Author Archives: thedoctor

Top 10 Ways to be Labelled as a (Procure)Tech Noise / TroubleMaker!

For those of you who want to be a noise maker, trouble maker, Debbie Downer, complainer, etc. etc. etc., the doctor can confidently tell you that these are ten proven ways to accomplish that goal! Enjoy!

10. Point out that Tech Failure Rates have reached an all-time high of 88%! (Bain)

(As it is, in Procurement, We Don’t Get No Respect. We’ll get even less if 9 of every 10 projects fail! They’d fail less if … )

09. State that that RFPs for Tech should be Affordable!
(They are a critical first step in proper vendor selection once your need has been identified, and skipping this step has always proven disastrous. And then, after you select the vendor, the next step is to kick of Project Assurance, so the implementation doesn’t go off the rails.)

08. Go further and suggest that Big X SHOULD NOT be used for analytics and AI!
(The reality is, as we’ve stated again and again, limited tech talent is generally NOT interested in consulting — they want to work with the big powerful mega-corps [Meta, Alphabet, etc.] or join the wild west start-up frontier. Those not good enough get scooped up by the consultancies to try and fill the bench they need to staff the projects they sell. Doesn’t matter how good the outdated playbook is if you’re starting with the B-Team if you’re big, and rich, enough to afford it … or the C-Team if you’re not. Also, as we’ve said before, this doesn’t mean you shouldn’t use Big X for strategy, internationalization advice, etc. or the roots where they started where they have, and attract, the best people — just that, like every business decision, you have to be smart about where, and how, you engage to get your ROI. In fact, there are a whole slew of areas we generally recommend Big X for, and sometimes ONLY recommend Big X for, and these are covered in When Should You Use Big X?)

07. Dare to suggest it may be the end of an era for an early ProcureTech suite!

(Is The Third Act the Final Act?) Let’s ignore the fact that there has been more consolidation and failure in this space over the last two decades than anyone realizes, and that the seven suites appear to be sailing the seven seas without a sextant [foreshadowing?]. See SI’s classic Vendor Day Reprise and count how many of those companies are still around as-is. These were representative of the cream-of-the-crop when they were covered. The rate of disappearance is actually higher across the board!)

06. Note that Gen-AI is way overhyped.

(Unless you want suicidal people committing suicide in suicidal self-driving cars, for example. See valid uses for Gen-AI. And note that one of the big analyst firms pushing it in its hype cycle also noted that that it’s failure rate is 85%! [Source])

05. Remind people that intake & orchestrate is not new!

(With intake in ProcureTech tracing its beginnings back 24 years and orchestrate tracing it’s way back over 50 years as it’s just the fancy new name for middleware, which was a term coined in the 60s and implemented in the late 60s/early 70s with RPC being one of the earliest examples. See Point 11 for more hard truths.)

04. Rail against 2*2 vendor maps, and logo maps, as vendor selection tools!

(They are NOT Appropriate for Tech Selection. At most, they can be used to identify vendors to shortlist — but you still need to create a proper RFP! Remembering that:)

03. FREE RFPS are NOT free!

(How many times do we have to tell you There Are NO Free RFPs? Too many, since vendors will NOT get the message!)

02. State that there is no demonstrable ROI for attendees and vendors at big (Procure)Tech events.

(We need better events. A great experience is not business ROI!)

01. Mathematically argue that no business is worth more than a 10X multiple at investment time.

(‘Nuff said. Deeper dive in linked article.)

Now, I don’t know about you, but if wanting

  • (10) tech project success,
  • (09) affordable RFPs for all Procurement departments that need them,
  • (08) value for your consulting dollar,
  • (07) a true picture of the ProcureTech space and where the best cost/value ratio is for all buying organizations (not just G3000s),
  • (06) real AI powered by real HI that delivers real value,
  • (05) solutions that do what they should with (true) open APIs,
  • (04) real solution guides,
  • (03) valuable RFP advice,
  • (02) valuable events for all (not just organizers and consultants), and
  • (01) fair investments across the board for underfunded ProcureTech companies

means being a troublemaker, then make me the leader of the troublemakers! I’ve had enough of platform failures, enough of marketing soundbites, enough of one-way sales, enough of vendor marketing packaged as analysis and advice, and enough BS. Without procurement, there is no business. And, like Rodney Dangerfield, who unfortunately never got it in his lifetime, we deserve a little respect.

