Category Archives: Services

The Sourcing Maniacs 2008 Vendor Tour Part 17: Power Advocate

This post is a bit lengthy, so I’ve broken it into Prelude and Power.

Prelude

Wakko Faster! Faster!
The maniacs are describing their ride on the Mindbender at the West Edmonton Mall, which they visited after meeting with Upside Software (acquired by SciQuest, rebranded Jaggaer).
the doctor I’m glad you enjoyed your trip to The Mall, but would you like to get back to where we left off before I had you jump ahead in your story?
Yakko Where were we?
the doctor You were describing your on-line review of MFG
Wakko MFG … it’s dynamite
MFG … it’ll win the fight
MFG … it’s the power load
MFG … watch it explode!
  air guitar
the doctor Yes, Wakko, we covered that already. So who did you visit next?
A brief moment of silence while they collect their thoughts … a daunting task for Wakko.
Wakko I’ve got the Power!
the doctor Uhmm …
Yakko That’s right! Power Advocate.

We were sitting in the Chinese Cafe …
Wakko finishing up our sixth order of Chow Mein …
Dot while wrapping op our review of MFG.
The maniacs return to their story and, as usual, proceed to ignore me.
Dot Where to next?
Wakko Hopefully someplace a little less breezy. I’ve lost three kites today!
The maniacs are still in Chicago, having recently visited Kinaxis before hopping into the cyber-enabled Chinese Cafe for their MFG research.
Yakko We’re on the N’s. I don’t know many N’s. New Momentum?
Dot Predictive market intelligence using optimization models. I think that’s a wee bit over Wakko’s head.
Yakko Fair Enough. NewView?
Dot Visibility solutions for automotive and aerospace?
Yakko I think so.
Dot Given the turmoil in those markets, I’m sure they’re too busy trying to get their solution installed at manufacturers that desperately need it to talk to us.
Yakko Possibly. the doctor did mention that he’s never been successful in his reach out attempts to them …
Next Generation Logistics?
Dot Again, Logistics.
Yakko Right. Not our focus. Well, I’m tapped.
Again, because he doesn’t check the Resources Site often enough, which currently has over ten companies that start with N.
Dot On to the O’s?
Yakko Sure! I’ve always been intrigued by Open Bravo.
Dot Aren’t they headquartered in Spain?
Yakko I believe so. But maybe we could get a web-demo and research them from right here!
Wakko That would be great! I could have more chow mein … six is an unlucky number in Cantonese … while eight is very prosperous … Waiter!
Yakko Let’s see if I can Google a number …
tappity, tappity
Here we go! A US number too!
beep bip-beep-bop boop-bop-bip boop-bop-bip-beip
Operator Hello …
Yakko Hello … could we get a demo of Open Bravo?
Operator You can download Openbravo ERP through SourceForge or access our demo centre for a quick overview. As we’re open source, you have free access to the product.
Yakko Oh. Uhm … thank you?
Operator You’re welcome.
click
Dot So?
Yakko Looks like “O” stands for “Oh, Bother”.
Dot What happened?
Yakko They told me to download it and try it out for myself. I don’t know about you, but I don’t feel like installing an ERP system just to review it.
Dot Neither do I. Who else starts with O?
Yakko I’m too bummed to think about it. Let’s just move on to the P’s
Dot Perfect Commerce?
Yakko Perfect? As far as I can tell, they got their ass-whooped so bad in the market, they had to be saved by a European-based services firm by the name of Cormine, that, for reasons beyond me, decided to keep the name. Plus, especially considering what we’ve learned so far on our tour, I think it’s really conceited to claim that your applications enable “perfect” commerce.
Dot Prime Revenue?
Yakko Interesting. Online billing and payment is commodity these days, but supply chain finance is cutting edge. However, as most companies still haven’t figured out that making your suppliers wait 30 extra days for payment isn’t supply chain finance, the concept might be too innovative for the market and an area we should tread carefully in.
Dot Power Advocate?
Yakko Didn’t the doctor mention them as a company he wanted checked out?
Dot I think so …
Yakko Where are they?
Dot Back in Boston …
Wakko Awesome! I was just thinking how great a cream pie would be to top off my eighth order of Chow Mein!
Wakko is, apparently, addicted to Boston Cream Pies.
Yakko I guess that settles it. Back to Boston we go!
Wakko So who will we be visiting?
Dot Power Advocate …
Wakko I’ve got the Power!
Yakko Wha …
Wakko Like the crack of the whip I snap attack
Front to back in this thing called rap
Dig it like a shovel rhyme devil
On a heavenly level
Bang the bass turn up the treble
Radical mind day and night all the time
Seven to fourteen wise divine
Maniac brainiac winning the game
I’m the lyrical Jesse James

