Category Archives: RFX

Best Practice Technology Vendor Selection for True Multi-Nationals Reprise Part III: RFX – You’re Missing the Most Important Point!

This is a reprise of a series that first ran in 2012. It’s as relevant, and important, today as it was then.

In this post we continue our series on best-practice vendor selection for your enterprise e-Procurement, e-Sourcing and Supply Management solution. As per Part I, this series specifically relates to the selection of technology(-based) vendors for your enterprise software needs, and e-Procurement, e-Sourcing, and Supply Management solutions in particular (as reiterated in Part II).

What is the ultimate goal of your organization’s technology acquisition project? To get an e-Procurement/e-Sourcing/S2C/P2P/S2S/S2P/SRM/3PM system? No. To increase efficiency / save money / get more spend under management? No. To get satisfaction? No.

The ultimate goal is your organization’s success. That’s the only metric you care about when initiating the technology acquisition project (TAP) dance. And if your organization is a global multi-national, then your organization’s success depends on the vendor’s ability to deliver globally. Not how many boxes the vendor can check on some random feature / function check list. Because, as we discussed in our last post, where large-scale roll-outs are concerned, there are only a few standalone best-of-breed sourcing and procurement technology vendors that will make the shortlist for a given organization.

One thing that your organization needs to be aware of is that this is not 2005, this is 2015 and not only are e-Sourcing, e-Procurement, SRM, and 3PM functionality becoming more-or-less commoditized among the established vendors, but any decent-sized vendor will be able to check-the-box against any publicly available check-lit. Sure, some will have features G, H, and I while others have features J, K, and L, but they all have critical features A through F. And as for features G through L, if they are valuable, the other vendors will catch-up, and the time it will take them is usually less than six months nowadays, and if a feature is made a contingency of a deal, the catch-up time is probably shorter still!

Another thing your organization needs to be aware of is that starting with a short-list of vendors that it is fairly certain can meet its needs will not only significantly reduce the length of the evaluation process (as it is no longer a question of “can the vendor meet my needs” but a question of “is this the best vendor to meet my needs”), but also significantly reduce the organization’s risk. If the organization needs to operate in forty countries and twenty languages, and doesn’t do it’s homework, it could end up wasting six months evaluating three vendors who don’t have a reference outside of the US and UK and who don’t support customers in a language other than English. If it has a deadline of nine months, what does it do? Either it takes the last vendor in the pipeline, if any are left, or rushes out to find another one, with no time to consider how appropriate the vendor it is for its needs or its organizational culture.

Which is another point that is often missed in the traditional implementation of an RFX cycle. Cultural considerations are typically ignored in technology selection, ignoring the fact that people have to use these systems — people who work, think, act, and like to conduct business in a certain way (and like to interact in a certain way with technology and technology / service providers). As a result, good technology selection is not just a matter of check-the-box when a strong vendor interaction is required. If two or more vendors are more-or-less equal from a functional/process selection, the tie-breaker should be cultural alignment. Does the vendor have the same goals? Work to the same metrics? Conduct itself in a similar manner? Give your customers and suppliers the same respect? Have a system with a workflow that can be tuned to organizational processes (and not force the organization to shoe-horn into processes and workflows that don’t support it’s efficient, best-practice, workflows)? These are important, but often overlooked, questions. Don’t forget them.

In our next post we will dive into more best-practices to truly take your technology acquisition project to the next level now that your RFX process is back on the rails.

Best Practice Technology Vendor Selection for True Multi-Nationals Reprise Part II: RFX – You’re Not Asking for the Right Information!

This is a reprise of a series that first ran in 2012. It’s as relevant, and important, today as it was then.

Today we continue our series on best-practice vendor selection for your enterprise e-Procurement, e-Sourcing, or Supplier Relationship / Third Party management solution. As per yesterday’s post, this series specifically relates to the selection of technology(-based) vendors for your enterprise software needs, and Supply Management solutions in particular.