Procurement deserves better!

P.S. If you lead a provider organization that wants to do better, please feel free to reach out!

Advanced Supplier Discovery Tomorrow — No Gen-AI Needed!

Back in late 2018 and early 2019, before the GENizah Artificial Idiocy craze began, the doctor did a sequence of AI Series (totalling 22 articles) on Spend Matters on AI in X Today, Tomorrow, and The Day After Tomorrow for Procurement, Sourcing, Sourcing Optimization, Supplier Discovery, and Supplier Management. All of which was implemented, about to be implemented, capable of being implemented, and most definitely not doable with, Gen-AI.

To make it abundantly clear that you don’t need Gen-AI for any advanced back-office (fin)tech, and that, in fact, you should never even consider it for advanced tech in these categories (because it cannot reason, cannot guarantee consistency, and confidence on the quality of its outputs can’t even measured), we’re going to talk about all the advanced features enabled by Assisted and Augmented Intelligence that are (or soon will be) in development (now) and you will see in leading best of breed platforms over the next few years.

Unlike prior series, we’re identifying the sound, ML/AI technologies that are, or can, be used to implement the advanced capabilities that are currently emerging, and will soon be found, in Source to Pay technologies that are truly AI-enhanced. (Which, FYI, may not match one-to-one with what the doctor chronicled five years ago because, like time, tech marches on.)

Today we continue with AI-Enhanced Supplier Discovery that is in development “today” (and expected to be in development by now when the first series was penned five years ago) and will soon be a staple in best of breed platforms (and may be found emerging in development beta versions of some platforms). (This article sort of corresponds with AI in Supplier Discovery The Day After Tomorrow that was published in March, 2019 on Spend Matters.)

TOMORROW

Intelligent Supplier Discovery

How is this different than deep capability match that is available today? Because it sure sounds like the ability to match to a very detailed request is “intelligent”. Compared to most search capabilities in most platforms, it is. But there’s more to selecting a supplier, especially one with whom you need a long term relationship, than just tech specs and certification checks. There are also performance considerations, innovation ability (hard to measure), culture, and other, softer factors.

First of all, you need a platform that can predict the ability of a given supplier to innovate and, more importantly, innovate for you based upon your specific needs. To do this, you need to chart the “innovation history” of a supplier (how many innovations per year, typical gap between innovations), compare the “innovation history” to other suppliers in the industry and category, use a predictive curve fitting or other ML algorithm to predict it’s rate (vs. the average). This is a lot of semantic processing to identify innovations and approximate dates, a lot of trend analysis to find the right predictive algorithms, and a lot of calculation. And then you need the ability to refine the innovation rate by category for a multi-category supplier so the trend line matches your need, and not your competitor’s.

Secondly, you need to be able to parse the “reviews” not just for sentiment, but positive or negative interpretations of specific, relevant “soft factors” like communication, working culture, etc. and compute appropriate ratios or bands that can be compared and be considered in super search / match criteria that is relevant to your organization. Next generation targeted sentiment analysis on factors identified on deep semantic analysis. No Gen-AI needed, just domain specific refinements of traditional approaches (trained on highly vetted, validated data sets).

Predictive Smart Search

For a company in direct manufacturing, electronics, pharma, or another industry where advanced innovation at a fairly rapid pace is required not just for growth, but continued market share retention, identifying the right suppliers is critical. This requires a very deep search, and for specific projects, potentially dozens of requirements and validations that need to be done before a supplier can be invited to an event.

So many in fact that, even if a buyer could identify all of these up front, building the search criteria to capture them all could be difficult. Next generation platforms will learn from each search entered into a platform for a product, category, supplier, etc. and extract the typical criteria, the frequency, and the preferences by organization and user.