apparently, Wakko likes Snap

Power

We rejoin the maniacs a few days or so later back in Boston.
Dot Are we here?
Yakko I don’t know … I always get so turned around in this city … even Wakko could have done a better job at urban planning!
Dot I think this is the right address.
Wakko raps on the door with his mini-mallet
British Professional Good day, sirs and madam. How can I help you?
Wakko Do you have the power?
British Professional Well, as you Americans say, we always pay the hydro on time …
Yakko I believe what my colleage is asking if this is Power Advocate.
British Professional Absolutely. How can I be of assistance?
Wakko Well, we came here from Chicago to find out what you do?
British Professional Blimey O’Reilly! You trekked all the way here from Chicago and you don’t even know what we do? Are you off your rockers?
Wakko Nope!
Somehow, Wakko has found a rocking chair.
British Professional On the cadge?
Wakko Not yet …
British Professional Well, that doesn’t sound very made up. So why are you here?
Wakko the doctor said we should give you a check-up.
British Professional Well, now I’m in bits.
Wakko You look whole to me!
British Professional looking very cautiously at Wakko
Yakko I believe what my colleague is trying to say is that the doctor of Sourcing Innovation said we should check you out if we wanted to expand our horizons.
British Professional Well that certainly clears things up a bit. I thought I was going bonkers.
Yakko Conversations with Wakko often have that effect. So, can you enlighten us.
British Professional I can definitely give you the griff. What would you like to know?
Yakko Let’s start with the basics. What do you do?
British Professional In his best American
We provide cost-effective supply-chain solutions to the energy industry with the goal of helping our customers achieve operational performance goals. We have deep expertise in the energy, utility, power, gas, chemical, and manufacturing industry; a custom 3-tier schema for the utility industry that captures detail in critical areas that UNSPSC and other generic schemas lack; tailored sourcing and spend analysis solutions; and customized category intelligence and cost-indices that you won’t find anywhere else.
Yakko That’s a mouthful!
British Professional It’s definitely not half! Where would you like to start?
Yakko Let’s start with your sourcing platform.
British Professional It’s essentially your standard e-RFX and e-Auction platform.
Yakko So why would someone choose your platform over Ariba or Emptoris?
British Professional Well, besides the fact that it’s a lot more affordably priced, it’s customized for the energy and utility industry. We have a lot of built-in commercial and technical templates as well as extensive capabilities for buyers to build their own data-sheets for apples-to-apples comparisons.
Yakko Don’t scores of platforms come with templates and templating capabilities?
British Professional They do, but buying hardware in the energy and utility industry is very different than buying a stapler from the cheapest office supply site. A lot of this stuff isn’t commodity, and even standard components are often only made by a handful of companies. Plus, it often takes a lot of detail to distinguish one component, like a transformer, from another … detail that’s lost without the right questions … which require the right templates … which requires the right category knowledge, which your average e-Sourcing firm lacks.
Yakko And you have that expertise?
British Professional Yes. That’s what differentiates us not only from other supply chain software providers, but other sourcing consultancies — our expertise in the energy industry where we’re an end-to-end solution provider. Even the new marketplace entrants, like Co-Exprise and CombineNet Energy don’t have the platform – services – market intelligence package that we can offer our customers. You have to remember, we’ve been around almost a decade, and many of our staff members have been doing this for over two decades … giving us hundreds of years of collective experience in the energy and utility industry and expertise that we feel is unmatched.
Yakko Can you tell us about your expertise?
British Professional Our expertise comes in the way of three major offerings: category intelligence based on years of experience that helps you get the most from your sourcing events; our new capital and O&M cost indices that provide our clients with leading market intelligence on the categories that matter to the energy and utility industries; and our customized taxonomy, used by a number of Fortune 500 companies, that provides the foundation for our leading spend analysis and visibility solutions.

Let’s start with our new cost indices. They’re web-based and provide our clients with real-time access to supply market data. They’re dynamic and allow users to define their own scenarios, with their own assumptions, to create their own probabilistic cost and demand forecasts in addition to the forecasts we provide them. And since they’re based on over 880 publicly available indexes that are augmented with data from over 65,000 suppliers and 1,000 international companies, they provide the most accurate market trend information you can get.

We currently offer six O&M indices and seven construction indices, with more coming in 2009, including “green” indices in first quarter and European indices in second quarter. The 5-level indices break costs down to the commodity level and allow the impact of each commodity to be measured and understood. The data goes back to 2000, and for any index, or any component category, sub-category, item, or commodity you can view trends based on at least five years of data.

These indices complement the decades of category expertise in the energy and utility industry that we bring to our clients, as well as our unique category intelligence power-search tool that acts like a Google for the energy industry. We also maintain extensive supplier lists, like Thomas Net, but with more detail, and our own category hierarchy, which underlies not only our spend analysis and visibility offering, but a number of Fortune 500 ERP taxonomies as well.

