Category Archives: SaaS

You Should Never Build Your Own ProcureTech Solution! Ever!

Integrate your own custom suite to suit your processes, maybe, but never build from scratch. (And we should not have to be talking about this again after just publishing on the subject two weeks ago, but too many conversations are indicating that we still need to shout this loud and clear!)

For some reason, this comes up every decade, usually after a hype cycle has peaked, marketers have switched from focussing on solutions to sound bites from a suite of providers who have released products that don’t meet customer needs, the implementation failure rate has edged back up to the 80%+ range, and customers have gotten absolutely positively fed up with the whole situation.

Customers, fed up with the valueless hype, marketing sound bites, high failure rate, and utter lack of solutions from the vendors targeting them on a daily basis, start to think that the right solution is to build their own.

Sourcing Innovation tackled this subject in depth back in 2015 when it wrote a 4-part series on why you should NOT build your own e-Sourcing solution, followed by an explanation of why you should not build your own Contract Management and e-Procurement platform. (links here)

That’s why we are both repeating and elaborating on last Friday’s Rant on why A Company Should Never Build It’s Own Enterprise Software Systems.

Not only do we have the situation where:

  • the company is not an expert in building software products
  • the company is not an expert in best practices across all of its processes
  • by the time a custom solution is developed, it’s out of date
  • it’s not about the product, it’s about the process you should be working toward and, most importantly,
  • it’s about the data that drives the process!

But we have the situation where, as highlighted in THE REVELATOR‘s article:

1. Developing your own is NOT being an early adopter! (Which is what many companies considering build-your-own think they are.)

Early adopter means someone who adopts leading edge technology from a third party, not someone trying to fast track their digitization effort with custom built tech. This is just high risk with little chance of reward for all the reasons mentioned in all of our prior articles.

2. They think Gen-AI will fix their data problem and allow them to develop their own!

If you’re read anything on Gen-AI on this blog you know that’s the last thing it will do. For Gen-AI to have any chance of working at all, it needs a huge amount of good, clean, data. Otherwise, it’s garbage in, hazardous waste out. No technology has ever needed such large amounts of near-perfect data to have even an abysmal chance of working, and the fact that the marketing madness has convince many CPOs that Gen-AI can fix a data problem is downright terrifying!

3. They obviously think that the initial quote will be close to the final cost.

No where are cost overruns more extreme than in custom development by a non-software organization that contracts a Big X with poor specifications that look easy, and that, due to lack of manpower, sends The C-Team (if you are lucky) because it’s just another instance of system X (when it’s not).

To be honest, in this situation, if the costs ends up being only 3X to get something usable (but still not what you wanted), given the high technology failure rates, that would be amazing.

We know it’s hard to find appropriate solutions given all the noise out there, and the overabundance of vendors that all look, sound, and go all in on useless Gen-AI the same, as it just takes one glance at the Mega Map to figure that out, but that doesn’t mean there aren’t vendors out there appropriate for you. Vendors that put solutions, not tech first, that built affordable tech that works (and didn’t take too much money from investors who then insisted on quadrupling the price), and that will work in an ecosystem with out vendors to solve your problems.

You just have to look hard. Real hard. Probably harder than you’ve ever had to look before. (Expect to eliminate 6 out of every vendors you look at for short list consideration and probably go through 20 to find 3.) But trust us, when you find the right vendor, it will be worth it. The solution will work, will configure to your liking, will be extremely usable for the problems your team faces every day, and will be one where the provider will grow with you for the decade to come.

Good things come to those who wait to find the right vendor. (Even if they have to crawl through multiple pig sties to do so.)

Dear Enterprise Software Vendor: Should You Fire Your PR and Marketing?

Note the Sourcing Innovation Editorial Disclaimers and note this is a very opinionated rant!  Your mileage will vary!  (And not about any firm in particular, as a few non-isolated incidents opened up a whole new line of questioning.)

