Category Archives: Services

Dear Vendor Rep, when you hear “We have trouble … ” You SHOULD NOT assume the individual wants you to sell them whatever your closest solution is. NEVER!

Another Friday. Another dozen topics to rant about. But one has to surface to the top, and this week, it’s the circulating documents and advice on LinkedIn on what a vendor sales rep should say when a potential customer says “X”. I don’t want to get to specific, and inadvertently call people out (although I may if I see a continued push for this nonsense), but needless to say, as this is a Friday, and another rant, the “advice” being given is entirely wrong and total BullSh!t! And I’m sick of it, and as a potential customer, you should be too.

As an example, and this is not necessarily a specific example, I’ve been seeing advice along the lines of:

If a potential customer says “we have trouble managing our inventory and/or raw materials

Then a vendor rep should hear “our business could be stalled or halted if we don’t have what we need to satisfy our customer demand, produce our products, or run our production lines” and “therefore, I want inventory management, product tracking, and or storeroom/warehouse management software and I want it now“.

And then that vendor rep should identify their most appropriate software solution or platform and say “our Gruntmaster 6000 module is exactly what you are looking for as it tracks your inventory on-hand by quantity and location, as well as in process by lane and supplier, lets you assign it to builds and customers, and gives you an accurate picture of what you have on hand and when you will need to restock and even prompts to re-order” …

H3CK NO! ( Get lost, Phil. )

As another example, if a potential customer says “we are in immediate need of Procurement cost savings

Then a vendor rep should hear “if we don’t get a cutting edge e-Sourcing or e-Procurement solution ASAP we are going to get fired so, please, find us one, no matter what it costs

And then that vendor rep should identify their most appropriate software platform and say “our new Ovation Sourcing Suite, running on the new-and-improved Phantom operating system, is exactly what you need as it will save your organization at least 10% annually on your addressable spend, which we estimate to be 400M based on your current spend profile, so you can easily afford the low, low, annual license cost of 4M

AGAIN, H3CK NO! (Phil, we’re warning you!)

In neither situation does the individual want a sale. They want a solution, but that’s not a sale, and not necessarily even a piece of software.

Specifically, they want to understand what their problem is, why they are having the problem, what processes could be changed to prevent the problem, and only then what a solution needs to be in order to help them (and they want to understand what they need before they are asked to judge a solution, and how valuable that solution really is). At least if they are an individual with independent thought who wants to remain that way. (the doctor does realize that there are apparently quite a few individuals [numbering in the thousands] who would rather just belong to a cult of savings and/or a cult of technology and that there is at least one predatory vendor out there that seeks these customers out and actively convinces them to repeat the “savings” mantra until they buy in and join the cult. But there are still quite a few individuals who may eventually want your technology who abhor cults and want to retain their individuality.)

Thus, when a customer says “we are in immediate need of Procurement cost savings

What you should say is “we need to do something or our jobs are on the line, but we don’t know what and we need some guidance

And before you give them a single word of guidance, you should ask, not say, ask “why, what’s your reasoning, and where do you think that savings could come from“.

If the reason is “the boss said if we don’t cut the costs he’ll cut our jobs“,

then you should say “okay, so your boss thinks you are overspending — that may or may not be the case in the current economic and supply chain environment; the first thing you should do is a category-based spend analysis against market benchmarks to identify where your spending is, and whether any savings is likely in each category with significant spend; then, based upon any identified opportunities, you need to determine the best way to capture those savings which could be renegotiating with contracted suppliers (in exchange for a longer term), putting spot-buy suppliers under contracts, or going to market with a (multi-round) RFP

and only then should you say, “now, if you would like us to help, we offer a spend analysis tool if you can do the analysis yourself and/or [guided] spend analysis services and/or we partner with consultancy CCA who can help you with the analysis; then, if you determine that you need RFP technology, we have an advanced sourcing product that could be a perfect fit, and if you determine (re-)negotations are the big problem, we also have a contract management solution/integration with negotiation support that many of your peers have said works great in those situations; we’ll reach back out in x weeks, which is about how long the initial analysis should take, but if you get answers sooner we’re here to help

Not only will the potential customer respect you, but you will be their first callback as soon as they know what they need, and if they can skip an open RFP process in their technology selection, it’s likely you will be their first choice because they want a vendor who will listen to them, understand their problems, help them identify the root cause and the necessary processes changes and improvement, and ensure that any solution they buy is one that’s actually appropriate to their situation and one they can use. And this will be true even if your solution costs more because they are looking first and foremost for a vendor that will help them achieve the promised ROI, not just promise them one (or insist they drink the kool-aid). (Please don’t sip the Kool Aid.)

