Monthly Archives: August 2011

Public Procurement in 2020 — Are You On Track? Part IV

At the beginning of the week, we began our discussion of Hansen’s predictions for public procurement in 2020, which were offered as a 5-part series last month in response to the 5 predictions of Bob Lohfeld (of Lohfeld Consulting) that were published in Washington Technology in early July. We started with a discussion of the Government Market and then moved onto discussions of Workforce and Process. Today, we tackle the Technology predictions.

In his piece, Lohfeld prognosticated that:

(1) Virtual businesses will avoid brick-and-mortar costs, reducing operations costs and increasing their competitive edge. (2) Mainstream companies will exist in virtual space with no physical offices. (3) Cloud computing will be accepted as the norm, IT security protection will be expected, and IT infrastructure will be designed for virtual workforces. (4) Both contractor and government workforces will telecommute, and geographic boundaries will diminish as virtual meetings replace trips to personal offices.

To this, Hansen quickly responded that once again, the above prognostication says a great deal without actually providing any meaningful insight or substance as it reflects broad generalizations without getting into the mechanics in terms of practical application.

SI has to agree. Why? Let’s review the prognostication sentence by sentence. Virtual businesses are already avoiding brick-and-mortar costs, just as they have been since the mid-nineties and the beginning of the e-Commerce and dot-com boom. Not only can we consider a number of virtual businesses as mainstream in the niches they serve, but many companies, especially in consulting and IT, have been aggressively moving towards virtualization since broadband penetration reached the point that real-time video conference was an affordable reality for a majority of their workforce. Even in our space, many of the office locations of your global solution providers are shared business centers or home offices of key personnel. Since one can define “cloud” any way one wants to, as no one knows what “cloud” really is, we can already say that “cloud” is the norm. Furthermore, IT security has been expected by anyone with any technical savvy for a decade and IT infrastructure has been designed for virtual workforces for the better part of the last decade. Finally, many government departments are already allowing their contractors who don’t interact with the public to telecommute, as this reduces their fixed overhead. With budget shortfalls expected to be the norm for the foreseeable future, and office space so expensive in ideal metropolitan locations, it’s obvious that the amount of telecommuting is going to increase and that most consulting organizations are going to strive to have all of their contractors work remote.

However, Hansen, who simply reprinted a post he wrote in 2007 on the emergence of the metaprise (that runs on a distributed synchronized supply chain platform that simultaneously links the unique operating attributes of all transactional stakeholders on a real-time basis), also failed to provide any useful insight. While the post did note that process and not technology is the driving force behind a successful e-procurement initiative, it was essentially a post on cost avoidance through advanced spend analysis (that included commodity-characteristic analyses) and the need for process and technology alignment to realize such cost avoidance.

the doctor has to say that he was disappointed with Hansen’s effort on this piece. While the doctor, who has been immersed in cutting edge technology on an almost daily basis since starting his Master’s research back in 1994, knows better than anyone the difficulty in predicting the technology landscape even three to five years out, he did expect a much better response to Lohfeld’s post and some solid predictions (or at least some more direct rebuttals). Unlike many bloggers and analysts in the space, who come from non-technical backgrounds and couldn’t cut a line of code if their life depended on it, Hansen actually has technology in his background and a pretty good understanding of what it can, and can’t do, as well as where it’s likely to go based on where it is now and where it’s been. And, more importantly, there’s no way he could have done any worse than Lohfeld!

So what will the Supply Chain technology landscape look like in 2020? Pretty much what it looks like today, actually. Until we see a quantum leap in computing (theory), it’s just going to be more of the same old, same old in a new package. The only difference is that it’s going to be faster and more powerful. Not only will optimization on even the largest global supply chain models be real-time (and power every real-time e-Negotiation with your supply base if the organization uses a leading platform from a leading provider), but analytics will be real-time across all organizational transactions. A couple of providers already have real-time optimization capability for models of moderate size (where changes are limited to price, volume, and “route” availability, for e.g.) and at least one provider has a spend analysis solution that allows an analyst to real-time drill on a spend cube of up to 10 Million transactions on a laptop. Expected improvements in bus speed, parallel processing, inline computation, and federation technology will soon allow real-time drilling on a spend cube of 1 Billion transactions. It’s only a matter of time before 1 Trillion transactions can be handled and data can be explored in real time. This will not only improve forecasting, but allow for a host of predictive analytics applications that can be used to update forecasts for global demand and market prices in real time.

