Category Archives: Market Intelligence

Public Procurement in 2020 — Are You On Track? Part IV

At the beginning of the week, we began our discussion of Hansen’s predictions for public procurement in 2020, which were offered as a 5-part series last month in response to the 5 predictions of Bob Lohfeld (of Lohfeld Consulting) that were published in Washington Technology in early July. We started with a discussion of the Government Market and then moved onto discussions of Workforce and Process. Today, we tackle the Technology predictions.

In his piece, Lohfeld prognosticated that:

(1) Virtual businesses will avoid brick-and-mortar costs, reducing operations costs and increasing their competitive edge. (2) Mainstream companies will exist in virtual space with no physical offices. (3) Cloud computing will be accepted as the norm, IT security protection will be expected, and IT infrastructure will be designed for virtual workforces. (4) Both contractor and government workforces will telecommute, and geographic boundaries will diminish as virtual meetings replace trips to personal offices.

To this, Hansen quickly responded that once again, the above prognostication says a great deal without actually providing any meaningful insight or substance as it reflects broad generalizations without getting into the mechanics in terms of practical application.

SI has to agree. Why? Let’s review the prognostication sentence by sentence. Virtual businesses are already avoiding brick-and-mortar costs, just as they have been since the mid-nineties and the beginning of the e-Commerce and dot-com boom. Not only can we consider a number of virtual businesses as mainstream in the niches they serve, but many companies, especially in consulting and IT, have been aggressively moving towards virtualization since broadband penetration reached the point that real-time video conference was an affordable reality for a majority of their workforce. Even in our space, many of the office locations of your global solution providers are shared business centers or home offices of key personnel. Since one can define “cloud” any way one wants to, as no one knows what “cloud” really is, we can already say that “cloud” is the norm. Furthermore, IT security has been expected by anyone with any technical savvy for a decade and IT infrastructure has been designed for virtual workforces for the better part of the last decade. Finally, many government departments are already allowing their contractors who don’t interact with the public to telecommute, as this reduces their fixed overhead. With budget shortfalls expected to be the norm for the foreseeable future, and office space so expensive in ideal metropolitan locations, it’s obvious that the amount of telecommuting is going to increase and that most consulting organizations are going to strive to have all of their contractors work remote.

However, Hansen, who simply reprinted a post he wrote in 2007 on the emergence of the metaprise (that runs on a distributed synchronized supply chain platform that simultaneously links the unique operating attributes of all transactional stakeholders on a real-time basis), also failed to provide any useful insight. While the post did note that process and not technology is the driving force behind a successful e-procurement initiative, it was essentially a post on cost avoidance through advanced spend analysis (that included commodity-characteristic analyses) and the need for process and technology alignment to realize such cost avoidance.

the doctor has to say that he was disappointed with Hansen’s effort on this piece. While the doctor, who has been immersed in cutting edge technology on an almost daily basis since starting his Master’s research back in 1994, knows better than anyone the difficulty in predicting the technology landscape even three to five years out, he did expect a much better response to Lohfeld’s post and some solid predictions (or at least some more direct rebuttals). Unlike many bloggers and analysts in the space, who come from non-technical backgrounds and couldn’t cut a line of code if their life depended on it, Hansen actually has technology in his background and a pretty good understanding of what it can, and can’t do, as well as where it’s likely to go based on where it is now and where it’s been. And, more importantly, there’s no way he could have done any worse than Lohfeld!

So what will the Supply Chain technology landscape look like in 2020? Pretty much what it looks like today, actually. Until we see a quantum leap in computing (theory), it’s just going to be more of the same old, same old in a new package. The only difference is that it’s going to be faster and more powerful. Not only will optimization on even the largest global supply chain models be real-time (and power every real-time e-Negotiation with your supply base if the organization uses a leading platform from a leading provider), but analytics will be real-time across all organizational transactions. A couple of providers already have real-time optimization capability for models of moderate size (where changes are limited to price, volume, and “route” availability, for e.g.) and at least one provider has a spend analysis solution that allows an analyst to real-time drill on a spend cube of up to 10 Million transactions on a laptop. Expected improvements in bus speed, parallel processing, inline computation, and federation technology will soon allow real-time drilling on a spend cube of 1 Billion transactions. It’s only a matter of time before 1 Trillion transactions can be handled and data can be explored in real time. This will not only improve forecasting, but allow for a host of predictive analytics applications that can be used to update forecasts for global demand and market prices in real time.

