Category Archives: Best Practices

Best Practice Technology Vendor Selection for True Multi-Nationals 2025 Reprise Part I: RFX – You’re Asking for the Wrong Information!

This is a repost and reprise of a series that last ran (for the second time) in 2015. It’s as relevant, and important, today as it was then, if not more so, thanks to the I2O Hype and AI BS!

It’s that time of year again. Your budget is about to be approved — a few months later than you’d like — and you’re ready to begin the process of obtaining that Spend Analysis, e-Sourcing, e-Procurement, Source-to-Contract (S2C), Procure-to-Pay (P2P), Source-to-Pay (S2P), Supplier Management (SXM), Third Party Management (TPM), Intake-to-Orchestrate (I2O), or some other system you’ve been dreaming of that you believe is going to revolutionize your Sourcing and Procurement.

You think you know what you want, but you have to go through an RFP and, more importantly, you know that you’ve only had time to look at a few options while building the business case as you were doing it evenings and weekends on your own time because the project wasn’t approved. Now you want to go to market and either verify that you’ve identified the best solution or find the best solution to meet your needs. Since you are a sourcing organization, that process demands an RFP. However, this RFP is not like your RFP for direct materials or indirect spend. This is a very specific technology solution RFP for a platform to meet your needs and support all of the other RFP / sourcing / procurement / supply management processes of the organization. It’s crucial to get it right.

That’s what we are going to discuss in this series — the proper process and approach to acquiring the right Spend Analysis / e-Sourcing / e-Procurement / S2C / P2P (I2P/AP) / S2S / S2P / SXM / 3PM / CLM / & I2O solution for your needs. Furthermore, let us clearly state that this series is specific to the selection of technology and technology-based vendors to provide enterprise software platforms, and/or implementation services, back-office (processing) functions, or technology-driven consulting services for your multi-national organization. While some of the best practices contained herein should also apply to the selection of (strategic) suppliers for high-value and/or complex products and/or services, this series particularly relates to the selection of a vendor to provide an enterprise software backbone, and, in particular, a backbone for e-Procurement and/or e-Sourcing technology for your Supply Management organization. As one size does not fit all where RFX and category selection processes are concerned, no claims, express or implied, are made with respect to any other vendor selection process and, in fact, if you’re only buying paper and pencils, some of the best practices contained herein will, in all likelihood, be overkill.

Now that the preamble is out of the way, let us begin by noting that the traditional RFX processed is well understood, and well documented in many places, including in the e-RFx for Total Value Management wiki-paper, co-authored by the doctor on the classic e-Sourcing Wiki (now only available on the WayBackMachine) over seventeen years ago. And, in the wiki-paper in particular, the high-level process is still more-or-less correct almost two decades later.

As per the wiki-paper, you start with a two-stage RFI before an RFP, which is solution focussed (and not cost or contract focussed), which is issued before a final RFQ, which is when you collect quotes and start the actual selection / negotiation process. Specifically, the high-level process is:

  1. RFI #0: Stakeholder Requirements (collected internally)
  2. RFI #1: Vendor Interest
  3. RFI #2: Vendor Pre-Qualification
  4.    RFP: Solution Inquiry
  5.    RFQ: Clearly-Defined Specifications

So what are you doing wrong, especially if you’re a Multi-National? To answer that, let’s look at how this is typically translated:

  1. Product Needs, Service Needs, Preferred Vendors
  2. Vendor Info. Request, Vendor Interest, NDA
  3. Product & Service Capability Profiles
  4. Solution Design Request
  5. Explicit requirements, process definition, and bid request

See the problems?

