Category Archives: Miscellaneous

SAP bought Ariba. What Should You Do?

 

Don't Panic

 

With one hand, pick up your copy of The Hitchhiker’s Guide to the Galaxy, with your other hand grab a Pan Galactic Gargle Blaster, have a seat, and read a few random entries while you have a nice relaxing drink. And definitely don’t panic.

In fact, don’t even give the acquisition a second thought right now. Why? Despite what every e-Procurement, e-Sourcing, and Supplier Network vendor seems to be implying with their comments (as summarized by Peter Smith over on Spend Matters Europe), press releases, etc., the reality of the situation is that, for the time being, nothing is going to change and you don’t have anything to worry about.

Since no one else is going to spell it out for you, the doctor is.

  • Ariba was the largest pure-play vendor in the Sourcing/Procurement space
  • SAP is one of the largest ERP vendors in the space
  • Large Companies are slow moving
  • Large Companies have high overheads
    (and can’t afford to sacrifice revenue streams without replacements)
  • SAP has a Fusion road-map through 2020

When you put all this together, and consider what has happened with past acquisitions in both companies, the following picture quickly emerges:

  • SAP is going to slowly merge Ariba products into its suite(s) through Fusion
    but this is going to take years and in the meantime
  • SAP is going to continue to sell and support Ariba as-is in the interim
    because it needs to not only make its money back, but support the high overheads until it is in a position to absorb Ariba into it’s core platform and do away with needing to maintain a separate suite.

In other words, you have a few years to come up with a backup plan if the way SAP merges Ariba’s suite into their platform isn’t to your liking or if the renewal costs when it happens are too rich for your blood. The only people who need to panic now are SAP partners where a significant percentage of their business came from SAP referrals as SAP will no longer be referring anyone with Sourcing, Procurement, or Supplier Network needs to third parties. (Companies like Hubwoo might be in this boat.)

Now, depending on where you are in terms of a renewal, or how much data you have in the system, or how much you use the system, you might not want to wait a few years to start thinking about moving off of the platform if you are worried about it meeting your future needs, but you don’t have to rush into a decision. And you certainly don’t have to panic. Time is on your side.

One Million, Nine Hundred Thousand, Six Hundred and Sixteen

One Million, Nine Hundred Thousand, Six Hundred and Sixteen words later (including the words in this post), or Three Thousand Two Hundred, and Fifty Five posts later (which does not count well over a hundred guest posts on other blogs) and Sourcing Innovation (SI) officially turns six. Although still not an extraordinarily long time in net-time, it is exceptionally significant in blog-time when the majority (in the 60% to 80% range) of blogs are abandoned within a month and a study of the top one hundred blogs in Technorati a few years back found the average life of an active blog less than three years!

Growth has continued, and as per last week’s post, SI is trending well above 125,000 visits a month, and the current trend indicates that SI is quickly closing on the 2,000,000 visits a year mark. (the doctor fibbed a little in last Sunday’s post when he said the graph was indicative of an average week. An average week actually has a few spikes in it these days, which pushes traffic close to, or over, 40,000 visits a week on average, as in the graph below.) And its reach on the search engines, and Google in particular, is still outstanding with almost 22% of visits coming from Google alone! (This means that traffic will continue to grow year over year. Why? The best SEO you can get is original content — and at almost 2 Million Words, SI is some of the best content there is!)

So stick around. SI is 24/7/365 and the best there is at Xemplification. Your Supply Chain will thank you. After all, it won’t be long before SI is legendary in the blog space!


60,162 visits in a week

Amazon is Not a Threat to Best Buy, but Amazon, Walmart, & Target Are!

Best Buy is having problems. It’s closing 50 stores and, according to some analysts, could close over 200 stores in the next few years. For some stores, the best they can hope for is that they are mistaken by Chuck’s enemies for a BuyMart in off hours and blown up so that they can at least collect the insurance payout. For others, they are going to find out what Circuit City found out when their circuits started frying.

