Author Archives: thedoctor

Mayday! M’aidez!? the doctor hears your plea. Happy May Day!

Dear Sourcing / Procurement / Source-to-Pay+ Vendor,

Are you struggling to grow in the stagnant economy brought on by rising consumer debt, unemployment rates, elevated interest rates, and recessionary fears which is contributing to the ongoing reduction in overall spend on software and SaaS solutions, including yours (even though they are desperately needed by companies reliant on consumer spend to minimize their costs, optimize their buys, and survive until the next growth period in the oscillating economic boom-bust cycles brought on by allowing billionaires* to play with monetary markets with little regulation)? You’re not alone! Dozens of companies fail or voluntarily close their doors in our space every year and dozens more need to get acquired to survive.

While there is no guarantee of success (at least until you get funded by a large VC or PE with very deep pockets and the ability to insert you into their other businesses or get acquired by a company too big to go anywhere for two decades [i.e. a failure of that company would result in an acquisition because too many companies depended on them]), there are ways to greatly increase your odds. Especially since there are ways to guarantee failure in our space. (Remember, when you are delivering product, it has to do something. You can’t really be The Producers when you’re selling a product versus IP.)

So, what can you do to increase your chances?

1. Ensure you have a core team that covers all the bases.

Read a few good books on building a successful startup (which didn’t really exist 20 years ago, so while founders in the early 2000s in our space had an excuse for not knowing what to do, you don’t). Definitely include Garry Mansell’s Simplify to Succeed on your list as he goes great job of describing the core roles and skills the founding team must share between them.

2. Follow and Implement Best Practices

the doctor penned a series last year that chronicled 10 + 2 best practices that will help increase your chances for success. While the list is not exhaustive, it’s a great start. If every company did all of these, they’d at least be more prepared out of the gate for the harsh reality of a back-office SaaS startup.

3. Stop making the same mistakes that keep being made over and over and over again!

the doctor has been an analyst for eighteen (18) years and an independent consultant for over (20) years. As he noted in a previous post, during that time he’s reviewed/researched over 500 software/SaaS companies in Source-to-Pay+ in-depth, and (co-)written up over 350 of them here on Sourcing Innovation or on Spend Matters between 2016 and 2022.

(Let’s spell it out so it sinks in. FIVE HUNDRED PLUS software/SaaS vendors reviewed/researched and THREE HUNDRED AND FIFTY PLUS software/SaaS vendor solutions written up for public access! How many analysts still active in our space can make that claim?) (The answer, just a few. the doctor believes you can count them on one hand.)

As the doctor has reviewed, followed, done diligence, and/or worked with these companies, and seen them grow, get acquired, fail, or voluntarily shut their doors, he’s seen the best practices they adopted and the mistakes they make. And some of these mistakes he’s seen over and over and over again for the past two decades. And he’s tired of them, not just because there’s likely a dozen business books out there that will tell you not to do them (although they’ll probably spend a whole chapter you don’t have time to read to get to the point), but because they are preventing companies with good solutions and good intent from going anywhere.

So, in the hopes that he can prevent even a handful of companies from making these same old mistakes again (and limiting their chances of success), he’s going to cover fifteen (15) mistakes he sees over and over again in every generation of founders in the hope that the next generation of founders stops making them!

So be sure to follow Sourcing Innovation / the doctor closely this month!

* And if our governments won’t heavily regulate the ability of billionaires to manipulate markets or hire and fire tens of thousands of people at a time just to maintain unsustainable growth rates in large enterprises, maybe Robert Reich is right and they shouldn’t exist. After all, at the 100M mark you can literally own everything you could ever need and use for a lifetime as that’s enough for a personal plane and a personal yacht in addition to a couple of nice houses and a few nice cars …

You Don’t Need Bold Steps to Transform Procurement; Foundational Will Do Just Fine

But if you want to call the steps bold, go ahead, no one will challenge you because in many Procurement departments you have to be bold to force the first steps.

