Category Archives: rants

STOP PAYING PROCURETECH/FINTECH ADVISORIES A DOLLAR JUST TO LOSE THREE DOLLARS!

Last week, in our post where we asked if ProcureTech Generated Billions While Practitioners Lost Trillions, we noted three things:

  1. Approximately 1.8 Trillion Dollars (more than the annual GDP of 92% of the countries on Earth) will be wasted this year on Tech-Related Spending
  2. Approximately 600 Billion Dollars will be spent with the big consultancies and analyst firms who do Financial (Technology) and Procurement (Technology) consulting and advisory
  3. That’s three dollars lost for every dollar spent on big consultancy and advisory firms

So how do you stem the bleeding? Especially if you can’t STOP spending mooney on tech advisory because you can’t stop spending money on technology because you can’t survive in today’s digital world without it?

You STOP forking over (high) six and seven figures without a guaranteed return! In other words, unless they save you some coin, then your money they will not purloin!

More specifically, if they are promising outcomes, then (the majority of) their compensation should be 100% dependent on outcomes. If you don’t make bank, then their compensation will tank.

To be even more precise, don’t buy:

  1. any technology platforms where the majority of compensation is tied to successful sourcing events, transactions, etc.
  2. any GPO services unless it’s 100% outcome oriented
  3. any functional outsourcing unless the majority of compensation is tied to ROI

Now, the technology providers and consultancies will push back, steadfastly claiming that their technology and services are worth way more than they are charging, but here’s how you counter:

  1. you will pay a base annual fee for the platform that will cover 150% of their base hosting costs, so they won’t lose, and then a percentage of transactions, identified savings through sourcing events, contract value, etc. where the percentage is calculated such that if you save 100% of their promised savings, they will make 50% more than what you would pay on a fixed cost after negotiation — if they are so confident in their claims, this should be a no-brainer
  2. you will pay a fixed amount on each transaction, calculated based upon the expected savings before you sign the contract, and if they can deliver the savings, you will definitely be using them regularly — and, as with the Tech Provider, you will calculate this so that they win bigger than if you pay them a fixed cost IF they generate a return for you
  3. you will pay a fixed rate per hour that is enough to cover the assigned personnel cost (their salary plus 30% overhead), and any compensation beyond that will be dependent on the department delivering an ROI beyond a certain amount (which is the amount required to cover the basic fee you are paying them); and again, you’ll fix the compensation such that if they deliver 100% or more of what they promise, they will win big too

Now, you’re probably saying the doctor is daft by telling you to offer them 50% more than what you’d have to pay on a fixed cost basis if they deliver, but here’s the reality, without incentive, THEY WILL NOT DELIVER!

There is an 88% technology failure rate across the board, and 94% failure rate if it’s a (Gen-) AI project. The reality is, as we pointed out in our series on how, even if they have good intentions in the beginning, your (technology) vendor will screw you, the vast majority of systems fail to deliver, because, once the contract is signed and you have access to the system, they have zero incentive to do anything else for you.

Similarly, once they have you on a multi-year contract, why should the GPO or consultancy have any incentive to go beyond the minimum? If you want them to continually serve you and look for ways to generate a return for you, make it worth their while. And then you won’t be paying them one dollar just to lose three dollars in return!

This is where you start. Then, you question any consulting contract over 100K to 200K as a mid-market and 1 Million as a large global enterprise. At that point you have to define the value you expect and what gain-share agreement you are going to craft to ensure it.

Does ProcureTech Generate Billions While Practitioners Lose Trillions?

A couple of weeks ago, THE REVELATOR, in his AI Whispering asked Why does the ProcureTech solution side of the table make billions, while the practitioner side loses trillions (and more)? And it’s a fair question. Because even though the practitioners don’t lose trillions on ProcureTech and ProcureTech consulting (as that’s only in the Billions), they DO lose Trillions on Tech and Tech Consulting that the ProcureTech Consulting and ProcureTech providers SHOULD be helping them save money on.

To be precise, at least 1.8 Trillion is going to be lost by Practitioners this year on Technology and Technology Consulting. Earlier this year, in our post on SaaS Spending, we predicted that at least 1.5 Trillion would be wasted based on total industry spend and an average waste of AT LEAST 30% (due to overspend, unused applications and project failure), but we are now revising that up to 1.8 Trillion based upon a minimum projected spend of 5.4 Trillion based on recent Gartner estimates.

