Category Archives: Market Intelligence

Tomorrow is March for Science Day. That IS Important For Everyone.

Why? Besides the obvious that all modern technology is the result of science, you won’t get your next-generation cognitive sourcing platform without more advancement in, guess what, data science.

And, right now, in the US, every year, in addition to having to deal with the introduction, and passing, of more anti-science policies, you also have to deal with the fact that funding for science (education) is diminishing as well and it’s the cornerstone of all progress. What do you think inspires the continual advancement of advanced mathematics and statistics? Scientific need. And where do you think the roots of most of your analytical algorithms come from? Science.

So even though you spend your days slicing data and running reports in the back-office to meet the business goals of savings, reduced inventory turn-around time, reduced, risk, etc. — you’re still using the results of scientific research and progress. Don’t forget that. Or someday Kyle may not be able to flick the internet back on again when it starts to fail. (The sad reality is that because of a lack of science education and knowledge, some people actually believe this is how you fix the internet.)

For more information, see March for Science

You Want to Get Cognitive? Then Get Analytical!

As per our post yesterday, the new “cognitive” buzzword is getting a lot of people interested in modern Sourcing and Procurement technology, and that’s a good thing, except when it isn’t. (How can it now be? Not all providers truly offer cognitive capabilities, not all are equal among those that do, and not all are right for your organization.)

And unless you truly understand what cognitive sourcing can do, when it should be used, what technologies you need to power it, and how to properly apply it, the answer is no cognitive sourcing is right for you.

In yesterday’s post, we noted that there were five (deep) technology requirements that a cognitive sourcing platform had to meet to have any hope of truly being cognitive and zeroed in the optimization requirement to indicate that before you even think about getting cognitive you better acquire, and master, strategic sourcing decision optimization because you can’t really properly apply what you don’t really understand, and the vast majority of organizations don’t really have a clue what this is because they don’t have it.

But optimization is not the only area that the average Procurement organization doesn’t have a good grip on. Spend Analytics is another area. Most organizations that have “spend analytics” solutions really have first generation “spend reporting” solutions that are nothing more than a set of canned reports and a few mildly alterable report templates that are customized to certain categories or segments of the supply bases. That’s not analytics.

Regular readers of Sourcing Innovation know that true analytics is the ability to create your own cubes, derive your own dimensions, define your own (pivotable, filterable) reports, and drill across data elements until you find opportunities that cannot be exposed by a canned report. (See the Spend Analysis archives for over a decade of great insights.)

Next generation cognitive systems find opportunities by doing more than just running a set of canned reports on a monthly basis and looking at trends. They are regularly running running variations of dozens, if not hundreds, of analytics on purchase data against deep should cost models populated by ever changing commodity and market costs feeds and looking for variations and emerging trends that could signify potential opportunities as they emerge.

But to understand what’s an emerging opportunity vs. a blip and what is small enough to allow automated platforms to procure and big enough to justify a deep strategic sourcing event or second look at the market, you need to understand just what analytics can do and how to best apply the insight gained from, and the capabilities provided by, a modern cognitive platform — and that requires hands-on experience.

So get a modern spend analytics solution and get your hands dirty in the data. Then maybe, someday soon, you can think about getting cognitive.

You Want to Get Cognitive? First Get Optimized!

The new “cognitive” buzzword is getting a lot of people interested in modern Sourcing and Procurement technology, and that’s a good thing, except when it isn’t. (How can it now be? Not all providers truly offer cognitive capabilities, not all are equal among those that do, and not all are right for your organization.)

And unless you truly understand what cognitive sourcing can do, when it should be used, what technologies you need to power it, and how to properly apply it, the answer is no cognitive sourcing is right for you.

When it comes to sourcing, a sourcing solution must meet a number of requirements in order for it to be considered cognitive. It must be capable of:

  • supporting advanced cost models
    to allow for an accurate determination of should cost
  • supporting sophisticated automated data collection to populate those models from market indices, statistics bureaus, public (government) data repositories, etc.
  • supporting a large repository of trend analysis algorithms
    to help an organization understand market dynamics
  • support sophisticated analytics
    to help organizations slice, dice, and compare all the insights extracted by the cognitive platform
  • support advanced optimization
    to analyze the cost models and all the supply and logistics options available subject to business constraints

If you look at each of these requirements in comparison to an average Procurement organization with some semi-modern Supply Management technology

  • they have some cost modelling capability in their ERP
  • they have some automated data collection around risk and commodity costs through providers like D&B and Ecovadis and Market Index data providers
  • they have some familiarity with trend analysis in their inventory management systems
  • they have adopted a spend analytics platform, which may be a generation behind, but still gives them some cost insights
  • but they have no decision optimization at all

So if you really want to get cognitive, get optimized. Without a good understanding of what optimization can do, and how to use it, how do you expect to figure out when to apply, and not to apply, cognitive sourcing technology properly.

