Category Archives: rants

Futurists are Still Stuck in the Past! Leave them there!

And the reasons are the same as they have always been.  (And the doctor just wishes they’d stop speaking at the events he has to go to.)

  1. They Have No Knowledge as they come from different backgrounds which offer them no education or experience in Supply Management.
    Just because you can get high, have psychedelic visions, white them down, and spin a good yarn doesn’t mean you can be a futurist. A poet, sure, but not a futurist …
  2. They Have No Vision beyond what the rear view mirror (or the hydrocarbon gas from the bituminous limestone) offers them.
    When Meatloaf said “it was long ago and far away and it was so much better than it is today“, he was referring to newly discovered young love, not business processes identified 30 years ago …
  3. They See Too Many Organizations Stuck in the Past and a few organizations (in the Hackett top 8%) ahead of the pack and they think they can peddle these best practices as future vision.
    This is not 1914 (which was 12 years before the first transatlantic telephone call) where good ideas take years to spread (and the first person to bring a new idea or technology from a different continent can make millions on someone else’s work) and a career can be built on one single improvement — this is 2019 where it only takes a few seconds for a story to be spread around the world. But I guess if you can’t look beyond the rear-view mirror …

So, why are so many organizations still stuck in the past (and fueling the flame that powers these fantasy futurists spinning the same yarns they spun five years ago and driving the doctor mad)? There’s a few reasons, and they include:

  • Lack of Education
    Many Supply Managers were simply thrust into the role, with no training or background for the role. And despite the fact that they have some competence or experience in other areas, they are so ill-equipped and ill-prepared for the role that they might as well have been dropped in The Lost World.
  • Lack of Resources
    Most Supply Managers are overworked (and underpaid, but who isn’t these days) and resource-constrained, with no time for training and no budget even if they had the time (or would sacrifice their few remaining free hours to get better and more efficient so that maybe someday they can take a whole weekend off).
  • Lack of Clarity
    With no formal education, no training, and no resources to make sense of the barrage of BS being thrown at them by futurists and analysts alike, how can they differentiate between current and past processes and technologies and what they need to embark on a path that will ready them for what comes next?

And the third reason is the most crucial. Until they get some clarity, Supply Managers are going to continue to be taken in by modern con-men (who include 2nd rate analysts, consultants, and salesmen of outdated technology) selling them silicon snake oil when they just need modern sourcing and procurement tools that fit their workflow and daily needs.

That’s why SI is here – and why the doctor co-invented (and single-handedly developed the sourcing, supplier management, and analytics) Solution Maps which grade a platform on functional capability only — not subjective vision, market size, arbitrary inclusion parameters, and other factors that are easily embellished or hidden behind a smoke screen.

So if you want a vendor who can help you, chose one based on solid capability.  And if you want an analyst that can help you, choose one that bases recommendations on real data.  Then you will make progress.

7 Sourcing Secrets Everyone Should Know By Now … Part II

… but don’t, because if they did, Source-to-Pay would be ubiquitous across the space.

As we noted yesterday, if you’re a long-time reader of SI, you can skip this post because you already know it all. But if you are a new reader, and haven’t scoured the archives yet, this post is for you — to help get you up to speed fast on what you may not yet have discovered in the extensive archives you can find right here on SI.

Yesterday we covered the first four “secrets” that shouldn’t be secrets anymore. Today we cover the last three.


5. Contract Management is just a new name for document management with integrated monitoring, it’s not a replacement for contract managers — and definitely NOT a replacement for lawyers!

Lately I’ve noticed how contract management is coming into vogue … again. And while that’s a good thing, it’s important to understand what contract management is and isn’t because it seems that some vendors, and some publications, are promoting the new offerings, with automatic clause identification and suggestion, as the latest and greatest tools to solve all your contract woes when the reality is that these tools are nothing more than document management tools with monitors, alerts, and contract templates that can swap out versions of a clause based on industry, geography, spend level, and identified risk.

We won’t deny the importance of having a good contract management tool that can monitor expiration dates, contract pricing, and, most importantly, invoiced pricing against contracted rates, but these tools, even if they contain sophisticated contract creation and clause identification capabilities, can’t replace a contract expert, a master negotiator, a trained legal professional, or a good spend analysis tool that can uncover devious work-arounds by less-than-reputable vendors looking for a way to make back that buck they gave up in negotiations. (For example, we still hear from consultants to this day who tell us how, ten years later, they find that some office supply management vendors still regularly changed SKUs to bill you twice as much for that pen as it’s really worth — as most of their customers still haven’t caught on.)


6. e-Procurement is tactical, and not a substitute for e-Sourcing

There’s still a lot of confusion in the marketplace between what is e-Procurement (and how it relates to I2P, P2P, EIPP, and the other new acronyms old players are coining to differentiate their new, streamlined, offering) and what is e-Sourcing, even though it should be fairly clear cut (as the doctor outlined over a decade ago in this post on why it’s sourcing and procurement). A few of the e-Procurement vendors are even claiming that you don’t need sourcing at all if you use the wisdom of crowds (which is not the case because there’s a big difference between a great deal on a commodity office supply and a great deal on raw cocoa or custom circuit boards, which are not commodities), market intelligence, and automation. Sourcing is the strategic part of the purchasing cycle, procurement is the tactical. You need both, and one is not a substitute for the other.


