Category Archives: SaaS

Simfoni – Ascending the Scales in Spend Analysis

Simfoni has matured and progressed quite a bit since we last covered them on Sourcing Innovation back in 2017 (in our article that discussed when a quartet’s not enough), and has even progressed since the doctor last co-covered them on Spend Matters in early 2022 (although the site revamp has conveniently erased his author credit from many of the series he co-authored) in their most recent 3-part vendor analysis (Part I, Part II, and Part III). (Note that a Spend Matters ContentHub subscription will be required to view this three-part series.)

Since the early days, when Simfoni was essentially a spend analytics solution built on Microsoft Power BI with some roll-your own customized spend analytics capabilities embedded with spend analytics process expertise, they have added quite a lot of capability on top, including both out-of-the-box and some DiY (do it yourself) analyses as well as:

  • Extensive out-of-the-box opportunity assessments
  • Impact assessments regarding GHG, ESG, and CSR elements
  • Self-serve classification and taxonomy management
  • Advanced dashboards and custom data analysis
  • Sourcing pipeline management
  • S2C (Source-to-Contract) capability accelerated through its EC Sourcing Group acquisition, including the following:
    • Self-Source/Full e-RFX (RFI, RFP, RFQ, etc.)
    • Supplier Management
    • Contract Management
  • Workflow Routing & Enablement
  • Catalog Management & Creation
  • BuyDesk & Global Sourcing Support
  • Invoice Management
  • Performance Management & Savings Tracking

In this update, we’re going to focus on Simfoni Spend Analytics. We’ll cover their S2C capability (which we last covered in 2016 in our post on how EC Sourcing was getting ready to take the mid-market by storm, and the doctor last co-covered on Spend Matters in 2021 on their 3-part vendor analysis: Part I, Part II, and Part III), in a later update. Note that we will not be covering their Global BuyDesk, their back-office GPO / Procurement-as-a-Service offering, or their Tail Spend Management Services as we focus on technology products only in this blog. But if you’re short on Procurement People Power or Category Competence, we do suggest checking these offerings out. After all, there are advantages to using the same provider for software and services, especially considering the breadth of their platform which provides a complete history and additional advantages once you’re ready to take over self-sourcing and make procurement personal.

The first screen you see in Simfoni Analytics is the “Terminal” which is the cross-application dashboard that front-ends the analytics solution providing a jumping point into key metrics and insights from each module of the full Simfoni platform, including analytics, sourcing, supplier management, and contracts. The Terminal is configurable, with several pre-built out-of-the-box widgets to choose from, which can even include currency trends / heat maps, quick links into key parts of the platform, and even (third party) content feeds.

From the Terminal, the most common jumping point will be Analytics, which has its own landing page that provides the entry point for all of the built-in dashboards which include:

  • Insights: spend summary for the current month vs the prior month, and the same month one year ago (in terms of spend, transactions, suppliers, and other key data points)
  • Spend: classic spend summary (total suppliers, transactions, POs, categories, suppliers, business units, trends, etc.)
  • Geo Mapping: spend breakdowns by regions / countries (and visual bubble map overlays)
  • Trend Analysis: insight into spend trends by supplier, category, region, etc.
  • Category Console: spend breakdowns by category and segmentation by value bracket
  • Spend Distribution: taxonometric breakdowns
  • Commonality Analysis: supplier by count of entity analysis and associated spend
  • Supplier Normalization: suppliers by duplicate count / familying opportunity and impacted spend
  • Supplier Spend Profiles: spend analysis dashboard restricted to a single supplier, possibly augmented with risk, impact, or other customized insight
  • Tail Spend: a spend dashboard limited to, and customized on, tail spend including breakdowns by invoice groupings, vendor groupings, and transaction groupings for insights into spend type (contract/non contract, direct/indirect), variance, and transaction cost

and may also include:

