Category Archives: Open Source

Are Open-Source Data Interchange Standards for SaaS the Key to Radically Simple Supply Chains?

A couple of years ago, the Harvard Business Review ran an article on Radically Simple IT that noted that the fundamental problem with enterprise IT projects, which continue to be a headache for business leaders, is that these systems are constructed using a cathedral approach. Like the great cathedrals erected in Europe in the middle ages, enterprise IT projects are costly, take a great deal of time, and deliver value only when the project is completed. Furthermore, they yield systems that are inflexible and cement companies into functioning the way their businesses worked several years ago, when the project started.

What’s needed are systems that can be improved — rapidly and continuously — well after they’ve gone live. The systems should be built on a “path-based” approach that provides a path for the system to be developed over time. After all, it’s difficult and costly to map out all requirements before a project starts because people often cannot specify everything they’ll need beforehand.

Given the rapid escalation of supply chain systems, designs, regulation, and security requirements, it’s pretty much impossible to map out all of the requirements of a supply chain systems project before it starts. And even if it could be done, they’d just change tomorrow anyway! A new approach is definitely needed for developing and implementing systems that serve the supply chain, and I think we’re reaching the point where they will be born of necessity.

You see, even though there are now a number of big players out there that offer very broad solution suites, these suites are, still, for the most part restricted to sourcing and procurement, logistics and inventory management, or global trade and data exchange. While the footprints of each type of system is rapidly expanding within their respective domains, most systems are still not expanding beyond the comfort domains of the vendors providing the systems.

And to be honest, most vendors with expertise in sourcing and procurement, have little in logistics, inventory, or shop floor operations and most with expertise in logistics, inventory, or shop floor operations have little in global trade regulations and security requirements. The key is going to be the development of modular SaaS platforms that can interoperate using a common data language that is open and not owned by any single vendor. (Single vendor standards just build a single vendor eco-system, or a bigger Ariba Supply Network.) Just like the web was built on true open standards, next generation supply chains need to be as well. The question is, who will lead the effort and when will the major players buy in?

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If You Fall For “Free” Then You’ll Get Suckered!

Money’s tight, the recession is still in full swing, everyone’s telling you to get a good deal, you’re starting to fall for “freeconomics”, and that’s a BAD thing. Anderson’s Claim that $0.00 is the Future of Business is false. Just because something, like the cost of software, is trending towards 0, that doesn’t mean it will ever reach 0. Zero is a limiting value. If you understand mathematics, that means that it will only reach 0 when an infinite number of instances are in play. Furthermore, a product that is consistently dropping in price month after month on a well defined curve could be trending to any point between the current price and zero on that curve … there’s often no way to say for sure, since you can only say with probability that the model is right, not with certainty.

As a recent Knowledge @ Wharton article points out, products and services offered for free aren’t really free; they’re just paid for in another way … and in business, the way they’re paid for is often more expensive than just buying them outright, especially when we’re talking about software.

Free services? Chances are those required a multi-year commitment at a monthly price point that is high after 12 months, really high after 24 months, and exorbitantly high after 36 months. Chances are you were offered the deal because the vendor sensed the disruptive entry of a new competitor or price point that was going to significantly erode their margin, and in return for this “concession” they could lock in a 300,000 deal for 50,000 worth of services (for example) knowing that if you waited six more months, you could have acquired the same deal from a competitor for half that. Free? Try twice as much! Same goes for “free” training or “free” modules.

Marketers know that “FREE” spikes demand in a nonlinear fashion and that the number of people who will irrationally want something that is “FREE” is many times that will want it even if it only cost a penny. And since enterprise negotiations are always done with a person, they use that fact to their advantage to try and draw your attention away from an overpriced product or service to a “free” offering that is nowhere near as valuable as it sounds.

And even if it is free with no visible strings attached today, you can bet those strings will magically appear tomorrow. Consider those social networks you like so much. Spoke is selling your profile data. Facebook recently decided that they “owned” your information. Sure they reversed that decision, but they’re still retaining the right to use that information … and just because you delete something from the site, that doesn’t mean it gets deleted from the backups. What happens to that data? And you can bet the investors who just poured 35 Million into Twitter are going to want to see that money back. Those context-sensitive ads you were complaining about on MySpace and Facebook last year might seem benign in comparison!