In yesterday’s post we reviewed the traditional RFX process outlined at a high-level in the e-RFx for Total Value Management wiki-paper over seven years ago, which is still more-or-less correct, and then reviewed how this process is typically interpreted, which is where the problems begin, especially where multi-nationals are concerned. We noted that there are three big problems with the standard interpretation of the process, which occur in the first part of the RFI process. In particular, we noted that most supply management project managers ask for the wrong information when they:

  • ask stakeholders for product/service requirements
  • ask stakeholders for preferred vendor recommendations
  • ask vendors for capability information and self-assessment

This last request in particular is especially futile as the last thing a vendor who wants your business is going to do is say that they can’t meet your request, even if their chances of success are dismal. You need to start by verifying that the vendor has the potential to serve you, independent of the vendor’s response or self-assessment. To do this, you need to start the process where an average organization ends it. In particular,

Start with the Reference Interviews

Too many organizations do this:

  • Collateral-Driven Vendor Identification
  • Request for intent to bid
  • Request for proposal and quote
  • Shortlist
  • Negotiations
  • Final List
  • Reference Interviews

By the time a typical large organization gets to the reference interviews, it’s too late. Months have been spent on the project, which needs to be wrapped up shortly. As a result, the buyer gets stuck with one of the finalists, even if none of the finalists end up being good solutions for the organization.

If you’re a multi-national organization, you have to start with the reference interviews. If you’re a small company, only do business in one or two countries, and only conduct official business in English (and all your international suppliers are Chinese with english-speaking reps), then it doesn’t matter because just about every vendor can serve you. But if you’re a multi-national that:

  • has offices in over twenty countries,
  • conducts official business in seven languages (English, French, Spanish, Italian, German, Russian, Portuguese, for e.g.),
  • has suppliers that speak six more languages (Mandarin, Cantonese, Vietnamese, Thai, Korean, and Japanese, for e.g.),
  • and has to support customers in over forty countries

then not every vendor in the supply management technology solution space is going to be able to support you. In fact, despite the plethora of companies in this space even after the last two rounds of M&A frenzy, the number of pure-play best-of-breed companies that will be able to support your global e-Procurement, e-Sourcing, or Supplier Relationship / Third Party management initiative is likely countable on your fingers, thumbs optional.

And the only way you can have any assurance that a vendor is going to be able to support such an initiative is to start with reference interviews with customers who are similar in size, scope, and needs. (Note that this does not mean they have to be in the same vertical as you. As long as they are about the same size, do business in about the same number of countries, require multi-language support, need a cross-section of similar direct and indirect category support, etc., that’s good enough to start. If the company you are looking at is you’re direct competitor’s best kept secret, they are certainly not going to tell you that.)

While this doesn’t mean that the vendor has to have offices in each country that you are in, support every language that you need supported, and have a success story for each of the forty countries you are selling into, it does mean that the vendor needs to have a global presence, should support at least a dozen languages (that meet a majority of your language requirements) with a track record of being able to add new languages quickly, and should be in dozens of countries with a history of successful roll-out initiatives to new countries.

In other words, unless you have been convinced beyond a reasonable doubt that the vendor can support your organizational needs, they shouldn’t even get a detailed RFI. Because it’s not about who can survive the funnel, it’s about who deserves to even be in the funnel. And that’s a very simple determination, as we’ll discuss in the next post.

Best Practice Technology Vendor Selection for True Multi-Nationals Reprise Part I: RFX – You’re Asking for the Wrong Information!

This is a reprise of a series that first ran in 2012. It’s as relevant, and important, today as it was then.

It’s that time of year again. Your budget has finally been approved — a month late — and you’re ready to begin the process of obtaining that e-Sourcing, e-Procurement, Source-to-Contract (S2C), Procure-to-Pay (P2P), Source-to-Settle (S2S), Source-to-Pay (S2P), Supplier Information Management (SIM), Supplier Relationship Management (SRM), or Third Party Management (3PM) that you’ve been dreaming of. You think you know what you want, but you have to go through an RFP and, more importantly, you know that you’ve only had time to look at a few options while building the business case as you were doing it evenings and weekends on your own time because the project wasn’t approved. Now you want to go to market and either verify that you’ve identified the best solution or find the best solution to meet your needs. Since you are a sourcing organization, that process demands an RFP. However, this RFP is not like your RFP for direct materials or indirect spend. This is a very specific technology solution RFP for a platform to meet your needs and support all of the other RFP / sourcing / procurement / supply management processes of the organization. It’s crucial to get it right.