  • Supplier Risk: a risk dashboard based upon integrated third-party risk data feeds (from Darkbeam, out-of-the-box with subscription, or bring your own subscriptions like BVD or Ecovadis)
  • Spend Impact: the impact of your organizational spend from an environmental or social perspective, provided you have the appropriate data feeds for the necessary calculations;
  • M&A Analysis: a specialized dashboard that allows you to compare spend between two entities and do an opportunity analysis
  • Custom Insights: a dashboard custom built for very specific needs unique to your organization

In addition to these analytical dashboards that provide deep insights out of the box, the platform also has some optimizer dashboards that include:

  • Opportunity Assessment where they use the results of all their analysis above to indicate top opportunities across supplier consolidation, one-time vendor elimination, supplier normalization, production commonality, catalogue buying (vs off-catalog purchases), PPV (purchase price variance), payment terms, and other actions (based upon a custom analysis they build for you upon implementation)
  • Supplier Consolidation opportunities by bottom level category as well as projected savings (and savings range) from consolidation to the lowest cost product
  • Purchase Price Variance by product along with savings potential by item
  • P-Card centric tail spend dashboards with spend, transaction, category, supplier, user, facility, etc. breakdowns for deep insight so that what happens on the P-Card doesn’t stay on the P-Card
  • Payment Terms analysis and impact from payment term alterations

And, since the early days, they have added a lot of self-serve data management capabilities including:

  • Category Management where you can define your categories (in a taxonomy)
  • Material Description Management where you can define standard material descriptions
  • GL Description Management where you define GL codes
  • Supplier Management where you manage supplier groupings (families)
  • Transaction Management where you can drill down to the transaction level and get full details and perform transaction-level mappings
  • Taxonomy Suggestions where new classification or change requests are tracked
  • Manual Classification where you can classify by supplier, description, material, and/or GL Description and where you can see the % of currently classified transactions, suppliers, and spend

Simfoni’s Spend Analytics capabilities are quite extensive, informative, and best of all, easy-to-use. If you’re looking for a best-of-breed spend analytics solution from a mini-suite vendor that also has strong procurement services, Simfoni is a vendor you should definitely check out.

Procurement Automation: Good. Automated Procurement: Bad.

We shouldn’t have to say this. It should be very clear by now. But given that a number of vendors are using the terminology interchangeably, possibly to convince you they have the right solution, maybe it’s not clear. But it needs to be. Because procurement automation is NOT the same as automated procurement and while procurement automation, properly done, is the best investment an average over-burdened and under-resourced Procurement department can make, on the flip side, AI-driven automated procurement is the absolute worst. To put things in perspective, downgrading Excel to Lotus 1-2-3 would be a better move. But let’s back up, and start with some definitions.

Procurement Automation is the process of automating certain procurement tasks that can be best accomplished by machines and procurement automation technology is the technology that automates the tasks that can be best done by machines. In simpler terms, it automates the “thunking” by doing all of the tactical, almost mindless, work that is a waste of a senior Procurement professional’s time.

The Source-to-Pay cycle is full of tasks that are best done by machines when appropriate rules and boundaries are defined. For each major area, we’ll outline some of these tasks as an example.

Intake/Orchestration

Procurement Automation will analyze the request, identify similar requests made in the past, identify the actions used to resolve those requests, identify the suppliers considered and selected, the products and services used, and other information. It will present that information to the buyer, including the suggested actions, and allow the buyer to one-click initiate any of the suggested actions, which might include a sourcing event, contract renegotiation, catalog purchase, etc.

Sourcing

Procurement Automation will, when a user kicks off a sourcing event for one or more products, automatically bring up the suggested suppliers, automatically suggest the appropriate questionaries and forms, automatically suggest the appropriate Ts and Cs to insist on up front, automatically send the RFP to suppliers, automatically analyze the responses to make sure they are complete, in the correct format, and in an expected range; automatically compare the responses to find deviations from the norm; automatically highly the lowest and highest costs, CO2 factors, etc. and present all that information to the buyer.