Based on this data, when a buyer, new product development specialist, etc. starts a search for a new supplier in a category and/or for a product, the platform will predict which factors are relevant to the user, recommend those factors and factors, and intelligently build the right search and tolerances for the user. And then retrieve the best suppliers, ranked with match percentages.

None of this requires Gen-AI. Frequency is just frequency mapping by product, category, and supplier. Matches are matches as per deep search. Auto query creation is rules based automation. Soft factors are identified by semantic and sentiment analysis. And so on. It just requires a lot of Human Intelligence (HI!) to put it all together.

Is That All, Folks?

Probably not. The more data that is collected, the more analysis that can be done, and the more matching and prediction that can be done across people, products, services, and solutions. And the more “intelligence” (which CAN NOT be generated by Gen-AI) that can be put forward beyond your search before you invite a supplier to an event. But it’s the next step, and we’re going to stop here because we are going to refresh our series on Supplier Management as well.

SUMMARY

Now, we realize some of these descriptions are dense, but that’s because our primary goal is to demonstrate that one can use the more advanced ML and AI technologies that already exist, harmonized with corporate, market and community data, to create even smarter Supplier Discovery applications than most people (and last generation suites) realize, without any need (or use) for Gen-AI, that the organization can rely upon to reduce time, tactical data processing, and risk while increasing supplier intelligence and overall organizational performance. It just requires smart vendors who hire very smart people who use their human intelligence (HI!) to full potential to create brilliant Supplier Discovery applications that buyers can rely on with confidence no matter what category or organization size, always knowing that the application will know when a human has to be involved, and why!

Once the Post-ZIRP* World Hits …

… providers that raised big bucks on vision and overhyped third party tech will begin to fall like dominos. (So choose your provider wisely over the coming year!)

And you knew this was a comin’ after our little lyrical rant on the Post-ZIRP World, especially if you were paying extra attention to THE REVELATOR‘s postings and the following discussion streams on LinkedIn.

THE REVELATOR, who claims that the only “AI” providers who will survive in ProcureTech will be:

  • ? AI Operating System Solution Providers
  • ? Front-End Functional AI Solution Providers

In simpler terms:

  • those that provide a foundation for ProcureTech solutions built on AI tech
  • those that provide AI-enabled front-end for more “human” interfaces to sophisticated back-end technology

Whereas I claim the only providers sure to survive are those:

  • who identified a problem, built a solution to solve that problem (working with [potential] customers), and delivered that solution successfully, possibly without any AI whatsoever (as not all solutions need UI)

The key here, and even in THE REVELATOR‘s examples, is that the company focussed on real-world problems of (potential) customers, built a real solution to solve that problem, and worked with customers to successfully implement that solution.

To this end, after a point was raised about how 2025 is going to be a bumpy ride for many companies that raised too much with their deft timing of bandwagon hopping, THE REVALATOR asked three very important questions that the doctor is all too happy to answer:

1. Will solution providers’ focus shift from funding to addressing the decades-long challenge of the high rate of initiative failures?

Not until the funding starts to dry up again. And even then they will again listen to the marketing mad men and try to save their souls with sound-bite marketing and gimmicks. When that fails, most of those who remain will try to slash costs across the board, focus on keeping and upselling existing customers, and double down on prayer until they can see ZIRP again through the telescope. At which point they will jump on the new hype-cycle driven bandwagon and try to raise cash to build garbledy-gook powered ProcureTech.

With the exception of suites with a large enough install base to survive indefinitely on current revenues (possibly with some significant operating cost reductions), only those currently focussed on solving real problems, and who continue on that path, will double down on trying to reduce not just failures, but even bumps in implementation to make sure every customer is happy out of the gate to the point those customers talk about them with their peers at networking meetups and they have leads coming in without cold calls.

2. With some notable solution map logos or brands running out of cash, how will it impact the post-AI Bubble Burst solution provider landscape?

A lot will disappear. Those who see the writing on the wall now, even though they won’t admit it, are already putting themselves out there for acquisition while the multiples are good. Those who don’t will scramble to merge with partners or take firesale deals just to stay alive. Those who fail at that will just disappear.

3a. What will be the common characteristic of solution providers who remain?