A recent article over on 3news.com did a great job of summarizing those procurement steps for a transformed procurement structure in 2024, proving that the state of affairs is the same globally and the good advice the same globally.

The article had five solid suggestions that are universally true globally across direct, indirect, services, and complex procurements. Since you can read about them in depth in the aforementioned article, as well as numerous posts here on Sourcing Innovation, we’ll just summarize them here.

Spend Analysis

If you don’t know what you’re spending where, with whom, and why, you won’t be able to improve it.

Category Managed Procurement

There’s no one size fits all procurement strategy and, for sourcing, procurement technology, so taking it on a category basis is a great start.

Cost Savings and Cost Avoidance

You can’t always find savings in an inflationary economy, so you have to increase focus on cost avoidance and ensure that nothing is bought that isn’t needed, and costs are maintained where they can’t be decreased.

Digitization / e-Procurement

Use digital systems to undertake e-Procurement, and, in particular, focus on ePro/I2P/P2P as you want the core Procurement process digitized, and POs and Invoices in particular, as you can’t analyze spend you can’t capture, and you can’t ensure you’re paying the right price without a system to enforce it, so if you don’t have a modern e-Procurement system, get one.

Sustainable Procurement

Do your best to procure responsibly to reduce waste, energy consumption, and overall costs.

About the only core requirements that are missing are:

RFX

Make sure you can get good, documented, quotes to back up your Procurements.

Supplier Management

Make sure you can identify, onboard, manage, and track all of your suppliers throughout the business relationship lifecycle.

 

It’s all Procurement 101, but if your organization hasn’t taken any of these steps, you may have to be bold and force your organization into the modern Procurement age.

Enterprises have a Data Problem. And they will until they accept they need to do E-MDM, and it will cost them!

insideBIGDATA recently published an article on “The Impact of Data Analytics Integration Mismatch on Business Technology Advancements” which did a rather good job on highlighting all of the problems with bad integrations (which happen every day [and just result in you contributing to the half a TRILLION dollars that will be wasted on SaaS Spend this year and the one TRILLION that will be wasted on IT Services]), and an okay job of advising you how to prevent them. But the problem is much larger than the article lets on, and we need to discuss that.

But first, let’s summarize the major impacts outlined in the article (which you should click to and read before continuing on in this article):

  • Higher Operational Expenses
  • Poor Business Outcomes
  • Delayed Decision Making
  • Competitive Disadvantages
  • Missed Business Opportunities

And then add the following critical impacts (which is not a complete list by any stretch of the imagination) when your supplier, product, and supply chain data isn’t up to snuff:

  • Fines for failing to comply with filings and appropriate trade restrictions
  • Product seizures when products violate certain regulations (like ROHS, WEEE, etc.)
  • Lost Funds and Liabilities when incomplete/compromised data results in payments to the wrong/fraudulent entities
  • Massive disruption risks when you don’t get notifications of major supply chain incidents when the right locations and suppliers are not being monitored (multiple tiers down in your supply chain)
  • Massive lawsuits when data isn’t properly encrypted and secured and personal data gets compromised in a cyberattack

You need good data. You need secure data. You need actionable data. And you won’t have any of that without the right integration.

The article says to ensure good integration you should:

  • mitigate low-quality data before integration (since cleansing and enrichment might not even be possible)
  • adopt uniformity and standardized data formats and structures across systems
  • phase out outdated technology

which is all fine and dandy, but misses the core of the problem:

Data is bad (often very, very bad), because the organizations don’t have an enterprise data management strategy. That’s the first step. Furthermore this E-MDM strategy needs to define:

  1. the master schema with all of the core data objects (records) that need to be shared organizational wide
  2. the common data format (for ids, names, keys, etc.) (that every system will need to map to)
  3. the master data encoding standard

With a properly defined schema, there is less of a need to adopt uniformity across data formats and structures across the enterprise systems (which will not always be possible if an organization needs to maintain outdated technology either because a former manager entered into a 10 year agreement just to be rid of the problem or it would be too expensive to migrate to another system at the present time) or to phase out outdated technology (which, if it’s the ERP or AP, will likely not be possible) since the organization just needs to ensure that all data exchanges are in the common data format and use the master data encoding standard.