7. It’s not what you know, it’s what you can learn!

Plain and simple,

  • it doesn’t matter if you’ve been doing it that way for 20 years if it’s not optimal,
  • shift happens, and
  • whatever happens, the world of tomorrow will not be the world of today.

You have to keep learning. That’s why this blog is here to help you.

7 Sourcing Secrets Everyone Should Know By Now … Part I

… but don’t, because if they did, Source-to-Pay would be ubiquitous across the space.

If you’re a long-time reader of SI, you can skip these posts because you already know it all. But if you are a new reader, and haven’t scoured the archives yet, these posts are for you.

Even though most of the time the doctor gets to interact with people who’ve been there, done that, probably failed because they were using an older, insufficient, product, sometimes someone comes along who’s never really had real tech in one or more areas and the obvious is new. And since new readers still stumble on SI, it’s important to get them up to speed … fast. So, here goes — because you really really really should know the following “secrets” that, after more than a decade, should not be secrets anymore.


1. e-RFX is electronic support for the full information and quote gathering cycle, not just bid collection

If all your e-RFX does is allow you to collect bids, it’s not e-RFX. It’s e-RFQ, and a poor e-RFQ at that. It should allow you to create questionnaires, surveys, and entire RFX packages with closed and open-ended questions, allow you to compare responses side by side, and allow you to collect not only all of the pricing, but all of the discounts, rebates, and promotions the supplier offers. It should help you manage the process, guide you through it, engage with your entire team, and support data import and export in open formats so that you can also use analysis, optimization, and contract management tools.


2. A Reverse Auction is simply an online auction event, it’s not a substitute for proper sourcing project management

We follow the space closely and not a month goes by where we don’t see an article on how Company XYZ is now refusing to participate in online auctions or company ABC no longer wants to use them because they got poor results or inflated costs after the award. When you dig down, this is because the supplier had a horrible experience or the buyer didn’t properly qualify the supplier or the product/service requirements. When you dig deeper still, you find out it is typically either because Company ABC simply threw an auction tool at the supplier and told they had to bid through the tool or lose all their business or Company ABC threw up an auction tool and said they’d award to the lowest bidder and either bought a product that wasn’t qualified to meet their needs or ended up ignoring the auction result and going with a different supplier, usually the incumbent, after the auction closed.

We find this appalling, because e-Auctions, like e-RFX, are not only a great time saver, but a great way to bring parties together from around the globe and allow them to participate in an e-Sourcing event that, when run right, is more transparent, educational, and profitable for all parties concerned than traditional methods of sourcing where you get bids by phone and fax until you find three bids you like and then meet in a room to “negotiate” until a deal is struck with a winner – especially for a commodity, low-dollar, and/or non-strategic category. (And we use the term “negotiate” loosely because old style purchasing methods usually boil down to the party with the most leverage beating up the party with the least leverage.) But this is only true if the event is run right. This takes proper project planning and management. Tools can facilitate the process, but they can’t replace it.


3. (Strategic Sourcing) Decision Optimization is for everyone, not just for math geeks!

We’ll admit this is the doctor‘s personal bandwagon, but having seen savings of over 40% and ROIs of over 400 on a number of projects, and average savings in the 10% to 20% range and average ROIs of 5X to 10X or more, the doctor knows he has a good reason for riding it. Despite the fact that true self-service decision optimization for sourcing has now been around for almost two decades, it’s still the “black sheep” that almost no one uses — and it’s a real shame because now is the time you need it most. Furthermore, the new tools coming out of the leading providers are not only a lot more usable than the first generation tools, but they are also more usable then second generation tools, and can be easily used not only by an college graduate who can build a cost model and specify some business constraints but by any high-school drop-out that can follow a workflow (as they allow the college graduates to build category and event specific templates that anyone can easily follow). In other words, if you have the pre-requisites for strategic sourcing, you can use these tools to save time, to save money, and make better, more informed, decisions.


4. Spend Analysis is flexible Data Analysis, not canned reports on a data warehouse populated via automated classification

Real spend analysis is the ability to dive into your data and find out not just where your true spend is higher than it should be, but why. This requires you to have the ability to slice, dice, and cube your data on any dimension you can think of, because you’re never going to know where the losses are until you find them. (After all, if you knew where your holes were, wouldn’t you have plugged them already?) Canned reports on a static data warehouse can only tell you how fixes you’ve already implemented are working, not where the holes are. Furthermore, “automated classification” (which is not the same as automatic classification rule suggestion) just doesn’t work. Any good consultant worth his salt can load your data into a real data analysis product and find two dozen mistakes in twelve minutes. You need the ability to define and redefine mapping rules on the fly as all automated classification can do is fix previously identified mistakes. It can’t identify new ones. Software isn’t intelligent (despite all the voodoo claims out there). People are (at least until we blindly trust the machine).