That’s what we are going to discuss in this series — the proper process and approach to acquiring the right e-Sourcing / e-Procurement / S2C / P2P / S2S / S2P / SIM / SRM &/| 3PM solution for your needs. Furthermore, let us clearly state that this series is specific to the selection of technology and technology-based vendors to provide enterprise software platforms, and/or implementation services, back-office (processing) functions, or technology-driven consulting services for your multi-national organization. While some of the best practices contained herein should also apply to the selection of (strategic) suppliers for high-value and/or complex products and/or services, this series particularly relates to the selection of a vendor to provide an enterprise software backbone, and, in particular, a backbone for e-Procurement and/or e-Sourcing technology for your Supply Management organization. As one size does not fit all where RFX and category selection processes are concerned, no claims, express or implied, are made with respect to any other vendor selection process and, in fact, if you’re only buying paper and pencils, some of the best practices contained herein will, in all likelihood, be overkill.

Now that the preamble is out of the way, let us begin by noting that the traditional RFX processed is well understood, and well documented in many places, including in the e-RFx for Total Value Management wiki-paper, co-authored by the doctor over on the e-Sourcing Wiki over seven years ago. And, in the wiki-paper in particular, the high-level process is still more-or-less correct.

As per the wiki-paper, you start with a three-stage RFI before an RFP, which is solution focussed (and not cost or contract focussed), which is issued before a final RFQ, which is when you collect quotes and start the actual selection / negotiation process. Specifically, the high-level process is:

  1. RFI #1: Stakeholder Requirements
  2. RFI #2: Vendor Interest
  3. RFI #3: Vendor Pre-Qualification
  4.    RFP: Solution Inquiry
  5.    RFQ: Clearly-Defined Specifications

So what are you doing wrong, especially if you’re a Multi-National? To answer that, let’s look at how this is typically translated:

  1. Product Needs, Service Needs, Preferred Vendors
  2. Vendor Info. Request, Vendor Interest, NDA
  3. Product & Service Capability Profiles
  4. Solution Design Request
  5. Explicit requirements, process definition, and bid request

See the problems?

  1. Stakeholders typically don’t know what they need in a solution. They aren’t technology experts. They aren’t supply management experts. They are domain experts. It doesn’t matter what they think they need in a product or a service, it matters what problems they are having today. You need to ask them what problems they need to solve, so that you can ultimately select a vendor with the solution that solves as many of your stakeholder’s pain points as possible.
  2. A preferred vendor is one that can offer you the best product or service from an organizational perspective, not a single stakeholder’s perspective. For example, a stakeholder might rate a vendor A+ because the representatives always responds quickly. But this is not necessarily indicative of great service. If the answer is always “we’ll send someone to fix that with 72 hours”, and you need the machine up 80% of the time, that’s still poor service if the machine breaks down regularly because 3 days downtime every few weeks will not support an operation level of 80%.
  3. Asking a vendor if they can provide you with the necessary functionality or service levels after you have shortlisted them as a possibility based upon a review of their collateral is not likely to get you anything other than a “yes we can”, especially if the vendor also offers consulting or “value added services”. One has to remember that most (big) consulting (and value-add) organizations are driven by partners with a strong desire for as many dollars as possible and the reps are told to always say yes and take on as much work as possible, leaving the question of how to get it done (if the organization is already stretched or weak in that area) until after the ink is dry.

Which brings us to the biggest problems with the current selection process, which we will discuss in Part II.

marketdojo – A Dojo Where You Can Plan your Own Path

In our last post, we introduced you to marketdojo, a state-of-the-art do-it-yourself e-Negotiation suite that supports complex RFX and e-Auction events as well as integration with their categorydojo product that helps a user determine appropriate sourcing strategies for each category and prioritize those categories based on the expected size of the opportunity.