  1. Stakeholders typically don’t know what they need in a solution. They aren’t technology experts. They aren’t supply management experts. They are domain experts. And if you ask them what they want, you are just going to get whatever the vendor spending the most on marketing is saying they need, or whatever they can find in a “Free RFP” (and There are NO Free RFPs). It doesn’t matter what they think they need in a product or a service, it matters what problems they are having today. You need those solved, not an array of feature/functions that will never be used! You need to ask the stakeholders what the problems they need to solve are, so that you can ultimately select a vendor with the solution that solves as many of your stakeholder’s pain points as possible. (And if you need that translated into more technical requirements that the vendors will understand, you hire a neutral consultant who does NOT have any vendor partnerships and does NOT do implementations, specializes in Project Assurance, and whose sole goal, and continued compensation, is based on your success (not the vendor’s and not the implementation partner’s).
  2. A preferred vendor is one that can offer you the best product or service from an organizational perspective, not from a single stakeholder / department perspective. For example, a stakeholder (team) might rate a vendor A+ because the representatives always responds quickly. But this is not necessarily indicative of great service (and is often indicative of desperation for a sale, which is never a good sign). If their answer to every system issue is always “we’ll get someone to fix that with 72 hours“, and you need the software up 95% of the time, that’s still poor service if the software crashes regularly because 3 days downtime every few weeks will not support an operational level of 95%.
  3. Asking a vendor if they can provide you with the necessary functionality or service levels after you have shortlisted them as a possibility based upon a review of their collateral is not likely to get you anything other than a “yes we can”, especially if the vendor also offers consulting or “value added services” (or the rep desperately needs to make a sale to keep his job because the company took too much funding at too high a valuation and everyone’s job is on the line). One has to remember that most (big) consulting (and value-add) organizations are driven by partners with a strong desire for as many dollars as possible, and the associate’s job security is dependent on constant sales and up-sells, and the reps are told to always say yes and take on as much work as possible, leaving the question of how to get it done (if the organization is already stretched or weak in that area) until after the ink on the contract is dry.

Which brings us to the biggest problems with the current selection process, which we will discuss in Part II.

Your RFPs, That Go To the Wrong Vendors, Suck Because CONTEXT MATTERS!

We briefly covered this in our post on how There are No Simple Answers Because CONTEXT MATTERS, but we feel we have to call it out and cover it again in its own post because, over the past few weeks, the doctor has

  • been asked multiple times for a list of the best vendors for X that just need to do A, B, C
  • been told that Gen-AI can help a client write better RFPs (and that he would like to see the new Gen-AI capabilities in the sourcing/procurement/services/contract management application, which, FYI, he wouldn’t)

when the reality is that:

  • there is no way he can give a short list of relevance without understanding at least the
    • company size, geography, and industry
    • existing S2P/ERP ecosystem and maturity
    • primary pain points

    because

    • company size can dictate minimum vendor size; geography presence, language, or cultural skills; and industry key capabilities that a platform will need
    • unless it’s a rip and replace project, the new module/solution will have to play in the existing ecosystem
    • and nothing defines what is needed more than the pain (not a random list of features that the buyer doesn’t really understand and just assumes will solve their problem)
  • as we have repeatedly explained, there is no Artificial Intelligence, Gen-AI is as dumb as a doorknob, and it doesn’t write better RFPs (although it may write better English) — not even close

Now, we really want to dive into this second point.

You can NOT write a good RFP if you don’t know:

  • what your pain points are
  • why you have them (i.e. process, system, and/or data issues)
  • where gaps need to be filled in your current system landscape (and what that landscape is)
  • how advanced your employees are in their TQ (Technical Quotient) and Procurement maturity
  • who will be using it and for what
  • when it is used in workflow-based processes

And, guess what, Gen-AI doesn’t know that, and doesn’t even know how to elicit that. For an RFP builder to be useful, it has to help you gather this. Which means experts need to encode it with methodologies and questions to elicit all this. Only then can Gen-AI LLMs be used to actually construct an RFP in natural language. So if all the vendor has is a nice shiny LLM wrapper, they have nothing useful. Remember that.

There are NO Simple Answers Because CONTEXT MATTERS!

If you’ve been following along, over the past few months we’ve had to complain about:

While these may seem like completely different situations that have to be (continually) (re)addressed on their own merits, they really aren’t. They are all interconnected (and taken together they help to define the 88%+ technical project failure rate in our ProcureTech space) and all have the one of the same issues at the core. They all try to oversimplify, which is something you cannot do in any field of technology because CONTEXT MATTERS!

Analyst Firm and Influencer Maps and flashy graphical comparisons on a few randomly selected “data points” are useless because context matters. You can’t create a shortlist of potential solutions without understanding, at a minimum:

  • who the company is and what the department does
  • the platform and skill topography
  • the problems that the existing topography is not solving

Because sourcing is not sourcing is not sourcing, procurement is not procurement is not procurement, and analytics is not analytics is not analytics. Indirect Finished Goods vs Direct Materials vs Services are sourced differently; catalogs vs. one-time buys vs. on-contract inventory replenishments are handled completely differently; and there’s reports vs drill down cubes vs data federation, and each brings different insights. APIs, interface, and integration requirements differ on platforms, core vs. nice to have shift based upon what’s in the ERP, AP, and SCP systems. And the maturity level has a great impact on what will, vs. will not, be used.

