Category Archives: Best Practices

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!

 

Where’s the Procurement Management Platform?

Where’s the Procurement Management Platform?

When we started out in the very, very, very late nineties, it was all about Procurement and/or Strategic Sourcing, which, in the beginning was all about RFPs and on-line auctions. The focus was on taking many organizations from fax and spreadsheets to integrated bids and on-line analysis and reporting (even if utterly simplistic).

Then, in the early naughts, we had the introduction of spend analysis, CLM, S(R)M, and invoice management and by mid-decade vendors were building mini-suites for upstream (Source-to-Contract) and downstream (Procure-to-Pay, which included Catalog Management, etc.) Sourcing and Procurement. By the time the teens came upon us, the big suite vendors were taken steps to merge upstream and downstream and you had the mega S2P suites start appearing in the early to mid-teams, some through over a decade of development and others through acquisition (mania). They third generation of these products/suites were heralded as the one platform solution (which ERP vendors like SAP and Oracle were hailing themselves as back in the eighties), but …

1) Even though the mega-trend in the 2010s of the Source-to-Pay mega-suite was supposed to be the end of decades of advancement in S2P, we soon found out that even a suite that had the six-core applications of Sourcing, SRM, CLM, Spend Analytics, Procurement, and Invoice to Pay didn’t meet all of an organization’s needs as they needed supplier networks to engage with suppliers, data providers for discovery and diversity, CSR & GHG data providers for risk, custom sourcing tools for complex/niche categories, etc. etc. etc.

2) Most of these platforms had little to no project management, process management, or opportunity management

3) Most assumed that serving procurement meant serving buyers and that was it … but you have to serve reports and oversight up to management and pull purchasing needs in from across the organization. I.e. no (out-of-the-box) management / Finance reporting and projections or intake management (facilitating the need for further Excel usage, and not less)

4) Even those with great spend analysis didn’t always revolve around the spend, and when you think about how business measures its metrics, spend should be the foundation.

And, in summary, they didn’t, and still don’t, deliver an organization everything it needs to be successful (which is why the BoB vs Suite debate rages on today), because Procurement is not an island (even though it was once staffed like the Island of Misfit Toys), and instead is the front-end interface to the supply chain, which, for some companies can include 10,000 companies when you trace all of the product requirements down 3, 4, 5+ levels to the raw material source. (But that’s another topic for another day.)

Getting back to the topic at hand, if you had a proper Procurement Management Platform, which was designed to support data-centric end-point integrations for specific processes and organizational needs, then

1) it would be quite easy to augment and add in custom applications for niche processes or data collections for niche process and reporting management as needed

2) it would be built around sourcing and procurement centric project management and contain the extensible workflow capability required to add customized process and opportunity management as needed

3) it would allow for the creation or integration of intake applications and interfaces to gather needs and report on decisions and progress and to synthesize all relevant data for roll-up views and KPIs that finance and management needs on a regular basis

4) it could be built to use the organizational spend as the foundational data source …

and Procurement could build up, maintain, and evolve the solution it really needs to be successful over time — which is something it can’t do today because buyers can’t code low level APIs, app stores don’t ensure app connectivity, and today’s “networks” merely support data exchange and not overall process management.

So where do you get this when no single provider on the market has (historically) had this? Good question … and one that we’ll hopefully answer in the year ahead.

Fifty Golden Rules

If you were smart enough to Simplify to Succeed, great on you! If you haven’t, because you’re still wondering whether you can test the waters and go it alone:

Garry Mansell will be releasing “Fifty Golden Rules” this summer, specifically targeted at those of you who are thinking about starting your own business. Written by someone who has built successful business from the very small to the very big … including taking Trade Extensions from an unknown player to the driving force behind advanced souring at Coupa … Garry has the experience, and has learned the lessons, to get it right. As someone who now spends his days guiding new companies and entrepreneurs, you know this book is being written for you. Be sure to follow Garry on LinkedIn for insight and updates.

Simplify to Succeed

BUY THE BOOK, published by Brown Dog Publishing, on Amazon UK (available in March 2022).

Want best practice advice on how to build and execute a Successful Strategic Sourcing Structuring? Bookmark Simplify to Succeed and read daily!