To put this in perspective, only 15 countries have a GDP in excess of 1.8 Trillion! In other words, the total technology spend wasted is greater than the individual GDP of 92% of the countries on earth.

But it gets worse.

If you add up the global revenue of the 23 Big Consultancies, which you will be using for ProcureTech, FinTech, and related consulting, it comes to 551 Billion.

Accenture 65
Bain 7
BCG (Boston Consulting Group) 13
Capgemini 25
Cognizant 20
Deloitte 67
E&Y 51
Fujitsu 26
Genpact 5
HCL Technologies 14
Infosys 25
Kearney 2
KPMG 38
McKinsey 19
Mercer 2
NTT Data 30
Oliver Wyman 3
Publicis Sapient 18
PWC 55
Recruit 23
BAH (Booz Allen Hamilton) 1
Tata 31
Wipro 11

And if you add up the global revenues of the 9 big analyst firms, which you will be using for ProcureTech and Fintech advisory, it comes to 51.5 Billion.

Clarivate 0.5
Forrester 0.5
Gartner 6.5
Hackett 0.5
IDC 4.0
IQVIA 15.0
Kantar 3.5
Moodys 7.0
S&P 14.0

That’s a total of 602.5 Billion you’re spending for ProcureTech and FinTech consulting and advisory in return for a loss of roughly 1.8 Trillion!

In other words, for every dollar you spend, you lose three. That’s the reverse of the ROI you should be expecting. You should NOT be investing in Technology or Technology Consulting unless you will get a 3 to 1 return. But what you ARE doing is investing in Technology Consulting and Advisory for a 3 to 1 LOSS! That is the EXACT OPPOSITE of what you should be doing.

So what should you do? STOP!

Or, if you can’t stop, change the game. More to come …

True Orchestration Platforms Are A Lot Rarer Than You Think. How do you find one?

In our last article we told you that you need a modern orchestration platform in order to deal with the application sprawl not just in an average organization but in your own department. However, the majority of today’s platforms are not orchestration platforms but ORCestration platforms, integrating your applications in a manner that is forceful, ugly, and impure, to say the least.

So how do you find a real platform? Well, for starters you can use the checklists in our first two part where Part I gave you the red flags to look out for and Part II gives you key features to identify.

But if you’re techie enough, or savvy enough, here’s a starting list of technical requirements that you look for. (There are more, especially if you’re looking ahead to 2035 and beyond, but let’s face it, you’re lucky if you’re running 2015 technology anywhere in your organization. So if you make it to 2025, that would be a quantum leap for you.)

Technical Requirements

  • Micro-Service Building Blocks that can be assembled together to support all existing and emerging internet an communication protocols
  • Transactional Blocks that encompass standard data-centric operations in the business back office around the information and finance supply chains
  • Blockchain Support for immutable records that capture data, ownership, and processing that has transpired
  • Context Aware as it’s not just data, it’s metadata of what it represents, who’s data it is, where it was obtained, when it was obtained created, and how it was accessed, why it was valid (and who validated it) in a secure, immutable, block
  • Policy Definition Support that can recognize the security and compliance policies of the integrated applications and ensure they are checked and adhered to before processing any request
  • Dynamic Routing that can ensure messages are re-routed when issues are detected to maintain (guaranteed) response times
  • Resiliency via decentralization and multiple service instances to ensure that one failure doesn’t prevent critical functions and processes from being completed
  • Adaptive when human intervention is required, it is recorded and new rules, and workflows, are generated to prevent a human from having to intervene again for the same problem
  • Secure as modern security protocols and requirements are built in at the core, not around the edges as an afterthought
  • Trustworthy full support immutable data objects, policies, and security independent of what systems are connected to the orchestration platform

Savvy Requirements

The whole point of Procurement is supposed to support the business, a business which must buy and sell to survive, and do so profitably. (That’s why Procurement is so focussed on cost, to keep expenses down, and supply assurance, to keep sales flowing.) This means that the business also requires Sales (who sells) and Supply Chain (who ultimately supplies) and that all of these units must work in harmony. However, fundamentally, without inputs, which depend on suppliers, there are no outputs, which means that the Supply Chain, and the support for the Supply Chain Ecosystem, is fundamental.