It’s NOT SIMPLE! And anytime someone says “keep it simple, just give them a list”, it means they don’t understand the reality of the situation and that, while it is not complex, not hard (and yes, Procurement can be really easy), it’s NOT simple. Context is needed to make the right recommendations and right decisions.

There is NO Autonomous AI Agent and anyone peddling one is selling the new silicon snake oil. (First of all, remember that there’s no such thing as Artificial Intelligence, and it’s still the case that since a computer can’t take responsibility for a critical decision, it should NOT make one.) For an agent to be autonomous, it would need to have, or be able to retrieve, all the data it needs, connect with all relevant internal and external systems, get information not on the web through traditional means (ask people), verify truth from lies, have the ability to adapt to any situation, and the intelligence to know when a decision can be made and when it can’t. Not only does it not have the intelligence, but no software agent in existence meets the rest of these requirements either. (The best that can be created is a support agent that can do all of the data processing, standard analysis, workflow automation, and decision suggestion using Augmented Intelligence that allows it to act as a useful personal assistant that multiplies your productivity. But ONLY if the Agent has the right context — and guess what, YOU have to work with a partner to custom build that agent with YOUR context. It won’t be delivered out of the box and magically trained just by feeding it your data. The myth of emergence has already been debunked. Please stop falling for it.)

There is no Best-In-Class process or methodology guaranteed to work for you. Unless you are lifting it from a company in the same business buying and selling the same products for the same consumer base that is structured the same way and more-or-less does the same thing as you, that best-in-class process or methodology may not even be close to what you need (and no amount of adaptation will get you there). Best-in-Class always works within a context (which includes your maturity level as an organization), and until that is understood, no consultant or analyst can make the right recommendations for where you are today.

So next time someone says it’s simple, and that their map, chart, or infographic will solve all your problems — delete it, because unless they also take the time to qualify the context in which that map, chart, or infographic applies, it is worse than useless for you (and doubly so if it presents a dangerous and dysfunctional dashboard) and may even cause organizational damage if blindly followed.

Finally, just remember, just because it ain’t simple, that doesn’t mean it ain’t easy. It just requires a bit of brainpower and effort to get it right, and, moreover, an amount thereof that is well within our capability!

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).

Don’t Get Misled By Overly Simplistic Comparisons!

A recent post on LinkedIn on Coupa vs. I-Valua that implies it’s always Coupa vs I-valua or that Coupa is better is missing the point entirely. So much so, that the doctor had to call it out (see the initial LinkedIn response here) because it ends up being very deceptive (even if that wasn’t the intent).

The post made a very simple comparison between Coupa vs. I-Valua in big graphical format that basically said the following:

Coupa I-Valua
1 Billion in Annual Sales, inc. 2006 200 Million in Annual Sales, inc. 2000
Considered Innovation Leader Can Be Customized to Specific Needs
Generally Good Customer References Customers Have Mixed Success

So much wrong with this!

1) Revenue size is in no way indicative of a company’s particular ability to serve YOU. As long as the company is financially stable and has enough support staff for an organization of your size, that’s all you care about. (And it’s obvious they both do since once a company surpasses 100 Million in annual sales, it can serve the vast majority of enterprise clients.)

1b) Neither is time in business relevant once the company has been in business long enough to have a mature solution.

2) “Considered the Innovation Leader” is either opinion, not fact, or bland, marketing BS. By who? The market at large? Well, guess what, in this scenario neither Coupa nor I-valua qualify — Zip is the current darling of ProcureTech. (But don’t go there … please … don’t go there! [Or we’ll have to rip into that assumption too. For now, we’ll be content in reminding you that, despite what Zip claims, there are NO FREE RFPs.] To keep it short and sweet, Zip’s S2P capabilities are still relatively non-existent as it was built as an orchestration platform to connect existing systems and make them work better, and what they offer to plug the gaps you don’t have is not anywhere close to Best in Class.)

