Category Archives: Analyst

In Source-to-Pay, How relevant is the Analyst Firm?

As a result of the M&A mania in the late teens (during the era of [mega] suite consolidation) and very early twenties (during the pandemic when all of the PE firms suddenly realized that e-Sourcing, e-Procurement and, most importantly, e-Payment solutions were critical [when no one could go into the office]), a lot of known smaller, and even mid-size, players were swallowed up, leaving a vacuum at the lower end of the market.

As a result, two things have happened:

* a slew of new players (run by leaders new to the market) have entered the market; and while most have very limited solution breadth or depth, their use of modern technology is plugging a hole and offering value out of the gate (especially to smaller companies with nothing)

* a lack of talent (which has also been swallowed up into larger companies) at the remaining offerings has resulted in many of the leaders in these companies coming from other areas of enterprise software

… and neither of these sets of players have a deep understanding of our market or the analyst firms in it and too often I’m hearing that part of the strategy is “get on the Gartner Map“, “get on the Forrester Map“, or “get on the Spend Matters Map“. And while the last map*0 is the map you definitely want to be on at some point (as it actually focusses on technology vs. a mix of soft vs. hard factors that make it hard to judge how technically relevant the solution on its own is for you), “getting on the map” isn’t a strategy.

As a corollary, I’m also hearing too often that a big part of the marketing strategy is to “get in front of the big analyst firms as fast as possible and, hopefully get written up“, and if there are analyst relations, all their time is focussed on these big firms. And that worries me. A lot!

Why? Because they think “the firm” is the answer, when, in fact, it’s not the firm but the analyst because “the firm” will only get it right IF the analyst gets it right. And at many of these firms, I’m more worried by the year if the analyst will get it at all. Why?

If we go back to Saturday’s post on AI: Applied Indirection, Artificial Idiocy, & Automated Incompetence, we have the dual problem that most of the solutions out there are claiming capabilities they don’t have and even most people in technology can’t judge whether or not the claims are real or fake, and this goes for analysts too. Especially new, junior, analysts without the right tech background, domain understanding, education*1 and experience in our space.

The reality is that we’ve went from the point where, in the beginning, to be a good analyst you needed to:

* understand the space
* understand the unique processes the technology has to support to serve the space
* understand the current breadth of offerings and capabilities across the vendor landscape

to where, to be a good analyst as technology progressed, you also needed to

* understand the different technology stacks and what they can, and cannot, offer
* understand the different technology options and what they can and cannot do (i.e. algorithms, workflows, etc.)
* understand the nuances of buyer needs across industries and niches (e.g. direct vs indirect, manufacturing vs. distribution, F&B vs CPG, etc.)

to today where, to be a good analyst, you also need to

* understand the different technologies that are used in ML/AI and what actually qualifies as ML/AI and what does not
* understand where advanced technologies, especially those based in ML/AI, are required, and where classic techniques will do just as well, or better
* understand the different levels of analytics, and whether a solution has real analytics, or just pre-packaged reporting
* understand how the different technologies on the market need to link together as we move from the world of suites to platforms

In other words, we’ve gone from the point where to be an analyst, in the beginning, you just needed:

* critical thinking skills
* a basic business understanding
* good writing skills

to where, as technology progressed, you also needed:

* a basic understanding of technology (2 years of computer science or equivalent STEM offering in engineering, physics, etc.) and scientific thinking
* a basic understanding of source-to-pay and related processes across industries and category uniqueness that may or may not dictate different needs
* a basic understanding of integration points to other enterprise systems
* a good domain understanding of the Sourcing/Procurement needs in modern multi-nationals

to where, looking at technology today, you also need:

* a deep understanding of math and analytics (and at least a Bachelor’s in a STEM area)
* a deep understanding of models and metrics and where, and how, all the different data sources integrate for risk, diversity, spend, and opportunity models
* a deep understanding of what’s needed for a modern data interchange, API integration, and procurement management platform
* a deep understanding of how procurement works with and supports supply chain, logistics, and finance and how the pieces support this
* a good bullsh!t detector and the ability to dive into claims that a company may want you to take without question and find out what really is there and what the claim really means
* at least a decade of experience on top of close to a decade of education (because if you’re not a genius, you probably need at least a Master’s or two Bachelor degrees to get all the background you need) to put it all together

But who has that anymore? And where are they?

To be continued … in Part II


*0 as of posting as those maps, V3, were designed as pure-tech [and the last iteration co-designed by the doctor]

*1 most programs, if they teach anything at all, teach classical operations management or logistics, neither of which is modern procurement or supply chain management, and definitely not advanced math or algorithms!


Influential Damnation 97: Analysts

Conferences are bad, but manageable as they are only once or twice a year. Consortiums are worse, as they meet regularly to thrust their views upon you. Pundits / Futurists are a significant damnation, because their brand of influence seems to be annoyance perfected. But none of these compare to the damnation of analysts. Why?

Analysts are the Gatekeepers of the Gold Seal of Approval.