This means that the best orchestration solution will be one that is built to support the supply chain department’s integration requirements within the organization and with external partners, not just Procurement. After all, if you read the series Bob and I authored on Legacy Sourcing and Planning Solutions, you can’t divorce Direct Sourcing from Supply Chain and expect success.

So if you want a great orchestration solution, find one that was originally built for supply chain where the vendor has layered on out-of-the-box support for Procurement. This maximizes your chance for success as you will already know supply chain integration support has been taken care of.

Wondering where to start? Maybe start by taking a look at something like HubX12 built as a decentralized distributed network for next-gen supply chains. With its built-in support for modern and emerging internet and communication protocols, advanced chains of custody, and compliance, it could serve as the transaction backbone that you need to integrate existing systems and build custom capabilities both within your organization and your supply chain.

Stop Buying ORCestration. You need Orchestration!

In our last article we told you that the majority of today’s platforms attempting to unify the Procurement application space for you are not Orchestration platforms but ORCestration platforms, integrating your applications in a manner that is forceful, ugly, and impure, to say the least. Definitely not what you need in a modern orchestration platform.

A real Orchestration platform is:

–> Light

They aren’t adding another bulky SaaS platform with its own deep stack requirements, vendor maintenance requirements, data store requirements, and rules engine which must not only be maintained separately, but replicate data and rules across the apps it connects. It’s a truly next gen platform, built up from only the (micro) services necessary to connect the apps and accomplish the tasks. It’s a composable container community, not a 100 room palace with no option in between.

–> Cheap

Next generation platforms, built on modern distributed architectures, and built to work behind the scenes (not in front) to allow the users to access the ecosystems they need to access through the applications they are comfortable with, won’t be million dollar applications. They’ll be a fraction of that as the organizations will be buying just a configurable framework, that they can configure themselves as needed, and not a full, heavy, SaaS application with all of the required support infrastructure just to keep it operational (regardless of whether it integrates any applications or not).

–> Flexible

Workflow can be built up, torn down, and put back together on the fly, as required to support evolving processes. Intake, UI, and integration can all be defined, and redefined, as processes evolve, new applications enter the landscape, and old applications leave. The organization is not restricted to a fixed intake screens with limited configuration, predefined workflows, or limited data formats.

–> Open

Built on composable micro-services, that are fully documented and compatible with modern stacks, they allow anyone to build the necessary integrations, workflows, and data manipulations necessary for true process orchestration. They also support the definition of contexts that allow them to be natively compatible with the data structures of the applications they are integrating. And one definitional mistake won’t bring down the whole platform because it’s not a monolithic megalith built on a house of data cards.

–> Real-Time

Not only are data pushes and pulls accomplished in real time, but the orchestration platform will automatically propagate data updates to all apps that maintain a copy of the data. Moreover, when an input the orchestration platform is an initiator of a process, the entire process will be executed without explicit instructions as each output will trigger the next step and serve as the input for that step.

–> Execution

Real orchestration platforms don’t connect apps in workflows, they execute workflows, and they do so dynamically based upon the inputs and outputs of each step. They adapt, and when transactions occur that cause exceptions that require human intervention, they learn from those interventions and dynamically construct new exception workflows on the fly, ensuring that no specific exception ever has to be manually dealt with twice.

–> Blockchain

It will support blockchain at the core, allowing not only for the integration and processing of arbitrary data records, but for immutable data objects to be input, created, and output — with a full history of what app did which change when. That’s a lot more than you can say about today’s ORCestration platforms.

–> Multi-Protocol

Not only will the orchestration platform be composable from the core up, but the building blocks will be designed in such a way that they can be composed to support all of the standard, obscure, and emerging protocols that might need to be supported. As a result, the platform will be able to integrate not only current apps, but emerging apps as well.

–> Organizational

A true orchestration platform is designed to support organizational processes and applications, not just Procurement, allowing the input (signal) data to come from any organizational system and be pushed to any other organizational system, bridging the gap between sales orders, POS demand signals, and demand planning and supply chain (re)order and logistics systems. True orchestration finally tears down the technology walls holding Procurement back, vs. today’s ORCestration platforms which just strengthen their foundations.