Furthermore, as broadband penetration becomes almost universal and more modern standards are adopted for data interchange by supply management solution vendors, the metaprise will become a reality and end-to-end supply chain visibility will finally become a reality for the average Fortune 3000 company. However, what we won’t see are any entirely new applications or software capabilities that aren’t already being investigated. Since the tens are shaping up to be another decade without any quantum leaps in the computing world, and since the specialist enterprise space always lags the consumer space, which always lags fundamental research, even if a quantum leap is made in computing technology this decade, Supply Management still won’t see anything new for a while.

The Case for Colombia

Buried at the bottom of an article over on World Trade that purported to offer insights into “the next generation of outsourcing” while, in reality, at least in SI’s opinion, offering none, was a little sidebar on the business case for Colombia that is worth checking out. According to the article (which focusses on an Argentina-based IT provider with a large operation in Colombia), Colombia, which is rated higher by the World Bank than Peru, Panama, Chile, Mexico, and Brazil as the “best place” to business, should be a locale of choice for North American operations to outsource to. Citing:

  • passion
    and a strong work ethic
  • government resources
    and wealth in the region
  • a strong talent pool
    which is highly qualified (with over 50,000 IT and BPO professionals) and well educated with 67,000 graduates being produced every year in in Bogota alone
  • plentiful real estate
    which is affordable
  • international experience
    as a relevant percentage of the younger generation has been to, or lived in, the US
  • time zones
    which are “local” to North America
  • a strong cultural fit
    as the culture is more aggressive (in comparison to eastern cultures where subordinates won’t do anything until being told to do so by a manager)
  • English aptitude
    which is official in San Andres and Providence islands, is now being spoken by a larger percentage of the population (eventhough EF Education First ranks Colombia in the bottom five in a recent study of English learners in 44 countries, source)
  • Free Trade Zones
    which are very business friendly
  • the El Dorado airport
    which handles more cargo than any other Latin American airport
  • the Conferias Pavilion
    which is the continent’s largest event centre, capable of accommodating up to 21,000 people
  • the pending U.S. – Colombia Free Trade Agreement
    that will see over 80% of U.S. exports become duty free immediately, with remaining tariffs phased out over 10 years
  • broadband penetration
    which is ranked 4th in Latin America
  • lowered political risk
    from efforts to weaken the guerilla groups while simultaneously lifting the middle class (in an economy that has tripled its GDP over the last decade), that were started by Colombia’s last President, continue to be pursued by the current President
  • increased safety
    as Colombia experienced a decrease in homicides by 45%, kidnappings by 92%, terrorist attacks by 71%, and attacks on the country’s infrastructure by 83% between 2002 and 2009 (and Bogota’s crime rates are now lower than Miami, Atlanta, and Washington D.C.

the article paints Colombia as an attractive place to be if you are an IT or BPO provider or looking for outsourced IT or BPO services.

And with over 1,200 multinationals already in Colombia, you wouldn’t be alone. Plus, with Spanish as on official language, chances are that a considerable number of your North American employees will already be able to communicate with the locals as over 1/6th of the US population either speaks Spanish as a first or second language or is currently studying Spanish.

Public Procurement in 2020 — Are You On Track? Part III

In Monday’s post, we begin our discussion of Hansen’s predictions for public procurement in 2020, which were offered as a 5-part series last month in response to the 5 predictions of Bob Lohfeld (of Lohfeld Consulting) that were published in Washington Technology in early July. We started with a discussion of the Government Market and then moved onto a discussion of Workforce. Today, we will discuss Process.

In his piece, in a nutshell, Lohfeld prognosticated that:

(1) There will be a strong connection between technology and workflow to enforce process rigour and increase efficiency. (2) Business development, capture management, and proposal development processes will become more agile and refined to fit shorter procurement life cycles. (3) We will place renewed emphasis on process maturity. (4) Process optimization will be based on actual measurements taken across multiple capture and proposal efforts and will use statistical analysis as the basis for process change. (5) Companies will implement business development, capture management and proposal development into an integrated workflow management system that serves as the corporate repository to manage all new business pursuits.