Furthermore, as broadband penetration becomes almost universal and more modern standards are adopted for data interchange by supply management solution vendors, the metaprise will become a reality and end-to-end supply chain visibility will finally become a reality for the average Fortune 3000 company. However, what we won’t see are any entirely new applications or software capabilities that aren’t already being investigated. Since the tens are shaping up to be another decade without any quantum leaps in the computing world, and since the specialist enterprise space always lags the consumer space, which always lags fundamental research, even if a quantum leap is made in computing technology this decade, Supply Management still won’t see anything new for a while.

Public Procurement in 2020 — Are You On Track? Part III

In Monday’s post, we begin our discussion of Hansen’s predictions for public procurement in 2020, which were offered as a 5-part series last month in response to the 5 predictions of Bob Lohfeld (of Lohfeld Consulting) that were published in Washington Technology in early July. We started with a discussion of the Government Market and then moved onto a discussion of Workforce. Today, we will discuss Process.

In his piece, in a nutshell, Lohfeld prognosticated that:

(1) There will be a strong connection between technology and workflow to enforce process rigour and increase efficiency. (2) Business development, capture management, and proposal development processes will become more agile and refined to fit shorter procurement life cycles. (3) We will place renewed emphasis on process maturity. (4) Process optimization will be based on actual measurements taken across multiple capture and proposal efforts and will use statistical analysis as the basis for process change. (5) Companies will implement business development, capture management and proposal development into an integrated workflow management system that serves as the corporate repository to manage all new business pursuits.

Whazitsayin? SI has to agree with Hansen when he said I quite frankly did not understand what Lohfeld’s actual process prediction entailed. Let’s take it statement by statement. (1) There’s already a strong connection between technology and workflow because most departments blindly do whatever the system tells them. This doesn’t increase efficiency. (2) If lifecycles shorten, either steps will be eliminated, but since this is government, more likely this means more e-Solutions will be adopted to collect and “analyze” information faster. But this doesn’t do much to enforce process rigour. (3) This is the same spiel that every consulting organization cycles through every 5 to 10 years. (4) This is likely since more and more systems are taking measurements and presenting metrics and benchmarks in (dashboard) reports so any process optimization that does occur will be able to use these measurements, but this does’t answer the question of how much process optimization will occur. (5) The private sector will likely integrate these systems, but there’s no guarantee that the public sector will upgrade right away. The private sector takes long enough to upgrade a SAP or Oracle or similar ERP implementation (because of the massive investment they want to amortize over 10+ years). The public sector often takes even longer. I don’t see much in the way of prediction here.

Plus, as Hansen points out, one has to remember that organizations in both the public and private sectors spent hundreds of millions of dollars trying to adapt their operations to an ideal workflow that in reality created more work re: cycles on the front lines than it did the expected efficiencies, and most of them failed. So just making a stronger connection between technology and workflow isn’t going to fix things. If the process is bad, automating it just makes it worse. Process will only improve when people realize that it has to adapt to the way in which [they] actually work (versus creating an illusionary ideal) and begin to create an utilize an adaptive model that maximizes the organization’s ability to customize workflow processes leveraging modularity. But since this will likely require the application of SaaS-based technologies within the framework of a (semi) private hub, this could take a while. Thus, at least in SIs view, we should not expect massive process improvement in 2020 in your average government organization. Just the same old processes automated and tweaked to run a little faster.

Public Procurement in 2020 — Are You On Track? Part II

In yesterday’s post, we begin our discussion of Hansen’s predictions for public procurement in 2020, which were offered as a 5-part series last month in response to the 5 predictions of Bob Lohfeld (of Lohfeld Consulting) that were published in Washington Technology in early July. Yesterday we discussed the Government Market. Today, we will discuss Workforce.

In his piece, in a nutshell, Lohfeld prognosticated that:

  • The workforce will be more diverse based on population shifts away from cities, and professionals will be employed in a virtual world without regard to where they reside. Baby boomers will be in their 70s and still actively engaged in the workforce either on a part- or full-time basis.
  • Employees will work on global government projects where work is performed in virtual space and staffed by people from multiple countries brought together for their technical expertise, without regard to cultural or geopolitical backgrounds.
  • The workforce will be able to support the entire bid life cycle, instead of discrete segments such as proposals or capture. Technology proficiency will be mandatory, and those who are slow to adopt or resist technology entirely will face dwindling prospects.