Garry Mansell is one of the true experts on global sourcing best practices (and where and when to apply technology). As a former Global Sourcing Leader for Mars, Garry has 15 years of real-world experience in the trenches that started before we had software, global trade agreements, and service providers to make it easy. Then, as Managing Director for Freight Traders, he headed one of the first businesses in the world to run online Tenders before merging into Trade Extensions and leading the development of one of the most advanced Strategic Sourcing Decision Optimization platforms, which was ultimately acquired by Coupa where Garry then headed the entire upstream Source-to-Contract function before semi-retiring to focus on modernizing CIPS, advising new startups (as a Board Member on multiple boards), and, hopefully, writing that book! (Hint, Hint!)

Check it out and find out the benefits of “smart money” (which applies to start up functions as well as start-up businesses), becoming a customer of choice (so you get your supply while your competition runs short), building the dream team (and how to do it — because you definitely don’t want to end up with the B-Team), and becoming a better buyer.

(Right now, Garry is penning the best free advice you can get multiple times a week.)

Sustainable Supply Chains Sacrifice China! (Most of the Time.)

Where your supply chain is concerned, China has just demonstrated what SI has known for over a decade — it is the enemy. (This isn’t the only situation where China or the CCP is the enemy, but those are different rants. Note that we do NOT equate China or CCP with Chinese people. Most Chinese are NOT the enemy of your supply chain or democracy just like most Americans are NOT the enemy of intelligence and common sense.)

Long time readers will know that in the naughts, SI spent a lot of bandwidth telling your deaf ears that you should be investing heavily in nearshoring and home country sourcing because of the dangers of outsourcing in general, and, the dangers of oversourcing to a specific country, like China, in particular — which have finally become very apparent. It’s too bad it took a freakin’ pandemic to make clear how dangerous it is to outsource so many critical products and JIT materials to a country halfway around the globe, especially when such sourcing in bulk across the industry leads to the lack of capacity close to home due to factory closures and talent evaporation.

There’s a reason the doctor told you two weeks ago to remember the 80’s (and the early 80s in particular) … and that’s because that’s the last time most multi-national corporations in the Americas got outsourcing right … when they were near-sourcing to Mexico (who should build the wall just to keep Trump out, but that’s yet another rant for another day).

Let’s face it, some stuff just shouldn’t be sourced from home. Stuff that’s not critical, stuff that’s very expensive to make at home (but easily trucked across a single border) for various reasons (which can go beyond labour to energy costs if there are no affordable renewable sources nearby, transportation costs for raw or unprocessed materials are ridiculous otherwise, etc.), or stuff where most of the raw materials or necessary environmental conditions (for growing, mining, etc.) are just not present at, or near, home.

But when you consider a typical organization, how much stuff really falls into this category? First of all, you have to exclude any product for (re)sale that’s a primary profit line. Then you need to exclude any raw material or component critical to production unless you just can’t get it nearby. Then any product necessary for security or safety. And so on. At the end of the day, you don’t have much left, and if you’re doing the analysis right, you’re going to be left with:

  • raw materials and products just not available nearby (because you need certain growing conditions, large deposits of a mineral only found in certain geographies, etc.)
  • processed materials or chemicals where the raw materials are very expensive or dangerous to transport
  • products unique to a culture or region
  • novelty or other items not critical to your business

which (before the short-sighted wall-street loving common sense hating clueless and unskilled consultants of the late 80’s and early 90’s, like Steve Castle, put everything into the outsourcing bandwagon and blinged it out beyond belief) were the only products a company would outsource halfway around the world and still the only products a company should be sourcing from halfway around the world. Everything else should be near-sourced, and if really critical or the cost differential is small, home-sourced.

This also means that just shifting everything to another country in the BRIC, and India (which is ruled by a more open, transparent, and dependable democracy) in particular, is also NOT the answer. (They may not be the enemy, but they are still NOT the answer.)

So, unless you want your Supply Chain to completely collapse after the next global disaster, go back to basics, remember the smart outsourcing decision from the 80s, reopen those Mexican factories, and start near-sourcing again. And then, where you can, bring it back (close to) home.