In yesterday’s post, we described their basic marketdojo product which consists of an RFX and e-Auction offering (which supports multiple RFX types and Auctions). Today we are going to discuss their categorydojo product, which is one of the two real differentiators between them and the other players targeting the low-end of the e-Sourcing market (in an effort to bring smaller companies out of the Purchasing Dark Ages where some still remain).

A lot of consulting firms have been doing the category analysis that categorydojo has been doing for years, and a few companies have even built simple opportunity analysis tools to help you figure out how what opportunities you should be chasing, but the doctor has yet to see any tool that is as clean, streamlined, and useable by an average buyer without a lot of training or consultation. This is one of the two real differentiators that marketdojo has built and one of the two features that actually impressed the doctor, which is not easy to do if you are yet another e-Sourcing or e-Procurement provider considering the dozens upon dozens of tools he’s seen over the last fifteen years. Basic suites are commodities now, and the most basic suites are free.

Once you’ve activated marketdojo, giving categorydojo a spin is as simple as going to categorydojo, clicking on the Dashboard link at the top of the page, and activating it.

Once it’s going, you create a spend portfolio (by selecting the Create Portfolio option) where you define your top categories, and then go through a wizard-driven Q&A about each category to help the expert system underneath properly classify and rate your category. Category creation can be as simple as category name, currency, average annual spend, and a notation on whether or not the spend is subject to EU Procurement Directives (if you are in the public sector). Then you define subcategories, their component spend, expected spend trends, and contract term. Then you define your perception of market conditions and bid complexity and you’re off to the races. Once you’re done, the tool presents you with a recommended sourcing strategy, which in the marketdojo suite, is initial RFI (because it’s not ready for a market event or a market event is not expected to be successful at this time), RFP (because it’s not auction appropriate), RFQ and standard e-Auction, or RFQ and Reverse Japanese Auction — and charts it on a quadrant graph relative to your other categories.

Then, once you have defined a set of categories, you can deep dive in and see the relative spend vs complexity for each category, the time vs. return, and most importantly, the power balance for each category and what it means to your organization and the expected savings. The founders, with a long history in sourcing, built up a knowledge base on different categories and expected savings targets and built this in to the evaluation from day one. Then, upon product launch, they made sure that categorydojo was integrated with marketdojo so a buyer could push an award back after an event was run so the award, and the savings, could be evaluated against the expected savings. This result was used to tune the models over time to the point that a buyer can have confidence that, at least 9 times out of 10, the available savings is within the range predicted by the tool (if the market conditions have been accurately captured and the suggested strategic approach is taken). I’ve seen the reports (which, by the way, do require a paid license), and, for every category I’m familiar with, the range is a realistic savings range for a company that hasn’t properly sourced that category before.

Finally, once you have all of the spend categories defined, and have worked your way through the reports, the tool lets you prioritize the categories so that you can build an effective sourcing plan for the year.

The tool is well done and easy enough for any buyer to use without a £5K a day senior consultant from a Big 6 consultancy! (Which means that the tool, which only costs £1000 per user per year, pays for itself as soon as you use it because each category analysis from a Big 6 will cost you at least £5000, and that buys an unlimited one user license of marketdojo for a month, which will help you realize your organization’s savings potential!)

If you’re at the lower end of the mid-market and in need of a (better) e-Sourcing tool, I would strongly suggest that you check the marketdojo out. Even though they have a few clients in the higher end of the mid-market, they are really designed for the low-end, and they fit very nicely there.

marketdojo – A Dojo Where You Can Walk Your Own Way

marketdojo is a company that many of you haven’t heard of and a company that I’m sure many of you who have heard of them dismissed because of the Western notion of what a dojo is. In western thought, a dojo is believed to be a training school for Japanese martial arts where students to to learn from a sensei. So when you hear marketdojo, the first thing you probably think of is a training school for (e-)commerce best practices and a services company — not a do-it-your-self SaaS e-Sourcing platform.