There’s no free in business (to business). There never was. There never will be. So don’t get suckered, no matter how tempting it is in this economy. The best deal you can get is getting a product or service for what it’s worth, and not a penny more. Then you’ll have value, and you won’t be on the hook for an unreasonable expense down the road.

(And don’t try to tell me Open Source is free. It’s not. There are restrictions around use that could be very costly if you violate them — just ask an attorney specializing in the matter. And it’s unsupported, so there’s the support cost of installing it, patching it, and supporting your users on it which can’t be passed off even partially to the vendor. And if it has a bug you can’t work around, you have to write your own patch. Developer’s aren’t cheap. That’s not to say that it’s not the best deal, but that you don’t know until you do a TCO/TVM model over the intended lifespan of the product.)

Fill Your Gas Tank with Coupa e-Procurement

These days, prices at the pumps are on everyone’s mind – consumer and business owner alike. And whether you’re a 3PL or a call center, your business depends on gas. Just like a 3PL will go under if it can’t afford to keep the fuel tanks in its fleet full, so will your business if your employees can’t afford the gas they need to get to work and you can’t afford to help them offset their transportation costs. But how are you to do that if everything else is going up in cost as well?

These days, the only way many businesses can consistently keep their costs down is to use e-Procurement – which has been found to lower an average organization’s costs by 4.8% (according to a recent Aberdeen study). But if you’re a small business, or even a smaller mid-size business on a limited budget, chances are you just don’t have the cash for the solutions offered by the self-proclaimed market leaders. (Ariba and Ketera, if you’re wondering.) But all is not lost – because there’s Coupa, the first e-Procurement platform for the mass market that any organization can afford. (Not just the Fortune 3000!) A true on-demand SaaS platform that takes advantage of Amazon’s cloud computing to keep prices as low as they can go, prices start as low as $295/month or $3540/year! Chances are that’s less than you’re paying Microsoft annually for it’s bloated, unstable, operating system that you run your business on – and within the reach of even the smallest of operations!

There’s no better time than now to investigate Coupa, who just today rolled out their latest update. On their seventh release (since their initial launch in July 2006), the platform is now well rounded for buyers, suppliers, and administrators alike – and still easier to use than (Let’s put it this way, if Amazon truly was “one-click”, Coupa would be “no-click”.) Their search functionality now supports lists and gallery views and sorting by supplier, price, and relevance. Their form-based ordering now allows for “requisition copy” for instant re-ordering. You can now receive notification of approvals (which can be done by system administrators through e-mail) in real-time through your Instant Messenger client! And their checkout is still a marvel in simplicity – everything that can be pre-populated (such as shipping, billing, and receiving information) already is, and most of the time all you have to do is click “submit”! And, unlike many other systems out there (including the B2C leaders) if you have to order multiple items that require different billing information, whereas most systems would force you to create multiple orders, with Coupa, you can choose to specify billing at the line item level. And if only a few items require special billing information, you only have to specify the information for those items. Default billing information will be automatically populated for all of the other items.

It’s all based on Coupa‘s philosophy that no piece of data should need to be entered twice – ever – a philosophy that is even extended to suppliers. (A philosophy that the doctor wishes more software companies would wrap their head around and stop wasting time building flashy Cadillac UI’s to mask their problematic Model-T Ford engines.) With Coupa, your supplier can automatically generate an invoice off of your purchase order with a single click, and they only need to enter information (such as shipping, billing codes, etc.) not available on the purchase order. Considering that the vast majority of EIPP systems only allow for electronic submission of a supplier invoice, this is a huge benefit. Millions, if not Billions, of dollars are lost annually due to invoicing errors – which are easily prevented when the supplier does not have to re-key in data, as every keystroke increases the chance of an error. Furthermore, Coupa supports standard catalog formats and “punch out” (and has over 2300 suppliers already enabled in its system), so the chances of a pricing error are greatly reduced as the supplier does not have to create a separate price list for every client for off-contract goods and services (and only has to create one price-list for on-contract goods and services, and never has to re-key pricing on an invoice).

