Category Archives: SaaS

Claritum – Medicine for the Procurement Soul, Part II

As per part I, while Claritum might sound like the latest miracle drug for the sinus, it’s really the latest miracle drug for Procurement — and when SI says miracle, it’s because, properly used, it really does work.

So what does Claritum cure? As per Part I, Claritum is the cure for SOOM. (SOOM, not VOOM.) Spend Out Of Management. How does it cure this? By providing a platform for spend not typically captured by the traditional Sourcing or Procurement platform so that the spend can become spend under management. This way, unless it’s spend that has to be made off site (at an event, during travel, etc.), or the buyer wants to keep the spend out of the system (because he doesn’t want the preferred product or wants to hide what the spend truly is for as long as possible), it can be made through the system that supports a process to get the right product or service at the right price.

Claritum provides a consumer shopping site solution that can be offered by the organization’s Procurement department, their service provider, or GPO. This shopping solution offers the traditional product catalogs that you will find on consumer sites like Amazon and competing provider catalog sites. It also contains standard rate-card service requisitions that you will find on (contingent and service) labour management platforms. Plus, it contains (the ability to create) template requisitions for all standard tail-spend categories, which can be searched and added to the “cart” as easy as standard catalog items. And, as expected, it contains free-form RFX ability for buyers to requisition anything not already covered. Basically, everything that can be bought through a platform can be bought through the platform and the only spend that should not be captured is on-site T&E spend (tickets for travel can be requisitioned through the platform, and the senior buyer responsible for T&E can process the request, create the PO, and then there is a PO to match the p-Card payment to) and on-site event spend, which should be a very low amount of tail-spend.

Now, this might not sound that special, as providers like IBX and Deem offer a lot of this capability, but this is just the surface of the Claritum platform. First of all, the Claritum platform was designed with multi-organizational use in mind and can be administered by a GPO who manages contracts for multiple clients, who can customize the catalog and offerings to the need of each client individually. Second, the RFX management process, which is tightly integrated into the catalog, is very deep and the requisitions can be set-up to make sure the right requests go to the right buyers and then the right approvers, and the right buyer can select the right suppliers, manage the process, select the winner, and send it back to the requisitioner who can then complete the process (and confirm the need) by adding the award to the cart, and checking out, which sends the request to the proper approver(s). Third, the API allows the platform to be integrated with all organizational ERPs, AP systems, and supplier catalogs, to make sure the right data gets into and out of the system. And fourth, and this sets it apart from all its competitors, it has the ability to manage stock inventory within the platform. Items come from the stock-room (or supplier store-room) first before requests for new shipments are made. And that stock-room inventory, including automatic replenishment rules, can be managed by an internal inventory manager, the GPO, or the vendor, depending on where the stock is located and who is (contractually) required to manage it.

Considering that many big organizations use GPOs or service providers for at least a portion of the tail-spend, it only makes sense to have a platform that can be managed by those same providers for the portion of tail-spend they manage. The Claritum platform is the only one that SI has seen that truly has these three components. The buyer store. The deep sourcing and procurement platform (which can be internal to Procurement, external in the GPO, or managed jointly). And the full featured supplier portal.

So if you want to get your tail spend under management, the doctor recommends that you check out the Claritum platform today. It really is worth a close look, even if you already have a S2P platform, because the extensive API will support integration and the ability to capture organizational spend outside of Procurement is the next big savings opportunity in many organizations. And if you have the choice of platform, Claritum is the one that should be Stuck With You.

Claritum – Medicine for the Procurement Soul, Part I

While Claritum might sound like the latest miracle drug for the sinus, it’s really the latest miracle drug for Procurement — and when SI says miracle, it’s because, properly used, it really does work better than expected.

So what does Claritum cure? SOOM. (Not VOOM, SOOM!) Spend Out Of Management. How does it cure this? Before we can answer that, we have to identify the main types of SOOM.

If Spend Under Management, SUM, is typically spend that is (strategically) sourced or requisitioned/ordered through the e-Procurement system (by way of a catalog, punch-out, requisition, or spot-buy) and tracked then SOOM is, simply put, everything else. What does this everything else look like?

  • maverick spend
  • one-time buys (for promotions, special projects)
  • print/packaging
  • Travel & Expense (T&E)
  • Event
  • MRO
  • Marketing Services
  • Uniforms and Apparel
  • Furniture
  • office products / consumables
  • low-dollar services and temporary labour
  • unique needs not met by current suppliers
  • misc. p-Card spend, including the strip club bill

Essentially, it is the “tail” spend of the organization (especially if it shows up on the p-Card of a certain executive or salesperson). In an above-average organization, this will typically be 20%-ish of spend. In a below-average organization, with a lot of spend managed by various departments and a lot of maverick spend, this could be 40%-ish of spend.

In other words, SOOM is everything Sourcing hasn’t sourced and Procurement can’t manage. Why can’t Procurement manage the spend? Let’s take the examples one by one.