–> Secure

Not only are these platforms built on security at the core, recognizing both security standards AND security policies, including the security policy of each application that is orchestrated by the platform. This means that when a user initiates an action, it only executes if they have the appropriate (data) access in all of the applications on the orchestration platform that are needed to complete the action. No hoping, or praying, that the ORCestration platform encoded the right security checks in its native workflow.

–> Policy (Aware)

As per our last point, modern orchestration platforms will understand the concept of policy at the core, and not just for security — for compliance as well! The orchestration platform will integrate with all of the applications that contain encodings of the organizational compliance requirements, understand those compliance requirements in their native contexts, and ensure that all processes are completed in a compliant process.

–> Collaborative

The core of the orchestration backbone is designed to not only support application collaboration, but user collaboration across the organization, and even with connected parties in the supply chain, through the native support of internet communication protocols as well as all standard application messaging protocols. Collaboration will never be easier than with a true orchestration platform.

–> Resilient

Since it’s not just another megalithic SaaS app, but instead a (micro-)service platform built up from building blocks, one failed integration and even one failed block will not bring down the whole platform, the rest of the platform and apps will still work.

–> Process (Focussed)

Modern orchestration platforms are designed to support organizational enterprise processes end-to-end, not departmental functions end-to-end. They can integrate and orchestrate any application in the organization’s software ecosystem (all 1,000+ in a large enterprise) as well as any partner systems the organization has access to.

–> Exception (Orientation)

Modern orchestration is designed to quickly identify exceptions, invoke exception processes, and ensure humans are only involved for a here-to-forth unforeseen exception. Moreover, it will allow for the human instructions and guided process to be automatically captured and encoded to make sure that humans never have to teach the system twice.

Unlike yesterday’s ORCestration platforms, today’s (and tomorrow’s) true orchestration platforms are built on modern technology stacks, and future-proofed for tomorrow’s applications, not just yesterday’s.

It’s Orchestration, NOT ORCestration!

In fiction, Orcs are generally described as a brutish, aggressive, ugly, filthy, repulsive malevolent race of corrupted monsters, embodying the “hell-devil” (orc-nĂ©as) of Old English literature. Ever since Tolkien popularized them in his Middle Earth as the servants of Mordor, pretty much every work of fiction has described them the same way. Even though Tolkien himself said they understood morality, they tended to only apply it to themselves as they saw fit in their constant state of corruption, a theme that is echoed to this day even in Dungeons and Dragons and Warcraft (which are the fictional works most of today’s generation will associate Ocs with). While some may strive to be moral and better than others of their kind, they still remain warlike and barbaric by our civilized measurements.

As a result, to be ORCish is to be brutish, aggressive, and even repulsive in one’s actions and to be ORCestrative is to organize things in a way that is forceful, ugly, and impure.

Which precisely describes the majority of today’s platforms attempting to unify the Procurement application space for you.

Today’s ORCestration platforms are:

–> Heavy vs. Light
They add yet another bulky system to your stack that takes months to implement, must be constantly maintained, comes with its own data store and rules engine, requires its own user licenses and management, and exacerbates the app proliferation problem you’re trying to solve with yet another app.

–> Costly vs. Cheap
Many of these platforms charge on a per user basis, with fees that can easily be $250/user/year or more JUST for basic intake. If everyone in a large organization needs their own user license, which is, FYI, the only way to achieve true intake and enterprise wide orchestration, an average large organization will be spending 1.25 Million a year for what is essentially Middleware 3.0 with Intake! It might be saving you a few Procurement or ERP licenses, but, as all the fake Christians like to say, you’re just taking money from Peter to pay Paul. Good job!

–> Rigid vs. Flexible
Most of these platforms are very rigid in terms of workflow, configuration, intake process, UI configuration, integration options, etc. Most of them only permit certain actions (intake, process reporting, etc.) to be initiated through the platform. Instead of increasing organizational flexibility, you limit it.

–> Closed vs. Open
Some of these platforms are so rigid (and inflexible) that they won’t even allow partners to do new application integrations because if it’s not done just right, it could all crumble like a house of cards. Classically, middleware was supposed to open up opportunities, not close them down!

–> Batch vs. Real-Time
In most of these platforms, data transfers between the platform and the apps are typically done on a batch schedule and if you need data in an app right away, you have to a manual push-pull. Heck, even classical RPA works better!