But most importantly, because it’s 100% hosted, Coupa does not require anything besides the browser already sitting on your employee’s desktop. Furthermore, since it supports the creation of buying policies during set up, it’s essentially 100% touch-less buying from an administrative point of view. You don’t need any IT resources. You don’t need your approvers double checking every order to see if every good or service is on contract and at the contracted price (because you can set the system up to only allow on-contract purchases at contract prices without authorizations), and you can eliminate manual review of all purchases that represent normal business conduct (by setting up regular purchases and rules for what purchases require approval and human intervention and what purchases don’t).

And you can take comfort in the fact that as good as Coupa is today, it’s only going to get better with time! Between July 2006 and May 2008, Coupa had 7 major releases and over 13 updates! That’s at least 3 releases and 6 updates a year! And when you consider that they were

  • the first open-source e-Procurement platform
  • the first e-Procurement platform built for the mass market
  • the first mass-market e-Procurement platform built as SaaS from the ground up
  • the first supply chain platform to use Amazon cloud computing
  • the first e-Procurement platform to offer a free 30-day trial
  • the first, and still only, e-Procurement platform to offer drag-n-drop shopping
  • the first, and still only, e-Procurement platform to include “how to buy” policy support
  • the first e-Procurement platform that allows employees to contribute feedback

and that

  • the rate at which spend through the platform doubles decreases every quarter (it’s now down to 25 days)
  • the supplier count is exploding month over month (over 2300 connected suppliers and climbing fast)
  • the average “go-live” time for a new client is decreasing by the quarter (average is now 17 days to get the system fully configured for “touchless” buying and the suppliers who represent 80% + of your business enabled)
  • the average update has 100’s of improvements … and over a dozen new features
  • it also comes with extensive reporting for finance, logistics support, and even basic inventory management capabilities … with new functions being added every major release

you just can’t go wrong giving it a try if you’re an average small or mid-size business. (Especially since it has a free 30-day trial!)

And chances are, with Coupa, you’ll save enough to keep that gas tank full, even when everyone else is running on empty.

Move over crowd-sourcing, here comes ITO 2.0!

The outsourcing journal recently had a good article on OpenWater Networks and how it partnered with Augmentum to build its Enterprise 2.0 Service Network – a “Social Network” for work – using “IT Outsourcing 2.0” or ITO 2.0. What is ITO 2.0? It’s the outsourcing of IT work to where the best brains are. Which is the way it should be.

I really liked some of the common sense quotes in the article from Timothy Chou. When he says that if you outsource to someone who is cheaper but not as smart as you, you have to spend a great deal of time managing them and that you (have to) look over everything down to the tiniest detail, he couldn’t be more accurate. It’s also true that this causes you to lose your economic advantage. However, it’s not true if you hire someone smarter than you (who has a PhD, for example) because you (can) let them flourish on their own. Just like when you hire an executive chef, you don’t have to tell him how to cook – you just have to tell him that you want a chicken dish that’s sweet and spicy and then let him work.

The advantages of this method, when compared to ITO 1.0 – which takes you to where the warm bodies are cheapest, are that partners are free to demonstrate their expertise, there is (essentially) no duplication of work, and innovation can flourish. As long as you make sure everyone speaks a common language from day one, the method can utilize the talents of all involved – especially if you augment the method with regular face-to-face communication. OpenWater personnel, in San Francisco (California, USA), make regular visits to Augmentum’s sites in Shanghai and Beijing (China) and Augmentum developers routinely visit the Openwater offices in California. This encourages the move away from e-mail, where context is loss, to the “service networks” that OpenWater is developing. This not only helps OpenWater and Augmentum build innovative software that would have cost them 10 times more money and 10 times more time if they had done it under ITO 1.0, but insures that the products are actually consumable – as, to borrow a phrase, they’re eating the dog food they make.

So how does this differ from crowd-sourcing? In crowd-sourcing, everyday people using their spare cycles to create content, solve problems, [and] even do corporate R & D and the company takes advantage of the collective to augment their internal capabilities. In ITO 2.0, the company is going out to the collective and specifically seeking out the best and the brightest. It then uses the network to share information and form relationships with these individuals to advance the common goals. In essence, the major difference is crowd-sourcing is ad-hoc and more in tune with open source while ITO 2.0 is more organized and more in tune with standard corporate methodologies. And the major similarity is that both revolve around the same underlying principles of using the network and the best and brightest to get the work done (wherever they are) – and that’s a good thing.