The situation for the inventory example is similar. Almost every manufacturer has an MRP, and knows what they are buying/using, so it’s likely their inventory issue is a process issue, possibly exacerbated by a lack of integration between systems, or a lack of visibility into forthcoming production plans. Similarly, every organization knows what they buy, it’s on the PO, and they know what is shipped, it’s on the ASN, and if they have a no-receipt, no-pay policy, they know they should have received what was in the ASN. But chances are there is no counting, or ASN override, when receipt is verbally acknowledged (and a buyer keys in a single “Y” when the warehouse clerk says “yeah, we got it“), no connection between the procurement system and the inventory system, no identification of where the product is stored, and no indication of whom the product was intended for.

In other-words, they probably don’t need an inventory system, they probably need an integration solution/module that connects the systems, consulting on best practices to help them get the processes right, and auxiliary modules for sales tracking or integration into sales so the inventory is properly allocated.

They may still need your solutions, but they need your knowledge first, and if you offer the right services, possibly need your consulting, more.

Remember this before you take that bad advice to lay right into an inappropriate sales pitch. At least if you want them to want you. (They don’t want a Cheap Trick anymore.)

Services Struggles? Get Zivio. It’s Apropos!

In Friday’s post we told you not to use a sub-standard sourcing solution for services sourcing because, in the end, you won’t realize the value you expect or collect the data you need to make better awards in the process. And we know that left you with questions because all the big platforms you know don’t do services, or at least do not do services well.

So, today, we provide one answer to that problem — Zivio, a relatively new player that specializes in complex services sourcing, that is Best of Breed, and that meets the requirement of being able to integrate into an existing platform or ecosystem that contains open APIs and that can accept all of the data it can capture, generate, and exchange, with its complete, open, APIs.

Zivio was designed to manage the entire process from initial project creation through supplier onboarding, selection, and approval to milestone tracking and management to close-out, final bill-out and reporting. Each step of the process is designed to be easy to use and efficient and makes use of any existing templates and knowledge in the tool, using AI where (and only where) appropriate.

Their new project definition wizard, called ScopeIQ, is designed for quick Statement of Work (SoW) creation and all a requisitioner has to do is enter a few short sentences with the most relevant keywords and the solution will suggest a title based upon similar projects in the past, which the user can accept or edit, and then, using past project descriptions (from the company and publicly available datasets), it will use AI to assemble a project description and statement of work that the user can then review and edit. If the organization does a number of similar projects, it works exceptionally well and the starting statements of work and project descriptions are quite good and often need little editing (comparatively speaking).

Once the user has accepted the SoW, they can complete the project definition by defining the appropriate metadata (category, subcategory, budget, milestones, project release date, bid closing date, award criteria, etc.) and send the project out for bid. The system can automatically identify the best suppliers based on project categorization, milestones, and past performance on similar project and the user can select these suppliers and invite them to bid with just one click.

When the bids are submitted, the users can see an overarching summary and select a sub-set for side-by-side comparison. At any time before award, the buyer can easily modify the project description and add or modify milestones. Milestones can also be added and modified after award with the right approvals and agreement from both parties.

The product has good supplier management, performance management, and approval management, especially around supplier onboarding, milestone approvals, and payment approvals. By default, the platform tracks on time performance, operational best practice, and on budget metrics by supplier, but can be configured on implementation to track more. It also computes an overall score for easy ranking purposes (which can also be customized on implementation). When it comes to reports, there are a large number of project, milestone, supplier, and financial reports out-of-the-box, and more can be easily configured on implementation. Plus, as the platform was built to integrate with your existing S2P/ERP platform / ecosystem, it can push all of the data out to an external tool where you can do additional reporting and analysis.

But the best part about the tool is the ability to define complex services projects to any level of detail needed, with as many milestones, tasks, and approvals as required, customized for the project, with breakdown costing and interim payments as needed. And then to log into the system at any time, see where a project is, see where all projects are with a supplier or where all suppliers are with a set of related projects. And the ability to quickly bring up summary reports of relevance to the appropriate level of detail at any time. It’s project based sourcing and it works great, especially when you’ve defined your first few projects and the system can use (and learn) from those templates and suggest SoWs, suppliers, and steps for you. It’s what general services sourcing should be.

Now, before we sign off, we should make it clear that we are not saying that Zivio is the only solution (especially as we’re sure we will see more in the months and years ahead as more people realize how critical proper services sourcing is), or the solution for every business (as there are custom solutions for Legal, Marketing, and SaaS, that we will be covering in our Source-to-Pay is Extensive series), but that Zivio is a solid general purpose solution for an organization with a wide array of services needs that should be considered if the organization does not have a services sourcing solution. It could be the right solution for your organization and, if it is, given the typical overspend in services categories, that means you should have been using it yesterday!

Don’t Use a Sub-Standard Sourcing Solution for Services!