In response to a post by eCornell (which is/was here), THE REVELATOR wrote this comment (which is/was here) which is repeated here in its entirety in case it gets deleted, since anytime we tried to have a serious conversation around sales, marketing, public relations, and/or Gen-AI with Big X firms and/or (mid-sized) consultancies and analyst firms, they have quickly deleted our comments, and sometimes their entire posts rather than enter into a real conversation on the subject (and now we have developed an implicit distrust any corporate account and keep copies of everything):

NOTE: The following post was inspired by a comment by Paul Rogers

Despite feeling like someone walking the hallowed halls of Cornell University wearing a “Yeah, Harvard University” t-shirt, sometimes you have to say things that need to be said – which is the purpose of sharing this article.

Ask ChatGPT the following two questions:

? What is the role of the Public Relations professional?
? What is the role of the Marketing professional?

Do you see any mention of end client or customer success as a priority? Whose best interests are PR and marketing professionals focused on? What does the answer to these questions tell you?

Corporate communication has always been about putting a positive spin on business and the brand. It reminds me of the 1986 Richard Gere movie Power – if not a great movie, it is certainly interesting and engaging. Denzel Washington’s role as public relations expert Arnold Billings is worth the price of admission alone.

Unfortunately, beyond the company they represent, are PR and marketing people doing more harm than good?

Thoughts?

To which the doctor responded (which is/was here)

Well, SI, which has repeatedly told companies in our space to fire their PR firms going back to 2008: Blogger Relations, firmly believes that PR firms are doing more harm than good because

  1. you are NOT selling enterprise software to consumers and
  2. it’s not “image”, it’s “solution”!

As for marketing, corporate marketing can be good if it exists to educate and explain, but when was the last time that happened on a regular basis in our space? Over a decade ago … now it’s all AI-this, orchestrate-that, and whatever the bullcr@p of the day is. It’s all buzz, no honey. All show, no substance. All confusion, no clarity. (It’s bad enough that Trump has brought back the Land of Confusion with his populist politics that have taken by storm the first world over, we don’t need it in our workplace!)

So, right now, I’d say at least 6/7, if not 9/10, marketers are doing more harm than good and should be fired with their PR brethren.

There are over 666 companies in our space, and way too many pandering any type of solution you can think of. While we need at least 3-5 in each industry group – market size – geo region – module focus you can think of for competition, we don’t need 30+. Most are not going to survive, especially when most of these don’t have solid solutions built from years of experience that solve real customer problems (as opposed to just offering some shiny new tech that looks good but doesn’t solve the majority of pain points in real organizations).

This means that companies need to focus less on marketing and selling and more on:

  • market research, especially listening to what the real pain points are of the customers they want to sell to (and they need to focus in on a customer group here, you can’t be everything to everyone in our space and any company that thinks it can is the first company you should walk away from)
  • solution (not product) development — not shiny new tech, tried-and-true tech that works
  • market education, explaining what they do, how they do it, and why it solves real pain points after building a solution that solves the pain points they identified in their research

Which means, especially if money is tight, they should forget the marketers and instead focus on hiring researchers and educators. People are getting tired of the 80%+ tech project failure rates. They’d welcome some real insight and real focus on real solutions. If only the market would wake up and realize this!

A Company Should Never Build Its Own Enterprise Software Systems …

… and the fact that, apparently, hundreds are now thinking about building their own custom ProcureTech systems (as highlighted by a DPW Kearney presentation and referenced in THE REVELATOR‘s remote dispatch) demonstrates that the current marketing and methodologies being employed by software vendors, consultancies, and analyst firms are abysmal failures (and reinforces my statement that PROCUREMENT STINKS and that we have to clean it up)!

(The only partial exception is if a software company is building a piece of tech for a company of its size and industry, i.e. tech sourcing for startups, then it should use its own software and eat its own dog food, but it should not build any modules it doesn’t intend to sell.)

Why?

1. A company that is NOT a software company is NOT an expert in building products.

Moreover,

1b. A company that has not been validated to be best in class across the board in a function (and no such company exists, FYI) is NOT an expert in what it should be doing process wise, only on what it is doing process-wise.

