Daily Archives: June 11, 2010

Sometimes You Just Have to Shoot the Sacred Cow

With apologies to our Hindu and Zoroastrian friends, sometimes the sacred cow needs to be put down. If it’s old, weak, limping, and in pain, it’s not slaughter, it’s mercy.

So how do you know when it’s time to shoot the sacred cow? How do you know when it’s beyond it’s prime and on a rapid decline? Simple. You monitor it’s health and give every cow an annual checkup. When it’s overall health level starts to drop dramatically, you know it’s time.

This goes for every cow in your organization — the performance cow, the promotion cow, and the payments cow in addition to the marketing, legal, and advisory cows. This is very important because performance that was good enough yesterday might not be good enough today, different skill sets will be needed by the managers of tomorrow, and if it takes 57 days to process a payment, that’s a problem, even if it is within your 60 day limit.

So, just like this recent HBR article on tackling the obvious points out, if you want to stay alive, you have to continually ask what is good performance, whom do you promote, and are you focussed on change … because your supply chain can’t stand still and survive.

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There’s No Need for CFOs to have Poor Visibility of Key Financial Information

A recent headline on the Supply & Demand Chain Executive site that stated poor visibility of key financial information [is] undermining CFOs’ confidence in company performance commanded my attention because there is just no need for this in 2010. The article, which referenced Basware‘s 2nd annual global study on The Cost of Control, noted that only 50% of finance executives profess a high level of confidence in the performance of their departments and only 44% maintain this level of confidence when considering the company’s performance overall.

This is, in a word, pathetic. There’s no need for this. This is not 2000 when spend visibility solutions were just hitting the market, when they cost way too much for the average organization to afford (as they started in the 7-figure range, compared to the 5-figure range that many great solutions start at today), and took weeks, if not months, to update the data warehouse when inaccuracies were found. This is 2010 when you can drill around a spend cube of up to 50M transactions on your laptop, in real time, and reclassify transactions, on the fly, in a matter of seconds. Or, if you have a nice enterprise server to play with, you can drill around a spend cube of up to 500M transactions in real-time and reclassify transactions on the fly.

(If you don’t believe me, and are in the market for a modern visibility and data analysis solution, please contact Lexington Analytics*¬†and ask for a demo — and watch what they can do with BIQ in 45 minutes or less. They’ll even do it on your multi-million transaction data set to prove there’s no trickery involved.)

Plus, there are now a number of vendors with good platforms on the visibility front that can handle very large data sets and a few of them, like Rosslyn Analytics, even do it over the web. And while not all of these vendors will be able to rebuild your cubes in real-time if you choose to change dimensions or reclassify a large number of transactions, they all support rapid drilling and custom report creation so that, even in the worst case, you come back tomorrow and you have your answer. In other words, there are a large number of spend visibility solution providers that will more than meet the visibility and reporting needs of the CFO (even if they are a bit lacking when it comes to power analytics, which is what you need for true strategic spend analysis). And if you have a decent, modern, e-Sourcing or e-Procurement solution, if you don’t already have an integrated spend visibility solution, you most likely have easy access to a spend visibility solution (as most suite providers either have one or have a partnership with a best-of-breed provider) and it’s just a matter of licensing the module and connecting the data feeds. Then your CFO is good to go.

So I don’t want to hear that your CFO doesn’t have good visibility, because that just means you haven’t done your job and implemented the spend visibility system you need to take your sourcing and procurement to the next level. A level you want to get to because, as I indicated in Sourcing Innovation’s recent Illumination on Strategic Spend Visibility, the strategic spend analysis program it will enable could multiply your organizational savings by a factor of five in the first three years and generate strong returns for years to come!

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*There are other consultancies, and even other distributors of BIQ for that matter, who can do this as well, but, so far, only Lexington Analytics has indicated to me both their desire to set the market straight and their willingness to do a no-commitment demo for anyone who is serious, so I mentioned them. If any other vendor is willing to do the same (no-commitment demo), please feel free to leave a comment.