If you know the Source-to-Pay software market, you know that most of the solutions out there were originally designed for indirect, commodity/finished good purchases, and most of the solutions are still targetted at those types of product-base acquisition today. (When we get to the list of sourcing vendors in our ongoing Source-to-Pay is Extensive series, you will see that this is the case.)

The reasons for this are multifold, but the main reasons [which often aren’t valid] for building, and maintaining, an indirect-focussed sourcing solution usually fall into one or more of the following:

  • for many non-manufacturing organizations and organizations that don’t require highly customized goods, indirect is the greatest percentage of external spend
    [often true, but not always the greatest savings potential]
  • it’s easier to do apples-to-apples with commodities and, thus, find the greatest savings
    [easy to do the comparison, but savings depends on the market and where the organization is overspending the most
  • services are the domain of CWM, right, so those platforms are likely covering it
    [they’re not, they’re focussed on workforce management, not project management, and that’s critical]
  • every organization has different services needs, and sourcing processes, so it would be hard to build a solution that wasn’t extremely specific to an industry and, hence, build a successful business
    [when you get specific, yes, but most organizations go outside for the same services: legal support, marketing support, tech support, facilities support, etc. and the types of work, and thus sourcing processes, are similar, its just the specific needs that differ (leasing vs. insurance vs. IP law, traditional media vs. web media, on-site vs cloud services and specific systems, etc.)]
  • it’s just too complicated and is best done manual
    [it’s certainly more work to design a solution, requires a different workflow, and most certainly the solution will requires customization on a client level, and does take more upfront build time, but services sourcing is not best done manual]

However, it’s likely that you were sold such a solution, and told that you can easily fit services into it with a bit of work, especially if the vendor also adapted it to support (limited) bills of material (BoMs) and direct (which they claimed was harder). The rigging to make it work would either be to create statements of work up front [which you should do] and getting all-in bids [which you probably should not do], or breaking the project done into phases and getting staged bids [which is good, if your stages are appropriate the time cost dwarfs the material cost], or offering it up as a time and materials and getting separate bids where you could optimize the material cost using third party market costs (and contract on behalf of the supplier) and the time cost by optimizing the resource rates against the expected hours/days, and then selecting the combined lowest cost [which isn’t bad, but extremely complicated and still leaves you with apples-to-orange comparisons later if sometimes the supplier did the material procurement and sometimes you did*]. And you can. Sort of. But it’s not a good solution, and you shouldn’t do it.


A whole host of reasons including, but not limited to:

  • force fitting square services into round holes is not a good solution
    [you’ll have to shave off the corners, and they could be important]
  • you’ll never know what part of the service is the most complex or costly if you can’t collect, and compare, the right, granular data
    [and, moreover, which suppliers are marking up the most and extorting high profits across the board because one part of the project is actually costly and complex and you have no way of knowing how big that one part is; that one part could only be 20% with the rest of the project being achievable with low-cost common cookie-cutter services]
  • when the project runs late or over budget, you’ll never really know why (unless there are a lot of change orders);
    [it might be just one of the phases or one task among 20 was considerably under-scoped or there was one part of the project in particular the supplier was just not suited for (even though they were for the rest of the project and were a stellar performer for mostly similar projects in the past, which didn’t have that one new/complex task; e.g. up until now, it was all simply enterprise system integration and installation and you used a different vendor for the security configuration and audits; but this time, the buyer baked it in to the core SoW, the supplier quoted as being able to do it, when they really didn’t have the expertise on hardening the product, configuring your firewalls, or fixing issues found by your third party security auditor)]
  • you won’t be able to build an accurate performance profile on your services providers and identify which ones typically come in on time, on budget, and to spec, while meeting any CSR/ESG or diversity targets set by your organization
    [and this is critical as those are suppliers you should be prioritizing for future projects, and those that aren’t performing as well, if strategic, are the ones that need to be the focus of development projects]
  • you won’t be able to manage, or even track, the project in the platform
    [and you should at least be able to look up where a project is with respect to milestones, whether or not it is on budget, and if the suppliers involved are involved with any other projects, and how much work a supplier has unfinished with you before you give them another award]

In other words, you should not use a sourcing solution that is substandard for services for your services projects — you should use one that is. And while this means you may have two sourcing solutions, this doesn’t necessarily mean you will need to have two data stores, SRM systems, analytics systems, etc. Modern Best-of-Breed solutions these days are being built API-first so they can plug into the solution you used for most of your sourcing and then punch out to them for specific projects, and push the awards back when you’re done. As indicated in our post last month that asked Where’s the Procurement Management Platform, you should be looking for a core solution that can serve as a platform, and then best of breed augmentations where needed, as no one vendor can do it all. And that’s okay. If they meet the majority of your need, and are willing to plug into an ecosystem, that’s where you start, especially since, as per our Source to Pay is Extensive series, you can’t implement it all at once anyway. But if you have significant services spend, you need to get it right.

* the doctor is fully aware you can compare apples to oranges, but the comparison is not very useful!