Supplier Management

Procurement Automation will, when a supplier is selected, automatically handle the onboarding; monitor the data for changes; monitor the performance metrics; monitor the OTD; monitor third party financial and risk metrics; and alert the buyer to any issues and performance changes that are detrimental or may indicate forthcoming problems.

Contract Management

Procurement Automation will, when an award is selected, push the award into the Contract Management system, automatically generate the draft contract, send it to the supplier, highlight any redlines the supplier makes when it comes back and automatically inform the supplier if any non-negotiable terms and conditions (including those they agreed to when they responded to the RFP), and automate the generation of the response email when the buyer does their redlines.

e-Procurement

For catalog buys, it will automatically generate the POs, route them for necessary approvals, distribute them to the suppliers when approved, automatically match the ASNs when they come back, alert the buyers if ASNs are not received in a timely basis, and match the invoices when they come in.

Invoice-to-Pay

When the invoice comes in, it’s automatically matched to the purchase order, it’s checked for price accuracy, identified as partial or full, verified to be non-duplicate, and if any checks fail, it’s bounced back to the supplier with a description of the issues and a request for correction and resubmission. If the resubmission deals with the problems, it’s queued waiting for goods receipt/confirmation if not present, or matched if present. If the match is made, then it’s automatically sent down the approval chain, and if it’s not made within a certain time period, an alert is raised.

In all cases, it’s automating the tactical tasks that don’t require any decision making and only involving the human when necessary.

In contrast, Automated Procurement is the process by where entire procurement processes are handed over to the machine to fulfill instead of the human. In other words, when an intake request comes in and the buyer marks it for sourcing, an Automated Procurement solution will handle the entire event up to and including the award and auto-generate and distribute the Purchase Order(s). The buyer is completely bypassed and the right inventory showing up at the right time at the right price is left entirely up to the machine. Sounds good in theory. Looks good in practice when it actually works, which it will some of the time. But grinds the company to a halt when it fails.

A machine that pursues lowest cost will select an unproven non-incumbent supplier for a critical part when the suppler, who has not supplied that particular part to the company before, outbids the incumbent. It will not detect that the bid was made in an desperate attempt to help the financially struggling supplier stay in business, that the bid is not sustainable, and that the supplier is not capable of producing the part at the indicated level of quality. Then, when the first shipment is mostly defective, and the promised rush replacement order never arrives because the supplier goes out of business, the production line for the 75K luxury car folds all for lack of a single control chip. (A similar situation has occurred in the past. Recently, chip shortages stopped Cherokee production in 2021, and that wasn’t the first occurrence. Or even the second, or third.)

Machines are not intelligent. Not even close. And expecting them to make a good decision every time with no logic whatsoever (as modern Artificial Idiocy algorithms just stack probabilistic equations on top of probabilistic equations almost ad infinitum) is lunacy. So while you should invest in the best Procurement Automation tech you can get your hands on, you should steer clear of any and all Automated Procurement Solutions those fancy new startups try to sell you. While those solutions may work 90% of the time, that last 10% of the time, they won’t work that great. And, in particular, that last 1% of the time they will fail so miserable that the disruptions and losses that result will more than cancel out any and all savings and efficiencies you might get from the 90% of the time the tech worked in the beginning.

Dear (Software) Vendor: If you Missed the Ten (+ 2 Bonus) Best Practices for Success, Time to Catch Up Now!

  • Part 1 Best Practices #1 to #3
  • Part 2 Best Practices #4 to #7
  • Part 3 Best Practices 8 to 10
  • Part 4 Bonus Best Practice #1
  • Part 5 Bonus Best Practice #2

In twenty years as an independent analyst and consultant, the doctor has never encountered a small/mid-size vendor who wasn’t doing at least one of these, usually there were a couple they weren’t doing, and the lack of these practices (and knowledge) was (and sometimes still is) holding these vendors back. In other words, you definitely should read these. We are only posting these articles once.