Come back tomorrow for Part II!

Ten Years Have Passed and Still Some Companies Don’t Want a Check-Up by the doctor!

Ten years ago the doctor penned a post here on SI which noted that one of the regular features here on Sourcing Innovation (and now over on Spend Matters too for those that opt for the full physical) are vendor solution reviews, which occur only after the doctor has seen the product. This vendor coverage provides solution providers with a great opportunity to reach a broad, global, audience and are generally quite well received. But there are still vendors, some who have been around since 2009 or longer, that still don’t get their checkup, even when reminded by the doctor or the administrative team at Spend Matters.

Occasionally the doctor tries to figure out the most likely reasons why, but at the end of the day the five reasons put forth in 2009 still bubble to top:

  1. The product doesn’t exist.
  2. The product doesn’t work.
  3. The product works completely differently than the marketing spin around it.
  4. A discussion of the product’s capabilities “gives too much away” to competitors.
  5. the doctor is distrusted for some reason.

And the doctor‘s responses are the same as they were a decade ago.

As far as 3,4,5 are concerned, no legitimate vendor in our space is selling snake oil or moonshine. All the products work, and accomplish some significant fraction of their mission. So that can’t be it.

With regard to 2, companies should understand that their competitors know them well, perhaps better than they know themselves. Nothing that the doctor might say is going to give away any secrets.

Finally, with regard to 1, the doctor has never slammed a company with a product that accomplished its designated task reasonably well, especially when the company is open about its strengths and weaknesses. The Sourcing Innovation and Spend Matters Pro vendor post archives prove this, far better than any claim we could make here.

Moreover, if a prospective target can’t find any external reviews on you, how are they going to find you? And even if you find them, why should they trust such a closed, secretive, organization? Think about that.

All the doctor can say is that if there’s nothing [relatively recent – last 2 or 3 years at most] out there about you, then you should reach out and get on a review calendar today (especially since the few senior analysts who are left are now booking months in advance due to increased demand now that our space has produced a few unicorns).

You Wouldn’t Let Your Banker Pick Out Your Job …

So why do you let a systems implementor / integrator choose your Sourcing / Procurement system???

And while you might initially believe that this simile is far-fetched, the reality is that it’s very close to home. While a banker is the right partner to help you manage your money, he or she is probably the worst person to figure out the right job for you given that he or she doesn’t really know you. Similarly, while you’re preferred implementation / integration partner is probably the best company out there to implement the platform that will control the majority of your organizational spending, chances are that partner has no knowledge of the true breadth of your Procurement processes work and no clue what the right kind of system for the organization would be. And as a result, just like a banker might steer you towards a job you’d fail miserably at (and lose, leaving you without a pay cheque), an implementor / integrator might steer you towards a system that will not work at all for your organization, and cost your organization millions in the process.

Furthermore, this is also true for any consultancy that has partnerships with a select group of source-to-pay vendors. In fact, taking advice from any of the consultancies that have partnerships with a select group of source-to-pay vendors is MORE risky than an implementation partner without any relationships. Why? Because these consultancies, by way of their partnerships, tend to ONLY recommend their partners because:

  1. that’s all they tend to implement, and know, and
  2. their partnerships provide them with referral fees, guaranteed services, and / or higher margins (and the senior partners at these consultancies mandate that these options are always recommended)

So, if your preferred consulting partner only has relationships with platforms that are primarily for indirect S2P, but your organization is primarily direct S2P, your organization’s chances of getting a good recommendation are zero. That’s right. Zero! (Even worse than a generic systems implementor with no knowledge of the space doing a Google search, coming up with five vendors, and making a random recommendation — at least then you have a 20% chance of getting a good recommendation!)

In other words, if you want a good recommendation, you have to ask a neutral third party, like an analyst firm, a niche consultancy which does not do implementations (and has no partnerships), or a consultancy that uses third party evaluations to provide you with the best recommendations it can, leaving aside any partnerships the consultancy might have. (For example, such a consultancy could license Spend Matters Customer Maps, which are Solution Maps with custom personas defined specific to the client needs, to help your organization identify the best fits and then help your organization with the RFIs to identify the best-of-the-best).

Otherwise, the doctor can pretty much guarantee you’re always going to be recommended vendors A and B (and maybe C) in North America and vendors X and Y (and maybe Z) in Europe … even though there are 8 S2P platforms and dozens of best-of-breed solution providers that might be right for you (as Solution Map ranks over 50 and plans to add many more over time). [Not that A, B, C, X, Y, and Z aren’t good in the right situation — but in S2P, one-size does not fit all — especially when you consider direct vs indirect, product vs service, head vs tail spend, strategic process requirements, optimization and analytics needs, automation, etc. — and the fact that some providers never get recommended even though for certain industries they are usually the best choice.]

So again, unless you want a quick way to triple your losses, don’t let an implementor choose your S2P platform. You choose it, and as per a recent piece of the doctor‘s over on Spend Matters, you take what you want!