As a result, it might not even be in the best position to design digital workflows, and especially not automated ones. Furthermore, even if it could do better than most on the digital workflows and automation, that doesn’t mean it can identify the right technologies for those workflows or the right stacks to build them on. And it certainly doesn’t have the chops to ensure the technology is secure, respects privacy rules, uses safe third party tech, keeps it up to date, etc.

In order to get these chops, they would have to hire a full IT team, which is very expensive, and would soar the lifetime solution cost to 10X or 20X what a solution offered by a modern SaaS provider with a multi-tenant stack would cost. With a significant percentage of that cost Up Front!

There only other option is to farm it out to a consultancy, and who are they going to choose? Probably a Big X. (You know, usually the exact opposite of who you should be hiring for niche / new technology, as pointed out in our post on When Should You Use Big X. )

2. Building takes years, and by the time it’s built, it’s out of date.

Companies need solutions now, not solutions in two, three, or five years … solutions that, by the time they are rolled out, are already outdated.

Moreover, by the time it’s rolled out, your other organizational systems are going to have changed, and then you have to integrate all the other systems to your custom solution on your own as your vendors won’t have out of the box connection options to your custom system, and that’s additional work and expense before you can get your outdated system rolled out.

3. It’s not about the product, it’s about the process.

Which means what a company really wants is a solution that embodies standard best practices with configuration options that allow the buyer to tweak it to their specific needs. As well as a solution that integrates well with their current ecosystem and provides the people who need it access when they need it as well as visibility when they need it. (In today’s verbiage, intake and orchestration, which is not new … intake was fully there in Coupa 1.0 [with respect to what the platform could do] in 2006 and Ariba was working on e-Forms back in 2000.)

3b. Furthermore, it’s about the data that drives that process!

And the most important requirement is the ability to export all system data in a standard format at any time! (Which is what almost everyone overlooks, because systems come and go, but as long as you have the data, it doesn’t matter.)

The Conclusion

And when you look at this, and you look at who’s out there, you have to wonder why more than a few companies couldn’t find at least 3 to 5 potentially good options for any ProcureTech need. The only reason, as far as I can tell, is they can’t identify them. (Because they are out there for almost every need in almost every organization in almost every industry across almost every region. As someone who has reviewed over 500 solutions in depth over two decades, the doctor says this with certainty.)

So why can’t these companies identify good vendors? As has been repeatedly commented on LinkedIn by the doctor and THE REVELATOR: there’s too much noise!

Marketing has devolved into a constant stream of one-way buzzword soundbites … which we tried to demystify a bit in the linked article earlier this year, but AI-backed, orchestration, autonomous, smart, etc. is all meaningless, and people know it.

In order to make a proper technology identification, a buyer needs to identify technology that solves the problems they are facing every day — which means they need focussed, educational, messaging that tells them about real problems the vendor’s technology was designed to solve. (Something we used to have a lot of in this space, but something I haven’t seen much of since the big M&A mania in the latter part of the 2010s where ProcureTech became the new FinTech, big enterprise investors moved in, and it became all about sell, sell, sell [and not solve, solve, solve].)

Now, this is something we should be seeing from analyst firms, but we don’t. We just see the same old maps with the same old enterprise vendors which hand over six, if not seven, figures a year to the firm to be included in their quadrants, waves, and marketscapes. Maps which are meaningless when each axis has like six different, usually subjectively scored, dimensions meshed into one.

And of course consultancies aren’t helping because the mid-markets exist by specializing in implementing smaller suites and best-of-breeds and living off of implementation referrals to the solutions they’ve learned to implement; while the Big X will quite happily tell you to build your own because they expect they will be the ones to design and build it, charging you tens of millions for something you might be able license for 1 Million a year, implement for 250K, and integrate for 500K if you are happy with an 80% to 90% solution (and then use the Big X for staff augmentation or custom extensions at a lower up-front cost, saving money for more valuable services later when you should use the Big X (and not cheap out on a low-cost consultancy without the experience).  (It would be very poor business for the Big X to turn you away!)