With regards to spend analysis, we offer all of the standard data-aggregation, cleansing, and enrichment capabilites that all of your standard spend analysis vendors offer, augmented by 20,000 unique industry specific auto-classification rules that allow us to parse transactions and automatically classify a much greater percentage of your spend faster.
Yakko 20,000 rules?
British Professional Yes, 20,000 rules.
Yakko I thought automatically classifying spend was easy and only required a small rule set?
British Professional That’s what the big players want you to believe. The reality is that there’s so many suppliers, so many abbreviations, so many SKUs, so many part numbers, and so many ways to identify a part in a limited-size description field that it’s almost impossible to automatically classify spend across an organization. Most solutions don’t even come anywhere close to 80% accuracy, which a good data analyst can do by hand in a few hours with the right spend analysis tool that allows real-time rule-generation and data classification!
Yakko Then how do Emptoris and Zycus do it?
British Professional Lots and lots of manual labor in India. The reality is that unless they’ve already classified spend at another company in your vertical with a similar supply base and similar purchases, they’re “automated classification engine” won’t even classify half of your spend, and they’ll have to ship it off to their offshore operation to clean it up and classify the rest. That’s why it often takes them 3 weeks to 3 months for them to build you an initial cube … they’re classifying your spend by hand and building the rules your organization needs to automatically classify similar transactions in the future.
Yakko So that’s why you have so many rules?
British Professional Yes, that’s why we have over 20,000 rules … which, by the way, only map spend in energy and utility companies. (A cross-industry solution would need hundreds of thousands of rules!) And it’s also why we use the most powerful spend analysis tool we could get our hands on that allows for real-time rule-generation and classification of spend. It’s called BIQ. You might have heard of it. Between our huge rule-set and our ability to apply our domain expertise on the fly, we can build a starting cube in a matter of hours, and do an initial spend analysis for our customers in a matter of days.
Yakko Days?!?!
British Professional Absobloodylutely!
Yakko But I keep hearing about how it usually takes a few quarters to select a solution, build a data warehouse, map the data, clean the data, enrich the data, configure the reports, and get actionable information.
British Professional Well, if you’re using last-generation technology, it certainly does, but we use BIQ, a rule-set we’ve been building for years based upon decades of experience, and deep expertise. Did you know that Lexington Analytics, another services distributor of BIQ with deep expertise in the financial industry, routinely goes to client sites and builds an initial cube, on the fly, in a few hours in their first meeting?
Yakko You must be pulling my plonker!
British Professional I assure you I’m not. With the right tool, and the right expertise, it really is possible to build starting cubes that fast. You really should read Eric Strovink’s guest posts on Sourcing Innovation carefully. A real spend analysis solution allows you to map data on the fly … and do so after you’ve applied a layered rule-set that allows you to progressively refine rules until you’ve achieved the required level of accuracy … usually 90% is sufficient for a good spend analysis. And it allows us to get results quite quickly.
Yakko But you say you also offer a web-based solution. BIQ is desktop. How do you do it?
British Professional Right now, we build the initial cube in BIQ, map it to our taxonomy, and when we have the right view, export it to our custom on-line viewing engine that provides you with dozens of built-in reports and allows you to slice and dice the data in the cube anyway you want.
Yakko Doesn’t the data get stale?
British Professional It would if we didn’t update it, and we have an automated process to do that. Which, to be quite frank, is just as good as any other product out there, as they all work the same way.
Yakko And what if the user wants more flexibility?
British Professional Such as …
Yakko Multiple-cubes. Measures. Meta-measures.
British Professional We rarely run into that. The reality is that only the power-users even think about that level of analysis. It’s not a problem though. Since we use BIQ ourselves, we can provide our clients with a full data dump of their cube at any time, the associated ruleset, and relevant report templates that will allow them to use BIQ on their own machine.

Plus, if the demand is there in the future, we will take advantage of BIQ’s new XML interface, forthcoming in its next release, that allows it to be driven over the web through a standard web-browser.
Yakko It sounds like you guys have an extensive solution for the energy industry.
British Professional We do … and we’re building out a basic contract management solution that takes into account energy-industry specific needs as we speak. An initial version will be available next year.
Yakko How will it compete with the stand-alone players like
Apttus,
CMA Contiki,
iMany,
Open Text,
Selectica,
Symfact, and
Upside Software, and a slew of others I know I’m forgetting?
British Professional It won’t. Just like our sourcing platform isn’t built to be the be-all-and-end-all of generic sourcing platforms, our contract management solution isn’t being built to be the be-all-and-end-all of enterprise contract management platforms. It’s being built to meet the needs of the energy and utility industry, and will offer capabilities, and templates, that specifically meet those needs. It will help us serve our clients better. We don’t serve companies buying staplers from office supply vendors. We serve utility companies buying transformers from electrical equipment manufacturers. There’s a big difference, and that’s why you need a customized solution.
Yakko So you really are an end-to-end solution for the energy industry.
British Professional Yes we are.
Yakko Cool.
British Professional Very, and with that I bid you ta-ta old bean!

 

Getting the Most Out of Cost Reduction

Today’s guest post is from Patrick J. Hogan, a Partner at Paladin Associates, Inc..

A recent article in Paladin Associates’ CheckMate Newsletter entitled “Cost Reduction is NOT a No-Brainer”, generated interest and requests for more information. It made the case that cost reduction programs should be carefully thought out so mistakes and inexperience don’t cause harm. What follows are some common ways that cost reduction programs can be mismanaged, go wrong, and cause real headaches. It is NOT a complete list!

Companies with inadequate spend information really don’t know what they are spending, who is doing the spending, and what suppliers they are spending with. Without such fundamental intelligence, chances are high that resources will be misdirected or wasted, and results will be sub optimized.

Many companies simply need to focus on fundamentals. It is surprising how many companies do not consolidate purchases or buying points, do not require system or product specifications, or do not require suppliers to compete on a regular basis. Many firms simply need to get back to basics.

A common oversight is indirect spending. Companies often focus exclusively on strategic direct materials and ignore indirect spending on telecom, facilities, transportation, office supplies, and so forth. Yet big savings are often available in these areas.

A frequent obstacle to efficient cost savings is lack of buy-in by the organization. It is an unfortunate fact that not everyone in a company is cost-sensitive, or sees cost reductions as being in their interest. In fact, many employees, and even managers, are “empire builders” who are actually more interested in maintaining or growing budgets, organizations, and perceived power. They may talk a good game, but really are not committed to cost-reduction. They may even fear cost reduction. Internal politics and power struggles are very often the chief obstacle to more efficient processes and procurement.

