Monthly Archives: September 2014

marketdojo – A Dojo Where You Can Walk Your Own Way

marketdojo is a company that many of you haven’t heard of and a company that I’m sure many of you who have heard of them dismissed because of the Western notion of what a dojo is. In western thought, a dojo is believed to be a training school for Japanese martial arts where students to to learn from a sensei. So when you hear marketdojo, the first thing you probably think of is a training school for (e-)commerce best practices and a services company — not a do-it-your-self SaaS e-Sourcing platform.

But that is what marketdojo is — a state-of-the-art do-it-yourself e-Negotiation suite that supports complex RFX and e-Auction events as well as integration with their categorydojo product that helps a user determine appropriate sourcing strategies for each category and prioritize those categories based on the expected size of the opportunity.

And they are appropriately named. One has to remember that dojo literally translates into “place of the way” and really means “a place for students to gather for practice, training, and testing”. Furthermore, there are also hombu dojos, which are the stylistic headquarters of a particular art. marketdojo is the hombu dojo for the do-it-yourself e-Sourcing art where the practitioners of the marketdojo way gather.

And while they were yet another me-too e-Sourcing tool when they started four years ago in 2010, they have taken great strides to differentiate themselves from the other entry-level e-Sourcing suites that revolve around e-RFX and e-Auction. These differentiators include:

  • Try-Before-You-Buy with no sales team interaction*while there have been a few e-Sourcing providers that would set you up a demo environment and let you take it for a test drive, SI doesn’t know of any that put their full platform up on a demo box where anyone could log in and test out all of the features without first engaging with the sales organization, sitting through the pitch, and proving their interest; To give marketdojo a test-drive, you go to the Sign Up page, fill in a short form, click on the link in the activation e-mail, and then click on Try Our Sandpit at the top of the home screen. No credit card required. It takes about 60 seconds. (You do, of course, have to pay before you can run a live event, but not before you’ve verified that it will work for you.)
  • Toggle View
    In the marketdojo platform, it’s a one-button click to toggle between your buyer view and the view of any supplier. No logging out and logging in as a separate user or trying to watch two views in two different browsers at the same time on a split screen.
  • Easy Public and Private Sector Event Creation
    In many economies, and the EU in particular, there are a lot of rules around public sector tenders, and the platform, with a single checkbox, can insure that all of the proper information is provided, questions are asked, and procedures are followed or, if the company is a private sector company, the buyer can go through a streamlined process and only provide the information she needs to provide and only request the information she needs to conduct the event.
  • Easy Pay as You Go
    You can pay per drink or buy an unlimited subscription on a monthly or yearly basis. To pay as you go, which starts at £500 for a single event, you purchase credits as needed on your credit card and go. There’s no limit to event size or event duration — and if you want to run an event on a category that’s under £50,000 of annual spend, they’ll even give you a discount!
  • Complex Lotting and BasketsNext month marketdojo will be releasing their new version which allows you to create complex lots and market baskets where each item can have a user-defined number of cost components and a formula that defines the total, or weighted, cost for the item and have the supplier provide their starting bids at whatever level of detail you desire. Then, when the auction is run, you can choose whether suppliers modify their bids at the cost component level, item level, market basket, or entire lot level — and do so as a fixed quote or discount off of their previous bid. This helps a buyer get a good understanding of what the cost drivers are but yet run easy events.

In addition, like other providers, they also offer:

  • Excel Import and ExportThis is especially useful with complex lots — you can create the desired matrix, and a supplier can export it, fill it in, and upload it at their leisure. You can also output reports and awards in Excel for further analysis or imports into other systems.
  • Easy Integration with their Other Tools
    They have two other tools — categorydojo, which we will cover in our next post, and innovationdojo, that you can read about on Spend Matters UK. While SI is, of course, a big fan of Innovation, and innovationdojo is innovative within the e-Sourcing space, these types of tools have existed in IT for quite a while now so the doctor isn’t all that excited about the shiny new e-sourcing friendly wrapper they put on what was an IT / product management tool (which, the doctor will admit, are as typically as ugly and unfriendly as you can get, but when you grew up with a green command prompt on a blac screen, you just get used to ugly UIs).
  • Award ExportOne click export to Excel OR their categorydojo, where you can compare your sourcing event plan and projected savings to actual savings and increase your accuracy year-over-year!

And since this takes us into Part II, we’ll end our initial discussion of marketdojo here.

* They are based in the UK, so if you try it out in the evening in North America, the sales team will be at home and won’t be online to ping you to even see if you want to chat.

 

If I Succeed in Destroying Dashboards and Razing Report Writers, What Next?