DO NOT CONFUSE THE ILLUSION OF UNDERSTANDING WITH ACTUAL UNDERSTANDING!

Because if you do, you will believe AI is Actually Intelligent when, in fact, as we have pointed out again and again and again, it is Artificial Idiocy, and the best modern technology only uses AI for thunking, not thinking, as thinking needs to remain the domain of us humans (before X robs us of our ability to use actual words).

Not only is there no AI, but when you type a command, there isn’t even any understanding by the algorithm of what you are asking for when you type a query into an AI tool. NONE. It’s all based on a statistical algorithm that uses pre-computed similarity probabilities to infer what you are asking. That’s not understanding. Not even close.

The Guardian recently published a long read article on Weizenbaum’s nightmares: how the inventor of the first chatbot turned against AI that anyone who is even mildly contemplating an AI tool needs to read. Slowly and carefully. Three times.

Weizenbaum, who was a mathematician, computer scientist, and a student of psychoanalysis, was one of the founders of modern artificial intelligence who not only invented the first chatbot (Eliza), but also built early (mainframe) computers (back when they used vacuum tubes and took up entire rooms) for the University he was studying at, General Electric, and the Navy. In the 1960s, he was part of Project MAC at MIT, a Pentagon program for “machine aided cognition” that perfected time-sharing, created in-system messaging (like instant messaging or early email), and created new tools for word processing.

He was also one of the first to think about the implications of Artificial Intelligence years, if not decades, before anyone else and one of the founders of computer ethics. He was a genius, and when he said that Artificial Intelligence is an “index of the insanity of our world“, he was totally right — and he was right five decades before AI became the buzz-acronym-du-jour. Few people effectively saw that far ahead in technology, so maybe we should sit back and listen. Carefully.

So please take the time to read Weizenbaum’s nightmares: how the inventor of the first chatbot turned against AI and realize that AI is not the answer. Deterministic algorithms developed by smart people that have studied the problem, tested their assumptions, and been consistently proven reliable are the answer. They may be based on machine learning, but machine learning that is expertly selected, tuned, and monitored by validation code that detects when the algorithm is not performing to expectation and interjects a human into the process. Not a multi-layered pseudo-random statistical algorithm that randomly predicts the next seven days worth of orders, starting on Monday, are 210, 198, 307, 250, 185, 250, and 3095 and thinks everything is A-OK even though the store is closed on Sunday.

Serex Procurement: Easy e-Auctions for the Small Enterprise and Lower Mid-Market

Serex Procurement is a point-based solution with one purpose: to replace the spreadsheet that most e-Procurement departments in smaller companies still use to manage their procurement (as well as eliminate the thousands of emails needed to collect prices and update that spreadsheet).

You might ask why, with so many auction-centric mini-suites available on the market, and over 70 e-Sourcing solutions available, we would focus on a niche solution centred around e-Auctions, request-for-price, and centralized buyer-supplier communications. The answer is simple — not every Procurement department is supporting a large enterprise and not every Procurement department needs advanced functionality, a mini-suite, or a pricey solution with bells and whistles they aren’t going to (be ready to) use at the current state of their Procurement evolution.

It may be 2023, but there are a still a large number of Procurement departments still running Procurement events from a spreadsheet, still stuck with an archaic ERP, and, especially in the small enterprise / mid-market, still burdened with a very limited budget for Sourcing and Procurement software. Furthermore, for these departments, this single step up is sometimes everything they need from an e-Sourcing perspective at the current step of their e-Procurement journey which gives them incredible value today. (And, as per our stance that what Procurement needs is a platform that allows them to add one module at a time on their digitization journey, it’s the puzzle piece they need right now.) Also, there are organizations that bought into super suites that have an end-to-end Source-to-Pay process but no auctions, an archaic process that doesn’t support quick and easy auctions, or a user-based licensing model that prevents roll-out to the entire organization. For these organizations, a point-based auction solution with an API that supports data pull and award push through the API (or fixed-format spreadsheets where the current solutions don’t support a modern API) is exactly what they need.