Frequently, the cost-reduction “team” lacks the specific functional expertise to effectively cost-reduce certain functions. Finance or Procurement personnel are generally not the best people to effectively cost reduce Marketing & Sales, Human Relations, Customer Service, Telecom, IT, and many other functions requiring specific product, market, contract, technical or professional functional expertise and judgment. This requires balancing both functional skills and cost awareness. Establishing cross-functional teams with both functional and procurement expertise is one solution.

“Right-sizing” or down-sizing is an area of great risk. Downsizing can improve a company’s health dramatically, or destroy morale and precipitate a “death spiral”. Many of the issues are not intuitive. This topic needs a book in itself, and requires experienced hands to get positive results.

Frankly, overly cozy vendor relationships can get in the way of effective cost-reduction. Suppliers’ sales people work to establish personal relationships and “differentiate” their products for reasons other than price. They are often successful in minimizing competition as a result. But this usually costs the buyer money!! Some favorite sacred cows are sales commissions, legal fees, HR benefits, ad agencies, and printing companies.

On the other hand, not understanding a supplier’s full capabilities can result in overlooked opportunities for savings. A supplier might well have the resources to help reduce costs through process or product changes or simple suggestions, or other approaches not defined in a formal specification or RFP.

An ironic mistake that companies can make in tough times like these is locking into a new “low” contract price, only to find that prices actually drop below that level over time…resulting in overpayment during the contract period. Don’t mortgage the future simply to insure short-term savings.

Many companies have a do-it-ourselves mentality. They do not believe they need help, or they don’t want to pay for consulting help. But nonetheless they are just not getting the total job done. “Not-invented-here” and the “we-already-thought-of-that” syndromes are common themes in many companies. The “fear factor” also plays a role… many employees are concerned about getting credit for cost-savings ideas, or of being blamed for ideas someone else may find. In our increasingly “blaming” society, they are not always being unreasonable either. Many companies have inadvertently set up win-lose scenarios on cost reduction that block the free flow of ideas and participation, and inhibit the use of consulting experts whose savings ideas might expose waste. But all companies have waste, and wise companies want to find it and remove it ASAP. Setting up a win-win environment is key, and getting outside help is smart.

A very common problem for procurement organizations is a lack of appropriate resources. Most companies, even those with large procurement staffs, lack all the skills, the manpower, the funding, and the time to turn over all the rocks required to get the total job done. An ROI analysis would frequently justify more resources. Or, temporary use of consulting resources may be appropriate.

Another common phenomenon is excessive focus on identification of cost reduction opportunities and process development, but inadequate attention on execution and results. Many companies have long lists of opportunities, but short lists of what have actually been accomplished or resulted in tangible savings. In a related vein, savings can erode over time if companies don’t monitor results, update specifications, record engineering changes, housekeep their records, etc. Implementation, follow-through, and measurement are essential in driving for results.

Effective cost reduction is not just about common sense. Like so many other things in life, it requires experience to do it right and avoid costly pitfalls. In tough times like these, with so many “new” managers being pushed into cost-reduction exercises, finding experienced hands to guide the process is critical. Professional consulting help must be considered, particularly with a company with a results-driven focus.

The Sourcing Maniacs 2008 Vendor Tour Part VIII: FieldGlass

In yesterday’s installment, we jumped ahead in our story and recounted the Maniacs’ failed attempt to infiltrate Empower and find out what Emptoris is really up to, whether or not they’re going to go public soon, and what their plans are in their quest to become the largest sourcing provider in the space. In today’s installment, we recount the maniacs’ visit to FieldGlass (acquired by SAP).

Today’s post is a long post, as it recounts the “rationale” the maniancs used in selecting Fieldglass, a lenghty definition of what contingent workforce manaagement is, as the maniacs apparently had no clue, and then a detailed description of Fieldglass’ capabilites. I’ve broken it into Preamble, Lead-In, CWM Definition*, Technology*, and Epilogue so that you can jump to the part you’re most interested in, where * indicates content,  if you’re short on time (and come back later for the rest).

Preamble

Yakko, Wakko, & Dot Oompa Loompa Doom-pa-dee-do
Yakko I have a great product for you
Yakko, Wakko, & Dot Oompa Loompa Doom-pa-dee-dee
Dot If you are wise you’ll take a look-see
Yakko, Wakko, & Dot Oracle‘s fine when you have lots of cash
It stores all your data and caches it fast
But when you’re cash-strapped, you’re hung out to dry
To watch the vultures circ’ling high
Wakko Up in the dark’ning skies
Yakko, Wakko, & Dot Oompa Loompa doom-pa-dee-dar
But now there’s Coupa, you can go far
You will buy in happiness too
Like the Oompa-Loompa doom-pa-dee-do
 
