Daily Archives: February 3, 2011

Does Verizon Have Its Head in the Clouds?

As we all know, Verizon recently acquired the right to offer iPhones on its network, a status symbol that mobile providers the world over have been vying for as they wait for the initial exclusivity agreements to expire. As the first provider given permission by the world’s fifth largest mobile phone manufacturer to challenge AT&T in the United States, it is probably a little bit smug right now as it waits for its February 10th launch date. But is that any reason to leave its head in the clouds?

Needless to say I was a little shocked to hear that Verizon is paying $1.4 Billion for Terremark Worldwide, a provider of cloud computing services. While it’s true that Terremark runs 13 global data centres, and data centres are valuable, 13 data centres are not $1.4 Billion valuable. Trust me. I can build you ten modular and scalable Green Data Centers for 1/10th of that with a lot more computing power than you might think you’d get for that price by going with high-density low-power 64-core servers from IBM or SUN which, by the way, cost less than 100K each, even maxed out on memory. You can easily fit 8 of those on a 20u rack. That’s the equivalent of 256 dual core servers on a single rack. Fill 8 racks with servers and 4 racks with SANs (Storage Area Networks) and you have a data centre — that fits in a small room — with the equivalent of 2,000 machines of processing power, that only costs you about 10 Million. I know Terremark also offers services and has a market cap of about 945M, but a 35% premium for something you can build yourself in a few months? I just don’t get it!

BravoSolution’s Business Centre Category Sourcing Solution Takes e-Sourcing to a New Level

Yesterday’s post discussed how BravoSolution has figured out that a real key to e-Sourcing success is a platform that is usable and efficient. It’s one thing to collect bids through a browser (which can be done by any junior high student these days, literally, especially when you consider 14-year olds and 11-year olds are building top downloaded apps in the app store), but another to actually make such an application usable for a category where thousands of bids need to be collected and compared from dozens of suppliers along with tens of thousands of pieces of non-price information.

In other words, they have hit upon the fact that key to e-Sourcing success is the delivery of a platform with the ability to:

  1. define an event of a known (category) type with the click of a mouse,
  2. dynamically determine appropriate and minimal data requirements,
  3. but still handle as much data as can be thrown at it, while the platform tools
  4. make use of and manage existing data.

This is what BravoSolution has done out-of-the-box for nine different categories, what they are doing for more categories as you read this, and what a buying organization can do for any and all categories of their choosing (with a little elbow grease up front). A buyer can view a category specific business centre for Chemicals, Transportation, Packaging, Industrial MRO, Facilities Service, Direct Materials, Contingent Labor, Travel, and Fleet Management which not only lets the buyer see the status of all of her past, present, and upcoming events, but quickly set up, manage, and re-run an event of the given type with a few mouse clicks.

But, more importantly, it is setup to allow a buyer to define and capture all of the relevant pieces of data about a complex category for consideration and analysis with minimal effort. As an example, we’ll consider a rigid packaging RFP through the Packaging Business Centre. In this type of RFX, a buyer will often be looking for plastic bottles and containers. The pre-defined RFX format can capture plant locations; detailed plant information; up-front costs by resin, machining, decoration, and colorant; pricing by group, where groups can be defined by volume, shape, finish, height, overflow capacity, and/or resin; freight; bundle information; plant and machine capacity limits; and additional RFI and RFP details as defined by the buyer.

But more importantly, if all of this information is known for a supplier from a previous event, it can be configured to automatically attach the existing information for a supplier so that all a supplier has to do is define new capabilities, remove old capabilities, and define new pricing. Furthermore, since all of the information is accessible through the business centre, before the buyer even selects the supplier, she can view the supplier information in the business centre to determine whether or not the supplier is even appropriate to invite. (If capacities are too low or if the supplier has not been awarded business in the past three events, it might not even be worth inviting the supplier. On the other hand, if a new supplier has been added to the system and meets the capacity and capability constraints, which can easily be determined by either querying the data or doing a search for suppliers that meet a minimum requirement, then it might be a good idea to invite the new supplier this time around.)

The information that can be collected and maintained about suppliers and capabilities is incredibly detailed. Plant definitions can be multiple screens long and a buying organization can capture location, hours per shift, shifts per day, operating days per year, labour contract information, number of employees, yearly changeover, key contact information, inspection and certification info, and other fields meaningful to the buying organization. Machine capabilities can be captured for each plant and this information can include machine types, models, tonnage, average age of machines, and cost per fully loaded machine hour. Other up front costs that can be captured included detail cost information on resins (for PP, HDPE, PES, PET, etc.) by manufacturer and SKU, bottle decoration (which have one-time set-up costs, waste percentages that affect costs, dec. cost per 1,000, etc.), and colorant costs. Pricing can then be defined for each group and freight can be defined for each lane by truckload (and less than truckload if so desired). Bundles can be defined along with minimum volume rules and discount information. Capacities can be defined by plant and machine type and can include auto-increments for each machine a supplier indicates they are willing to add if such supplier is awarded sufficient business. And no time is required to set all of these templates up, because they are already there.

And once everything is captured, all of the information can be fed into (collaborative) sourcing optimization and rules (and filters) can be defined on any price or non-price factor. All of the standard price adjustment (favor/disfavor, by bid attribute), count (supplier, bid attribute), award allocation (conditional, guaranteed, relationship, revenue, etc.), exclusion, limit, and force rules are available. These rules can be restricted by any or all suppliers and bid types and allow a user to do a very powerful analysis. And once the award has been made, the details can be pushed into the contract centre where a contract can be quickly authored using an existing template, or existing clauses. BravoSolution‘s category solution RFXs are very well thought out and much better than many of the first generation e-Sourcing tools still on the market (which were a great start, but leave much to be desired once a Supply Management organization is ready for next generation sourcing).