Category Archives: Process Transformation

Cutting Edge Tech Is NOT Defined by the C-Suite, …

… Financiers, or the Marketers pushing hype (from the A.S.S.H.O.L.E.) at you 24/7.

Nor is it defined by the algorithms it uses, the software stacks it runs on, or the hardware stacks it makes use of.

Cutting edge tech is ANY and ALL tech that

  • solves one or more significant problems that not being solved by your tech today and
  • does it by automating at least 90% of the tactical data processes that can be automated

It can be based on the latest AI algorithm or twenty year old RPA. It doesn’t matter if it shines a light using a LAMP stack, if it is an edgy MEAN stack, an Austin Powers inspired Grails stack, or even a .NET stack (though the doctor personally shuddered typing those last three caps out). The entire point of enterprise software is to solve your problems.

The point of software is NOT to provide

  • an excuse for a C-Suite to cut his tech-bro buddy a fat check,
  • a new Tulip Market for greedy financiers who think they can score big and get out before the crash, or
  • marketers a platform to pump out pompous poop on a daily basis.

As Mr. Koray Köse penned in a recent piece on LinkedIn on how you are in need of cutting edge technology, the last thing you want to do is take your direction from the VC-pumped C-Levels who do nothing but repeat the marketing garbage they are fed, sometimes changing the baseline of the garbage mid-sentence!

You have to remember:

  • All the VCs and most of the PEs want to create the next unicorn and get rich quick overnight. So most of these VCs and PE firms are pumping huge amounts into companies with little to no product (to support their grand vision that even SAP and Oracle haven’t managed to achieve after 5 decades and trillions of dollars) and directing the majority of that to be spent on buzz-creating sales and marketing (and not real product development). After all, you don’t actually have to create anything beyond buzz to get rich — market crashes throughout history have proven that since Tulip Mania. (What was created there of value? Nothing. But hype made a few men rich and many men poor.)
  • Even though today’s LLMs are dumber than a doorknob (and demonstrate more than any previous generation of the tech that AI should stand for Artificial Idiocy), with performance degrading every iteration (because there is no more data to steal, and the AI engines are now training each other on regurgitated digital garbage), marketers are still taking storytelling to a whole new level (and we mean storytelling because ALL the claims are fake) with a spin that even the Spin Doctors of old would be envious of. (Little Miss Can’t Be Wrong now, right? They want to Make You A Believer so you hand over all your Money when you should Exit … Stage Left and Run To The Hills!)
  • This copy is being pushed onto the C-Suites of all of the other investments in their portfolio with assurances that it’s all true, and being similarly echoed to all of the CXOs that attend the conferences they speak at, the golf outings they are invited to, and the exclusive social gatherings they arrange.

Not one of these groups knows what you need, and two of these groups have absolutely no interest in giving it to you — their interest is all about getting your money, building the hype, inflating the value, and, hopefully, cashing out big before the next hype cycle and/or the inevitable market crash that’s coming.

The technology you need is the technology that is:

  • built with real world problems in mind,
  • tested on real world problems in real companies and proven to deliver, and
  • scalable and extendable to your operations and needs.

This type of tech is built over years and doesn’t use unreliable probabilistic AI at the core. (It runs on traditional, configurable, RPA that is 100% reliable and auditable. Now, this tech might employe AI to help with the configuration by analyzing your systems and processes and self-assessed gap analysis by recommending configurations for you to approve, and that’s okay, because it’s not randomly making decisions, its recommending options and letting you confirm or deny. It might also use SLMs for specific problems where they work a high percentage of the time to jump-start searches, documents, and processes for you, and as long as you retain full control and can accept, modify, or reject, that’s okay too. But everything is built on a solid core, with 100% dependable automation for all key data intake, processing, and pushes that is done without any manual intervention, appropriately calibrated to your business rules, processes, and goals.)

It’s also built slow, rolled out to a small group of beta customers or development partners, and hardened in the field before being rolled out en masse.

And, most importantly, it’s built by a company that is boot-strapped or frugally running on a shoe-string budget from minority SEED investors to get that first version up-and-running successfully in its first 10 customers before that company goes for any VC funding to scale up. A company that has the time to get it right before being under constant pressure to make demanding, if not impossible, sales targets.

Moreover, to have any chance of getting this software, you need to know three things:

  1. how to identify what you need that will form the heart and soul of the RFX,
  2. how to write a good technology RFX and analyze the responses, and
  3. how to identify the right companies to invite to the RFX.

What You Need

For Supply Chain, as Mr. Koray Köse points out, if you need help identifying your true needs and cutting through the noise, he can help you out with that with the eyes of a hawk, the skill of a surgeon, and the wit of a Williams (a Robin Williams). For Procurement, Joël Collin-Demers can slice through your organizational landscape like a hot knife through butter and let you know exactly what you need in priority order.

The Technology RFP

Every consultancy and their mascot claims they can help you here, but you need to be very, very careful.