  • one-time buys (for promotions, special projects)
    there is no RFX template, so the system is just by-passed
  • print/packaging
    thesystem isn’t set up to handle print jobs, so the staff just goes to staples or office depot
  • Travel & Expense
    there is no T&E platform support, so everyone just uses their own credit cards and expenses a month to three later because it’s easier
  • Event
    event management has unique requirements, and so is done offline
  • MRO
    service calls are unplanned, parts are bought as needed, and janitorial supplies are too insignificant for sourcing
  • Marketing Services
    marketing statements of work and account management requires special support, not in a standard RFX, so the tool is again bypassed
  • Uniforms and Apparel
    sizes, colours, etc. aren’t on the standard RFX, and it’s one time, and it’s easier to order through the supplier site, so that happens
  • Furniture
    it’s a one-time buy, so just go to the furniture store, put it on the p-Card
  • office products / consumables
    there’s no simple reorder form, so it’s simple to just have the accounts manager ship and bill you the monthly order and pay on the p-Card
  • low-dollar services and temporary labour
    it’s easier to call up the temp labour agency or the consultancy of choice, have them send the resource, and bill you later than try to go through the process
  • unique needs not met by current suppliers
    since the system isn’t set up for supplier discovery, you do the web search, have a few chats, find a supplier you feel comfortable with, have them ship the products, send the invoice, and then you instruct AP to pay it upon goods receipt
  • misc. p-Card spend, including the strip club bill
    for anything non-standard, if the p-Card is accepted, it is easier, especially if it’s spend you want to hide the spend until it’s too late for the organization to do anything about it (and there is a process that allows you to do so)
  • maverick spend
    for anything the buyer wants to break the rules for

In other words, the main reasons Procurement can’t manage the spend are:

  • the buyer doesn’t want the spend managed,
  • the process doesn’t support the spend, or, primarily,
  • the Sourcing and Procurement platform(s) don’t support the spend.

And that’s the kicker. Most platforms have been designed to capture the strategic or high-volume spend and customized to that, following the 80/20 rule under the assumption that most of the savings is in the top 80% which has the volume leverage and supplier relationship leverage. And while this is mostly true, especially since advanced sourcing can save an average of 10%, indicating that there is 8% potential savings, this 8% savings is only achievable over a 3 year timeframe, as most organizations only strategically source about 1/3 of their spend annually. In other words, an average organization repeatedly sourcing the same spend only saves about 3% annually. What goes unnoticed is the bottom 20% of spend which, due to lack of analysis and effort, typically contains an overspend of 10% to 30% (with an average overspend in the 15% range). This is significant. 15% of 20% is 3%, about the same as an organization pushes to the bottom line with strategic sourcing. And this spend is made every year, and this savings, if the spend could be managed, is available every year. If I’m losing out on 50% of my savings, I Want A New Drug!

So if you had a platform designed for this tail spend, which supported the right processes needed by the individuals who contribute to tail spend, most of this spend could be captured. And that’s what the Claritum platform is designed to do – capture all of the tail spend that buyers throughout the organization need to make. How does the Claritum platform do that? Come back for Part II.

Per Angusta: Purchasing CRM

Per Angusta is an interesting SaaS company in the Procurement space. While most Procurement companies focus on the Sourcing or Procurement process, or supplier management, Per Angusta focuses on the workflow that ties it all together — a workflow that is typically managed in Microsoft Excel Spreadsheet Hell.

In particular, Per Angusta is a SaaS platform built to manage sourcing pipelines, track savings for organizational validation, and make Procurement’s impact visible to the organization — which, as per Sigi Osagie (the master of Procurement Mojo), is the key to building your Procurement Brand.

One of the unique things about the Solution is that the Sourcing Project Management Tool is not only designed to manage the sourcing workflow, but to integrate with your best-of-breed sourcing and procurement tool either out of the box (and, out of the box, integrates with Rosslyn Analytics, HICX, Market Dojo, and other Per Angusta partners) or through the API that is being released shortly.

The solution contains all of the basic project management capabilities you would expect, as well as a few unexpected ones including, but not limited to, deep configuration capability, a supplier data repository, and even Slack integration. Moreover, the strengths of the solution are exactly what you need — flexible project definition and the ability to track deep negotiation details. The platform can track projects of different expense types, document proposed negotiation strategies, and document the requirements of each stage: need definition, sourcing, negotiation, and signature. This is a very powerful capability as it allows the Procurement team to demonstrate that over 80% of the costs are locked in during the design and sourcing phases, and that very little savings can be obtained if the stakeholder waits until the (end) of negotiations and the contract phase to engage Procurement.

The Per Angusta platform is one that is worth exploring in detail, and for a very in-depth review, you can check out the recent piece over on Spend Matters Pro co-authored by the doctor and the prophet.

LeanLinking: The Newest Contender in the SRM Arena

LeanLinking is a three year old Denmark company in the SRM space that you haven’t heard much about but should be aware of, especially if you are a smaller mid-market company, as this SaaS company has been rapidly developing their Best-of-Breed SRM solution since day one and it is now a very solid offering for a mid-market company desperate for supplier relationship management capability at a price-point they can afford (and this solution starts at a price point everyone can afford, but more on this later).