Whazitsayin? SI has to agree with Hansen when he said I quite frankly did not understand what Lohfeld’s actual process prediction entailed. Let’s take it statement by statement. (1) There’s already a strong connection between technology and workflow because most departments blindly do whatever the system tells them. This doesn’t increase efficiency. (2) If lifecycles shorten, either steps will be eliminated, but since this is government, more likely this means more e-Solutions will be adopted to collect and “analyze” information faster. But this doesn’t do much to enforce process rigour. (3) This is the same spiel that every consulting organization cycles through every 5 to 10 years. (4) This is likely since more and more systems are taking measurements and presenting metrics and benchmarks in (dashboard) reports so any process optimization that does occur will be able to use these measurements, but this does’t answer the question of how much process optimization will occur. (5) The private sector will likely integrate these systems, but there’s no guarantee that the public sector will upgrade right away. The private sector takes long enough to upgrade a SAP or Oracle or similar ERP implementation (because of the massive investment they want to amortize over 10+ years). The public sector often takes even longer. I don’t see much in the way of prediction here.

Plus, as Hansen points out, one has to remember that organizations in both the public and private sectors spent hundreds of millions of dollars trying to adapt their operations to an ideal workflow that in reality created more work re: cycles on the front lines than it did the expected efficiencies, and most of them failed. So just making a stronger connection between technology and workflow isn’t going to fix things. If the process is bad, automating it just makes it worse. Process will only improve when people realize that it has to adapt to the way in which [they] actually work (versus creating an illusionary ideal) and begin to create an utilize an adaptive model that maximizes the organization’s ability to customize workflow processes leveraging modularity. But since this will likely require the application of SaaS-based technologies within the framework of a (semi) private hub, this could take a while. Thus, at least in SIs view, we should not expect massive process improvement in 2020 in your average government organization. Just the same old processes automated and tweaked to run a little faster.

Dog Bites Man

Today’s post is from Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement.

News from the Department of D’Oh

Here’s a whole Wall Street Journal article saying venture capital activities are increasing in China. Not once in the article did it mention the nationality of the VC firms who are doing that investing. You don’t have to dig very deep to find that all three of the companies the article mentions are Chinese companies.

“Chinese VC firms increase investment in China.” What a surprise!

Thanks, Dick. (Global Supply Training)

Public Procurement in 2020 — Are You On Track? Part II

In yesterday’s post, we begin our discussion of Hansen’s predictions for public procurement in 2020, which were offered as a 5-part series last month in response to the 5 predictions of Bob Lohfeld (of Lohfeld Consulting) that were published in Washington Technology in early July. Yesterday we discussed the Government Market. Today, we will discuss Workforce.

In his piece, in a nutshell, Lohfeld prognosticated that:

  • The workforce will be more diverse based on population shifts away from cities, and professionals will be employed in a virtual world without regard to where they reside. Baby boomers will be in their 70s and still actively engaged in the workforce either on a part- or full-time basis.
  • Employees will work on global government projects where work is performed in virtual space and staffed by people from multiple countries brought together for their technical expertise, without regard to cultural or geopolitical backgrounds.
  • The workforce will be able to support the entire bid life cycle, instead of discrete segments such as proposals or capture. Technology proficiency will be mandatory, and those who are slow to adopt or resist technology entirely will face dwindling prospects.

Yes, work will become more virtual. Yes, work will continue to be staffed from people in multiple countries. And, yes, the workforce collectively will be able to support the life cycle, but how does this help? Like Hansen says, its lack of depth and imagination is tantamount to the empty calories of a Three Musketeers bar.

SI has to agree with Hansen – the real issue centres on the Clark and Fourastie three (now four) sector hypothesis of how a wealthy nation’s economy evolves. The hypothesis includes the extraction of raw materials (Primary), manufacturing (Secondary), services (Tertiary) and knowledge-based (Quaternary). The workforce will be aligned to where the economy is. Plus, as Hansen points out, multiple factors such as time, increased globalization, a weakened economy and political sensibilities can and do in fact intertwine into a convoluted landscape. And this effects the diversity of the workforce that comes together for any project.

Plus, what about the communication challenge? How do we deal with the situation where, literally, four generations work side by side on projects in the same (virtual) office location. How do we simultaneously communicate with people who have never worked without the internet and people who have never really used it and still have no idea of its potential? Until we answer this question, prognostication on the workforce for the average government organization is missing the point.