Dot the doctor sure knows how to write a catchy tune!
Wakko I could sing it all day long. ‘Cause I wanna go to the Coupa Store!
Dot So where are we going next?
Yakko I guess we’re on the D’s.
Wakko Who do we know who starts with D?
Yakko Demica.
Dot Supply Chain Finance, right?
Yakko Yep.
Dot Well, the innovation there is in the application thereof, and not necessarily in the technology, as the doctor explains nicely in the wiki-paper, so I’ll pass this time around, since we’re more focused on technology right now.
Yakko No prob. We can always do a services company tour later if we don’t find any jobs before this tech tour is over. How about Descartes?
Wakko The “delivery management” company. That’s just combining 3PL with VMI and network op-ti-my-za-shun, right?
Yakko I think so, but I’m not 100% sure.
Wakko I’ll pass for now. Too complex for me! I still have problems with 5 by 5 … I run out of fingers and toes …
Yakko Hmmm … Denali?
Dot Consulting, market intelligence, and professional placement. Again, services.
Yakko Well, dat does It. I’m out of D’s. On to the E’s!
Dot I have a sour taste in my mouth for the E’s right now.
Yakko And there’s a chance we can sneak into Empower in the fall and find out what Emptoris is up to. Ok. On to the F’s. Frictionless?
Wakko Aren’t they just a bunch of saps?
Yakko Excuse me?
Wakko Didn’t SAP buy them?
Yakko Oh, you mean S-A-Ps. Yes, you’re right! Fogbreak?
Dot Again, back in California. Too soon to go back.
Yakko FieldGlass?
Wakko What do they do?
Yakko Contingent Workforce Management.
Dot And where are they?
Yakko Chicago.
Dot That’s not too far.
Wakko Wind! I like wind! Let’s go!
Dot And since we have a mighty hike ahead of us …
the maniacs are still in Pittsburgh, PA, where they were visiting Co-exprise before doing their on-line Coupa research
let’s sing!
Wakko It was just yesterday, I ran out of feed
Dot A wascally wabbit, it ate all my seed
Yakko Hens were getting restless, I couldn’t drink my mead
Yakko, Wakko, & Dot I logged into Coupa, and it met my need
  Editor’s note: the maniacs proceed to sing all of the Coupa songs, repeatedly … and even though I think they’re pretty damn good (after all, I wrote them), they get a little tiring after you’ve heard them for the tenth time … in a row … so I’ll save you a few pages and simply point you to Davie and the Coupa Factory, It’s Coupa Time, The Coupa Hoedown, The Coupa Drinking Song, and The Coupa Store if you’re curious.

 

Lead-In

Wakko Feel that wind! We must be getting close.
Yakko Pretty darn close, actually!
Dot So why are we here? After all, isn’t contingent workforce management simply contractor management? And when you need a contractor, don’t you just call up your placement agency and get one? What’s so hard about that? And why would you need a software solution?
Wakko Quoting?
Dot e-RFX.
Wakko Billing?
Dot e-Invoicing.
Wakko Payment?
Dot e-Payment.
Yakko Firing?
Wakko Donald Trump!
Yakko Were we too hasty in selecting FieldGlass as our next target? Were we swayed by the possibility of an excuse to visit the windy city
Wakko so I could fly my kite
Yakko and not by whether or not the technology might have something to offer, making the company viable, and, thus, increasing the chances that there might be a job for us?
Dot Maybe. I’m starting to wonder about this decision.
Yakko Well, we’re here … so we might as well give them a shot!
Wakko On it!
Out comes Wakko’s mini mallet. Tap. Tap. Tap.
See, no dings!
  A man in a blue suit and dark jacket opens the door.
Dark Jacket Can I help you?
Wakko I’m Wakko!
Yakko I’m Yakko!
Dot And I’m Dot!
Yakko, Wakko, & Dot And we want to know why we’re here!
Dark Jacket Now that’s a very difficult question, and one I leave to the philosophers. I’m a technology guy myself.
Yakko What we mean is, why is FieldGlass here?

 

CWM Definition

Dark Jacket To provide a unified, best-of-breed, contingent workforce solution.
Dot But why? Isn’t contingent workforce management simply contractor management? And when you need a contractor, don’t you just call up your placement agency and get one? What’s so hard about that? And why would you need a software solution?
Dark Jacket No, and no. Why are you here?
Yakko We’re seeking enlightenment. We’re trying to find out what various solution providers offer the sourcing world.
Dark Jacket To what end?
Wakko Well, we’re trying to map the new sourcing world to find our place in it
Dot and help the doctor in his quest to educate the masses.
Dark Jacket The Doctor? I’m sorry, but you’ve lost me.
Yakko the doctor of Sourcing Innovation informed us that the best way to find our place in the sourcing world was to understand it, and the best way to understand it was to go and talk to the innovative vendors and find out what they were doing. And if we did that, we could help him in his mission to educate the sourcing world, which he says is a win-win for everybody.
Dark Jacket Sourcing Innovation … I think I’ve heard of it. It’s one of those upstart blogs, isn’t it?
Wakko It’s not just any blog … it’s the best blog if you want to learn about innovation in your supply chain.
Dot And it publishes our stories! How can you beat that!
Dark Jacket So you want me to explain what FieldGlass does?
Yakko And why anyone would need a contingent workforce management solution. Especially in supply chain. It really sounds like a simple HR tool to me.
Dark Jacket Well, it sounds to me like you don’t understand the problem. Would you like to?
Yakko, Wakko, & Dot Yes, please!
Dark Jacket OK … give me a few minutes.
  Dark Jacket disappears back inside and re-emerges a few minutes later.
Dark Jacket Since you say you’re familiar with Sourcing Innovation, we’ll start there. I did a bit of research, and found a number of informative articles on the site that frame the problem quite well, and which should allow me to convey the purpose of the FieldGlass solution to you in a manner that will be easy for you to understand.

