Daily Archives: August 11, 2010

Demos Don’t Teach You Much … Unless … (Part I)

Sheesh is Right! The average analyst doesn’t have a clue how to properly evaluate a technology offering. But what should you expect considering most of these individuals come from a liberal arts background and think “C” is for Cookie? And if you don’t believe me, maybe you should read those tragic quadrants, graves, and benchmarking futiles more carefully … because the reality is that an evaluation scheme based on chicken-with-its-head-cut-off bingo would likely be just as accurate as the rankings in the average analyst report these days.

But back to the point. Recently, over on Spend Matters, Jason Busch decided to tackle the issue of product demonstrations (Part I and Part II). In his first post he said that you should be prescriptive where the demo is concerned and that, except in a few rare cases, you should focus on ease-of-use. I disagree.

In the words of commenter “Sheesh” [italics in the rest of this post], Jason’s points are true if the analyst knows what to ask. If all you do is focus on “usability”, you’ll end up choosing the solution with the most flash. Problem is, there’s always a trade-off between flash and substance. A software company only has so many development hours before it runs out of cash and has to sell something. This means that the more hours it spends on creating a razzle-dazzle UI, the fewer hours it has to spend on actually building useful functionality. Remember, we’re talking about enterprise software, not end user entertainment.

Jason’s followed with a second post where he proposes a series of demonstrations based on specifically prescribed scenarios.

The problem is that, as Sheesh says, you’re not a tech expert and you shouldn’t [even] attend the demo unless you bring one with you. The “business scenario” approach assumes that the ability to address “business scenarios” is a useful measure of anything. Typically “business scenarios” are crafted from melted-down aggregations of vendor marketing messages and feature lists, combined with some business problem that the vendor has already got a pat answer for unless he’s a complete idiot. If he’s on the ball at all, you won’t discover anything interesting; or if you do, it will be something on the order of Debbie Wilson’s mouse clicks. ‘OMG this vendor takes seven mouse clicks and that one takes twelve!!!!!’ Not at all useful!

Sheesh continues, You have to go deeper than chin-stroking about a suite of standard reports and baked in transaction processing flows for “business scenarios.” What’s behind the curtain? What if you want to write your own report, or modify one of theirs? What if you want to change the way the transaction processing works, fundamentally? If you find a solution that’s extensible in those dimensions, then it’s tons better than any canned solution, by definition. Because you can make it do whatever you want it to do.

Furthermore, the software procurement process shouldn’t try to find a “best fit” in a shoe store that doesn’t carry your size. Rather, the software procurement process should focus on finding a solution that can be easily extended and adapted to your needs, on as many dimensions as possible. If the solution can be extended and adapted, it really doesn’t matter what it does out-of-the-box, in terms of canned reports, canned transaction flows, canned sourcing and optimization templates, or canned demos — or what its relative performance might be on business scenarios that encompass what you think you need today, but tomorrow might fail miserably at characterizing your needs. If the solution is extensible, then it can solve a universe of problems rather than a small subset of them.

As the commenter stated, there are lots of such questions that need to be asked, but they need to be asked with the aid of a technical resource.And there’s really no excuse not to have an expert technical resource on hand. Expert advice is cheap, especially compared to what you’d pay to some analyst firm, or waste on some solution that compares well on an analyst checklist, but is actually hopelessly inflexible. In the long run, it’s probably a few tenths of a percentage point of what you’ll spend on the “enterprise” solution (which won’t be a solution at all if it sits there, on the “shelf”, unused).

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A Hitchhiker’s Guide to e-Procurement: Tax Reclamation, Part I

Mostly Harmless, Part XV

Previous Post

Tax reclamation is the process of applying for and securing tax refunds and rebates due to the organization. In many circumstances, a buying organization may be eligible to reclaim some or all of the taxes that it pays to a supplier. For example, in the US a buying organization can often reclaim out-of-state sales taxes (if the organization has no presence in that state), in Canada an organization can reclaim GST (Goods and Services Tax) paid, and in the UK, sometimes an organization can reclaim VAT (Value-Added Tax). In addition, a company can almost always reclaim tax overpayments if a filing is made in a timely manner, especially if the organization has an APA (Advance Pricing Agreement) in place.

Taxation is a tricky subject in just about any country. For example, in the US, while intangible assets are not subject to property taxes in most states, they are in some. The same holds true of electronic downloads (software, books, etc.). There’s the LKE, which allows capital gains tax to be deferred when the sale of an asset is being used to generate cash to buy new, or similar, assets to replace the asset which is being deprecated. Then there’s the tangled web called the Harmonized Tariff Scheduled (HTS) which determines import taxes, where classification mistakes are easily made and where a simple misclassification (ladies sleepwear vs. ladies lingerie) can result in a large difference in assessed taxes. (My favorite is imported printers. Leave the cartridge out, the tax rate can be 0. Put the cartridge in, that’s a “value” tax of about 5.5%.) And of course, there’s the issue of foreign taxes, which the organization can get credit for, and in essence reclaim, if properly recorded and reported.

Canada has similar complexity. Out-of-province purchases may not be subject to a provincial sales tax if the company does no business in that province. There’s the GST (Goods and Services Tax) which must be charged by the seller on all non-exempt purchases, but which a buying organization is able to reclaim in full on an annual, or quarterly basis (as the tax is designed so that the ultimate bearer of the tax is to be an individual). And then there are special tax credits, such as the SRED (Scientific Research & Experimental Development) tax credit that can be accrued on up to 75% of all eligible R&D expenses and used to offset (federal) taxes owed by the corporation.

And then there’s the EU, where every country, despite a common currency, still has it’s own complicated tax structure. There’s so much to keep track of that a number of businesses are built around the provision of taxation databases and regular updates to their customers, as some of these businesses are able to charge thousands a year just for database access. The EC (European Commission) Taxation and Customs Union site alone has 14 different databases indexed (and these are just the EU tax systems), including:

  • AEO

    Authorized Economic Operators

  • EBTI

    Binding Tariff Information


    Tariff quotas and ceilings.

  • SEED

    System for the Exchange of Excise Data


    Autonomous Tariff Suspensions


    Integrated Community Tariff

  • Taxes in Europe

    The EC’s on-line information tool covering the main taxes in force in the EU member states.

  • VIES

    VAT Information Exchange System

As a result, tax reclamation is an involved and difficult process that requires really good e-Procurement support to get right. However, considering that it can save a large organization millions of dollars a year (or more), it’s worth it.

Next Post: Tax Reclamation, Part II

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