Category Archives: Software Buying Guide

Source-to-Pay+ Is Extensive (P13) … But I Can’t Touch The Sacred Cows!

In our last installment (Part 12) of this series here on Sourcing Innovation (SI), we provided you a list of forty-plus (40+) vendors that could potentially meet your spend analysis needs and help you identify the cost savings, reduction, and avoidance opportunities you have in your organization as well as the best modules to achieve those cost savings, reduction, and avoidance opportunities. The right spend analysis tool properly applied will generate returns that are many orders of magnitude greater than the cost of the tool and will surprise you.

However, some of those best opportunities will be in the “sacred cows” of Marketing, Legal, and SaaS subscriptions. And you probably think you can’t do anything because you don’t have the data, Marketing and Legal won’t let you touch their spend (or give you the detail you need to even analyze it, often because they didn’t collect it), and you have no idea on what SaaS is actually being used and how much you overspend.

the doctor knows this, and knows that you might need custom solutions to manage, and analyze, this spend, so, before we move on and tackle the next module in the Source-to-Pay queue, we’re going to take a brief sidebar and provide you with short lists of vendors that specialize in each area that will collect the data you need — and sometimes even provide you with deep, customized, integrated analytics that provide you with the insights that matter (including the insights that matter on your matter spend) — to enable deep spend analysis, benchmark creation, and opportunity identification.

But first, we have to repeat our disclaimer that, as per the lists of e-Procurement vendors provided in Part 7 and the list of Spend Analysis vendors provided in Part 12, this list is most definitely in no way complete (as no analyst is aware of every company, and neither Marketing nor Legal are the particular domains of expertise of SI), is only valid as of the date of posting (as companies get acquired and go out of business, often without notice), and does not include the broader range of offerings that are available for SaaS Management (including provisioning and cloud management), Marketing (including agency management pure-plays, although DecideWare, for example, does this), or Legal (including contract authoring, management, and clause analysis — although we will cover some of these players when we get to Contract Lifecycle Management [CLM]).

Again, and we can’t say this enough, not all vendors are equal and we’d venture to say that this most definitely applies to the lists below. The companies below are of all sizes (very small to very large), offer different functionality (focussing in on different aspects of Marketing, Legal, and/or SaaS Spend Management), different levels of customization and integration, different types of companion services, focus on different company sizes and/or company types, and integrate with different Source-to-Pay and Enterprise ecosystems.

Do your research, and reach out to an expert for help if you need it in compiling a starting short list of relevant, comparable, vendors for your organization and its specific needs. For a few of these vendors, you may find a write up in the Sourcing Innovation archives, Spend Matters Pro, or Gartner cool vendor write-ups, but for many of these vendors, you’ll have to look beyond your typical sources of information as they are highly specialized and don’t fall into the typical Source-to-Pay bucket. But if you have enough Marketing, Legal, or SaaS spend, they can be highly valuable.

Note that, due to the newness of SaaS spend management, the different marketing and legal needs of every organization, and the high degree of differentiation between many of the solutions below, we are not (yet) defining baseline functionality and instead advising you to do a detailed analysis of your spend, processes, and needs and judge potential solutions based on that. If you need help with that, seek out a pro who can do the (gap) analysis and RFI creation for you.

SaaS (Software-as-a-Service) Subscription Cost Management

Company LinkedIn
Employees		 HQ (State)
Country
Beamy 60 France
BetterCloud 305 New York, USA
Cledera 63 Colorado, USA
Flexera 1026 Illinois, USA
G2 Track 792 Illinois, USA
Hudled 8 Australia
NPI Financial 410 Georgia, USA
Productiv 139 California, USA
SaaSRooms 9 United Kingdom
SaaSTrax ?? North Carolina, USA
Sastrify 166 Germany
Setyl 14 United Kingdom
Spendflo 70 California, USA
Substly Sweden
Torii 114 New York, USA
Trelica 12 United Kingdom
TRG Screen 179 New York, USA
Tropic 240 New York, USA
Vendr 404 Massachusetts, USA
Viio 18 Columbia
Zluri 111 California, USA
Zylo 144 Indiana, USA

Legal Spend Management

Company LinkedIn
Employees		 HQ (State)
Country
Apperio 48 United Kingdom
Brightflag 150 New York, USA
(LexisNexis) CounselLink 28 Ohio, USA
Fulcrum GT 158 Illinois, USA
Mitratech TeamConnect 1119 Texas, USA
Onit 339 Texas, USA
Ontra 421 California, USA
Persuit 100 New York, USA
Thomson Reuters Legal Tracker ?? Ontario
Tonkean LegalWorks 76 California
Wolters Kluwer (TyMetrix 360) ??? Netherlands

Marketing (Procurement) Spend Management

Company LinkedIn
Employees		 HQ (State)
Country
DecideWare 27 Australia
HH Global ?? United Kingdom
Mtivity 15 United Kingdom
Promost 68 Poland
RightSpend 23 New York, USA
SourceIt Market 6 Australia

Onwards to Part 14.