But at the end of the day, while it’s still buyer beware and a buyer should do his homework before engaging any vendor, we can’t help but think that a share of the fault lies with the majority of vendors who have abandoned solution first, education first methodologies and allowed revenue operations to switch to a marketing and sales first approach with no questions, please.

the doctor can’t wait for the coming rapture where THE REVELATOR has predicted that 75% of ProcureTech vendors won’t survive unscathed, because only two groups of vendors are going to survive — the really big suites with enough customers to keep going on current install base, and the new vendors who are smart enough to go back to basics, solve real problems, and lead with real solutions. Those are the vendors that SI has focussed on since it began, and the vendors that you need!

Top 10 Ways to be Labelled as a (Procure)Tech Noise / TroubleMaker!

For those of you who want to be a noise maker, trouble maker, Debbie Downer, complainer, etc. etc. etc., the doctor can confidently tell you that these are ten proven ways to accomplish that goal! Enjoy!

10. Point out that Tech Failure Rates have reached an all-time high of 88%! (Bain)

(As it is, in Procurement, We Don’t Get No Respect. We’ll get even less if 9 of every 10 projects fail! They’d fail less if … )

09. State that that RFPs for Tech should be Affordable!
(They are a critical first step in proper vendor selection once your need has been identified, and skipping this step has always proven disastrous. And then, after you select the vendor, the next step is to kick of Project Assurance, so the implementation doesn’t go off the rails.)

08. Go further and suggest that Big X SHOULD NOT be used for analytics and AI!
(The reality is, as we’ve stated again and again, limited tech talent is generally NOT interested in consulting — they want to work with the big powerful mega-corps [Meta, Alphabet, etc.] or join the wild west start-up frontier. Those not good enough get scooped up by the consultancies to try and fill the bench they need to staff the projects they sell. Doesn’t matter how good the outdated playbook is if you’re starting with the B-Team if you’re big, and rich, enough to afford it … or the C-Team if you’re not. Also, as we’ve said before, this doesn’t mean you shouldn’t use Big X for strategy, internationalization advice, etc. or the roots where they started where they have, and attract, the best people — just that, like every business decision, you have to be smart about where, and how, you engage to get your ROI. In fact, there are a whole slew of areas we generally recommend Big X for, and sometimes ONLY recommend Big X for, and these are covered in When Should You Use Big X?)

07. Dare to suggest it may be the end of an era for an early ProcureTech suite!

(Is The Third Act the Final Act?) Let’s ignore the fact that there has been more consolidation and failure in this space over the last two decades than anyone realizes, and that the seven suites appear to be sailing the seven seas without a sextant [foreshadowing?]. See SI’s classic Vendor Day Reprise and count how many of those companies are still around as-is. These were representative of the cream-of-the-crop when they were covered. The rate of disappearance is actually higher across the board!)

06. Note that Gen-AI is way overhyped.

(Unless you want suicidal people committing suicide in suicidal self-driving cars, for example. See valid uses for Gen-AI. And note that one of the big analyst firms pushing it in its hype cycle also noted that that it’s failure rate is 85%! [Source])

05. Remind people that intake & orchestrate is not new!

(With intake in ProcureTech tracing its beginnings back 24 years and orchestrate tracing it’s way back over 50 years as it’s just the fancy new name for middleware, which was a term coined in the 60s and implemented in the late 60s/early 70s with RPC being one of the earliest examples. See Point 11 for more hard truths.)

04. Rail against 2*2 vendor maps, and logo maps, as vendor selection tools!

(They are NOT Appropriate for Tech Selection. At most, they can be used to identify vendors to shortlist — but you still need to create a proper RFP! Remembering that:)

03. FREE RFPS are NOT free!

(How many times do we have to tell you There Are NO Free RFPs? Too many, since vendors will NOT get the message!)

02. State that there is no demonstrable ROI for attendees and vendors at big (Procure)Tech events.

(We need better events. A great experience is not business ROI!)

01. Mathematically argue that no business is worth more than a 10X multiple at investment time.

(‘Nuff said. Deeper dive in linked article.)