Let’s say you are a new and innovative startup, or even an older software provider that just went through a re-invention phase, and you have this great new product that contains at least half a dozen innovative features and functions not in any other product in the market that has the ability to deliver any organization that adopts the product tremendous efficiency and cost-control beyond anything else they can put in place. Your software should be winning awards and getting the gold-seal of approval that lets potential customers know that, for industry X with problem Y, this is one of the best solutions on the market. But it won’t even get a side mention in the back pages of the local business journal until it gets recognized by an analyst firm as an emerging solution, and forget front page coverage on something like Mashable until it has been vetted and approved by at least one major analyst firm. They are the keepers of the gold seal of approval, and if they don’t like you, you better keep one foot in the coffin.

If you’re not on their lists, you’re not on BigCo’s list.

The best way to get coverage is to get a big win. But a big win requires a big company adopting your software and getting a big result that they want to advertise to the world (so they can say how smart they were and how well they did). But the chances of a big company even inviting you to an RFX until the analyst firm, that they spend six or seven a years on to advise them, puts you on a contenders list is slim to none. Unless you can find a back door (through a consulting partner who will use your product to get a great result on a services engagement and then mention you in a press release and give you credibility with the firm), you’re out in the cold. After all BigCo payed six, if not seven, figures for the analyst firm’s shortlist, so it should be the best and they shouldn’t question it.

If you won’t pay to play, it will take a while to get on the analyst firm’s shortlist.

Analyst firms have two major client pools: BigCos (the Global 3000s and the emerging mid-market companies that want to be the Global 3000) and TechCos that want to supply the BigCos with tech products. BigCos pay for access to the research library and time with the top analysts to help them identify the right solutions. TechCos pay for access to the research library and competitive analysis and time with the analyst to help craft a product and/or services roadmap that will help them differentiate themselves in an often noisy marketplace. The big clients in each group will pay a significant amount of money, and will respect significant value in return. BigCos will expect one-one-one analyst time with the experts and specific consulting projects and the TechCos will expect prominent placement in all of the research.

As SI has explained, there’s a reason why every time a new Perilous Pyramid report is released on a subject by a big analyst firm, which will typically revisit major software markets every one to three years, the criteria for inclusion as well as the criteria for scoring changes. It’s not just because the technology changes, but because sometimes certain companies need to be excluded and certain capabilities scored higher for those six figure TechCo clients to look good. And if those six figure clients don’t look good, they won’t be giving the analyst firm six figures at renewal time.

And if you’re not a big client, good lucking winning the Perilous Pyramid.

As a result, if you’re a new company that can’t afford to become a big TechCo client of the analyst firm, or that doesn’t believe in the pay-to-play model and won’t pay for lip service, good luck winning the Perilous Pyramid, because, even if you happen to get the attention of the lead analyst on the report and that lead analyst really likes you, if your solution is too much of a threat to the big TechCo clients, it could be a couple of years of relationship building before you even get a mention as an emerging company (that didn’t make the Pyramid because revenues hadn’t exceeded the new minimum of m Million). the doctor, who is an expert in optimization and analytics and associated technologies as well as other advanced sourcing platforms can tell you that the best platforms in these areas have never reached the top level of the Perilous Pyramid and many never even got included in the reports when they were one of the best solutions (due to lack of revenue, lack of suite functionality, or some other arbitrary inclusion requirement). Fortunately most of these Pyramids did rank the established companies that were included fairly accurately (as there are big TechCos with good solutions that would serve the needs of most, but not all, client organizations), but the reports never gave a complete picture. Either equivalent options (from a technology perspective) were missing or not ranked as highly due to arbitrary ranking or scoring criteria.

As such, analyst firms are one of the biggest influential damnations out there. Like any market intelligence / consulting firm, they have to keep their clients happy to stay alive, but that often means ignoring solutions that should be covered. This means that new startups suffer as do big clients that have a very specific need that can’t always be met by the bigger TechCos. Now, a few analysts do their very best to uncover and promote new startups that aren’t paying clients (and some even do so without the expectation that those startups will become paying clients when they can afford to do so), but given that they have to spend the majority of their time flitting between, and dancing to, two different types of tunes (BigCo client and TechCo client), they don’t have much time left for anyone else. So while their advice will be good, it’s never complete and even though we might want to think that because we paid six figures for their advice that we could take it at face value, we can’t and, like everything else, have to take it with the grain of salt it comes with.

What Impact Will a 9% Drop in Profits Have On Your Organization?

Unless your Supply Management organization takes it to the next level, your company is facing a 9% drop in corporate profits this year due to rising prices and other inflationary pressure according to a recent Hackett Group study. For a typical Global 1000 company with 27.8 billion in revenue, Hackett’s study estimated that commodity and offshore labor inflation will drive a 150 million per year hit to the bottom line. Ouch!

Why? While most companies are now able to effectively anticipate commodity price increases, more than 60% of companies surveyed by Hackett in the recent study have not been successful at mitigating these cost increases. The reality is that few executives have experienced significant inflation, which is now at levels not seen in 30 years (when inflation rates hovered around 13% back in 1981).