M&A Has Been Mad. Platforms Will Disappear. But There Will Be More Than One. But Who?

We’ve been writing a lot about M&A lately, including, but not limited to, our pieces on:

because M&A is still going strong. (And, as per our recent post on The Hidden Value of SI Association, SI is acutely aware of this because this is how it loses its customers. SI works with these companies, helps them become known and successful [through a focus not on buzz but actual education, process improvement, and appropriate roadmaps], they get noticed by cash-rich firms, who then buy them, and in many cases, strip out the management teams and/or consultants.)

We’ve also noted that not only will some platforms have to disappear (to make the mergers successful) but that (in our recent piece on One Vendor Won’t Rule Them All … And One Ring Won’t Bind Them), due to the wide range of needs that organizations need and the different process that are used around the globe in organizations headquartered in different regions and run by different cultures.

But that being said, now that Sourcing and Procurement technology is starting to become more mainstream — and the majority of organizations are looking for analytics, procurement automation, and supplier program management — those organizations that are looking for their first platform (as well as the early adopters of first generation platforms that are now almost a decade behind) are trying to figure out who they should look at and, more importantly, what product lines they should look at (now that some organizations have as many as three different product lines for Procurement under one organizational roof).

This is hard to predict, especially since the Fortune 500 is in more flux than it’s ever been. It used to be if you were on the list, you were on the list for years (if not decades) and changes were subtle. Now a company can make it one year and as a result of one major disruption or media fiasco, be in bankruptcy the next year (and disappear from the list). And while most of the companies in our space are not on the Fortune 500, these companies are now being bought by the big enterprise software giants, including SAP (with a market cap over 100B), that are.

And the instability in enterprise software companies amplifies they smaller they are, and when the biggest stand-alone public company in our space has a valuation of a mere 2.5B and the largest private company in our space would likely get a valuation in the same range, you can see where we are when the average large company has revenues that you have to round up to 100M and the average BoB vendor rounds to the 10M range.

But the platforms provided by some companies, due to the immense value they offer, will survive, even if under a different name, as part of a different platform, under a different company, held by a different holding co, whose name may change three times over the next decade. And who will they be?

Simply put, they will be those platforms that are the hardest to replicate and offer the deepest capabilities that are key to value identification, like optimization, advanced predictive and prescriptive analytics, cognitive process automation, semantic risk identification and monitoring etc — whether the platform is a standalone best of breed platform in a financially stable 10M company or part of a suite of a larger 100M company or just one module in a suite in stable of suites in a 1B enterprise. So don’t try to guess which vendor will survive, instead focus on what platform will survive — and chances are you will be setting your organization up for success.

We’re In the Midst of Conference Season … What Have We Learned So Far?

There are two conference seasons in enterprise software, Spring and Fall, and enterprise sourcing and procurement falls into this squarely.

Every year, it seems to get crazier and crazier, but what have we learned?

The Bigger You Want to Appear, the Bigger Your Conference Needs to Be

Back in the day, if you were big, you satisfied yourself with a low-key user workshop … so low-key that it might not have even made your website. These days, you do big 3-day affairs, splashed across the relevant parts of the web, and keynote it with the biggest names you can get, whether or not they have anything to do with Sourcing.

The Bigger You Want to Appear, the More Events You Appear At

It used to be that you went to an event or two and splashed your banner, but now you go to every major event — ISM, Procurement Leaders, ProcureCon, SIG, etc — and all their instantiations. You’re on a constant roadshow, because the gospel needs to be spread far and wide.

The More Attention You Want, The More You Focus on Indefinites

Instead of focussing on functions, or process improvements, or knowledge, there is a big focus on value, customer success, or organizational recognition.

In other words, many of the big vendors, who have been pumped up by big PE coffers or IPOs, have apparently used their reserves to lure away the big enterprise CMOs under the assumption that the broader enterprise success strategies will work in Sourcing and Procurement. Their tactics are certainly getting them noticed, but these people are used to selling to IT, Operations, Marketing, Accounting, etc. — everyone but Procurement.

They haven’t yet figured out that Procurement is different.

First of all, Procurement are tough negotiators — they’re not going to pay a penny more than they think the software, and the services (be it implementation, process improvement, or other best practice education) that comes is worth. So unnecessarily boosting overhead by spending money on trade shows that don’t deliver value (because they don’t enable any learning opportunity) or on keynotes that don’t advance the knowledge of the attendees (because they don’t know anything about Procurement) or on drastically overpriced venues doesn’t help their case.

Secondly, Procurement want more than one-way conversations. They want interactions. They want input into the next release and the overall roadmap. And they want to learn as they do it. But these days, many user conferences have done away with the user feedback sessions, even though it’s the perfect place to do it.

It wasn’t long ago the marketers in this space got that. Let’s hope they reclaim their top spots after the new mega cos realize that the enterprise marketers they brought in are missing these fundamentals. Because for our space to advance, everyone has to be smart on all sides.