We’re at the beginning of a talent crunch that will surpass anything the world has ever seen. Over one quarter of America’s population, and well over one third of America’s workforce, is eligible, or will soon be eligible, for retirement. The vast majority do necessary jobs. Where are their replacements going to come from?
Yakko New Graduates?
Dot Other countries?
Wakko Robots?
Dark Jacket Nope. Nope. And Nope. There aren’t near enough graduates to fill all those empty positions as American’s youth is declining. Remember, it’s the boomer generation that is retiring and birth rates have decreased since then. There are strict limits on how many people can enter the US each year to work. If we are lucky, and the incoming administration doesn’t lock down the borders even more, over the next five years, the government might permit 1% of those jobs to be filled with foreign workers. And that might be an optimistic scenario, especially since most countries around the globe are suffering talent crunches as well, and some are worse off than we are! Finally, although Disney’s Imagineering leads us to believe that it won’t be long before Robo can do all of our jobs for us, the AI that would be needed is likely still decades off so robots won’t save us either.
Yakko So we’re doomed?
Dark Jacket Only if we continue with the traditional mentality that all workers must be full time employees. The fact of the matter is that, at least to a limited extent, the vast majority of the American population, almost 80% in fact, is able to contribute to the economy in some way, shape, or form. Furthermore, if we add up all the available capacity that is going unused in the traditional employment model, we find that, at the very least, we can make a major dent in the talent crunch … and maybe even halt it altogether (at least for the time being).
Dot So how should we be thinking?
Dark Jacket Part-time. Flux-time. As needed. As available. Pre-graduate. Retiree. Disabled. Telecommute.

Many people retire because they are forced into it (because of organizational policies, especially in the public sector), because they don’t want to work full time anymore, or because they are unable to do the job they were doing, be it due to failing health or lack of education and training, and not because they want to sit on their porch and stare into space. Many of these people want to keep being productive, they just want to do it less, and maybe do it from home. And they’re great resources. Their valuable experience can be used to mentor junior employees, which helps them become better, more productive employees, faster; to improve processes, which will help the organization do more with less; and to guide management around pitfalls and traps that they know are there in the market, which can prevent the current generation from repeating the mistakes of its predecessors.

And with the high and steadily rising costs of education these days, as well as the desire to be part of the consumer economy, more and more high-school and college students are seeking part time work. Not only are they a great resource to help you with the escalating amounts of tactical work many business face in today’s economy, but utilizing them in positions that correspond to their course of study helps prepare them for full time work when they graduate.
Yakko And that’s why we need contingent workforce management?
Dark Jacket It’s one of the reasons. As I have just described, organizations can not rely on full time labor alone. In addition, the need for temporary contract labor in the services industry is going to increase as lack of talent and market forces dictate less full time employees and more contract labor. And from a business perspective, without a contingent workforce management solution, you can’t have an effective talent management program, and this costs your business money. Lots of money.
Dot How much?
Dark Jacket It depends on the company. But if you look at our Verizon Case Study, readily available on our website, you’ll see that Verizon achieved a four-month payback, 9M in savings in the first year, and a 2 year ROI of 77% after implementation of our InSite solution.
Yakko That’s a lot of cash!
Wakko So how come my wireless bill is so bloody expensive?
Dark Jacket You’ll have to take that up with Verizon, I can only tell you how contingent workforce management saves you money.
Dot So how does it do that?
Dark Jacket Simply put, it streamlines the contingent labor requisition process, simplifies the identification of resources, automates the distribution of requests, standardizes resource rates, automates the collection of quotes, tracks awards, and insures that companies always bill at the approved rate and only for approved hours on approved projects. This reduces recruitment costs, reduces processing and payment costs, and, most importantly, prevents overcharges and overpayments, which often total 20% or more at companies without contingent workforce management solutions.

 

Technology

Yakko And how does your InSite solution enable Contingent Workforce Management?
Dark Jacket Simply put, we enable the end-to-end contingent worker life-cycle, from acquisition, through onboarding, through management and payment, to offboarding, with complete historical data storage to allow you to repeat the process in the future for the same employee, same position, or same department as needed.

We do this with an application that has fully customizable workflows that support the hiring manager, approvers, HR coordinators, suppliers, and workers in each step of the procure-engage-pay-offboard cycle, to whatever level of support and detail they need.

Our application simplifies the definition and setup of a requisition, which, when driven off of a pre-configured template, will automatically populate the job title, description, department, job site, travel requirements, full position description, desired skills, approved rates, default suppliers to issues the requisition to, job status, and any other detail that is relevant to the job posting. All a hiring manager has to do is define the desired start-and-end dates and, if she desires, modify default settings and requirements if the position requires some customization. Once the requisition is completed, pre-configured rules route it to the appropriate approvers, and once it is approved, it is delivered to the appropriate suppliers using multi-tiered supply based rules that can give preferred suppliers or minority suppliers of contingent labor the ability to bid first.

Once the supplier submit candidates, the hiring manager can then use the tool to shortlist candidates (or block them from consideration), select candidates for interviews, record the interview results, select a candidate for hire, send a work-order to a supplier, and then, when the supplier accepts the work-order, “hire” the candidate.
Dot Well, that’s kind of what we’d expect a workforce management tool to do. But what’s so special about it? How does it help procurement? Why can’t we just use Word, Excel, e-Mail, and a File Server.
Dark Jacket That’s a mouthful!