Why is it having these problems? According to recent articles, including this one in Forbes which says that Amazon is Not a Threat to Best Buy, there is speculation that Amazon, and other big web stores that are offering the same brand name consumer electronic devices at greatly reduced costs are stealing sales and stealing Best Buy’s customers and profits. And while this may be the case for accessories (like USB drives), phones, MP3 players, and even netbooks and laptops, where shipping fees are small (compared to the total cost of the purchase), it’s definitely not the case for larger appliances and electronics product because:

TV profitability is minimal and getting worse online. Shipping costs go up, TV prices go down, and accessories are hard to sell online. This does not make for a profitable business. We continue to believe third party sellers are not selling big ticket on Amazon like they were because they are losing money. Some categories remain great, like cameras and headphones, but ultimately, pick up in store to avoid shipping will work and only become more prevalent post the sales tax arbitrage is over.

Unless I want a previous generation big-screen HDTV and can get a kick-ass clearance deal, I’m not ordering a TV online because the shipping charges will probably be $100 or more, and if something is wrong with the TV, I might have to pay the same again to send it back. It’s not worth saving $50 on the purchase price if I have to pay $200 in shipping. And while the average consumer might fall for a red tag sale where you inflate the base price so you can take 30% off instead of 10%, they’re going to see the grand total and also balk at an online purchase of such an item.

However, this doesn’t make the case for buying that new big-screen HDTV at Best Buy. Sure, they have a bigger selection than most other stores on the showroom floor and it’s usually the case that they have at least one employee per department who knows more about the products than anyone at a big-box department store is going to know about the same product, but, in today’s marketplace where everyone wants to GroupOn the TeamBuy, debt is high, income is flat, and the possibility of losing your job is always around the corner, no one wants to spend more than they have to for a commodity item. So, now that they can see something in the store, decide they want it, check Target’s mobile website, see the same product is 10% cheaper in the Super Target down the street, why would they get it at Best Buy? Especially if they are not purchasing an extended warranty? And if they happened to see that same product at Walmart last week 15% cheaper? Plus, the fact that it’s probably on Amazon for 10% cheaper tells them that if they don’t want it today, at least one big-box department store is going to have it cheaper. So, while Amazon on its own is nothing to fear from Best Buy’s perspective, Amazon & Target or Amazon & Walmart combined are.

Until Best Buy can offer a better buying experience at the same price as these big box stores on all the big (ticket) items they sell, the incentive to buy at best buy is not going to be there. Especially given the state of customer service at these stores recently. Consider the plight of a customer at the Greenville, South Carolina store who was subjected to porn when visiting a best buy store, or the doctor who was repeatedly ignored AFTER indicating he was there to purchase a $200 product at that store on that day. In fact, when I think about it, if they don’t fix their customer service issues, they probably won’t survive long enough for the Amazon-Target or Amazon-Walmart tag-team to take ’em out. Especially since you can’t buy more than one item through their Canadian web store at a time! It’s a shame. They used to be great. Now …

Are the Traffic Ranking Websites The New SEO Scams?

As regular readers of this blog will know, back in 2009, SI briefly claimed the top spot on the traffic ranking engines during the summer (see this post). Before then, it was in the number two position for quite some time, and, according to these traffic ranking sites, remained strong in the number two position until about last summer. Then, about the same time that most of the major ranking engines starting introducing premium accounts and services, it started falling — rapidly — even though traffic has been holding steady, and often increasing 2% to 3% month over month, for the past year.

According to these respected traffic ranking sites, which used to at least be directionally accurate, it now gets between 1,000 and 6,000 visits per month. Are you fracking kidding me? On average, SI gets between 4,300 and 5,000 visits per day, which averages out to between 30,000 and 35,000 visits per week, and between 125,000 and 150,000 visits per month (which translates to somewhere between 1.5 and 1.8 Million visits per year). Not Perez Hilton traffic by any stretch of the imagination, but still quite respectable in this space!

