Author Archives: thedoctor

Listen to Tom and Jon. Say what needs to be said. Especially if you can’t smile when saying it.

Procurement is not just about savings (and the cost avoidance that the C-Suite continually demands but refuses to recognize during the performance reviews). Nor is it just about supply assurance, which is most definitely critical in direct industries. It’s not even about risk management, even though that’s a big part, because the organization likely has a role dedicated to that.

It’s about value generation. While corporate and the other departments like to propagate the myth, Procurement is not a cost-center! With the exception of headcount and supporting software, it’s not spending it’s own money, it’s helping the other departments and budget holders spend their money more wisely in a manner that generates additional value, whatever that value may be. Sometimes it’s lower cost, sometimes it’s higher quality, sometimes it’s lower risk, sometimes it’s higher service.

This will require a lot more than just standing up and refusing to endorse a large contract that did not go through a proper selection process and/or was not properly vetted. (Emphasis on large. If the contract is small, and does not require procurement vetting [which will often be the case in Marketing, Legal, etc.], it’s probably not even worth the cost of review. But if a department wants to hand out a multi-million dollar contract with no bid and no vetting, BIG RED FLAG!)

A big thank you to Tom Mills for reminding us of this in his recent post on how Procurement’s job is not to smile and nod, which reminded me of a post by THE REVELATOR Jon Hansen about a year ago on How It’s Procurement’s Job To Speak The Unthinkable (which he credits to Tom for inspiring him in something Tom wrote about a year ago).

Because Procurement has to stand up to decisions that will have a significant negative impact on the organization, such as

  • outsourcing critical functions (with no mechanism to capture knowledge and bring the function back when a temporary crisis has been averted),
  • changing providers due to temporary geopolitical conditions without proper long-term planning, and/or
  • attempting to replace employees with AI (vs. augment them for maximum performance).

While we can say that all of this will make you EXCEEDINGLY UNPOPULAR with the CXO who is pushing for this (even more so than just telling the CEO to essentially f*ck 0ff, which, I can tell you from personal experience, they really don’t like to hear), you have to do it because, as we all know, none of the I-can-manage-off-a-spreadsheeet MBAs or @ss-k1ss3rs will! But all of this is absolutely vital to organizational success and the value Procurement can bring because no one understands better

  • the cost of lost knowledge,
  • the full impact of a rush decision to change suppliers and all of the organizational and supply-chain wide fallout that will occur for months (and maybe years) to come, and
  • the true value of a knowledgeable employee (vs. the true cost of a bad decision left to AI)

than Procurement. Procurement is about identifying, realizing, and protecting value. And if Procurement pros don’t speak up when they need to, then value will be lost. After all, it’s not like you can’t be very polite when doing it (unless the project leader keeps cutting you off, in which case you have another problem to speak up about).

Even in the age of “AI”, SaaS Startup Valuation Isn’t That Hard

The Prophet recently penned a long LinkedIn post on The New Diligence Questions for SaaS in an “AI”-dominated world that, on a first read, makes it sound like diligence is going to get insanely difficult unless you’re backing AI (because, apparently, AI is going to replace everything and everyone).

The reality is that AI doesn’t really complicate the equation, especially if you already realized that a lot of software is becoming a commodity and making the right investment is all about focussing on what’s not commodity and then, when you find that subset of potential investments, which one of those is the most user friendly. And you can narrow down to a good potential investment pretty quick with just 3 short questions:

What data is being captured, created, or curated?
Tech replicates quickly, and easier to build now than ever. But good data is scarcer and scarcer.
What unique algorithmic capabilities does the platform possess that can’t be accomplished by today’s, and likely tomorrow’s, AI?
Orchestration, workflow, NLP, et.? Sorry but that’s all pretty common place. We’ve had we-based middleware since a year after the world wide web was invented (and orchestration is just middleware 3.0), workflow for decades longer, NLP for decades (although LLMs now make it easier to use and more accessible), etc. You need to look for unique algorithmic capability that can’t be plug and play from open source components or learned by dumb AI (like advanced optimization, new types of mathematically sound predictive analytics algorithms, etc.)
Does the platform enable users, through Augmented Intelligence capabilities, to be 10X as productive as they would be without it?
i.e. where data collection, processing, workflow, etc. etc. etc. can be fully automated, is it? does it employ NLP interfaces to the extent possible for non-technical users?

This is what defines winning software, not plugging in overhyped 3rd party LLMs and AI tech that is still, more-or-less, experimental, hallucinatory, and fundamentally flawed.

Once you have successfully answered these questions, chances are that there is nothing else super significant to answer about the tech (beyond the standard due diligence process, inc. security and privacy reviews where needed) and you can focus on the business and market questions. Does the market exist, and does the business have the right people, processes, and support to capture the market.