Let’s start with the last question. Theoretically, you could create your template job descriptions in Word and your rate-cards in Excel, store them on a Central File Server, and then, every time you need to fill a new job, create a copy, send it out through e-mail, and store the specific instance somewhere else on a file server. And maybe if you’re a small company who only hires a few contingent workers a year, and you were very methodical, you could make that work for you. But what if you hire 100 contingent workers a year in 20 different positions. How easy do you think it would be to keep track of all the different paperwork? Let me ask it this way, you used to do Contract Management right?
Yakko Right.
Dark Jacket And for your average company with more than 500 active contracts without a contract management solution, what was the average level of contract management maturity.
Dot The average company couldn’t even find its contracts!
Dark Jacket So how well do you think the average company who has to hire hundreds, or thousands, of contingent workers a year, where each worker has her own contract, fares?
Dot Not very well.
Dark Jacket And that’s fundamentally why you need a contingent workforce management solution if you have to hire a lot of contingent workers each year.

Now, the reason it helps procurement is that it stores all of the information, including rate information, billed hours, and budgetary information in one place. This allows procurement to get up to date information at any time as to how many contingent workers in each category are hired each year, on average, and how much is being paid, on average, for each position. Procurement can use this information to initiate fact-based negotiations with contingent labor-suppliers to get better rates. Then, procurement can turn around and compare invoices versus approved rates, hours, and expenses and make sure that each worker is being paid at agreed upon rates, and no more, and that unapproved expenses are never paid. Furthermore, they can configure rules that will prevent managers from approving payments that are outside of approved rate or expense bands or that would cause a budget to be exceeded. It gives them the insight into contingent workfoce spend that they’ve never had before without this type of tool.
Dot I get it now. So what’s so special about your tool. We know other companies offer workforce solutions, and we’re wondering what sets yours apart.
Dark Jacket As you can see, it’s very easy to use and guides a user through the process.
Wakko Even I can use it, so I’ll give you that. But most tools are getting easier to use every year. Why should I use yours?
Dark Jacket I could tell you about the hundreds of little usability features we’ve crammed into this tool that make it as easy to use as Google for our average user, but instead I’ll tell you about how we think we’re really different.

Our tool, which supports over 80 Fortune 2000 Global Multi-nationals, was built to be a global tool. That means that we’ve localized it for over 30 countries …
Dot But isn’t that just changing the unit of currency and supporting different languages? If you use Java, that’s easy to code these days.
Dark Jacket It’s much more than that. When I say we’ve localized it, I mean that we’ve configure it to take into account all of the standard business practices, taxation requirements, and legal requirements of each country in which our customers have deployed it. For example, workforce management in Europe is considerably different than in the US. When you bid a rate, you have to break it down into base pay, benefits, travel, per-diem, etc. in Europe. Furthermore, you have different taxation requirements to track and different legal issues to watch out for when onboarding and offboarding. Our tool customizes its workflow and data capture to each country it is used in. And to make sure we do it right, we retain over 20 international law-firms around the globe to keep us up to date on changing requirements and ensure we go above and beyond the requirements when we enter a new country on behalf of a customer.
Wakko So I could hire a vinyard worker in France to hand pick grapes for me and be certain I was following all the rules?
Dark Jacket If you wanted to …
Wakko Awesome!
Dark Jacket That’s what we think of our tool, which can be delivered pure SaaS, and which we improve upon every day. In fact, we now not only do contingent workforce management, but we also do direct hires and service management against projects. And we also have a new InSite Visualizer tool that can be used to generate business intelligence on all of the data the tool collects and present the user with trends and patterns that emerge over time. This way they can accurately predict resource costs over the next contract cycle before entering into a negotiation or compare their data against industry average benchmarks to see how well they’re doing. This is on top of the dozens of standard reports, as well as the ad-hoc report generator, that is built into the tool and the workflow.
Yakko Contingent workforce management is sure a lot more involved then we ever thought it was!
Dark Jacket It truly is … and that’s why your standard direct goods procurment solution you get off-the-shelf won’t work and why you need a customized solution.

Now if you’ll excuse me, I have a workforce management platform to improve. Good day.

 

Epilogue

Dot That was a learning experience!
Yakko I guess it is a lot more involved than just telling HR to “get me this resource by Monday”.
Wakko I’ll say. So where are we going next?
Dot We’re on the G’s.
Wakko Didn’t the doctor recommend someone else?
Yakko I think so. Just a second.
Yakko takes out his notebook. GDM … Global Data Mining.
Dot What do they do?
Yakko BI, maybe? I don’t know. So let’s go!
Wakko OK. So where are they?
Yakko Just outside of Denver, Colorado I believe.
Wakko All right! We get to see the Rockies! Let’s go!

 

“Spend” Analysis helps the Service Chain too

It would appear that Business Intelligence, once restricted to leading edge spend analysis providers, is starting to permeate the services supply chain. As noted in a recent Industry Week article on “Creating Visibility Throughout the Service Chain”, customer dashboards, key performance indicators (KPIs), and customized reports have long been available to internal account teams but now, however, leading edge organizations are making these same tools and data available to their suppliers and customers through business portals with aggregated information from multiple enterprise and transactional data systems. This is because business intelligence in the service chain not only generates efficiency, but also creates opportunities for real customer loyalty and business growth.