Here’s a snapshot of traffic that I took a few days ago using the built in statistics tool in the GoDaddy QuickBlog hosting service. Between May 22, 2012 and May 29, 2012, SI received between 3,500 and 5,500 visits each day and over 36,000 visits in that week.

SI Traffic for May 22 to May 29, 2012

However, if I pay for premium membership, most of the traffic ranking sites will allow me to install (updated / more accurate) traffic monitoring capabilities (which translates into custom javascript / image loads) that will allow the sites to track my traffic more accurately (and do what GoDaddy and Google do for free). I don’t know about you, but if this isn’t an SEO scam legitimized, I don’t know what is. (Short story, I’m miffed, not giving them a dime and they can all go to heck!)

Has anyone had similar experiences with these sites over the past year?

What Impact Will the National Defense Authorization Act (NDAA) Have On Your Supply Chain?

According to a recent press release over on the IHS site, stringent new counterfeit-part regulations in the 2012 U.S. National Defense Authorization Act (NDAA) may have broad international implications that could impact hundreds of of overseas companies that supply Billions of dollars’ worth of items to the U.S. Government. This act, which was signed into the US law on December 31, 2011, not only authorized 662 Billion in funding “for the defense of the US and its interests abroad”, not only included Title X, Subtitle D on “Counter-Terrorism” which deal with the detention of persons the government suspects of involvement in terrorism, but also contains 8-page section 818 on the “detection and avoidance of counterfeit electronic parts” buried in its 565 pages.

This section states that the secretary of the department of defense shall issue or revise guidance … which … shall address requirements for training personnel, making sourcing decision, ensuring traceability of parts and shall revise … the Federal Acquisition Regulation to address the detection and avoidance of counterfeit electronic parts and The revised regulations … shall provide that … covered contractors who supply electronic parts or products that include electronic parts are responsible for detecting and avoiding the use or inclusion of counterfeit electronic parts or suspect counterfeit electronic parts in such products and for any rework or corrective action that may be required to remedy the use or inclusion of such parts.

In addition, the act states that the Secretary of Defense shall implement a program to enhance contractor detection and avoidance of counterfeit electronic parts and the program … shall require covered contractors that supply electronic parts or systems that contain electronic parts to establish policies and procedures to eliminate counterfeit electronic parts from the defense supply chain, which policies and procedures shall address

 

 

  • the training of personnel
  • the inspection and testing of electronic parts
  • processes to abolish counterfeit parts proliferation
  • mechanisms to enable traceability of parts
  • use of trusted suppliers
  • the reporting and quarantining of counterfeit electronic parts and suspect counterfeit electronic parts
  • methodologies to identify suspect counterfeit parts and to rapidly determine if a suspect counterfeit parts is, in fact, counterfeit
  • the design, operation, and maintenance of systems to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts, and
  • the flow down of counterfeit avoidance and detection requirements to subcontractors

 

 

 

And many other requirements, along with punishments for offenses which an include 2 and 5 Million dollar fines for individuals and 5 Million and 15 Million dollar fines for corporations for first offenses with second offenses garnering fines of up to 30 Million dollars.

This is of grave concern, because the legislation applies not just to counterfeit parts, but suspect counterfeit parts. An organization that supplies parts that are suspected to be counterfeit, whether proven counterfeit or not, will have to remedy the situation on its own dime (which could cost Millions to mint), and if it doesn’t do so satisfactorily, could be fined Millions of dollars on suspicion. And given that the reports of counterfeit parts have soared dramatically in the last two years, with 1,363 separate verified counterfeit-part incidents in 2011 as compared to 324 in 2009, this is a serious concern for anyone supplying products to the US Government. Given that many of these counterfeit parts are commercial electronic components that have wide use across every major technology end market, this is an especially serious concern for suppliers and manufacturers in electronics supply chains.

It would appear that this puts the need for supply chain security and risk management in your electronics supply chain at an all time high, now that even suspected fraud can bankrupt your company. The impact of this legislation could be much worst than 10+2. What do you think?