Now, I don’t know about you, but if wanting

  • (10) tech project success,
  • (09) affordable RFPs for all Procurement departments that need them,
  • (08) value for your consulting dollar,
  • (07) a true picture of the ProcureTech space and where the best cost/value ratio is for all buying organizations (not just G3000s),
  • (06) real AI powered by real HI that delivers real value,
  • (05) solutions that do what they should with (true) open APIs,
  • (04) real solution guides,
  • (03) valuable RFP advice,
  • (02) valuable events for all (not just organizers and consultants), and
  • (01) fair investments across the board for underfunded ProcureTech companies

means being a troublemaker, then make me the leader of the troublemakers! I’ve had enough of platform failures, enough of marketing soundbites, enough of one-way sales, enough of vendor marketing packaged as analysis and advice, and enough BS. Without procurement, there is no business. And, like Rodney Dangerfield, who unfortunately never got it in his lifetime, we deserve a little respect.

Procurement deserves better!

P.S. If you lead a provider organization that wants to do better, please feel free to reach out!

Two and a Half Decades of Project Failure

  • 2024 Bain: 88% of business transformations fail to achieve their original ambitions (Source)
  • 2023 HBR: Some estimates place the failure rate as high as 80%.
  • 2023 Gartner: states that 85% of AI projects fail. As well, 87% of R&D projects never get to the production phase.
  • 2023 EY: 2/3 of senior leaders have experienced at least one underperforming [digital] transformations in the last 5 years (Source)
  • 2020 Standish Group: 66% of technology projects end in partial or total failure (based on the analysis of 50,000 projects globally). 31% of US IT projects were canceled outright and the performance of 53% ‘was so worrying that they were challenged.’ (Source)
  • 2020 McKinsey: 17% of large IT projects go so badly that they threaten the very existence of the company (Source)
  • 2020 BCG: 70% of digital transformation efforts fall short of meeting targets (Source)
  • 2020 KPMG: 70% of organizations have suffered at least one project failure in the prior 12 months (Source)
  • 2019 Everest Research Group: 78% of enterprises fail in their digital transformation initiatives (Source)
  • 2018 PWC: 75% of digital transformations fail to generate returns that exceed the original investment (Source)
  • 2018 Standish Group: only 29% of IT project implementations are successful, and 19 percent are considered utter failures (Source)
  • 2017 Gartner: 75% of all ERP projects fail (Source)
  • 2016 Innotas: 55 percent had a project fail in the last 12 months (Source)
  • 2015 Genpact: more than 66% of digital transformations fail to meet expectations (Source)
  • 2013 Innotas: 50 percent had a project fail in the last 12 months (Source)
  • 2012 McKinsey: large IT projects run 45 percent over budget and 7 percent over time, while delivering 56 percent less value than predicted (Source)
  • 2011 HBR: average project cost overrun is 27%, 1/6 projects is a black swan with a cost overrun of 200% or more Source
  • 2011 Forrester: 70% failure rate of change management initiatives (Source)
  • 2010 Deloitte: only 37% of projects delivered the functionality on time and budget meaning that 63% of projects failed to some degree (if not entirely) (Source)
  • 2009 Standish Group: failure in 68% of projects is probable (because success in 68% of projects is “improbable”) Source
  • 2001 Standish Group: 52.7% of projects will cost 189% of their original estimates and 31.1% of projects will be canceled before they ever get completed (Source)
  • 2001 Robbins-Gioia Survey: 51% viewed their ERP implementations as unsuccessful while 46% did not feel the organization understood how to use the system (Source)
  • 2001 Conference Board Survey: 40% of the projects failed to achieve their business results within one year of going live those that did achieve benefits had to wait (at least) six months longer than expected (Source)
  • 1999 Gartner: 75% of e-business projects will fail to meet the business objectives through 2002 (Source)

Is it just me, or is it the case that:

  • many of the firms who have been chronicling project failures for over two decades are also
  • many of the firms that have been guiding IT projects for over two decades?