Category Archives: Services

The Shared Services & Outsourcing Network – A Useful Resource for Sourcing Professionals

Not too long ago, the Shared Services & Outsourcing Network was brought to my attention. Even though I was afraid that it might be another Supply Chain Social Network, I decided to check it out anyway. I’m glad I did. It’s along the lines of the type of Knowledge Network that I’ve been promoting behind the scenes for a while now — and I’m glad to see that they’re starting to appear.

The site supports two types of members: Premium Member and Associate Member. Premium memberships cost 149.99 a year and come with exclusive access to Shared Services News magazine, regular e-newsletters, full access to online articles, and upcoming job section access and three free job postings a year. Free associate memberships come with access to some of the articles on the site, the regular monthly newsletter, up to four specialist alerts, and basic access to the upcoming job section.

I signed up for a free associate membership. The Industry News goes back four months, and is indexed on five topics (strategy & governance, process & technology, people & culture, customer satisfaction, and globalization) and four functions (human resources, IT, finance & accounting, and other). The networking is limited to knowledge sharing Q&A forums and Blogs (which include Peter Allen from TPI, Sam Poston of ScottMadden Inc, Dave Griebl of Monster Worldwide, and Ed Martinez of BellSouth Affiliate Services Corporation). The event listings are reasonably well populated, and broken down by Continent and Country and there are numerous resources for on-line learning including interviews, presentations, podcasts, and webinars.

In all, I think it’s a good resource for sourcing professionals who need to manage shared services or outsource business processes. There’s a significant amount of information available for free members, and with over 7,000 global members, a wealth of information available for premium members – which I believe would be a great investment for any organization that’s looking for a shared services or outsourcing partner. Take a few moments and check it out. I think it will be worth your time.

(e-Sourcing, e-Procurement, and e-Supply Chain) RFP Help Here!

Here’s irony for you: as a Purchasing and Procurement professional, some of the most complex products and services you will source are the very tools that you have to acquire in order to be successful. That’s right, I’m talking about e-Sourcing tools and e-Procurement systems.

If you’re a regular reader of Sourcing Innovation, you know that I don’t pull my punches when it comes to reviewing e-Sourcing and e-Procurement tools. I’ve seen it all, and I can assure you that there are very real differences between them — differences that can and will have a profound impact on your success.

I can help you find the tools and solutions that are right for your company and your needs.

Unlike industry analysts, who are paid by the very vendors they “review,” I do not have any skin in the game with regard to a particular approach or a particular vendor. And, unlike armchair “experts” who opine on technology without having any technology background, I am a technologist by training (a PhD computer scientist, in fact) who cannot be fooled by a pretty user interface or a piece of Marketing drivel. When I get a vendor brief, I insist on looking inside the cookie jar. I’m not satisfied just admiring the glaze on the outside. If the vendor won’t open the jar, I assume the worst, and I’m usually right. (And they don’t get a nice blog entry on Sourcing Innovation either!)

There are numerous mistakes that are easy to make in the RFI/RFP process. You should not be embarrassed if you have made some of them, because both vendors and analysts are aggressively pushing strategies that ultimately benefit them, not you. It’s very hard not to fall into the traps they’ve set for you.

For example:

  • Never, ever, use an RFI or RFP “template” from a vendor. At best, this is just a way for the vendor to sell you the exhaustive, but often mostly useless, set of “features” they happen to have. At worse, it is a way for the vendor to sow “poison pills” that other vendors will have difficulty answering, so that the scoring algorithm on the RFx will cause them to appear better than the competition, whether or not this is true.
  • Never use an analyst’s report to generate a list of “features” that the analyst believes a product should have. The analyst doesn’t know anything about you or your business, and typically knows very little about the products, either (other than what he or she has been told by the vendors who are paying him or her or his or her company).
  • Never use vendor marketing materials to decide on the “key features” that you need. Vendors often compete with each other on irrelevant points that have no bearing on the functionality that your business requires, and analysts tend to repeat these irrelevancies until they achieve a life of their own.
  • Never assume that a product is “stable” or “bullet proof” just because it’s been out there for years. I’ve seen mature RFP software utterly fail, when RFP software (after years and years of development!) ought to be a slam dunk. I’ve seen “enterprise” e-procurement systems where the price actually charged by the vendor does not match the catalog price (you’d think they could at least get that right!). By the way, neither of these examples involve small vendors.
  • If a claim seems outrageous, it almost always is. For example, no static report can replace an opportunity assessment from a trained professional. Don’t imagine that you can base a procurement strategy on the output of an automated tool.

Fortunately for you, I’m in a unique position to help. With my dual background in technology and sourcing/procurement, I can work with you to:

  • understand what you need and do a proper Needs Assessment
  • put together an RFP that outlines the functionality you need, not an exhaustive list of useless features. Vendors want you to focus on irrelevancies; you need to focus on core value.
  • review the RFP responses and help you identify the questions you need to ask, like I did generically last year in my X-emplification and X-asperation series
  • review a potential contract in order to identify:
    • unnecessary modules
    • missing functionality
    • missing cost definitions (so you don’t get burned later on)
    • and other potential weaknesses

So if you need help with that needs assessment, RFP, or contract, reach out at any time using the contact information in the FAQ. No job is too big or too small as I know that you don’t put the cart before the horse.