–> Routing vs. Execution
All the majority of these platforms do is route requests and data packets from one application to another, requiring a (moderate to large) number of third party applications to do anything at all. You could replace their core function with a last generation workflow engine at a fraction of the cost without sacrificing that much actual functionality!

–> EDI/API vs. BlockChain
Not only is most data shared in batch after being routed using traditional workflow, but it can only be accepted, processed, and routed if it is shared in a classical data exchange format. Forget about integrating it with any modern systems that use blockchain for traceability or e-payments. Just Fuhgeddaboudit.

–> Single vs. Multi-Protocol
Not only are the majority of these platforms limited to classic EDI/APIs for data interchange, but they tend to run off of a single protocol for network and stack integration. This not only limits them to one stack, but prevents them from being forward-compatible with next generation technology that will need to support multiple stacks (LAMP, MEAN, MERN, Django, etc.), multiple classic protocols (including HTTPS, DHCP, ICMP, SNMP, etc.); specialized protocols like BGP and OSPF; and emerging protocols like MCP.

–> Departmental vs. Organizational
Today’s platforms are being sold as the answer to your Procurement needs by providing you with an interface to all of your Procurement systems — that have already been integrated. But here’s the problem — just integrating your Procurement systems doesn’t meet all your needs! The inventory is in the inventory management system, the lead time in the logistics system, and the forecast in the demand planning system, and these are all part of the supply chain systems. All today’s platforms do is force your existing best of breed applications into a hodge-podge frankensuite. You might as well stick with a mega source-to-pay suite and buy a license for everyone in the organization, especially since some of them were built with intake in-mind (as long as you buy a license for every organizational user).

–> Insecure vs. Security-Aware
Of course the platform comes with its own security, on its SOC2 certified servers, with a secure log-in for every user, but that’s the only security it recognizes. It doesn’t recognize the security of any of the applications that are integrated, beyond the API access key. This means that all of the data available to the platform through the key is available to all of the users of the platform, whether or not they should have access to that data, unless the security policies are replicated in the platform.

–> Rule-Based vs. Policy Aware
Not only do each of the connected applications have their own security protocols for data access, but their own policies for compliance. With regards to some data, such as third party personnel profiles or employee communications, not only is the data restricted to certain people, but they must have reasonable cause to view it, assert that cause, and possibly log the proof of that reasonable cause. Also, some pricing data must be restricted to authorized parties to prevent unauthorized disclosure to competitors, etc. The majority of these platforms can’t even implement basic policies yet alone enforce (compliance) policies in the apps they integrate.

–> Autonomous vs. Collaborative
While all of the applications are integrated to the fancy middleware, they still all function autonomous, usually unaware what other platforms are connected, who needs to use and is using the data and outputs of the platform, and where the inputs come from. All they know is that some piece of mysterious middleware shoves data in, executes API calls, and pulls data out. They don’t know where it’s going, how many copies are being made, and how, and even if, those copies are being maintained. The autonomous aspect of each connected application amplifies the data nightmare of the Procurement organization as well as the readiness for next generation Procurement.

–> Brittle vs. Resilient
Most of these platforms are constructed like traditional SaaS apps and have al the same weaknesses. When they go down, they go down, and so do all their connections. Like the One Ring, they are invincible until the One Ping overloads the stack and they come crashing down.

–> Function vs. Process (Focus)
Business run on processes, but these ORCestration platforms still focus on pushing data into, executing through API, and pulling data from functions. The better platforms support end to end Procurement functions, but they are still only functions, because the whole point of Procurement is to support the organization, which means that the process goes beyond the four walls of Procurement. They need to elevate the functions in the apps they connect into process flows, but they’re not doing that.

–> Task vs. Exception (Orientation)
The whole point of software is automation and freeing the user from tactical data processing and thunking that computers are great at so they can do the more strategic and relational work that computers are poor at and can’t do at all! Considering automation in these platforms requires users to manually define workflows, including workflows for exceptions, one by one, they don’t do a very good job of empowering the user.

Today’s ORCestration platforms are the engineering equivalent of trying to fix a break in a line with spit, glue, and duct tape. It might work for a bit, but it’s not going to take much force for the “fix” to fall apart!