Yes, work will become more virtual. Yes, work will continue to be staffed from people in multiple countries. And, yes, the workforce collectively will be able to support the life cycle, but how does this help? Like Hansen says, its lack of depth and imagination is tantamount to the empty calories of a Three Musketeers bar.

SI has to agree with Hansen – the real issue centres on the Clark and Fourastie three (now four) sector hypothesis of how a wealthy nation’s economy evolves. The hypothesis includes the extraction of raw materials (Primary), manufacturing (Secondary), services (Tertiary) and knowledge-based (Quaternary). The workforce will be aligned to where the economy is. Plus, as Hansen points out, multiple factors such as time, increased globalization, a weakened economy and political sensibilities can and do in fact intertwine into a convoluted landscape. And this effects the diversity of the workforce that comes together for any project.

Plus, what about the communication challenge? How do we deal with the situation where, literally, four generations work side by side on projects in the same (virtual) office location. How do we simultaneously communicate with people who have never worked without the internet and people who have never really used it and still have no idea of its potential? Until we answer this question, prognostication on the workforce for the average government organization is missing the point.

Look for the InSourcing Bandwagon to Start Boarding in 2012

As per this recent article over in World Trade on “The Next Generation of Outsourcing”, Michael Corbett, Chairman of the IAOP (International Association of Outsourcing Professionals) has been quoted as stating that outsourcing has reached its “threshold moment” with its ability to drive global socioeconomic and technology progress.

And we all know what happens when a business craze has been pronounced as reaching its “threshold moment” or “inflection point”. The big 5/7/8 consultancies look for the next craze that they can build excitement around to keep the consulting dollars pouring in. And since they believe that business trends, like the economy and “retro” social trends are cyclical, I can guarantee that it won’t be long before “insourcing” is announced as the next big thing.

Just like “downsizing” turned into “rightsizing” when the consultants realized that ( a) “downsizing” is a very easy thing for the media to spin negatively (because it is negative) and ( b) taking out too many people cripples the company to the point that it can’t do anything, the consultants will suddenly discover that “outsourcing”, which is ( a) also capable of being spun negatively by the media, is very similar to “downsizing” and then rediscover that ( b) taking out too many people internally is bad and some should be “brought back” to prevent the company from being crippled. As a result, prepare for the influx of “insourcing” bandwagons in 2012, which are being built as I write this (and launched as the economic debate for the 2012 Presidential Election focusses on the economy and the lack of Jobs at Home).

But just like you shouldn’t have hitched a ride on the outsourcing bandwagon, you shouldn’t hitch a ride on the insourcing bandwagon either (even if you did hitch a ride on the outsourcing bandwagon). For many companies, that have spent the time, effort, and resources to not only develop a close working relationship with the outsource provider, but to integrate their best practices and knowledge into their operations, continued outsourcing is the right way to go. Disruption, which occurs when something is pushed out or pulled in, is extremely costly. If the relationship is working well, and the provider is providing the services in a lower cost locale, pulling it back in doesn’t make sense. As with any major strategic decision, a thorough analysis has to be done to make the right decision. And that never happens if you just jump on a bandwagon.

It’s a Knowledge Economy – Do You Know Where to Turn?

Today’s economy is a knowledge (driven) economy, “one in which the generation and the exploitation of knowledge has come to play the predominant part in the creation of wealth. It is not simply about pushing back the frontiers of knowledge; it is also about the more effective use and exploitation of all types of knowledge in all manner of economic activity“. Very little has changed since the Department of Trade and Industry of Great Britain penned these words in 1998.

In fact, the importance of knowledge in wealth creation is accelerating by the day now that global trade, information technology, new media, and, in particular, the social web is increasing in innovation, size, and market penetration on an exponential basis. Leading organizations now “follow the sun” and operate core business processes 24/7/365 on a global basis. Product and service pricing are increasingly being driven by value first and cost second. Organizations have to either accept the new economic reality created by the knowledge economy or fall further behind their peers in sales and market size.

But over the the past three decades, the knowledge required to compete in today’s global economy has increased exponentially. And, for your organization to survive, it needs people who are up to the challenge. People who need to be well educated, and, for the most part, better educated than they are because the world keeps changing, while the education your people received, 5, 10, and 25 years ago doesn’t.

So how do you go about educating your Supply Management workforce? Especially when there are at least seven different options available to you? You start by asking the right questions. And you find out what those questions are by downloading the latest white paper by the doctor of Sourcing Innovation, sponsored by BravoSolution, on The Knowledge Economy.