Some Additional Screen Questions for Services Suppliers

Is Your Insurance Up To Date And Can We Have a Copy of Your Policy?

Let’s face it, it’s important that you are protected. Especially if you are hiring service people that will be performing tasks that have health and safety consequences such as window washing (they fall off the bucket-pulley), installing power lines (they fry themselves or people around them), or transporting hazardous waste (which doesn’t give people super powers, but can give them acid burns or deadly radiation poisoning). You don’t want lawsuits against you for a responsibility your service provider takes.

How many people do you have with the skill sets we require? How many need to have their certifications renewed in the next 12, 24, or 36 months? How many are within 4 hours of our location?

If you need 5 contracts with a given skill set and certification to do the job, and they only have 5, and those resources are also required by their other (higher-paying) clients, what is going to happen to your timelines? They are going to be shattered.

Moreover, if the certifications need to be renewed pn a regular basis, the last thing you want is a resource that is going to be grounded in 6 months to go take a training course if that’s a critical time in your project timeline.

And if you need a guaranteed response time by a certified professional within a few hours, if the closest resource is a 4 hour plane flight away, that’s not a good situation to be in.

How many claims have been made against you in the past year? And how does it break down in terms of safety vs performance/contractual guarantees?

Face it, if the provider is large enough, something is bound to have gone wrong according to Murphy’s law, or someone is bound to have made a claim, founded or not. And even if the provider is stellar, you need to know this as claims, and lawsuits, can take up their time and resources and put a strain on them that could carry to your projects if not known or managed.

Furthermore, safety issues are paramount so if the provider doesn’t have a good track record, you will need to think twice.

What is your on-time delivery rate for projects of the type we are requesting? When you are late, what is the typical root cause?

If you get this far down the list, then the next thing is to understand when something has went wrong, why. This can allow you to devise communication and monitoring plans to possible prevent disruptions or delays through early warning and better project and service people management.

What is your approach to joint project management? They’re your people, but they need to be meeting our project timelines?

If the service people are being hired to support a long-term critical project, and lack of the right people at the right time could jeopardize that project, then you need to now you have a service provider tha twill work with you to make sure you have the right people at the right time to meet your goals.

Societal Damnation 47: XaaS

This is a damnation so damning that it was one of only two damnations that required two entire posts just to overview (and one of the few damnations the doctor could literally write an entire book on)! So just what is XaaS?

XaaS, short for Everything as a Service, is the latest craze that is going to cause your Supply Management organization nothing but suffering and pain. While it sounds really cool, because, historically, the transformation of a non-core but essential function (legal, accounting, etc.) or utility (water, electricity, waste disposal, etc.) into a service made your life easier. But, as with any good thing, it’s always possible to have too much … and with XaaS, to have too much forced down your throat even if you’re already choking on your own regurgitations.

And while the right services can provide an organization with advantages that include, but are not limited to,

  • expertise,
  • cost reduction, and
  • efficiency

for an organization that does not have the dedicated personnel, or expertise, to perform the function as good as a third party, if the wrong services (or service providers) are provided (or selected), the organization will instead be burdened with a number of considerable disadvantages that included, but are not limited to:

  • cost increase,
  • efficiency decrease,
  • loss of control, and a
  • 3rd Party Management (3PM) nightmare.

And if different business units decide to start outsourcing what they perceive as non-core functions (which are in fact core to the business or which should be managed by Supply Management or a different business unit), functions for which the service provider cannot achieve economy of scale, or functions that have not been optimized for outsourcing (which will result in an efficiency decrease as a best-practice provider will not be able to optimize inefficient workflows) willy-nilly, Supply Management will have quite a third party management mess to deal with.

In a nutshell, services are good, but, as clearly illustrated in our second damnation post on the subject, Everything-as-a-Service is a ridiculous concept and any organization that buys into it is just asking for trouble.

So what can you do when you are pushed to buy into this latest outsourcing craze?

1. Get an organizational policy in place that all services spending goes through Procurement.

This will be very hard, but unless Procurement knows about an outsourcing initiative or a XaaS buy, it can’t make sure that the organization makes the right buy, if a buy is even required at all!

2. Do your homework on each request.

Why is the service being requested. What does it do and what processes or services does it replace. Why could a third party do it better and are the third parties being considered capable of doing it better. If the process is outsourced, will the organization lose important skills or knowledge. Should a traditional product to enhance in-house be considered instead?

3. Figure out what processes are truly strategic and what process are just tactical.

Strategic processes should be kept, or at least managed, in house while tactical processes are the prime candidates for XaaS providers. From the list of tactical processes, identify those that would be best suited for outsourcing through efficiency gains or cost savings.

In other words, the key to sustentation is not jumping on the bandwagon and doing everything you can to prevent the rest of the organization from jumping on when you’re not looking.