Category Archives: Sourcing Innovation

The UX One Should Expect from Best-in-Class Spend Analysis … Part I

Our last series, which was a doozy at four parts, covered The UX One Should Expect form Best-in-Class Optimization (Part I, Part II, Part III, and Part IV) and while it probably left even the best-in-class optimization vendors quivering in their boots (as no vendor meets every criteria on our list, and the majority don’t even come close), it had to be done. No other advanced sourcing technology can identify, and capture, as much value year-over-year as optimization and with costs risings, budgets shrinking, competition escalating, and global conditions changing constantly, this technology is becoming a must-have for every sourcing organization period. But, as the Brits like to say, the maths are hard and you can’t expect an average buyer without an advanced degree in math, engineering, computer science, etc. to know this stuff, so it has to be useable. Very useable. It has to be stupid easy to select a cost model, pick and choose english constraints, import the costs, enter a few parameters (like maximum number of suppliers, preferred award split, etc.), and run the model. And if it’s unsolveable (because it’s over-constrained or data is missing), the reason, and the fix, has to be made crystal clear to the user.

But it’s not the only important advanced sourcing application that every sourcing organization should have. The other is spend analytics. It’s the only other advanced sourcing technology that can identify year-over-year value of 10% or more. (And while it can’t always capture that value as you will need to do a sourcing event to capture it, if you’re not doing the right sourcing events on the right categories at the right time, you’ll never realize the full extent of value that can be realized. It’s not uncommon to realize a cost reduction of 30% or more on your first appropriately designed optimization-backed multi-level global services event where you bid out at the global, national, regional, and local levels and get the right mix of the right providers in the right places for the needs at hand.) You need spend analysis, but not everyone has an advanced computer science or quantitative analysis degree, and first generation tools were so hard to use that once all of the categories in the top n report were sourced and all the suppliers in the top n suppliers put under contract, there was no more value to be had. But with an easy to use tool, the true value of analysis is exposed, and your top analysts will be finding new opportunities every day, week after week, month after month, and year over year.

But, as with optimization, it’s hard to create the right UX. It’s not just a set of fancy reports (as static reports have been proven to be useless for over a decade), but a set of capabilities that allow users to cube, slice, dice, and re-cube seven ways from Sunday quickly, easily, and repeatedly until they find the hidden value. It’s innovative new reporting and display techniques that makes outlier identification and opportunity analysis quicker and easier and simpler than its ever bin. It’s real-time data validation and verification tools that insure that a user doesn’t spend a week building a business case around data where one of the import files was shifted by a factor of 100 because of missing decimal points, destroying the entire business case in 4 clicks. And so on.

That’s why the doctor and the prophet are bringing you an even longer and more in-depth look at what makes a good User eXperience for spend analysis. In a time where there seems to be a near universal playbook for spend analysis solution providers when it comes to positioning the capability they deliver, when many vendors sound interchangeable, and when many vendors are fungible in a way that is not necessarily negative, this insight matters more than ever. Last week, over on Spend Matters Pro [membership required], the doctor and the prophet published our first piece on What To Expect from Best-in-Class Spend Analysis Technology and User Design that begins our in-depth foray into this critical, but often ill-explained, technology.

So what is required for a best-in-class spend analysis user experience? Dozens of things, but one key thing is integrated dynamic dashboards. Unlike the first generation dashboards that were dangerous and deadly (as the doctor has written about dozens of times on SI over the years, including rants here, here, here, and here), true, modern, next generation dynamic dashboards are actually useful and even beneficial. They’re ability to provide quick entry points through integrated drill down to key, potentially problematic, data sets can make sharing and exploring data faster, and the customization capabilities that allow buyers to continually eliminate those green lights that lull one into a false sense of security is the key to analytics success.

For a deeper dive into what an integrated dynamic dashboard is, check out the doctor and the prophet‘s initial description of What To Expect from Best-in-Class Spend Analysis Technology and User Design over on Spend Matters Pro [membership required] and stick around for the remainder of the series where all will become clear.

The UX One Should Expect from Best-In-Class Optimization … Part IV

In our last post on The UX One Should Expect from Best-in-Class Optimization (Part III) we continued our foray into the world of optimization and how the requirements for a good user experience go far beyond the requirements for e-RFX and even best-in-class e-Auction platforms. (We will remind you that you can review the basic requirements for e-RFX and e-Auction in our four part series on Best-in-Class e-Sourcing and Best-in-Class e-Auctions, Part I, Part II, Part III, and Part IV.)