But that is what marketdojo is — a state-of-the-art do-it-yourself e-Negotiation suite that supports complex RFX and e-Auction events as well as integration with their categorydojo product that helps a user determine appropriate sourcing strategies for each category and prioritize those categories based on the expected size of the opportunity.

And they are appropriately named. One has to remember that dojo literally translates into “place of the way” and really means “a place for students to gather for practice, training, and testing”. Furthermore, there are also hombu dojos, which are the stylistic headquarters of a particular art. marketdojo is the hombu dojo for the do-it-yourself e-Sourcing art where the practitioners of the marketdojo way gather.

And while they were yet another me-too e-Sourcing tool when they started four years ago in 2010, they have taken great strides to differentiate themselves from the other entry-level e-Sourcing suites that revolve around e-RFX and e-Auction. These differentiators include:

  • Try-Before-You-Buy with no sales team interaction*while there have been a few e-Sourcing providers that would set you up a demo environment and let you take it for a test drive, SI doesn’t know of any that put their full platform up on a demo box where anyone could log in and test out all of the features without first engaging with the sales organization, sitting through the pitch, and proving their interest; To give marketdojo a test-drive, you go to the Sign Up page, fill in a short form, click on the link in the activation e-mail, and then click on Try Our Sandpit at the top of the home screen. No credit card required. It takes about 60 seconds. (You do, of course, have to pay before you can run a live event, but not before you’ve verified that it will work for you.)
  • Toggle View
    In the marketdojo platform, it’s a one-button click to toggle between your buyer view and the view of any supplier. No logging out and logging in as a separate user or trying to watch two views in two different browsers at the same time on a split screen.
  • Easy Public and Private Sector Event Creation
    In many economies, and the EU in particular, there are a lot of rules around public sector tenders, and the platform, with a single checkbox, can insure that all of the proper information is provided, questions are asked, and procedures are followed or, if the company is a private sector company, the buyer can go through a streamlined process and only provide the information she needs to provide and only request the information she needs to conduct the event.
  • Easy Pay as You Go
    You can pay per drink or buy an unlimited subscription on a monthly or yearly basis. To pay as you go, which starts at £500 for a single event, you purchase credits as needed on your credit card and go. There’s no limit to event size or event duration — and if you want to run an event on a category that’s under £50,000 of annual spend, they’ll even give you a discount!
  • Complex Lotting and BasketsNext month marketdojo will be releasing their new version which allows you to create complex lots and market baskets where each item can have a user-defined number of cost components and a formula that defines the total, or weighted, cost for the item and have the supplier provide their starting bids at whatever level of detail you desire. Then, when the auction is run, you can choose whether suppliers modify their bids at the cost component level, item level, market basket, or entire lot level — and do so as a fixed quote or discount off of their previous bid. This helps a buyer get a good understanding of what the cost drivers are but yet run easy events.

In addition, like other providers, they also offer:

  • Excel Import and ExportThis is especially useful with complex lots — you can create the desired matrix, and a supplier can export it, fill it in, and upload it at their leisure. You can also output reports and awards in Excel for further analysis or imports into other systems.
  • Easy Integration with their Other Tools
    They have two other tools — categorydojo, which we will cover in our next post, and innovationdojo, that you can read about on Spend Matters UK. While SI is, of course, a big fan of Innovation, and innovationdojo is innovative within the e-Sourcing space, these types of tools have existed in IT for quite a while now so the doctor isn’t all that excited about the shiny new e-sourcing friendly wrapper they put on what was an IT / product management tool (which, the doctor will admit, are as typically as ugly and unfriendly as you can get, but when you grew up with a green command prompt on a blac screen, you just get used to ugly UIs).
  • Award ExportOne click export to Excel OR their categorydojo, where you can compare your sourcing event plan and projected savings to actual savings and increase your accuracy year-over-year!

And since this takes us into Part II, we’ll end our initial discussion of marketdojo here.

* They are based in the UK, so if you try it out in the evening in North America, the sales team will be at home and won’t be online to ping you to even see if you want to chat.