Wired Crowdsourcing

Last week, Wired was on a Crowdsourcing kick that was pretty hard to miss if you were even a casual reader. Crowdsourcing, a topic I first tackled in Purchasing Innovation VI, then in Cambrian House: Crowdsourced Software, and more recently Democratizing Innovation Vs. Crowdsourcing is the process of delegating various tasks for which you do not have the manpower or expertise from internal production to external entities or affiliations of networked persons with the expertise, access to, or raw capabilities that you require.

Wired’s crowdsourcing kick consisted of a series of articles that included Kristin Gorski’s Creative Crowdwriting: The Open Book, J. Jack Unrau’s The Experts at the Periphery, Derek Powazek’s Exploring the Dark Side of Crowdsourcing, Patrick Crawford’s News the Crowed Can Use, Sarah Cove’s What Does Crowdsourcing Really Mean?, Randy Burge’s Using Crowd Power for R&D, and Johannes Kuhn’s Crowdsourcing Soccer in the U.K..

In What Does Crowdsourcing Really Mean?, Sarah Cove interviews Douglas Rushkoff, the New York based writer, columnist, and lecturer on technology, media, and popular culture, on crowdsourcing and related subjects.

Douglas Rushkoff, who is rubbed the wrong way by the term crowdsourcing, defines crowdsourcing as the corporatist framing of a cultural phenomenon. Crowdsourcing is a word. A company can look at [crowdsourcing] as either a threat – to their copyrights and intellectual property or as some unwanted form of competition – or, if they see it positively, as almost this new affinity group population to be exploited as a resource. When you call an open source, bottom-up effort crowdsourcing, clearly you are understanding it in a different way than open source communities might understand it.

In Exploring the Dark Side of Crowdsourcing, Derek Powazek interviews Ragnar Danneskjold of Subvert & Profit. Subvert and Profit is a web site that makes a business out of gaming the social media site Digg for paying advertisers – it serves the nice market for ‘darker’ crowdsourced actions.

In the article, Ragnar Danneskjold (an alias, of course) notes that the business is made possible by mixing the two quickly rising paradigms of crowdsourcing and undercover marketing and taking advantage of the fact that most Digg users understand that their community is a wild anarchy.

In The Experts at the Periphery, J Jack Unrau interviews Karim Lakhani of Harvard Business School’s Technology and Operations Management Unit.

In the article, Karim Lakhani notes that crowdsourcing is a great mechanism for knowledge transfer, or that, in certain cases, crowdsourcing helps connect people who have ideas and knowledge about certain ways to solve a problem to those people who need a problem solved but don’t have the knowledge and ideas. It allows us to enable experts on the periphery at the intersections of disciplines to come together and innovate in more of a systematic manner.

However, according to Karim, we on’t know what the limits are yet, i.e. under what circumstances do they work, under what circumstances will they not work, when is it more efficient and effective to do a distributed model versus a closed or centralized model. Maybe that’s why he believes that we do not want to think of crowdsourcing as a model by which someone can, or many people, can earn a living.

In News the Crowed Can Use, Patrick Crawford asks if social news sites can survive the very openness that makes them thrive.

According to the author, devotees of “crowdsourced” media sites love to equate social editing with democracy, and they’ve got at least one part of the comparison right: social editing is every bit as raucous, messy and enthralling as the electoral process. Social editing web sites allow users to source, debate and prioritize content without intervention from an editorial staff. And, more importantly, it appears, at least in some form, that they are hear to stay.

In Using Crowd Power for R&D, Rndy Burge interviews Alpheus Bingham, co-founder of Innocentive, about crowdsourced R&D.

Alpheus notes that crowdsourcing can often be used to address the aspects of your business that feel most broken, to help deal with risks. For example, if you had a core research group that consisted of only five scientists trying to completely cover the four primary disciplines you needed to adequately manage internal research, you might find that your researches are stretched, especially on key aspects of diversity. That’s where crowdsourcing can help you.

In other words, although it would appear that the definition of crowdsourcing is not yet completely understood or agreed upon, it seems that the experts agree that crowdsourcing – which can be positively used to tackle problems that can not be solved in house, or to socially select and edit news-worthy stories, or to find experts at the periphery – is, in some way, here to stay and those that find ways to take advantage of it could be in a better position to survive in this strange new distributed economy than those who do not.