As per the previous entry in this series, the doctor cannot emphasize enough just how important sourcing optimization is, and is about to become, for any organization that wants to continue to not only find savings but identify crucial value. This is because, as stated in our last post, in many global jurisdictions, and in North America and the UK (where many global organizations are headquartered) in particular, savings are about to go up in smoke due to inflation, protectionist policies, insufficient supply of raw materials, and forthcoming breakdowns in trade agreements.

There’s no other solution that can not only identify year-over-year savings of 10% or more but also an award scenario that will allow the organization to realize that savings of 10% or more if the award scenario is adhered to. It’s getting hard to understand how organizations, getting more budget-stressed by the year, can continue to hold out from adopting the only solution that can help them.

Buyers have to put aside their fear of the maths and go out and get a solution ASAP. But not just any solution claiming to be a true strategic sourcing decision optimization platform, or even any true strategic sourcing decision optimization platform, will do. It has to be one that provides the right user experience.

So what is the right user experience? One that satisfies about a dozen different key usability requirements, of which we’ve already discussed three — true, powerful, cost modelling; guided sourcing by the way of system-assisted “what-if” support; and identification of the constraints, or sets of, that are preventing a solution when the model is over-constrained and a solution is needed.

But this, as you can guess, is not enough. It’s only a fraction of the key requirements that need to be satisfied in order to provide the necessary user experience that will drive each and every buyer to find the value that only a true best-in-class optimization solution can be used to find.

Another key requirement, but by far not the last, is analytics-driven comparison reporting. You see, one thing that is critical in the identification and allocation of the proper award is, as the co-authors of this series identify in The UX One Should Expect from Best-In-Class Optimization Part IV over on Spend Matters Pro [membership required], effective visualization.

Why is effective visualization so critical? Consider that a power buyer’s job is to try and find the perfect scenario with the almost perfect award that maximally satisfies the constraints and the desires of all the stakeholders. This could require the comparison of dozens of alternatives that have about the same costs and about the same overall total constraint violation, but have the potential to dissatisfy each group in significantly different ways. Without an effective analytics and visualization component that can help a user visualize the mathematically minimal but not objectively minimal differences in the minds of the stakeholders, a user could spend days or weeks trying to decide on the right award variation among dozens of spreadsheets when a good visualization solution can eliminate the less desirable candidates in minutes. It’s another key requirement of a good, modern, user experience in sourcing optimization.

But, as you can guess, this is still not all a platform needs to do. For a deeper dive on this, and other requirements, check out the doctor and the prophet‘s final instalment in our optimization UX series, The UX One Should Expect from Best-In-Class Optimization Part IV, over on Spend Matters Pro [membership required] and stay tuned for our upcoming deep-dive series on the required UX for spend analysis as this will not only help you select an optimization solution with a good visualization solution but an analytics solution with a good visualization component as well.

Coupa + Trade Extensions = ??? … Part II

Back in May, the doctor indicated that at some point after Inspire he’d do a deep dive into the acquisition of Trade Extensions by Coupa. He waited as he wanted to think more on the possibilities and probabilities and get more insight into the potential, but as no additional insight appears to be coming in the short term, in our last post we began to summarize where things are at now from the perspective of a SWOT analysis. Yesterday we outlined some of the key strengths and weaknesses of both platforms. Today we will dive into some of the key opportunities and threats.

Coupa + Trade Extension Opportunities

  • Quick deployment anywhere due to pure SaaS nature
  • The great UX offered by both platforms is extremely attractive
  • Both are true market leaders in what they do
  • Both are deployed, supported, and used, globally
  • The Open Business Network can feed new suppliers and quotes into both platforms
  • All spend can be appropriately placed under management
  • Easy analysis of all spend and spend data can be accomplished between the platforms
  • Collectively, each key step of the full Source-to-Pay platform is supported
  • A large amount of educational content on both fronts that can form the foundation for end-to-end Source-to-Pay education

Coupa + Trade Extension Threats

  • Not the only Source-to-Pay offering
    Jaggaer has better CLM & SXM
    Ivalua is one platform
    etc.
  • Weak CLM and no contract analytics leaves an opening for competitors
  • Weak SPM and no best-of-breed SRM leaves another opening for competitors
  • Out-of-the-Box integrations with on-site systems is limited
    and a great web API is often only great for cloud-based solutions
  • No end-to-end category guidance and management
  • No category templates for common categories for strategic sourcing or group-purchase Tail Spend sourcing
  • The platforms do not integrate and may not for some time …
    while sourcing always precedes procurement, awards need to get from sourcing to procurement and spending needs to be monitored and analyzed against spend and logistics may need to be optimized mid-contract if demands change or factory allocations shift
  • No end-to-end education on how to master S2P to not only maximize SUM but maximize savings and value