  • many of their consultants are not technology experts and tend to prioritize features over functions, as that’s all they know
  • many of these firms have partnerships with the (mega) suite players, and you don’t maintain sycophant, sorry, Gold/Platinum/Diamond, status unless you direct a LOT of business their way each year, so they tend to try to fit everyone into one of these buckets
  • many follow the old consulting model of “give the client exactly what he thinks he wants” and don’t take the time to figure out what you actually need and educate you, leading to an RFP that is no better than what you would have written yourself, as they spend half their time questioning you, and the other half writing down your responses

For true success, you need someone who is simultaneously:

  • an expert in the domain,
  • an expert in technology, and
  • not incentivized to help any vendor whatsoever and, preferably
  • an expert in project assurance (but not always necessary)

If you need help writing that ProcureTech / Direct Sourcing/Supply Chain RFP, feel free to reach out. This is my expertise. And for some tips, feel free to start with our recent series on How Do You Write A Good RFP?

Vendor Selection

Very few analysts and consultants know more than a handful of vendors. The big firms focus on the big vendors who cut big cheques, which are the 20-ish same vendors you see in their maps year after year after year. They don’t know about the other 700. Only a few of us independent analysts go far and wide and actually know what is out there and how it can help you.

For ProcureTech, SI should be your first stop. It’s the site that gave you the mega map to open your eyes as to just how wide the playing field is. Moreover, if you need something really niche where the doctor doesn’t have the expertise, he’ll find the right expert to refer you to.

For SupplyChain, Mr. Köse knows a lot of the players. But don’t overlook Bob Ferrari of The Ferrari Group. As one of the original supply chain analysts, he knows all the players and what their platforms can and can’t do inside and out.

And if you reach out to the right experts and get the right help, maybe you can get true cutting edge tech that actually helps you!

The Sourcing Innovation Source-to-Pay+ Mega Map!

Now slightly less useless than every other logo map that clogs your feeds!

1. Every vendor verified to still be operating as of 4 days ago!
Compare that to the maps that often have vendors / solutions that haven’t been in business / operating as a standalone entity in months on the day of release! (Or “best-of” lists that sometimes have vendors that haven’t existed in 4 years! the doctor has seen both — this year!)

2. Every vendor logo is clickable!
the doctor doesn’t know about you, but he finds it incredibly useless when all you get is a strange symbol with no explanation or a font so small that you would need an electron microscope to read it. So, to fix that, every logo is clickable so you can go to the site and at least figure out who the vendor is.

3. Every vendor is mapped to the closest standard category/categories!
Furthermore, every category has the standard definitions used by Sourcing Innovation and Spend Matters!
the doctor can’t make sense of random categories like “specialists” or “collaborative” or “innovative“, despises when maps follow this new age analyst/consultancy award trend and give you labels you just can’t use, and gets red in the face when two very distinct categories (like e-Sourcing and Marketplaces or Expenses and AP are merged into one). Now, the doctor will also readily admit that this means that not all vendors in a category are necessarily comparable on an apples-to-apples basis, but that was never the case anyway as most solutions in a category break down into subcategories and, for example, in Supplier Management (SXM) alone, you have a CORNED QUIP mash of solutions that could be focused on just a small subset of the (at least) ten different (primary) capabilities. (See the link on the sidebar that takes you to a post that indexes 90+ Supplier Management vendors across 10 key capabilities.)

Secure Download the PDF!  (or, use HTTP) [HTML]
(5.3M; Note that the Free Adobe Reader might choke on it; Preview on Mac or a Pro PDF application on Windows will work just fine)

You Need a Plan to Mitigate Supply Chain Risks. But You Also Need a Platform.

A recent article over on Supply & Demand Chain Executive on Navigating a Supply Chain Management Toolkit noted that with a plan in place, organizations can quickly respond to any changes and help mitigate any supply chain risks.

Which is true, but how much of the risk they can mitigate is the question.

The article, which is very good and definitely worth reading (so check out the link), noted that problems arose as a result of COVID and disruptions since because many organizations use just-in-time inventory management (which we’ve already noted should have ended by now along with seasonality). The article also noted that the problems were often exacerbated by the fact that order processes were often not documented effectively and, in general, most organizations don’t spend the time and resources to really manage their supply chain. All of this is correct, as is the observation that these challenges can be alleviated with wholly embracing the tried-and-true methods for effective supply chain management because effective processes, measurements and accountability are … key to a supply chain that works for an organization.

But, on their own, not the key. Today, you also need a platform that enables the organization to:

  • quickly detect a risk event has occurred
  • quickly analyze the impact
  • quickly initiate any pre-defined mitigation plan
  • quickly implement new decisions and processes where the mitigation plan isn’t sufficient and doesn’t exist
  • monitor the impact of the risk event and the response in near real time

Otherwise, your process could be too slow, your measurements inaccessible and/or unrecorded, and your accountability (under audit) non existent.