Moreover, once you have the E-MDM strategy, it’s easy to flush out the HR-MDM, Supplier/SupplyChain-MDM, and Finance-MDM strategies and get them right.

As THE PROPHET has said, data will be your best friend in procurement and supply chain in 2024 if you give it a chance.

Or, you can cover your eyes and ears and sing the same old tune that you’ve been singing since your organization acquired its first computer and built it’s first “database”:

Well …
I have a little data
I store it on my drive
And when it’s old and flawed
The data I’ll archive

Oh, data, data, data
I store it on my drive
And when it’s old and flawed
The data I’ll archive

It has nonstandard fields
The records short and lank
When I try to read it
The blocks all come back blank

I have a little data
I store it on my drive
And when it’s old and flawed
The data I’ll archive

My data is so ancient
Drive sectors start to rot
I try to read my data
The effort comes to naught

Oh, data, data, data
I store it on my drive
And when it’s old and flawed
The data I’ll archive

Does it Matter if Analysts Firms Aren’t Entirely Pay-to-Play if the Procurement space thinks they are?

As expected, the doctor‘s question on whether Traditional Analyst and Consulting Models Outdated and/or Unethical? on LinkedIn has led to some debate.

Most notably, Duncan Jones indicated that he’s pretty sure [the dozens of smaller vendors] are mistaken when they told the doctor they won’t get covered (and sometimes not even given the opportunity to brief) by at least one of three big analyst firms unless they become a client and/or spend 50K+ on a write-up/research bundle as well as not sure about what ‘coverage’ they hope to get as a “smaller vendor” wouldn’t qualify for a Wave of MQ.

Duncan suspects that this may be the result of just a few unscrupulous salespersons telling prospects that they will get preferred treatment (which implies if you don’t pay, you don’t get any) and admitted that there is often pressure from a salesperson. But based on some of the conversations the doctor has had, it’s definitely gone beyond gentle pressure, because, true or not, there are a number of smaller vendors that adamantly believe they will not get any coverage or any time from at least one of the well known analyst firms unless they pay a package or client fee that they see as extortionary. (Note:  Not necessarily the same firm in each case!)

So now the doctor has to ask, even if it’s just a few bad apples trying to hit (possibly unreasonable in the current economic climate) quotas, does it matter if the analyst firms are not truly pay-to-play if the general perception among small and mid-sized vendors (who might be the next generation of big players that they would want to include in their 2*2s/maps) are that the analyst firms are pay-to-play and, more importantly, if the next generation of potential client vendors have a very bad taste in their mouths from the rotten apples they were fed by these select few unscrupulous individuals (to the point where they may never even take a call from those firms again)?

Let the Bloodbath Continue!

Note the Sourcing Innovation Editorial Disclaimers and note this is a very opinionated rant!  Your mileage will vary!  (And not about any firm in particular.)

In a recent LinkedIn post, THE PROPHET tells us there is a Consulting Bloodbath starting, especially in the Big 5 (and their strategy firms). All the doctor can say to this is Good Riddance! and It would be even better if they battled it out Gladiator style! (After all, it’s been 28 years since American Gladiators ended, time for a rebrand and a relaunch with a little bit of MXC, which ended 17 years ago.) But we’re getting ahead of ourselves here …

Basically, according to THE PROPHET, firms are worried about the economy and growth headwinds ahead (this is also why investors have yanked money from equities and lessor-rated debt in recent weeks), and this includes tech/dev teams within consulting firms. In some cases lucky consultants are put on the bench and told they have six or nine months to find their next gig, and in others (and maybe the doctor is reading a bit between the lines here) they received their pink slips faster than they could say please Jack Robinson.