As the article notes, a real analytics solution that provides a user with the ability to truly “slice and dice” data across multiple business hierarchies offers a number of benefits, which include:

  • the quick determination of how well the most strategic and / or largest revenue sites are being serviced
  • the mapping of actual service delivery performance to perceived customer satisfaction
  • the actual equipment utilization against contract terms
  • the proactive monitoring of equipment usage and synchronization of information with actual inventory
  • the ability to gather the data required to capture a true “operational index” or “readiness-to-serve indicator”

The last benefit is of particular importance. The success of the service chain relies on the ability of a service organization to quickly and efficiently serve their customer. If service is bad, the customer will go elsewhere. It’s that simple. And the only way to to gage the true “readiness-to-serve” of the organization is to get a multi-dimensional view of the data. This is because overall equipment utilization (OEE), MTBF, first-time fix rates, on-time delivery performance, service-event resolution times, call center performance, service supply-chain order-fill-rates, warranty compliance, and invoice accuracy, among other service metrics, all contribute to an organization’s “readiness-to-serve”. To extract and aggregate this data from a classic reporting tool would be a humongous project that required multiple rounds of data extraction and Excel manipulation. But in a true data analysis tool, you could slice, dice, aggregate, disaggregate, normalize, derive, re-derive, restructure, aggregate again and get the report you needed in ten minutes.

And this is something that can only be done by a real spend analysis solution, because “spend” analysis has to go beyond the spend, and be able to analyze all of the data related to the spend. Otherwise, you get an incomplete picture, and that can cause more harm than good.

Maximum Value From Your Consulting Advisors II

As I clearly pointed out in Consultants are Cheap, a good consultant can be the most cost effective business savior you’ll ever have the good fortune to hire. Especially when you consider that, unlike your top-performer who is forever consumed with the tactical day-to-day operations of the business, a good consultant can come in and spend all of his or her time applying his or her hard-earned market leading education and experience on the core strategic issues that, when effectively addressed, can take your operation to the next level.

However, as I pointed out in Maximum Value From Your Consultants, you’ll only get your money’s worth — and more — if you’re willing to:

  • Put your own ego in check.
    This will be hard for a few managers (who take after Dilbert’s Pointy-Haired Boss), especially those whose general reasoning abilities fall in the low percentiles (as per a recent psychology paper in the APA by David Dunning and Justin Kruger, summarized for the average Joe in this Salon article on Sep 22, 2008), but I know that the majority of you will understand me when I say that if you don’t do it, you’ll never truly hear what the consultant has to say.
  • Listen intently to what the consultant has to say, even if it’s not what you want to hear.
    You might think that you’re doing good in procurement and great in marketing, only to find out that you’re procurement is so-so at best and that your marketing truly sucks. It’s important to listen intently because the only way to improve is to fix your flaws, and that’s something you can’t do if you won’t admit you have a problem.
  • Be ready to take immediate action.
    There’s less than zero value in a report that sits on the shelf. How can there be less than zero? Simple, you paid for a report you failed to act on. That’s negative dollars on the balance sheet. The way you get value is to implement the recommendations that fix your problems and save you money (and / or increase your sales).

Then, you need to

  • Work with the consultant.
  • Get the consultant the data she needs promptly …
  • … and insure that the data is good.
  • Free the consultant to focus on the core issues, not just process or just technology.
  • Accept that sometimes new technology will be the answer (and sometimes it won’t).
  • Be prepared for scope creep or scope shift.
  • And to go back to school if need be.

And then, finally, you have to select the right consulting advisor for you. Start by reviewing the Advisory Checklist, because a good consultant has:

  • a depth of experience
    in the most critical areas that need to be addressed
  • a breadth of experience
    that helps him or her understand how the issues being addressed involve and impact your operation as a whole
  • true independence where YOUR outcome is concerned
    as the consultant must be free to select the right solution for you, not a solution from a solution vendor that his or her firm has a stake in
  • a deep focus on IP, Research, and Success
    as a good consultant tries to constantly stay ahead of the market in his or her primary areas of expertise
  • a strong firm behind him or her that practices internal knowledge management
    which allows their consultants to leverage their collective experience, best practices, and lessons learned from every engagement for every client

And finally, in addition to a deep down desire to generate value for each dollar they charge, a great consultant (from the consultant corral) will:

FOLLOW HER OWN ADVICE
And so will the firm that stands behind her!

That’s probably the single most important thing to remember when trying to select the consultant that’s right for you. I probably should have pointed this out before, but I thought it was obvious, and, more importantly, we’ve only just begun the consultant craze which happens every time markets start tanking and companies hemorrhaging cash go looking for consultants in a panic (when they should have been engaging those consultants all along to avoid hemorrhaging cash in the first place). In consultant crazes, good consulting firms tend to rack up big successes one after the other in a short time frame. And sometimes, these successes go to their heads, and they start thinking they can expand beyond the niches they carved out for themselves. Sometimes they have the knowledge and skills they need to expand in-house, sometimes they don’t. In the latter case, a good firm will not expand their menu of services until they get new partners on board and plugged into their methodology, even if a customer asks. So how do you know if a consultant follows her own advice? Ask her what she can’t do. A good consultant knows her limits, will tell you her limits, and, most importantly, when you encounter a problem outside the original project scope that she is unable to bring you a first class solution to, she’ll tell you, and, if her firm can’t help you (because it’s a sales operations problem and you hired them for procurement process and technology, for example), she’ll work with you to find the right consultant who can.

Furthermore, good service providers, no matter how good they are at project management, will not rush to bring software development in house — because this will substantially increase their cost of operations, and thus of service delivery, if they do not have the time, resources, and funding to devote to a full-fledged product development operation (and most [niche] consulting firms don’t). Good service providers partner with rapid-development SaaS providers when their clients need specialized solutions. They offer to manage the work for you, not do it themselves.