Answered in part 1 – those that focus on solving real problems, and doing so at a fair, sustainable price point for them AND the client, who, since happy with the solution, will continue to renew and even add more modules/capability over time.

3b. What will be the common characteristics of those who disappear?

Those who went all in on the Gen-AI or orchestration bandwagon, didn’t build any unique and original functionality that solves real procurement problems, tried to build a business on overpriced third party tech (not due to third party tech fees, but the ridiculous multiple they have to charge because they raised too much money and the investors are demanding a return), and failed.

* Zero Interest Rate Policy

We Might Just Need A New Funding Model For (Procure)Tech StartUps!

This article was inspired by the same LinkedIn Article by Gaurav Sharma that inspired my last article on We Need Better Events!

Basically, Gaurav posted the following:

My Buyer’s mindset is bugging me on this point!

The average cost of a CPO 3-4 day business trip on a conference: USD 10k at a minimum (Conference tickets, Business Class travel, stays, network lunch, etc).

If 70 Smart CPOs can pool this sunk cost into an investment pool, it can become a seed investment for a Procurement tech startup. Advantages?

  • Instead of just “talking” about Ideas at a conference, you can be part of a “builder community.”
  • Own the Equity.
  • Your own customized solution; hence, your Opex will be reduced by getting rid of your dated tech stack!
  • You still get networking benefits!

And he was right about how much is wasted on many of these events, but, as I pointed out, it’s peanuts to what is wasted by vendors to attend just one 2 to 3 day big procurement event and get lost in a sea madness.

But if we held better events, as I discussed in my last article, and saved a lot of money, then the question of what we do with it becomes valid. Unfortunately, CPO-led funds are not the answer. Why? As I pointed out in my comment(s):

  1. You’ll never find 70 CPOs who (think they) have the same problem; sometimes it’s hard to find just 7!
  2. CPOs are definitely NOT CTOs – they have no idea what it takes to build a product!
  3. … many are not founders either – they have no idea what it takes to build a company! (And when many try, they don’t do so well … that’s why many of the 666 companies on the mega-map won’t be around in a few years, going the way of many, many companies before. (See SI’s historical vendor day reprise and count how many of those are left … extrapolate that % and it’s about accurate for survival rates beyond a few years.)
  4. Many CPOs need to learn, and startups need to be taught what they need to do, especially since, right now, we have too many vendor offerings and most don’t solve the right problems. (Again, see the Mega Map.)
  5. Even if you get a MVP out of that 700K (not likely), you’ll need a next round to make a real enterprise grade product, and then another round to grow the company enough to support it across those 70 organizations.

And this brings us to the funding issue. One thing that Gaurav got right is his implication that current funding sources aren’t always doing the job we need done. Right now, most (Procure)Tech funds come from:

  1. PE funds that only back growing, successful companies that the PE fund thinks they can grow and charge more for (or increase profits by reducing the operating expenses, scaling back on R&D, and potentially running the company into the ground over the long term)
  2. VC funds that play the numbers game (invest equally in 10 potential winners betting 1 will be a unicorn, 3 will be successful, 4 more will fail but be salvageable for the tech team and 2 will be a write off completely covered by the unicorn win)
  3. Angels that follow their fancy

And no funds come with a purpose to solve a particular business or technology problem. So maybe we need to follow the charity / endowment model in education / the public sector and establish

d. “Startup Funds” that

  1. identify common problems that need to be solved and create a fund for each problem
  2. pool money from companies that want those problems solved into each fund
  3. look to invest that seed money in a startup once the fund reaches a certain value (1M+) and the right startup is identified with a plan that can create an MVP (that can be shopped to VCs or bought by beta companies) for that investment level

Then CPOs, and even tech companies, with a similar need can pool their money towards a certain goal.

Thoughts?

So You Admit You Might Be a Dead-Company Walking. How Do You Avoid the Graveyard? Part 7

In short, as per Part 1, you

  1. keep admitting to every mistake you are making and do something about it, then
  2. continue by looking for cost-effective opportunities for improvement and pursue them and finally
  3. never, ever, ever forget the timeless basics.