The bit about tech/dev teams makes the doctor happy because,

  • these are not tech firms, and they are selling modern analytics/automation/AI solutions they often have no business selling (and no real capability to deliver at even an average level unless they recently acquired a firm that does — remember what they initially got big doing, that is what they do better than anyone else)
  • they are not structured for proper SaaS development and deployment and are NOT SaaS enterprises
  • most of the “talent” they are using are not “top” talent, and if if they are “top” of their class when they are hired, they still need mentorship and experience to become “top” talent, mentorship and experience they are NOT going to get a lot of at a Big X until they start climbing the ranks (as there are too many hires each year for one-on-one mentorships to be practical, it’s usually one mentor per team)
  • the Big X cost structures are too high for mass market penetration; only the F500 / G3000 can afford them, but they still shouldn’t be using them automatically because overpaying for anything that can be commoditized by a SaaS or servifes vendor doesn’t deliver the value they need in inflationary times where supply chains are breaking daily (and instead the Big X should be used for where they deliver the best value — see when should you use a Big X)

And before you chastise me from apparently taking pleasure in people getting fired, think it through! If you do you will realize

  • the true “top” talent is going to end up at appropriate SaaS/Tech companies (or SaaS+IP powered niche automated services consultancies where their true talent/drive really is) where they can get the mentorship they need to grow and reach their full potential (and possibly rejoin a Big X later, either by choice or through acquisition0 because
  • Big X being forced to pull out of (chasing) inappropriate custom SaaS/tech deals/engagements will open up the market back up for those companies that are well positioned, who can start growing and pick up this top talent, and, moreover, give Big X a chance to focus on where they offer the greatest value, can easily guarantee a return on a high dollar investment, satisfy the customer on the first project, and get repeat business for life (see when should you use Big X)
  • the “talent” that is not ready for the tech market will either go back to school or find their true calling (before going down a path where they will eventually get overwhelmed, be unhappy, or both; we can’t have the next generation burn-out in first world countries where a very significant portion of the aging population will not be of working age in the very near future)

Plus, shift happens! (How many of us have been restructured, rightsized, or outsized from a job by financiers and lawyers who think they can run a complex enterprise from a balance sheet or understand advanced technology and engineering when they can barely gas up the Jaguars and Mercedes they drive to work everyday?*) Furthermore, given that the average life expectancy at a job these days is 4 years, this talent might as well learn about, and get used to it, now when parts of the economy will be rebounding (and they have opportunity ahead of them), versus getting their @ss3s unceremoniously throw to the curb next time the market drops.

And if, for some reason, a Big X Consultancy (which did not start in tech but in accounting/tax, operations, strategy, etc.) is where they belong, then let them prove it in a battle royale! Forget about sitting on the bench waiting and hoping to get invited to a sales call where they can sell a project to work on, put them in the Arena! When a Fortune 500/Global 3000 needs a consultancy, force them to make their selection in the arena where the consultant leads will battle it out modern gladiator style! Not just a Dragon’s Den pitch, they have to battle it out to even get the opportunity to pitch — prove they’ll do whatever it takes to deliver value at the hourly rates their employer is charging!  (Yes, we’re kind of joking here, but if it is where they belong, they should have no problem proving their worth!)

Thoughts?

 

* If the apocalypse is nigh it is largely because some rich benefactors, not even involved in the day to day running of the company, and likely never involved with the company at all, looked at their spreadsheet models and forced the engineers who actually know how to build things out of the C-suite, allowed Gen-AI to tell them how to do technical jobs, and then elected populist pinheads as Prime Ministers and Presidents to tell them balance-sheet management is okay. And let’s not forget that, as per the OECD PISA data, statistically most of them shouldn’t even be able to do high school math competently!