P.S. Yes, as per the categorization, this is an advertisement for the doctor‘s services. I’d hoped I wouldn’t have to state the obvious, especially since I classified it as such, but it appears I have to.

 

Claro’s Crystal Customs

Our last post on Claro re-introduced you to Claro and their successful sourcing practice. Today’s post is going to cover the other parts of their consulting practice and their particular areas of specialty.

Claro now has four primary areas of specialization:

  • Sourcing & Procurement
    From Spend Analysis through Contract Management to Procure-to-Pay, Claro has capabilities across the sourcing and procurement spectrum and their partnership with Ketera (acquired by Deem) allows them to not only utilize modern e-Sourcing tools on a client’s behalf, but leave them behind as well. (Of course, a client should do its own analysis of marketing leading and best-of-breed sourcing and procurement solutions, including Ariba (acquired by SAP), BIQ (acquired by Opera Solutions, rebranded ElectrifAI), Emptoris (acquired by IBM, sunset in 2017), Enporion (acquired by GEP), and Iasta, among others, before blindly choosing the Ketera solution, because, even though Ketera might be the right fit, it might not.)
  • Insurance and Claims Management
    First party and third party claims management on behalf of insurance companies and organizations that need to make a large number of insurance related claims
  • Healthcare
    Revenue Cycle Management, DRG/Clinical Documentation Support, Healthcare Process Improvement, Self-Pay Management, Drug Discount Programs, and other healthcare services. Claro has worked with over 450 hospitals across the US both individually and in health systems of up to 25 hospitals. They’ve also worked with large academic medical centers.
  • Bankruptcy
    Claro has just started a new bankruptcy practice out of their New York office to help those clients that are being hit hardest by a market that has given us the double whammy of stagflation.

Their background gives them particular strength in insurance and healthcare. For example, they recently helped one of the largest insurance providers in the country optimize their benefit plans to save themselves, and their clients, millions of dollars. They’re also one of the few consultancies that has leave-behind software for hospitals that helps those hospitals improve their service offerings while capturing more insurance payments.

Furthermore, in healthcare, they can help a hospital save money and increase revenue by helping them improve their DRG/Clinical Documentation. In the US, there are now approximately 700 Diagnosis-Related Groups and the proper classification of a diagnosis is critical as the benefit paid to a hospital for a given illness is often fixed based on the original DRG classification. Misclassifying a complex pneumonia as a simple pneumonia can cost a hospital hundreds, if not thousands, of dollars. Claro’s expert group, which includes medical doctors, can help a hospital improve it’s processes to insure that the diagnosis is correctly captured every time and that the hospital is able to claim all of the insurance premiums that it is due.

When you combine their insurance expertise with their healthcare process expertise and their sourcing expertise, one quickly sees that they often do their best work in hospitals and health care systems as they can improve efficiency, save money, and increase insurance billings in a single project. They’re definitely one of the few small jewel consulting firms to look at if you’re a health care provider.

Claro’s Crown Jewels

Last year, I blogged about how you could achieve Clarity with Claro in your sourcing projects. Since then, Claro has been named one of Seven Small Jewels for 2008 by Consulting Magazine. I was in Chicago recently, so I decided to catch up with Bart Richards, who is now a Managing Director of the Sourcing Group.

Over the past year, their sourcing practice has been growing by leaps and bounds as more and more companies are trying to find savings opportunities in an inflationary market where cost pressures on all sides are causing financial hardships across the board. The good news is that they have been successful as there are still savings to be found when the right categories are addressed, but the better news is that they understand that, in today’s market, cost avoidance is king as simply holding prices static can provide you a significant advantage over a competitor who sees their costs rise 10% to 30%.

The truth of the matter is that if your organization is still focussed on cost savings, and you are focussed only on strategically sourcing those categories you know you can save on, you’re actually losing money. How can this be? Let’s pretend that you source steel and services (or petroleum and travel, or energy and telecom, etc.). Let’s also say that you spend 10 Million on each category and that it is your expectation that you can only save on services. If put all of your effort into strategically sourcing services, you could probably save 20%. But steel prices have more than doubled over the past year. If you simply delegated steel to an e-Auction, you’re likely to find your steel prices increase 90%. Although that would be good compared to the market, that would be very bad if focussing all of your efforts on this category could have resulted in a price increase of only 60%. By focussing on savings, you saved 2M on savings only to lose 3M on steel — for a net result of a 1M loss. Not very smart. Today, it’s more important to focus on those categories that have substantially increased in price since your last sourcing event, or that are rapidly rising in price, than it is to focus on the few remaining categories that might yield savings. Because if you don’t, you find that you save a dime only to lose a dollar.