Good Strategies for Microsoft AND Big Software Co. Enterprise Renewals

A guest post earlier this month over on Spend Matters on 5 Mistakes to Avoid When Renewing a Microsoft Enterprise Agreement in 2015 had some good tips not just for Microsoft Enterprise Agreement renewals but Big Software Co. Renewals in general.

The major pieces of advice generalize as follows:

Waiting until the last minute for renewal negotiations.

While this may have worked in the past, the bigger providers have smartened up. They have learned that it’s not the month or quarter or the year, but profit that matters, and will wait a month to get more profit when they are sitting on a huge cash reserve. Also, they have learned that if you wait until the last minute, you probably haven’t identified any other options, and even if you did, would not have time to implement another option and it’s you they have over a barrel, not the other way around. In addition, as per the article, there are only so many sales people and, unless you are a really big customer, if the sales people are busy, they may not get to you before the licenses expire and the systems lock up.

An over focus on price and an under focus on terms and conditions.

Price is important, but, as per the article, so is matching the service offering to the organizational need. Not only do you not want to over subscribe, and end up with a large number of unused licenses, but you don’t want to subscribe for products that don’t meet organizational needs either. But this isn’t the most important thing — it’s the fine print. If organizational needs are in flux, the last thing the organization wants to be is locked into a multi-year agreement or a minimum license count, with a huge penalty if the organization tries to end the agreement early. Similarly, the organization wants to understand the full cost of a cloud service and, if additional bandwidth or CPU usage costs can be added on during periods of intensive usage, this needs to be understood as well.

Treating negotiations as a one-time event.

The buying organization may set-and-forget the three year renewal until thirty (30) months, or more, have passed, but the vendor will be analyzing the contract, and usage, every quarter and looking for ways to extend the offering as soon as possible. The organization needs to monitor its usage as well to be able to make an informed counter to a vendor who indicates that the company is nearing capacity in licenses, computing power, etc. when it is still 20% away from maxing anything out and only increasing in usage at 1% a month.

Not being audit ready.

Chances are your Big Enterprise Software Vendor has an audit clause in the contract for any licenses installed on premise. And chances are that if the organization has not had an audit in the last couple of years, that, unless the organization agrees to the default renewal (which will often be for more licenses than required at a higher rate), that the customer will be audited for usage. The organization should do it’s own software (license) audits on at least an annual basis and keep detailed records. Not only will it have the data to dispute any claims to the contrary made by the vendor, but it will be able to make sure it remains in compliance at all times.

Enterprise software is costly. But it doesn’t have to be a spend sinkhole.

Enterprise Software Companies DO NOT Need Public Relations!

Since we’re on the topic of what really grinds the doctor‘s gears, another thing that really grinds the doctor‘s gears is the incessant insistence by public relation companies that they need to be ingrained in all communication activities undertaken by an enterprise software company. To this I say, BullCrap!

Let’s start by defining what public relations is. As can easily be read on Wikipedia, public relations is the practice of managing the spread of information between an organization and the public. Let’s dwell on this. It’s the management of information flow between the organization and the public. Now let’s dwell on what enterprise software companies do. Enterprise software companies sell software made by their organization to their client organizations. Now let’s dwell on this. They move software from one organization to another organization. Not to the public. As a result, the accompanying information flow is between two organizations, not between the organization and the public. So where does public relations enter the mix?

Let’s dive into what modern Public relations organizations do, or at least try to sell perspective clients, to see if we can make any sense of this.

  • Audience Targeting

    While it’s important to sell to the right audience, enterprise software companies have a pretty good idea of who their audience is. It is companies with a potential need for their software that is their audience, and not only does marketing have a pretty good idea of what their audience is, it is their job to know what that audience is.

  • Messaging

    Messaging is of the utmost importance, especially with so many other vendors also hawking their wares, and in a world where many customers are looking for partners, or at least software providers who can offer a complete solution (software, services, and training), the messaging often has to be perfect. But this is why you have Marketing — this is their primary job.

  • Social Media Marketing

    Since many of the decision makers at a potential customer are on social media, this is an important channel in which to place your messaging. With so many social media networks (LinkedIn, Facebook, Twitter, etc.) and so many different individuals in the target organizations to target (employees, directors, C-Suite, etc.), this is a lot to manage, and secondary to the messaging and audience targeting responsibilities of Marketing. So it makes some sense to get some help here — but this help should come in the form of organizations that specialize in social media marketing for B2B organizations, not Public Relations firms that specialize in information flow to the public for B2C organizations.

