Daily Archives: September 1, 2009

Survey Says … Many Users Underwhelmed by SaaS

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Many users are underwhelmed by on-premise software too. The sad fact is that when many people buy a new software package, they get caught up in the hype and not the reality. Regardless of the delivery model, it’s still software … and in the business world, it’s software which is designed to help you perform many remedial business tasks that are often pretty underwhelming in themselves, to be blunt. Furthermore, should anyone in their right mind ever claim that the software itself would “wow” you more on-demand than it would served from your own data center? (I hope not!)

As I pointed out in the wiki-paper and in numerous posts here on Sourcing Innovation, SaaS comes with a large number of advantages over traditional installed software, but, by default, “wow” is not one of them. A delivery model alone won’t “wow” you as you don’t see it. Only software can “wow” you, and while there are many great SaaS software packages out there for sourcing, procurement, and supply chain management, most of them aren’t going to “wow” you … because that’s not going to provide you value. Good supply management software increases your visibility, helps you identify cost reduction opportunities, and makes you more efficient. “Wow” eye candy might be nice to look at, but not only does it not provide you any value, it costs you. You pay more for the software (because the provider wasted money building the eye candy) and your people lose productivity, because the “wow” will distract them and just get in the way.

So while Gartner’s recent survey, summarized in a recent S&DC Executive piece, that found underwhelming customer satisfaction scores, hesitation over the true-cost of SaaS solutions, and concerns regarding how successfully SaaS applications can be integrated with other applications does raise some issues that SaaS providers need to address up-front, I’d contend that “wow” is not one of them.

Don’t Forget About the NPFTF …

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If you’re on the ball and a US public company, you’re probably worrying about the SEC (Securities and Exchange Commission) and the FCPA (Foreign Corrupt Practices Act) because the government has been cracking down — hard — on violations and handing out million, and billion, dollar fines to violators. But while you’re making sure your staff are adhering to the SEC guidelines and not bribing foreign officials, you better make sure they are not committing fraud at home because the National Procurement Fraud Task Force (NPFTF) is ramping up too. Established by the Federal government in 2006, the NPFTF members include the FBI, the DOJ Inspector General, inspector general, defense investigative agencies, federal prosecutors, and various divisions of the DOJ.

Focusing on civil and criminal enforcement, the NPFTF has pursued more than 400 fraud cases since its inception. While bribery is the most prevalent type of fraud, bid rigging, embezzlement, money laundering, false claims, product substitution, misuse of classified and sensitive information, and mischarges have also been pursued. To date, these cases have resulted in more than 300 criminal convictions and hundreds of millions of dollars in settlements and judgments.

It’s important to remember that your average organization has a greater risk to fraud than you realize, according to PwC research summarized in a recent S&DC Executive article that notes that the “risk of waste, abuse and fraud in procurement is seeing an increasing threat in a down economy”. That’s why you need to insure your processes and controls are strong and that they are regularly monitored and evaluated. After all, it’s not just the Feds that are on the ball … over 20 states and cities have followed their lead and started enacting their own civil false claims acts. If you’re a career procurement professional, chances are your ethics are second to none, but who knows what your internal customers, trying to circumvent your processes with their maverick spending habits, are up to.

So what can you do to minimize your risks? Look for, and eliminate, these red flags:

  • inconsistent data across procurement-related systems
  • data quality issues related to spend data and vendor data
  • lack of controls around preferred vendors & negotiated contracts
  • lack of compliance with preferred buying guidelines
  • multiple instances of the same vendor in master data
  • inconsistent payment terms across the organization
  • duplicate payments
  • inefficient invoice processing
  • lack of sanity checks

And take the following actions:

  • streamline procurement processes
  • strengthen IT systems
  • do not rely solely on a code of ethics & whistleblower hotline
  • perform periodic due diligence of vendors
  • analyze procurement trends, payment patterns, & product change mix