In yesterday’s post, where I responded to the smart alecks, I noted that, once dashboards are destroyed and report writers are razed, there was about a half-dozen next logical steps that could be taken to improve today’s spend analysis solutions, even if that solution was BIQ.

Should cost modelling, award optimization based on historical data and business rules, and federation across related data sets for deeper dives are pretty obvious. Are there somewhat less obvious advancements we should also be thinking of?

Of course. One rung up the ladder, three of them are:

Predictive Modelling

Once you have should-cost modelling, the next logical step is predictive modelling. Use historical data to extract pricing trends and predict likely future prices for the commodity. Use this to determine not only the best time to (re) source the category as well as using deep-dive analysis to determine the best strategy.

Optimize Supplier Relationships

Once you have optimized all of the awards based on historical data and business rules, you also have the optimal allocation by supplier. Once you have the optimized set of awards for each supplier, you can optimize the re-order schedule, shipping arrangements, and even production and sourcing schedules on behalf of the suppliers and take costs out one level down in the supplier chain. Helping your suppliers help you goes a long way to building good supplier relationships and increasing supplier performance.

Simultaneous Drill Across Multiple Data Sets

Once you have true federation, you want to split the screen and update the views to only contain the relevant data in each data set as you drill down through the data. Going back to our previous example, you start in the Payment cube drilling into the goods receipts associated with the wonky widgets, then switch to the Order History cube to find the initial requisitions, but when you drill on the user in the second cube, the first cube is updated to contain only those goods receipts associated with the user. The user can drill through either cube to find the data she wants, whichever is easiest, and both cubes update. She doesn’t have to go back and forth.

These are just a few more things that can be done, and all would simplify the life of an analyst. More to come at a later time but first, this time I’m going to insist that you tell me what you would do. :-;

If I Succeeded in Destroying Dashboards, How Else Would I Improve Spend Analysis.

The smart alecks are correct — technically destroying dashboards is not adding anything to spend analysis so I didn’t actually provide a way to improve spend analysis technology, just the results you get from using it.

So if I succeeded and dashboards bit the dust, what would I do? (Besides banning integration points for report writers for all OLAP-based spend analysis products?*) Good question. Especially since there’s about a half dozen logical next steps.

Three things that would be useful if you had a true spend analysis product like Opera’s BIQ would be to:

  • Integrate Easy Should-Cost Modelling CapabilityThis way you can define a cost breakdown for a product or service you are looking to source and have the tool automatically generate an expected cost based upon current data, as well as a price-range, with confidence, based upon low, average, and high prices paid for the raw materials, energy, labour, etc. (provided that the should-cost model permitted base-cost definitions for any cost components you weren’t buying that were bought entirely by your supplier)
  • Optimized Awards Based on Historical Data and Business RulesYou don’t have to send out an RFX to get base market pricing if you are already buying a product, it’s in your transaction store. Nor do you have to run a complex event to determine the lowest cost providers for a market basket. Moreover, if you are buying commodity products and services with list prices, and all your suppliers do is give you a discount of X% for a guaranteed award, you don’t really need optimization to determine the lowest cost as it’s just a simple formula against current pricing. And if your only business rule is 2 or 3 way split, it’s just the 2 or 3 lowest cost suppliers with the appropriate risk mitigation. In this situation, it would be easy for spend analysis tools to build in some simple optimization capability to tell you your lowest cost buy, and if it’s close to your should-cost model, you can just cut a contract without going through a time-consuming sourcing event.
  • True Federation across Related Data SetsMost spend analysis tools are only capable of working on one cube built on one data classification at a time. This means that even though a user can pick the drill dimension order, only one set of data can be viewed at one time. But sometimes you want to drill into greater detail (such as who requisitioned all those widgets from the wonky supplier), and that’s not in the transaction file — so you need another cube with more detail on the invoice (history). Then you drill in on the augmented AP (cube) data until you get to the invoices associated with the supplier, switch over to the new cube and drill down to the line items of interest and retrieve the requisitioners. Another situation is where you are getting a lot of warranty returns, and you want to figure out what batches the returned items are in so you can determine whether or not the batches were bad and it will be cheaper to do a mass replacement (by just putting out a recall) than dealing with one breakdown at a time. In this case, you need to drill into the warranty cube and then branch over into the invoice cube to get the batch numbers associated with the appropriate goods receipts that are associated with the invoice.

These are just a few things that can be done, and all would simplify the life of an analyst. More to come at a later time but first, what would you do?

* If you don’t know why, you don’t know your spend analysis product limitations!

In What Way Would I Improve Spend Analysis?