  • Media Relations

    This is important for any organization that does business and needs to get its message out to the world, even if it is just the corporate sector. However, this relationship should be controlled by marketing, not some third party with a watered down message.

Now it’s no secret that the doctor does not like PR, for a host of reasons (chronicled in his Blogger Relations series), but this has nothing to do with his like of PR. This has to do with his dislike of many PR firms telling enterprise software companies that they need to be embedded in all of their communication processes and work with those companies in a collaborative and consultant manner for months and months to define their targeting, messaging, (social) media, and relations strategy and do all of the work that should be done, or at least managed, by Marketing at a very high cost to you. Not only are you shelling out 10’s of thousands of dollars for them to walk you through an exercise where you do all the work (because, let’s face it, they don’t have a clue what you’re selling, what’s unique about it, or how to uniquely position it), but you’re losing two, three, and sometimes even four quarters of momentum while you go through this drawn out exercise to get a message that your marketing team, possibly with the help of some subject matter experts, could figure out in a matter of weeks! It’s the oldest consulting trick in the book after making up a fad you don’t need — take your money to listen to you elicit what you need. (If you need to talk through your strategy to elicit your messaging, the doctor is certain a quack psychologist will be cheaper.)

So Fire That PR Firm and put your money where you need it:

  • Subject Matter Expert Consulting

    to help you figure out what is distinct about your solution and missing in your solution space

  • Thought Leadership and Expert Writing Services

    to help you get your message crystallized and down on (white) (e-)paper and in appropriate training materials for your clients

  • Social Media Campaign Management

    to manage your messaging through social media and on-line channels

Just like you shouldn’t get taken in by companies selling infinite scrolling websites that you don’t need, you shouldn’t get taken in by companies selling your collaborative PR services that you don’t need either.

IBM is Predicting the “Software-Defined Supply Chain”

In a recent article over in the Supply Chain Quarterly, Paul Brody, the Vice President and Global Industry Leader of IBM, told us that we need to Get Ready for the Software-Defined Supply Chain, and SI agrees. But the big questions of when, how, and where the transformation will start are still up in the air.

According to the article, this is the most exciting time in manufacturing since Henry Ford put the Model T on a moving production line. A wave of new technologies is emerging, maturing, and converging in a way that will reshape product design and manufacturing, shifting from a world defined by hardware and logistics constraints to one that is largely defined by software. However, despite these exciting new opportunities, the supply chain leadership at some of the world’s top companies is more focused than ever on perfecting an increasingly obsolete business model.

This is because most big manufacturing companies are overlooking the three critical technologies [that] are transforming manufacturing: 3-D printing; a new generation of intelligent assembly robots; and the rise of open-source hardware. Individually, each of these trends is transformational; together their power is multiplied.

This is all true, but the transformation is still limited to design and prototype production. Why?

While it is true that, with 3-D printing, solid parts are convertible from software design to reality at the touch of a button which instructs the machine to gradually build up an object one layer at a time by depositing materials like plastics and metals in very thin layers one atop the other, this process is slow. Something that can be moulded in a few minutes will take at least a few hours, and maybe a day, with one of these printers.

And while it is true that a new generation of robot assembly stations may cost as little as $25,000 per robot and require minimal effort for installation, which often equates to a day, or less, of a technician’s time, these low cost robots are still limited in the scope of tasks they can perform and rely heavily on complex programming which can be very hard to debug.

And while it is also true that the shared-resource model of open-source software development has spread into the realm of hardware design and that, from mechanical systems to networking equipment, hundreds of product designs are now available to anyone, no reverse engineering required, not many companies are producing this hardware. They’d rather produce their own proprietary hardware and sell it at a(n extravagant) profit. So unless you can produce the hardware you need to produce the products you need, you’re stuck with cobbling together your own designs using low cost parts (like the raspberry pi with controller add-ons or the upcoming $99 Intel board).

The reality is that while all of this technology, as it matures, will get cheaper and become more available, will start to transform manufacturing, manufacturing based on open source platforms, low-cost robots, and 3-D printing is not going to become mainstream for quite a while. However, it is going to transform design — since a designer can custom print in less than a day, on his workshop desktop, a prototype for any part he can design and conduct initial testing and analysis without having to configure a custom mould or manufacturing process. He can then use low-cost programmable robots to test streamlined, automated, production processes, and then build a test line out of open source hardware. However, once everything works as expected, because manufacturing requires economies of scale, the small-scale programmable robots are going to be replaced with larger, customized, high-speed robots; the printers with traditional moulding, bending, and cutting; and the equipment with proprietary equipment under a 24/7/365 support contract with a 1 to 4 hour response time.

Design is being revolutionized by those ready to move into the 21st century, but it will be a while still before large-scale manufacturing is revolutionized.

If a Deal Is Too Good To Be True, IT IS!