3) As Joel was also quick to point out in the comments, good customer references depends upon who you ask (and many of us who have been in the space a long time know that both vendors have very happy customers, some unhappy [former] customers, and customers who are generally satisfied (but wouldn’t go out of their way to give a recommendation). At Spend Matters, where I developed the Source-to-Contract Solution Maps, in the first release, I-valua was top dog and Coupa was average on the customer ratings. As more references poured in, I-valua dropped down to average and Coupa climbed slowly. In other words, both have great customer references, both have average customer references, and both sets of providers have a customer base with mixed success. (And you can’t always blame the company for the success or failure, both sell very advanced solutions and sometimes customers insist on a module they aren’t ready for.)

Furthermore this comparison misses multiple key points that need to be taken into consideration in any comparison, which include, but are definitely not limited to:

4) Simplification is key — and both platforms can simplify extensively! However, the approach is different — Coupa, in simple terms, gives you default configurations that are easy and widely adopted. I-valua built the infinitely customizable platform, and YOU have to work through that process to get it simple. In technical terms, I-valua was built for power users, Coupa for tech novices, but both can be configured to a middle ground.

5) There are more than 2 suites! While Coupa is a finalist in most deals (due to market size), depending on the industry and geography, the final “2” could also include SAP Ariba (yes, still), Jaggaer, GEP, Zycus, Oracle, Corcentric (Determine) or Synertrade, especially in enterprise deals, with another half dozen or so smaller suites emerging in the mid-market. And, for a subset of those deals, Coupa is definitely NOT the best. Sometimes it’s not even close!

5b) While Coupa is undisputedly one of the indirect (sourcing) market leaders, it is still very weak in direct sourcing compared to some of its peers (especially when compared to emerging players built for direct from the ground up). Classically, it had no direct support. The Trade Extensions acquisition gave it support in advanced sourcing and the Llamasoft acquisition gave it direct support in supply chain demand planning, but direct was never at Coupa’s core. For direct industries, it makes a difference. (To be fair, most of Coupa’s peers weren’t built for direct either, but Jaggaer acquired Pool4Tool, I-valua acquired and rebuilt DirectWorks in their platform from the ground up, GEP built NEXXE for supply chain to supplement its weak direct capabilities in SMART, and Synertrade was built from the ground up for direct – one of the few suites that was.)

I could go on, but, with over 666 companies to choose from, it’s never just Coupa vs. someone else, or I-vlaua vs something else. Sometimes neither of them should be in the room. Evaluate the alternatives. And do so after you know your core requirements, as that’s what you need to narrow down to a relevant pool of providers.

And also, you need to consider your sources when you see very simplistic one-side comparisons like these. While there may not be intentional bias, the relative knowledge the author has of different solutions will weight the comparison if the author is not an analyst who has rigorously, and objectively, weighted each platform side by side on its technical merits alone! (Which the doctor did for six years in this case, along with many of the other big names listed above.) (The Spend Matters solution map was a deep technical solution map with over 600 areas of feature/function/process evaluation on the tech axis [and dozens of questions on the customer axis] for a reason. Comparisons are NEVER this easy between suites and sometimes the usual market leader, for your organization, is the default market loser.)

In this situation, the post author’s company does a LOT of Coupa-related platform advisory, the post author has experience with Coupa that predates that in professional CPO or equivalent roles, and is one of the few consultants out there who has a good understanding of the Coupa platform. (And, by the way, there aren’t many of these consultants, especially when you consider that Coupa doesn’t really know Coupa anymore! The only two employees who knew the entire platform end-to-end, that contains over 20 acquisitions over the years, left last year. And the last few years also saw the departure of key personnel from acquisitions that gave them their advanced analytics, optimization, and risk capabilities. As for the doctor, he’s been following Coupa since Procurement Independence Day and consulted for, advised, or did diligence on half their acquisitions over the years. He’s one of the few that probably now knows the core of Coupa better than Coupa, and knows when someone, like the post author, knows a platform well.)

So if you need help identifying the right vendors to consider, and guidance on how you should be comparing them, seek out the niche analyst firms and independent analysts who have been covering the space for over two decades — they’ll give you the right list of vendors to look at, the right factors to consider, and can even help you craft the right RFP. (Unlike the big firms who just publish the same maps with the same vendors who happen to get a ranking that often just happens to be highly correlated to how much they pay the firm. [Remember, vendors have lured big analyst firms astray.])  And when you need help on a shortlist, seek out the consultants who have actually implemented multiple players on that list for their advice.