It’s certainly no competitor to HICX or State of Flux (both of which have been reviewed on this blog and both of which will soon see deep joint coverage by the doctor and the prophet over on Spend Matters Pro, more on this later) at this point, but when you compare it to the plethora of older-generation SIM solutions on the market, it’s the goose-that-laid-the-golden-egg for many smaller mid-market organizations that need something but have no real budget.

While the LeanLinking tool is essentially designed to help buyers build supplier report cards in preparation for supplier performance review, corrective action, and development meetings, monitor these scorecards over time, and track relevant aspects of supplier interaction, it’s built in such a way that encourages social interaction (which Generation Y likes and which the millennials like even more, which means it is something that is likely to get adopted). It also supports easy file-based data import (and can create complete data format descriptions for IT), which is very helpful to the mid-market, which keeps most of its data in Excel anyway (even though Excel is a damnation that should have already been exercised from the organization long ago). It also has a number of other basic capabilities you’d expect in a SRM system, including compliance tracking, contact management, and so on, but this is not the reason to take note of it.

The reason to take note of LeanLinking is that they realize that it’s hard for Procurement in most mid-size organizations to get any software budget (without a proven ROI, which, of course, can’t be proved until Procurement has the software — the never-ending catch-22) and have decided to bypass Finance (and IT) entirely by offering a consumer (buyer) subscription option starting at just £19 a month for a single buyer. This allows a buyer to expense the platform on his monthly expense report and bury the license cost until he has shown ROI (and then use that as an argument to get a department license, which will be a lot more valuable as the entire team will be able to share data, reduce duplication of effort, get funding to link in feeds from the ERP through the API, etc.).

It’s a novel concept and a novel platform. For more information, see the SM post by the doctor and the prophet as well as our in-depth Pro Analysis (membership required).

Why You Need MROaaS

Yes, you need MROaaS. Everyone needs MROaaS. ( But don’t tell your boss you need MROaaS, spell it out, because we all know what she’s likely to hear when your tongue trips over this one. 😉 ) Next to T&E (not T&A), it’s probably the biggest tail-spend savings opportunity in the enterprise. And it deserves to be addressed.

MROaaS, short for MRO-as-a-Service, which is itself short for Maintenance-Repair-and-Operations-as-a-Service (which is very unsexy when you say it this way), is, for large organizations that need to maintain a lot of inventory on hand, the biggest overlooked outsourcing opportunity in the business. Inventory is costly (and many estimates put annual inventory overhead at 25% of product cost). But not having the right inventory at the right place at the right time is even costlier. (Downtime leads to lost production and, ultimately, lost sales which is very costly when you still have to pay the day-to-day overhead, including your employees’ salaries.) And MRO is often the biggest consumer of long-term inventory (because the majority of goods for sale will move in and out within a few months, or even a few weeks, while MRO inventory could shit on the shelf for two years). So inventory optimization alone is a good reason to have good MRO.

But that’s not the only reason to have good MRO. The reality is that, in an average organization:

  • over 20% of inventory on the shelf is excess and/or obsolete
  • fill rates for most MRO storerooms are closer to 75%
  • there is supplier “lock-in” even where alternative sources of supply exist

And the losses mount quickly.

But these aren’t the only problems organizations face. Most also have to deal with

  • recall inventory not getting identified and then being used when it shouldn’t (which creates hazards)
  • significant expediting when a part is out of stock and it is needed yesterday
  • inefficient returns management when the wrong part gets shipped or a part is identifies as bad six months (or three years) down the road (when it might not even be returnable)

And the losses continue to mount.

But with good MRO:

  • excess and obsolete inventory can be reduced by up to 90% (or more)
  • fill rates can exceed 95%
  • alternative sources of supply are easily identified
  • recall inventory is immediately identified and returned
  • expediting becomes the exception rather than the rule
  • returns are properly handled in a timely fashion

And the organization stops bleeding red.

And this is why the organization needs good MRO. But why does it need MROaaS. Slowing down the cash hemorrhage is one thing. Improving the organization’s overall health is another. Good MRO can add value in a lot of ways. In addition to the inventory optimization that will see the results above, it can also provide:

  • proactive shipment monitoring to insure the right shipment is made at the right time
  • lean process improvement to take time and cost out of the process
  • supplier consolidation to allow for more volume-based cost reduction opportunities and more time to focus on each supplier
  • supplier development programs to insure that supplier performance improves over time

And this is just the tip of the iceberg a good MRO program can provide. But a typical organization, which never gets to the MRO tail-spend, is not an expert in MRO. It’s not even a novice in MRO management in most cases. This is where MROaaS comes in. For the most part, the only organizations that are true MRO experts are those that provide MROaaS. And since it takes true expertise to go from cost reduction to value generation, you need MROaaS.

And if you are still not convinced, the doctor and the maverick have put together a detailed four-part series over on Spend Matters on the subject that should provide all the education you need on why MROaaS is something that has to be considered if MRO spend is a significant part of the organization’s tail spend. Parts I and II are already up and available here:

  • MRO as a Service (Part 1): Embedding Procurement as the Value Engine
  • Unpacking and Applying the Value Streams of this Model: MRO-as-a-Service (Part 2)