This is just as true in technology and services as it is in products. If you get four bids for a new technology platform and / or (integrated) services package and three are plus or minus 20% and one is 1/3 of the price, I guarantee that lowball bid is too good to be true. And if you did your homework, you’d instantly know it and disqualify it.

You buy a product or service because it’s cheaper to buy than to build or perform it in house. However, that product or service still has a cost to the vendor, in terms of manpower and resources — costs the vendor has to meet in order to deliver you a quality product or service. If the vendor doesn’t cover these costs, and make a fair profit, one of two things is going to happen — the vendor is going to go out of business trying to serve you at an unsustainable level or the vendor is going to deliver a significantly inferior product or service to stay afloat.

I’m reminding you of this because a number of companies have not only been looking for new solutions now that we’re into a slow recovery, but because a number of companies, desperate to reduce costs, have been rebidding everything under the organizational umbrella, including the supply management platform(s) and service contracts. And in doing so, many of them have been getting unbelievably low bids from a handful of vendors who are desperate to win (new) market share — and the companies are seriously considering these bids. These bids are unbelievable for a reason — they’re not real. They’re up front costs, and as soon as you sign on the dotted line, you’re going to be hit with “change fees”, “service costs”, “upgrade fees”, etc. if you want the same level of service being offered by the competition, who are all in the same ballpark at sustainable bids. Or, even worse, the vendor is just going to give you the platform or an initial spending report, and then disappear until renewal time because the cost only covers platform support, not project or customer support. Or, and this is the worst situation of all, the vendor is trying to build a new business (in a new vertical) and thinks it can use you as a marquis customer to attract new customers, who it will overcharge to make up for the loss on you. If it works, you’re in luck, but the vast majority of the time what happens is that either the vendor fails to deliver, because they didn’t understand the true success requirements or they didn’t understand how much it would cost and how long it would take to make you a success, and then shuts down the business. If you’re lucky, they just shut down the vertical and you get to keep using the platform until you can find a new vendor. If you’re, not, the whole vendor goes tits up and you’re left holding the empty bag.

The worst part is that every month, if not every week, I hear of yet another company who signs on the dotted line with one of these vendors offering “unbelievable” deals that “can’t be matched” — and, even worse, the company is one that should know better (because there are success stories that illustrate it understands many of the precepts of good supply management). Especially when it’s so easy-peasy to determine if a bid is reasonable or not.

It’s easy to determine a reasonable range for a (bundled) technology platform (and /) or service. All you have to do is build a should cost model. Let’s say you’re buying a SaaS e-Procurement platform and want regular project management support, best-practice training, and custom integration to your in-house technology platform. Then you know the vendor will have, at least, the following costs:

  • Platform Delivery & Maintenance
  • Account & Project Management Personnel
  • Development Personnel

If the SaaS license will require 1/50th of their data centre resources, then the base overhead to support you will be 1/50th of their data centre and support team costs. If you require about 20 hours a week of account and project management support and training, then you will require half of a senior resource who has expertise in your industry and categories. If the custom integration is expected to take two man years, than you will need the equivalent of two developers on the vendor’s staff dedicated to you.

Now, if the average cost to maintain a small data centre, or rent part of a data centre, that will support 50 similar-sized enterprise clients is 3M, then you can quickly estimate that it will cost the vendor 60K (+- 10K for a margin of error) just to have you on the books, before it lifts a finger. If the senior resource required to support you on your projects is a 120K to 150K resource, then it will cost the vendor 60K to 75K to dedicate this resource to you half of the time. And if the average developer with the necessary skills is going for 70K to 90K, that’s another 140K to 180K that the vendor needs to outlay to support you. Then, there’s the vendor’s cost of sale, which, depending on commissions structures and expenses, is probably in the 15% to 25% range, and the need for the vendor to make a fair profit, say 10% to 15%, to keep investors happy. If you add it all up, you get:

Cost $ Range
Platform Delivery & Maintenance 050K to 070K
Account & Project Management Personnel 060K to 075K
Development Personnel 140K to 180K
Subtotal 250K to 325K
Cost of Sale 040K to 070K
Profit 025K to 050K
Total 315K to 445K

This tells you that any bids you get in and around the 315K to 445K range are reasonable, that if you get any bids that are more than 600K, the vendor either doesn’t understand what you want or is trying to rip you off (up front), and that if you get any bids less than 250K, either the vendor is planning to not support you to the level you need to be supported, the vendor is planning to make it up later with “change fees” and “service fees” when you’re locked in to a long term contract and held captive, or the vendor is looking to make a poster child out of you and take unfair advantage of the relationship (and then leave you holding the empty bag if things go south).

Regardless of why the vendor gave you the unbelievable bid, one thing is clear. If you accept it, you will get screwed.