can do even more with the platform they have already bought, and at a very attractive price point I might add.|
|CEO||We’re a True SaaS provider, so we are very competitive with our basic solution prices.|
|Dot||Under a Million?|
|CEO||We start at under one hundred thousand a year for our entry-level solution.|
Under One Hundred Thousand?
|CEO||Yes Dot, under one hundred thousand for our basic Smart Source solution. You don’t have to buy everything to start, and even if you do, unless you also buy a considerable amount of services support for your organization, it’s still under the seven figure mark that you liked to charge.|
|Dot|| still shocked
How do you make money?
|CEO||Economies of scale enabled by SaaS, and smart spending. We eat our own dog-food and follow our own advice. We keep our costs reasonable, which allows us to give our customers good service at a great price, and in return we keep them. We believe we have one of the highest customer retention rates in the sourcing space. But I’m sure you’re not here to discuss our success stories. What would you like to know?|
|Yakko||How you’re different.|
|CEO||Well, we think our product is better than our competition, but if you limit yourself to a “check-the-box” comparison, as so many analysts are prone to do, you’d see that our major solution differences when we are compared against your average sourcing vendor are our strategic sourcing decision optimization and supplier relationship management capabilities. These go well beyond your standard bid-negotiate-award-track capabilities found in your average e-RFX, e-Auction, and Contract Management applications and allow you to focus on identifying the best value for your money and then ensuring that the savings you negotiated, and contracted for, are realized.|
|Wakko||But don’t a number of companies claim to have Op-ti-my-za-shun?|
|CEO||Very few have true optimization, Wakko. Most just use heuristic decision support algorithms that they try to pass off as optimization. We use true Mixed Integer Linear Programming and best-of-breed industry solvers, like ILog CPlex, underneath a true strategic sourcing decision optimization model that meets ALL of the requirements outlined by the doctor in the wiki-paper.|
|Wakko||And that’s important because?|
|CEO||Because you need all four types of constraints — capacity, allocation, risk mitigation, and qualitiave — and costs — unit, usage, and freight — to accurately model your average real world sourcing scenario. Otherwise, the scenario you end up with is only approximate, which means the solution is only approximate, and, if you missed key constraints, not realistic. Without all of the constraints, and some “competitors” only provide a subset, you either get a result that’s too good to be true, and is, because you can’t implement it, or the result isn’t as good as you can get, because you couldn’t specify all of the constraints and discounts.|
|Wakko||And it works?|
|CEO||Remarkably. As covered in recent posts by the doctor on Sourcing Innovation and our own e-Sourcing Forum, we’ve had two events where we’ve saved over 20M on two projects of roughly 80 Million and 110 Million, respectively. We also find that we do hit the industry average of 12%+ above and beyond e-Auction savings alone when we apply the technology.|
|Yakko||It must be hard to use. You need a team of PhDs to drive it, right?|
|CEO||Not at all! It’s quite easy … your average intermediate buyer can drive it very successfully after just a few hours of training. You create the constraints using wizards and english sentence fragments. You can import the cost data from Excel or from your e-RFX. You can create a new what-if scenario by copying an existing scenario and changing only what you want. Your power-users will teach themselves to be experts in the tool in a matter of hours. I bet even you could use it Wakko.|
|Wakko||But I don’t know how to do Com-bin-a-tore-e-ul Op-ti-my-za-shun!|
|CEO||You don’t have to. Our tool does all the heavy lifting. If you can fill in a spreadsheet, use drop downs, and enter numbers in web-based text-boxes, you can use it. It’s really that easy.|
|Yakko||And what about SRM. Is that easy too?|
|CEO||As you would say, yassuredly.|
|Dot||So what’s it do?|
|CEO|| It’s still in development, and we’re aiming for a late 2008 / early 2009 release, but what it’s going to do is streamline data capture and sourcing processes for the buyer and supplier alike. The first addition to our suite is a new supplier self-registration portal, backed up by a workflow-driven custom survey development tool. This pair of tools, the first for the supplier and the second for the buyer, is going to allow a buyer to define what information they need from every supplier, and then what information they need from suppliers in certain verticals and / or what information they need from suppliers who wish to supply certain types of products or services to the buyers. Then, when a supplier logs in and enters their basic information, as well as specifying the products or services they offer, they only have to fill out the surveys specific to them.