For example, the article indicates you should start by getting a better grip on inventory management (which is correct, no product, no business for most companies), and that involves a self-assessment, forecast accuracy review, and inventory segmentation. All correct. But that doesn’t help you when all of a sudden there’s a fire in the factory, a strike at the port, or a strait/border closing. What do you do then?

It also tells you that you should focus on better supplier relations, which is also extremely important, and focus on vetting suppliers before you onboard them and then measuring them and computing the total cost of ownership of keeping them, which is also very important as suppliers should improve over time and costs should not inch up faster than inflation. It also mentions the importance of proper strategic sourcing (matrices) to get the right products from the right suppliers. Another definite. But fails to tell you what you do when all of a sudden a key supplier can’t deliver or becomes unavailable.

The answer here is you use all of your good relationships and data to immediately identify the next best supplier. If you were splitting award, you try to shift to the other supplier (if they can handle the volume — if you were doing an 80/20 split and the 80% supplier suddenly became unavailable indefinitely, the 20% might not be able to support you, or at least not for very long, and you will have to add a new supplier to the mix. If you were doing proper sourcing, and proper supplier vetting before including them in an event, then you already have potential suppliers — the runners up from your last event. A good platform will let you immediately identify them and immediately start another sourcing event to onboard a new supplier as fast as possible.

If you have a good logistics (sourcing) platform, and your primary carrier / route becomes unavailable, you may be able to identify another carrier / route that will get you the products on time, or at least be able to accelerate an order from a secondary source of supply while you wait for the first source through a lengthier route.

The point is, while you need great processes, measurements (to indicate if something is taking too long, such as an order acknowledgement or a delivery, which can be a sign of a potential risk event materializing), and accountability (to show you made efforts to detect and mitigate risks in a reasonable time frame), you can’t measure, execute processes, or provide unquestionable audit trails of accountability without a proper platform. Never forget that. (And for help, you can see our Source-to-Pay series which helps you to identify where to start with your acquisitions and what vendors you might need to look at.)

And again, remember to read the article on Navigating a Supply Chain Management Toolkit as it will help you understand the basic processes you need to put in place.

A CPO Leading a Spend Management Strategy is a Key to Organizational Success

Not that long ago, the doctor gave you THE SIGN that you need a CPO which, directly put, was that your organizational spend was over 10 Million a year. No ifs, ands, or buts about it! Not long after, he found this article over on CXOtoday.com which pointed out that empowering business success was The Art of Mastering Spend Management. This article stated that companies should consider implementing a spend management strategy, regardless of their size and it made him happy (even though the article looks like it was written by a junior copy-editor* who just cut and paste standard spend management summary sentences from generic spend management publications as it was not very deep or specific) because CXOs need to hear this at a high level over and over and over again until they get it. (Note that the doctor doesn’t get happy often. Most articles just make him angry. Sometimes very angry, especially when the conscientious invoke their right to dare to be stupid and embrace artificial idiocy, but that’s a rant for another day.)

The article starts off by clearly stating that a spend management strategy plays a vital role in today’s economic reality as it enables companies to control costs, boost financial efficiency, and make informed decisions. It ensures resource optimization, agility, and long-term stability, enhancing competitiveness and adaptability in a rapidly changing business landscape.

This is most certainly true. And all one has to do to see that it is true, and it would have been so much better if the article said this, is remember the first formula they teach you in business school:
Profit = Revenue – Expense

Since Spend Management allows you to minimize expenses, this helps you maximize profit. And when you consider that
Margin = Sale Price – COGS      and that
Margin % = (Sale Price – COGS) / Sale Price      and that
Margin % for most industries <= 10%

This says that every $1 saved in expense generates at least as much profit as every $10 increase in sales. As a result, spend management is at least ten times as effective as sales or marketing and key to get a grip on early, even before you can afford the full time CPO. The CFO and COO should develop best practices for any decisions that result in spending, monitor the decisions, ensure corrections are made (and employees [re-]trained) when mistakes are made, and baselines generated for all recurring costs. Even though they might not realize the same level of success as an experienced and dedicated CPO, the baselines they generate and the knowledge they capture will be key when the CPO starts as the knowledge will allow them to dive in quickly and find near-term and mid-term opportunities for improvement (and cost reduction) and the benchmarks will allow them to not only prove it, but ensure that all bids received are competitive.

The only thing we want to note is that the important aspects of spend management, especially for smaller organizations, are:

  • strategy,
  • process (that implements the strategy), and
  • governance (that ensures the process is followed and the strategy implemented)

Technology is not critical (or even necessary), and only technology that supports the process (and collects the appropriate data) should be implemented.

This is important to note because this article is sponsored by a particular vendor in an effort to promote a particular product (which is only good for T&E spend, not all organizational spend) and you don’t necessarily need that technology (or any other instance of that technology) to have a spend management strategy and do proper spend management, especially if you are a smaller organization. (However, larger organizations do need good T&E spend management, and spend analysis, because flowers should not be $5,000 unless it’s a greenhouse.)

* but what should one expect considering it was sponsored by SAP to promote SAP Concur (and routed through their PR Agency)?