And while inflation may not yet be at 13%, it is bad. Not only do respondents to the Hackett study expect the rate of inflation for commodities overall to rise by more than 30%, to 6.3% a year, but commodity price volatility has increased nearly 60% since before the recession. Making matters worse, at the same time, due to the talent crunch, the rate for internal labor is expected to more than triple from 0.7% to 2.2% and the rate of inflation for external labor is expected to more than double from 1.2% to 3%.

The problem, as identified by the Hackett study, is that most companies tend to take a fragmented, siloed approach to anticipating and mitigating costs. And while more advanced companies will forecast prices and do some basic hedging by adjusting contract length, purchase volumes, or inventory levels, few take the cross-functional approach required to combat the mitigation. The majority of companies do not do the analysis required to understand the impact of commodity cost increases on profitability, do not use specialized analytics to anticipate future commodity costs, and do not provide clear direction and policy for making hedging decisions. A future post will explore in greater detail some of the options presented in Hackett’s study on Taming the Inflation Dragon and why your organization must adopt more advanced

It’s Easy To Move Beyond Spreadsheets and Improve Operational Decisions

All you have to do is survive the uprising that results when you ban spreadsheets from the organization.

Industry Week recently published a very nicely thought out and written piece from SAP on how to move beyond spreadsheets to improve operational decisions using business intelligence that sounds wonderful in theory but doesn’t work in practice. Why not? Because the first thing a user does when they get a new system is dump the data to a spreadsheet they can play with because

  1. they are used to the spreadsheet environment and
  2. the vast majority of BI tools don’t have the capabilities the average analyst needs to do the analysis she needs to do because they all work off one version of the data that cannot be altered in any way.

Thus, an average BI system only worsens the problem as users create and share more and more spreadsheets in an effort to get around the limitations of yet another system with yet another version of the truth. There are only two ways to move beyond spreadsheets. They are:

  1. Ban Spreadsheets
    and force your users to work within the limitations of the BI tool or
  2. Adopt a Real Analysis Tool that Supports a Spreadsheet Interface
    and allows your users to continue to use the interface they are comfortable with in a productive, value-creating, manner

Spreadsheets are not going to go away just because you’ve introduced yet another system. It’s delusional to think otherwise. Your only choices are to ban them or embrace them in a manner that is actually helpful.

What About Bob?

Almost nineteen years ago, Touchstone Pictures asked What About Bob?, not knowing what a profound question this would be for the Supply Management space, which had not yet truly emerged, nineteen years later. And before you ask what is that crazy doctor referring to, be assured that I’m going to tell you. But first, a little background.

A little over a year ago, Dennis Moore, Susan Scrupski, Thomas Otter, Vinnie Mirchandani, Jeff Nolan, Jason Busch, Zoli Erdos, and pretty much anyone else who mattered in the Enteprise Blogsphere came together and created the Enterprise Irregulars, a central point where anyone who wanted a multi-faceted snapshot of what’s going on in the Enterprise space could go to get it. Little did we know that would be the first milestone on the path to Analyst 2.0, the new analyst model for the Supply Management space. Shortly after, Jason Busch of Spend Matters decided to double down. He expanded the number of voices he allowed to contribute, increased the rate of publication of his Perspectives, and announced bold new changes coming in 2010, which began with the new Compass publication series, which are essentially an Analyst 2.0 spin on the classic Aberdeen model. (The only difference being that instead of sponsoring one big fat [dry] metric filled research study, you sponsor a four-part series that addresses emerging trends and related issues as well as best practices with a dash of metrics thrown in for good measure.)

Then Mr. Horses for Sources himself, Phil Fersht, decided it was time to go all-in with the new Analyst 2.0 model and formed a whole new Analyst Firm dedicated to Global Sourcing Performance.

And now we have turmoil at the Analyst 1.0 firms who are trying to stay relevant. Gartner acquired AMR, and Andrew Bartolini, who was the VP of Global Supply Management Research (and who succeeded Vance Checketts who succeeded Sudy Bharadwaj who succeeded Tim “Mr. Perfect” Minahan), has departed Aberdeen to create his own Analyst 2.0 offering over at

There’s so much going on right now, and so much noise being made, that I just have to ask What about Bob? You see, while most of the space is going gaga over all of the hullabaloo surrounding the emergence of Analyst 2.0, they’re forgetting two important truths. One, it’s about substance and quality, not flash and delivery. And two, quietly toiling away over in a little corner of The Ferrari Consulting and Research Group‘s piece of the web, is Bob Ferrari who has been plugging away on Supply Chain Matters for over two years now, bringing you deep thought and analysis on a variety of topics on a weekly, and occasionally daily, basis. He’s good. He’s great. He’s wonderful. And he’s too modest to ask it himself. So I’ll ask it. If you need a real analyst, with decades of experience, including stints at IDC and AMR, What about Bob?

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