The survey construction tool, which will look similar to those who have tried our relatively new contract management tool, is based on the same underlying concept that the user should be able to define what fields, and meta-data fields, are of interest and allow the buyer to define what information they want, and how they want it. In addition, our survey construction tool, which builds on our RFX creation abilities, allows a user to define survey pages, and then makes uses of wizards to guide the buyer through survey construction. And, of course, all of this data is indexed, searchable, and easily managed. Furthermore, as with contract management, the buyer can define triggers on certain events (survey completion, changes to key data fields, etc.) and certain values (expiry dates, renewal dates, etc.) which will send off alerts or e-mails when certain events happen or certain actions need to be taken.
|Dot||Well, that sounds pretty common sense. A few companies have that already. How’s it different?|
|CEO|| What’s different is where we’re going with it and, most importantly, the approach we’re taking. We realize that the “R” in SRM stands for “relationship” and that is something that can not be accomplished with software-based tools alone. You can only have a relationship if there is interaction between the buyer and supplier on a regular basis. This means that there are only two ways a tool can help: enable communication or disable the roadblocks that prevent it. The most common roadblocks are the various tactical tasks that keep getting in the way, specifically, the tasks around collecting, organizing, tracking, and reporting on data.
Thus, in our view, a good SRM tool enables communication — and that’s why we’re building a new supplier portal, starting with our registration site — and centralizes all of the tactical data collection, organizing, tracking, and reporting in one location for the buyer — and that’s why we’re building a new supplier administration module, starting with surveys and scorecards, that is integrated with the rest of our suite, including contract management and meta-bid enabled optimization, which will allow the buyer to track agreements, expirations, certifications, insurance, and performance data in one place. Sometime next year, the tool will also allow senior buyers to define workflows around supplier contracts and interactions, which will guide the buying team through the organization’s best-practice supplier interaction processes. And we’re also building in new commodity-based classification hierarchies that will allow buyers to better segment their supply base and define hierarchical scorecards by commodity category and location to help them get a better view of total operational performance and how a supplier is impacting that.
|Dot||And it’s all going to be integrated in one platform?|
|CEO||Seamlessly. Unlike our competitors, who have been on acquisition binges for the last decade, we built everything from the ground up on one platform, in one core language. That allows us to seamlessly integrate all of our products into one application in a way that most companies would envy. That’s why we think our SRM will succeed where many have failed before. It may not have all of the bells-and-whistles of some of the best-of-breed stand-alone products, but we believe it will have the core functionality that everyone needs, plus provide the advantage that you only have to deploy one platform. It’s the classic 80/20 rule — 80% of the functionality, for 20% of the cost, and effort, for our customers. When the full platform is released next year, we believe that the majority of customers will find that it does more than what they need. And that’s what we feel the market needs.|
|Yakko||That’s a very interesting take.|
|CEO||And a practical one. Most of the mid-market just needs basic functionality in sourcing and procurement to get through the day. There’s only a few Fortune 500 / Global 2000 companies that are advanced enough to productively use every bell and whistle you can imagine. We’d rather serve the 90% of the Fortune 500 / Global 2000, and, more importantly, the mid-market at large, who have been underserved for years due to the big-platform price tags that have traditionally put the traditional e-Sourcing platform solutions out of their reach.|
|Wakko||I think I get it. 20% of the Fortune 500 would give you 100 companies, and it’s hard to get 20% of the Fortune 500. But if you got 10% of the Global 10,000, that’s 1,000 companies, and there are still 9,000 other companies who need a solution, and a lot fewer companies serving them.|
|CEO||That’s right, Wakko. It’s about building a great company with a great tool that brings great value to, and enables, the mass market. That’s what we’re shooting for. And we think we’ll get there. And with that, I must get back to work. Have a good day.|