So, in other words, if the platform

The SaaS play has value, and you can move onto the business and market analysis.

The only real question will be how to define the market and the new market value in an age of (temporarily) overhyped AI / Agentic plays (when, as we have pointed out many times, it’s not new, just better) to determine its real valuation (when you are being flooded with nonsense).

And of course,

  • beyond pure S2P,
  • easy agentic co-worker interfaces, and
  • plays well with “AI”,

as pointed out by The Prophet, will increase value, but that’s not the core of what you’re looking for.

Governance IS the Agent No One is Talking About

Joel is right — The Procurement AI Agent That No One is Talking About is Governance, it’s the agent that is needed the most, and, moreover, it’s one of the few agents, especially among the AI Agents (that include the felon roster), that can actually be implemented predictably and reliably, if you define their role properly.

In Joel’s post, he asks:


What happens AFTER you go live?

  • Users start tweaking workflows without documentation
  • Agents get duplicated as teams grow
  • Logic gets lost when staff turnover happens
  • Nobody remembers why decisions were made

And then tells you the answer:

It’s the same mess we created with ERP and S2P systems!

And then he goes on to say

????’? ???? ?? ????:

  • Automated workflow documentation
  • Change tracking with rationale capture
  • Duplicate detection and consolidation
  • Impact analysis before modifications
  • Knowledge retention across team changes

And he’s very close here, except what we really, really need (and really, really want) is

  • Impact assessment before initial implementation (as well as modifications),
  • Workflow documentation up-front and not just on changes, and
  • Documentation of every decision made, whether or not it changes the workflow, as well as who made it, and who approved.

In other words, knowledge capture and retention is ongoing, change tracking is also decision tracking, and analysis is continual.

However, when it comes to duplicate detection and consolidation, good luck with that!

While it would be nice to automatically detect (and quash) duplicate agents — if they are acting on API pulls through third party systems, how do you know they exist? When users in multiple departments go rogue, and do their own thing (especially if they are unaware there’s already an agent-based app for that), how do you know? You don’t!

So, instead, what you should really be focused on, especially from a GRC viewpoint, is

access tracking and access control
only authorized, validated requests get through to systems and agents because while you can’t track every agent on your system, approved or felonious, you can ensure access control to data if you replace the (open) APIs with no access control or access tracking with an agent that intercepts all requests and does that
risk assessment
continuously monitor data sources, internal and external, for KRIs and alert the right person when a potential risk situation is detected
compliance enforcement
ensure that any company, industry, or government protocols are followed in access control, data collection, decision making, and reporting

Considering that all of this can be accomplished via well-defined workflows, you could build very reliable agents and solve the un-cool problem that everyone needs a solution too. And I think that would be cool. Don’t you want to be someone who’s cool?

There is No Super-Selection Map for Source-to-Pay

In a post on comparing the Hansen Fit Score to other analyst ranking maps and methodologies, THE REVELATOR asks “which would you choose, and why”, to which the doctor responds that THE REVELATOR has to be a lot more specific, because, depending on your context, there could be three choices

1) The Hackett Group Inc. KPIs for zeroing in on what type of technology you should choose for the biggest boost to your business as there’s no arguing with their book of numbers. But this doesn’t give you a shortlist.

2) Spend Matters, A Hackett Group Company Solution Map for deep tech assessments, allowing you to qualify tech for consideration before doing a deep dive assessment on business needs (and we all know that most people can’t do this effectively). Once you know what module, or modules, you need, SolutionMap will give you a qualified list of the best, rated, vendors with those modules.

3) Jon W. Hansen fit score for sieving a shortlist of relevant vendors who make the tech cut into the 3 most likely to be the best organizational fit to invite to the RFP where they can prove their worth AND interest in actually making your organization successful

However, the optimal route, if you have the time and money, is 1, 2, 3 … (and let’s face it, since this could save you millions, you likely do). Why? When you use

1) you focus in on the specific problem set/module (set) to attack first for the biggest impact

2) you filter down to those providers who have the tech to do it

3) you filter down to those that would be right for your business on the other dimensions 1 and 2 does not address.

However, none of these approaches can

0) perform a gap analysis, determine what problems you need to solve, and help you center your analysis on the right metrics or numbers or

5) take the short-list you are left with after using Spend Matters Tech Match (built on Spend Matters Solution Match) or the Hansen fit score and construct a proper RFX to help you determine which vendor will provide you with more than a license but work with you to implement, and execute, a proper solution.

And that’s why there’s no super selection map for source-to-pay!

(And please remember, never use a big analyst firm quadrant map because vendors have lured big analyst firms astray.)