Today, we’ll continue by describing what you do when you identify, and admit to, one of the next two mistakes (mistakes 9 & 10) we chronicled in our two part introduction to our “dead company walking” (Part 1 and Part 2) series (where we helped your potential customers identify problems that signify you are a SaaS supplier they should be walking away from). (You can find part 2, part 3, part 4, part 5, and part 6 here.)

9) Sales is about numbers, not solutions

While this wasn’t generally true in the early days in our space (probably because the overall investment was low and S2P+ plays weren’t getting a lot of attention from the big VC and PE funds investing in them) this has now become a big problem and at the majority of big players, or VC/PE backed players (funded before any whiff of profitability), who are focussing on numbers only … and if you don’t make them, every quarter, you’re out.

Moreover, at the bigger firms, it’s don’t worry about solving the problem, that’s the implementation partner’s problem, and their failure if they don’t, which, sadly, could only be true IF they are the one that sold the solution through a partner (referral) platform. (But still is a situation that should not happen. More later.) Otherwise, your customer’s success is entirely your responsibility, no ands, ifs, or buts,

And if you don’t focus only on customers you can support, you won’t have happy customers, which will mean a few things for you.

  • unless you replaced (part of) the ERP/MRP and became the ERP/MRP, good luck getting a renewal,
  • you won’t get a reference, and
  • when potential customers run into your customers at events and ask about you, you’re going to get a very bad review and even if those customers aren’t CXO/VP cheque signers now, the fact they are trying to improve themselves means that they will be, and you can forget about ever getting any business from any organization they will ever work for (and we’re not in the boomer times where you had a job for life, we’re in the times where most people change jobs every 2 to 3 years because greedy corporations, instead of focussing on retention, focus on recruitment and, thus, the only way these buyers can get the raise they deserve is to switch jobs on a regular basis).

It’s time to get back to basics, and ask:

  • what solutions can you sell : and focus only on customers with appropriate problems
  • what upgrades can you sell later : and not only focus your development roadmap to support them, but educating, supporting, and maturing your customer to the point where they would get value from those upgrades and want to pay for them
  • what’s the best price/package combo to maximize the overall lifetime value of each customer : it’s not about how much you can sell now, it’s about how much you can sell as long as you both shall be in business; and that will require figuring out how much value you can deliver over time in a controlled expansion, and pricing appropriately so your customers see bang for their buck year after year and ensure that, if times get tough, your solution is off limits as far as the chopping block is concerned
  • what sales people can sell this way : you want sales people who are focussed on the long term success of a customer and willing to close a smaller deal now for a bigger deal later; however, for this to work, their remuneration has to go beyond the traditional sale, and you can’t rip a customer away from them, because you qualify that sales person as a “hunter” and want them to focus on new sales, and give the client to a “farmer” who will then get big commissions on effortless upgrade sales later based on all the hard work the initial sales person did in the beginning; you hire “hunter/gatherers” who are not only responsible for closing new clients, but keeping those clients at renewal times where they should be able to renew the license at a fair increase (due to inflation and increased core platform capability) as well as sell the new modules / upgrades appropriate for the client; and, finally, you need sales people in it for the long haul, not a sales person who jumps ship every two years (because they know they sold silicon snake oil)

X) Any temporary price cut to get those initial clients can be made up later!

This is bullcr@p and, guess what, your investors know it.

You have to ask yourself, because this is what your customer is asking, if it’s not worth it now, why is it worth it later?

The reality is that if it was worth it, your customer would pay it now. If you have to cut more than 10% to 20%, your software is not worth it, and you’re fooling yourself or your investors if you keep saying it is.

Moreover, you’re ruining you reputation when you say it’s a million dollar solution that is yours for the low, low, one time price for $200K. Enterprise buyers are a bit savvier than trusting, uninformed consumers. And the reality is that even an uneducated hillbilly who lives in the mountains and only comes to town twice a year to stock up on supplies would see through the hogwash and call you out as a con.

Your investors might want big sales as fast as possible, but the path to true success is happy, repeat, customers who buy more at every renewal. Fair, honest pricing and a bit of patience will lead to greater success than sleazy car-salesman tactics.

Stay tuned for Part 8!