Category Archives: rants

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!

How Do You Identify Dead Companies Still Standing?

They still use Excel.

We’ve known for over a decade now that errors in spreadsheets are pandemic. Needless to say that it boggles my mind that Microsoft Excel still continues to be the application of choice for supply chain and logistics managers around the world. Why do we need to remind you that Fidelity lost 2.6 Billion as a result of a spreadsheet error, that Fannie Mae made a 1.13 Billion honest mistake with a spreadsheet, and RedEnvelope lost more than a quarter of their value in a single day after they warned of a fourth-quarter loss due to a spreadsheet-based budgeting error that resulted in an overestimate of gross margins.

How long is it going to be before someone accidentally uses a plus sign instead of a minus sign in a profit formula and forgets to uncap an inventory calculation and instead of ordering 100,000 units of a profitable product, instead orders 1,000,000 units of a product that actually results in significant losses at the target sale price, for which the market demand is weak, ties up all of the organization’s working capital, and essentially bankrupts the company?

My guess, with the steadily increasing complexity of S&OP, JIT inventory management models, and supply chains, any day now! But, maybe after a few companies are brought to their figurative knees from spreadsheet errors, we’ll see the day when Excel is sh!tcanned along with the dinosaurs who still think it has any more use than a HP or TI calculator.

It’s time for anyone still using Excel to wake up and realize we don’t live in Walt Disneyland and that the story of the prince and the pauper is a fairytale. A pauper is not going to become the benefactor of princely riches by trying to save money on real supply chain and logistics software by stretching Excel to the limits just so that it can temporarily inflate the balance sheet or the profit and loss statement. In today’s uber-connected world, appearances don’t account for much. It’s not long before someone digs deep and uncovers the truth.

There’s a reason why customers are demanding end-to-end visibility of their supply chains, including those of their supply chains logistics’ partners. And a reason customers ow expect all of their suppliers and business partners on the supply chain (including logistics providers) to participate in a supply chain network. It’s because they know that the only way they can accurately manage their supply chain is to keep on top of it, that the only way they can build accurate models is with accurate data gathered from partners, and that the best reports they are going to get are going to come from supply chain visibility and planning software plugged into these “networks” (where, in reality, these are “enterprise communities” that allow the necessary collaboration, not “consumer [social] networks” where you can poke, prod, and shake your buddy for no apparent reason).

In other words, Excel has become the new paper, and, like paper, it needs to be abandoned. So if you don’t want to be the pauper, move off of this outdated technology and onto solutions designed for your supply management needs. With a plethora of Best-of-Breed solutions on the market, including modern Source-to-Pay solutions, designed for large and small providers, it’s extremely likely that there’s at least one solution that meets your needs almost exactly without too much tweaking. If you look hard enough, the doctor would bet that there’s at least three, or will be before you can look twice

Two Hundred and Twenty Nine Years Ago Today …

The first foundations were laid for the patent pirates with the introduction of the first U.S. patent to Samuel Hopkins for a potash process. While patents are a necessary evil to protect the investments of real inventor and corporations that have to spend millions upon millions (sometimes to the tune of hundreds of millions) to produce a truly new technology, software patents are an unnecessary evil that allow the pirates to plunder millions upon millions of dollars from rivals with fundamentally different products (but covered under an interpretation of a sufficiently abstract description) and prevent true innovation in our space.

It’s been a downhill trend ever since the first software patent was issued 51 years, 3 months, and 8 days ago as it was a mere 4 years before the software patent pirates saw an opportunity when the first software patent case went before the courts a mere four years later.

That’s right, we’ve had almost five decades of pirates in cyberspace, and you thought malware was the big problem?

How to Get Past Applied Indirection

As per our recent series here on SI, when most vendor sales rep start to claim they have AI, they are really just telling you to your face that they are trying to mislead you into thinking their trivial automation, simple fixed ruled-based workflow, and/or classic statistical projection capabilities are much more advanced than they really are, hoping you won’t ask what AI really stands for when they use the acronym.