Plus, the blended pricing model Serex Procurement offers makes it very affordable for companies with no budget to start on a gain share and, once the value is proven, move to a fixed price model with no gain share. More specifically, an organization can sign up for as little as $300/month by giving up 50% of their savings, or get unlimited events with 0% gain-share for $5,000/month. (Or pick a tier somewhere in between — Sourcing Innovation recommends doing the math based on the conservative end of the estimated savings on the events you will be running and picking the tier appropriately.) Furthermore, while there is a minimum contract term, an organization can upgrade their tier at any time during the contract term (once they are confident they’ll save more by upping the tier.)

The fully SaaS e-Auction solution has all of the core capability you’d expect from a modern SaaS e-Auction platform, and then some. One of the key differentiators is that the platform is SKU-based and supports the definition of SKU groups in a manner that makes it just as easy to source a direct Bill of Materials as it is to source an indirect lot of office supplies. Not many sourcing/auction platforms make it easy to do both, but Serex Procurement does.

In addition to product groups, the platform also allows the definition of bidder groups which allows an organization to group suppliers that it typically invites for a certain category (indirect) or Bill of Materials (direct). Combine this with the fact that an auction can be defined on a set of product groups and bidder groups, and this makes it extremely quick to define a new auction from scratch, and even quicker to define a new auction as a copy of a historical auction, as this only requires changing the start and end dates and times to make the copy. (Once the copy is made, a buyer can edit whatever they wish.)

As we indicated above, the auction platform supports the standard parameters you would expect, including:

  • start and end time
  • auto-extension of y minutes with a bid in the last x minutes
  • show/hide bidder position
    by setting to “hide”, the platform can be used as a simple request for price
  • tie bids accepted/rejected
  • bid increment
  • max bidder position
  • bid validation window
  • landing factors (% of savings required to leave an incumbent to acknowledge switching costs;
    basically it is a penalty factor on new suppliers)
  • shipping factor (to acknowledge additional transportation costs / currency exchange costs)
  • product yields (to account for variable wastage due to packaging/sizing)

It also supports new bidder definition, new product definition, import from spreadsheet or API for bidder or product definition, and Excel-based bidding for suppliers. Product sheets can be uploaded and attached with as little or as much information as needed, and in-platform messaging allows for easy direct or group-based communication between the buyer and suppliers.

The platform allows the buyer to setup as many email / message templates as they like, to make supplier communications quick and easy as events are created / modified. It’s also very easy to search products, bidders, and past events (to find the perfect instance of the event to copy for quick setup).

When you think about its intended market, about the only thing missing is better quick-hit RFP functionality, as the way you do it now is to set up a private price-based auction. Since they already have document management, bid sheet support, supplier and messaging support, and history management, it would be quite simple to add easy three-bids-and-a-buy RFPs where suppliers can get requests, upload their own options to fulfill a request as well as corresponding prices (at different volume breaks), and provide more detailed information and the buyer can then select one or more to either direct award to or invite to an auction with pre-certified options. Serex has acknowledged that this would be useful, and is in their queue for future development, but they are very customer driven and the queue gets prioritized based upon what current customers are asking for. However, should multiple customers converge on this, it would not take them very long to build it as they have three decades of software development and implementation experience (with the first 20 years in CRM system selection, implementation, and custom integration add/on development — an area their other division are still leading experts in).

If you are in the market niche, we strongly encourage you to check Serex Procurement out as you can get a great, unlimited use, e-Auction solution for a few thousand a month (plus modest gain share, or unlimited use platform for only 5K/month) without the need to bite off more than you can chew solution capability (and cost) wise.