When it comes to spend analysis there is at least one particularly powerful tool out there that will meet the majority of the needs of any organization and probably at least one tool that will do, with elbow grease, just about any analysis an analyst can think of. Since businesses have wanted reports and analytics since the days of the first spreadsheets, analysis tools are always advancing and most are beyond the ability of the average user to fully utilize their functionality.

So, given this fact, how would I improve spend analysis? And given that this question may imply that I may only make one improvement, just what would that improvement be? Especially since most tools don’t do (true) federation, don’t support full reg-ex (regular expressions), don’t understand semantics, and don’t run fast enough on large data sets — indicating that, as a PhD in CS with deep expertise in analysis, modelling, optimization, and semantics, there are theoretically a number of advancements I could bring to the table if I put my mind to it?

Despite the plethora of options available, today there is only ONE thing I would do to improve spend analysis. I’d make it impossible to do anything but spend analysis. Specifically, I’d make it illegal to include dash-boarding capability in any (spend) analysis product.

Why would I do such a thing? Besides the fact that I’ve been ranting since 2007 that dashboards are dangerous and dysfunctional, I would do such a thing because, among other things, they give you a false sense of security that, if mismanaged, could be so grave that, like the myth of Nero, you would fiddle while the factory burned.

Why would I ditch the dashboards and make it a crime punishable by any fate one could devise that was worse than death to include any capability whatsoever designed to support a dashboard? Because I just read this post on Purchasing Insight on the inordinate cost of poor spend analytics that said that it’s reckoned that more than 50% of businesses employ between 2 and 5 people to prepare and create procurement dashboards and spend reports. This is ludicrous. (No, not Ludacris.) If these people are senior analysts, then a large organization is spending more than 500,000 a year on salary and overhead to create dangerous and dysfunctional dashboards that spit out shiny spend reports that, after being analyzed the first time for inefficiencies, provide zero value to the organization. Once the report is analyzed, the inefficiency identified, and the problem corrected, and once this is verified in the next report, no subsequent report is going to tell the analyst, or management, anything new.

As SI has said again and again, the value of spend analysis is actually doing spend analysis, again and again, testing new hypothesis every time they pop into the analyst’s head. Yes, most hypotheses will yield nothing, but that’s not important because it only takes one insight to yield 100,000 worth of savings. If the tool is flexible, powerful, and configured appropriately, the user will be able to explore dozens of different analyses in a week, and if even one yields 10,000 of savings, that’s an (amortized) ROI of (at least) 5X. Spend analysis is analysis. Not dashboards and reports.

So if you really want to improve spend analysis — ditch the dashboards and focus your talent on real analysis. Otherwise, just download a free reporting engine off the internet. You’ll get the same worthless result, without forking out six figures for a tool you’re not really using.

Air Canada! Blame Canada!

Today, SI is going to pay homage to SM and Jason’s recent experience with Air Canada Rouge, summarized in this post on A Review of Air Canada Rouge – Just Say No for Business and Personal Travel over on Spend Matters. In consideration of his predicament, I suggest that one takes a South Park view and, in the spirit of consideration granted us by Trey Parker and Matt Stone … Blame Canada! (South Park Movie Clip; language NSFW)

Times have changed
Our flights are getting worse

They won’t upgrade their planes
They just want to fatten their purse!

Should we blame the government?
Or blame society?
Or should we blame United* for their misdeeds?

No, Air Canada<sup>**</sup>!
Blame Canada!

With all their beady little eyes
And flapping heads so full of lies

Air Canada!
Blame Canada!

We need to form a full assault
It’s Air Canada’s fault!

Don’t blame greed for old aircraft
Canada is so lax, they don’t know how to spend the tax!

And CEOS once had our travel needs first
But now amenities, one by one, have been dispersed!

It’s Air Canada!
Blame Canada!

It seems that everything’s gone wrong
Since Air Canada came along!

Blame Canada!
Air Canada!

They’re not even a real airline anyway

My son could’ve flown with dignity and flown in comfort too
Instead he froze like an eskimo without an igloo

Should we blame the captain?
Should we blame the crew?
Or the VPs who cut the fuel budget too?
Heck, no!

Blame Canada!
Air Canada!

With all their hockey hullabaloo
And that loser Harper too!

Blame Canada!
Shame Air Canada for…

The dirt we must avert
The excess we must redress
The despair and woe, out it all must go
We must blame them and cause a fuss
Before somebody thinks of blaming us!

* They Break Guitars!** Before you tell me Air Canada Rouge is technically not Air Canada, as they are a (wholly owned) subsidiary, ask yourself if the average person is going to know that.