Given that your number one priority is to get more spend under management (SUM) and that this priority is only realized with the help of modern platforms, you’re going to be dealing with a lot of sales reps for years to come, especially since, at best, you’re on a generation 2 platform (and, to be honest, if you have anything, odds are it’s really generation 1), and that just doesn’t cut it anymore. So you’re going to have to find the right platform for you.

Now, the good news is that you have help narrowing down that shortlist with the help of Spend Matters Solution Map, co-designed and, in core areas of platform technology and Strategic Procurement Technology, scored by the doctor, and that as part of this narrowing down, we can help you identify vendors with the foundations for real AI, as well as, if we’re lucky, select capabilities that fall in the domain of assisted intelligence.

But just because we can give you a partially pre-qualified short-list (which can be tailored to your specific organizational needs by way of the Customer Map offering), that doesn’t mean that the vendor sale reps still won’t try to stretch the truth or, in some cases, even lead you astray on aspects of the solution we don’t score. So you will still have to deal with some level of applied indirection even if you’re proactive enough to take our advice and start with the right short-list. (Which can also be based on unbiased customer scores as well as in-depth analyst scores across up to 700 discrete platform capabilities to make sure you start off with the best candidates, among which will be the right solution for your organization.)

But if you’re not one of the lucky supply managers able to convince your boss to let you spend the money on this exercise (which can be carried out by your favorite consulting partner who will help you properly weight the various capabilities given your organizational maturity and need), then you’re going to not only get hit with quite a few sales reps stretching the truth, but a few outright lying (because they know you don’t have any validated data points to go off of), and not feeling a tinge of guilt because they told you up front they were selling you with AI (which you didn’t ask them to define) that really stood for applied indirection, and not the assisted, augmented, or artificial intelligence that you mistakenly assumed it stood for.

So how do you spot it? And get past it?

Here are some tips and tricks to do just that.

1. Ignore their claims, get a demo and ask them to walk through through how it supports your organizational process, which you will lay out the day before

Yes, some vendors have become quite good at combining (robotic process) automation, rules-based workflows, and statistical algorithms to fake AI, to the point that you might think there is actually some machine learning under the hood and, at the very least, they have assisted intelligence technology in the worst case, and probably augmented intelligence that will take your team to the next level. But not very many vendors fall here (and in the grand scheme of things, the reality is that very few vendors fall here), and very few demo masters can pull off a faked end-to-end process demonstration.

2. Have your own data files ready to go!

If they are claiming auto-contract parsing and clause extraction, have some contracts in the correct format (PDF, Word, etc.) ready to go at demo time, that you did NOT give the vendor advanced knowledge about, and ask them to upload and walk you through the process live. Or if it’s a 3-way invoice match process, have matching POs, goods receipt, and invoices in whatever standard they support (cXML, EDI, indexed PDF, etc.) ready to go as well and ask them to suck them in and process them in front of your eyes.

If they survive this, even if it’s not real AI, it’s very advanced automation and an extensive knowledge-base supporting the rules-based workflow, which may be all your organization needs to advance its SUM and get success.  (For example, you don’t need AI for spend categorization – an expert can map your spend to 98% accuracy in 3 days with the right tool even if you are an F500 and then as exceptions come in, you have an expert create overrides, which get fewer and further between over time. Plus, unless we are far, far into the tail, 2% of spend in the category doesn’t even make a dent.)

3. Get a real data scientist / tech expert in on the demos.

Someone who has utilized real AI technology to ask tough questions about algorithms, platform foundations, data stores, and so on. If the provider can’t furnish good answers, there’s probably not too much under the hood.

4. Talk to mature customers.

You want customers who have been with the provider 3+ years, implemented and worked through the full platform offering, executed difficult Sourcing / Procurement projects, had a few failures the provider needed to respond to quickly, and so on. They can give you an idea of how advanced the system has been in practice and how good the provider has been on improving it. And if they give you a good recommendation, even if the system is not as advanced as the vendor claims, there’s probably something there.

It’s easy to not get fooled if you remember that the proof is in the pudding, and if the pudding is good, there are repeat, happy eaters of it.