This is also why it’s critical that an organization’s sourcing performance metrics, as well as incentives and bonus plans, revolve around cost avoidance and not cost savings. After all, as I have said before, there’s no such thing as savings, because if you really can save money, it simply means that you shouldn’t have been paying that much in the first place, and that you are paying a price that should have been avoided! Now, I know it is more work to define avoidance metrics than it is to define savings metrics, but the payoff is worth more than the price. Furthermore, there are a number of on-line resources, such as the article archives and blog entries provided by Next Level Purchasing (now the Certitrek NLPA) and the wiki paper on the e-Sourcing Wiki, that you can use to guide your efforts, standard pricing indexes that you can use to precisely define average raw material price increases since your last sourcing event, and a number of consultants (including the doctor) who can help you define the right metrics as well as the right sourcing sourcing program.

With this knowledge, Claro has been successful both at finding savings for their clients in categories such as services, travel, and benefit plans as well as controlling cost increases and keeping them to a level that is usually significantly less than market average by focussing on those categories that the client can buy in bulk, hedge against, or lock in longer-term preferential agreements. They’re still saving an average of 10%+ in a number of categories for their average client, but more importantly, they’re reducing expected cost increases in key categories by 10% to 20% or more, which provides for better overall cost containment across an organization than simply focusses on the low hanging fruit.

A number of examples of their success stories can be found in the numerous case studies on their web-site, and if you want to know whether or not they have sourced a particular category recently, and what sort of results you could expect, you can contact them for more information and additional case studies relevant to your situation at any time. They’re more than happy to take your call, or your e-mail, and Bart Richards can be reached at brichards <at> theclarogroup <dot> com.

Our next post on Claro will talk about the other services Claro offers as well as some of their particular areas of expertise.

Strategic Service Knowledge Management a la Servigistics

Knowledge Management is the process of identifying, creating, representing, and distributing knowledge to those who need it. It’s a broad subject with definitions that focus on the technology, organizational, and sometimes even ecological aspects. As noted by Wikipedia, schools of thought include those that focus on intellectual capital, social planning, information theory, value networks, and even complexity while concepts tend to revolve around the dimensions of knowledge, the different stages of a knowledge-related activity where knowledge is required, and both structured and unstructured, planned and ad-hoc knowledge access.

The reality is that any definition of knowledge management will be contingent on the knowledge you need to manage and the definition that is right for you will be the one that not only addresses your issues but allows you to define and measure value. With respect to strategic service management, a knowledge management solution is one that allows your service personnel to access the knowledge they need, when they need it, and to contribute new knowledge quickly and easily to the knowledge base. It should also allow your customers to access the knowledge that is appropriate to them when they need it, in a format that makes sense to them. And it should be very easy to manage and maintain.

Specifically, it should make problems easy to diagnose and identify by a technician so that they can quickly get to a solution. To this end, it should support free search for advanced users, guided search for novice users, and direct solution access for expert users who know the system well. It should also support multimedia so that users can identify problems visually, and, if appropriate, audibly as well. The indexed solutions should be structured to not only allow information display at various levels of detail, but to allow a user to quickly jump to the portion of the solution they need.

Servigistics’ knowledge management solution allows for free-text search, guided search, and direct access by index values. It supports images, audio, and video that can be included in both problem descriptions and solutions and enables information to be be coded for display at different levels of detail depending on the user.

If the user has the right permissions, the user can update the knowledge store on the spot – which allows expert technicians to capture their knowledge as soon as they identify a new problem and a new solution. It also includes your standard “rate the usefulness of this solution” feature that not only allows users to give their feedback, but affects the order in which solutions are displayed, or queries asked, in the future as the system learns with each access. And it incorporates natural language processing which allows a solution to be found even if the search terms don’t appear in the solution as it is capable of identifying similar terms and concepts.

Now, if you’re an expert in KM, or someone who studied it ten (10) years ago, you’ll realize that there are no revolutionary features incorporated in Servigistics’ knowledge management product, as all of these features were being worked on ten (10) years ago, but you’ll also know that generic KM solutions not customized for a particular problem domain tend not to be very useful. The reality is that case-based reasoning, dynamic questioning, natural language search, and similar techniques aren’t perfect, and their accuracy degrades (rapidly) as the breadth of the solution decreases. Furthermore, people in different professions tend to work in different ways (as they are trained in different ways) and no generic solution is going to please everyone. This means that the right solution isn’t the most advanced solution, but a solution tailored to your problem domain that incorporates the most appropriate technologies.

To this end, I believe Servigistics’ offering, which is one of the first Knowledge Management solutions for the Strategic Service Management domain, is a good solution. It meets the basic requirements. It’s easy to configure and use. It’s accessible by support representatives, technicians, and customers and it can be configured to show each user the information at the right level of detail in a view tailored to them. And it integrates with their command center and the rest of their Strategic Service Management Suite, allowing each user to access it quickly and easily when they need to. It’s definitely the right approach.