    … but most importantly …

  • No clear direction on how the two platforms will be integrated to increase the net value of both.
    Considering there has not yet been a truly successful acquisition of a strategic sourcing optimization platform (where both the acquirer and the acquiree’s platform have thrived), this is a major threat … and worry.
  • The two companies don’t speak the same language. Not even close.

At the end of the day, as we have indicated before, there is a huge potential for both companies and all of their collective customers, but, hiding in the shadows, there is also the potential for catastrophic failure. (This was one of the priciest acquisitions of a best-of-breed platform in optimization history, and Coupa could have done a lot with the money it spent.) The jury is still out, but to be honest, the longer it takes for a clear direction to materialize, the more one naturally starts to worry.

Coupa + Trade Extensions = ??? … Part I

Back in May, the doctor indicated that at some point after Inspire he’d do a deep dive into the acquisition of Trade Extensions by Coupa. He waited as he wanted to think more on the possibilities and probabilities and get more insight into the potential, but as no additional insight appears to be coming in the short term, we’re going to summarize where things are at now, from the perspective of a SWOT analysis.

Coupa Strengths

  • Pure SaaS
  • Extremely easy to use tactical e-Procurement/P2P Solution
  • Compliant e-Invoicing in 30 Countries
  • Open Business Network
  • Integrated Expense Management … on the go
  • Integrated Budgeting
Trade Extension Strengths

  • Pure SaaS
  • Easy to use optimization-backed Strategic Sourcing Platform
  • Most powerful decision optimization platform on the market
  • Extremely powerful fact sheets for upload, verification, and analysis
  • Extensive formula and modelling support to support any category and modelling needs
  • The TESS Academy
Coupa Weaknesses

  • Integration to On-Site Systems is Limited
    (the API is great for integration to other SaaS solutions)
  • Integrated RFX/Auction support is extremely limited, no BoM support
  • Community Intelligence is limited to what is pushed through the platform
  • Large Supplier Network, but limited intelligence on reliability, sustainability, and risk
    (the Riskopy acquisition will hopefully improve the situation over time)
  • Well suited for Tail Spend, but no built-in help identifying categories that should be strategically sourced
  • Contract Management is very limited
  • Focus on just pushing spend through the platform to increase SUM detracts from value-generation opportunities
Trade Extension Weaknesses

  • Out-of-the-Box integration to other systems is extremely limited
  • No repository of out-of-the-box models for standard categories
  • Contract Management is very limited
  • No auto-classification, initial cube construction requires expertise and elbow-grease
  • No Supplier Information Management or integration with an SXM platform

Come back tomorrow where we discuss the opportunities and threats.

The UX One Should Expect from Best-In-Class Optimization … Part III

In our last post on The UX One Should Expect from Best-In-Class Optimization (Part II) we continued our foray into the world of optimization and how the requirements for a good user experience go well beyond the requirements for e-RFX and even best-in-class e-Auction platforms. (As for the basic requirements of any e-RFX or e-Auction platform, see our two-part series on Best-in-Class e-Sourcing Part I and Part II and our deeper dive into Best-in-Class e-Auctions Part I and Part II.)

the doctor cannot emphasize just how important sourcing optimization is, and is about to become, for any organization that wants to continue to not only find savings but identify crucial value, and, to be blunt, unavoidable. This is because, especially in North America and the UK (where many global organizations are headquartered), savings are about to go up in smoke due to inflation, protectionist policies, insufficient supply of raw materials, and forthcoming breakdowns in trade agreements.

Considering that it’s one of only two advanced sourcing solutions that can be used to generate year-over-year savings, and value, in excess of 10%, and the only solution that can not only identify the potential but also identify an actual award scenario to realize the savings and/or value, organizations getting budget-stressed year-over-year will not be able to hold out much longer — at least not if they want to stay competitive.

But not any platform will do, it has to be useable. Most buyers, who are afraid of, as the Brits like to say, the maths, are naturally afraid of such platforms, which they still fear are math heavy and insanely difficult to use (like the first generation platforms tended to be), and that fear will only be overcome if they see a great user experience awaits. And we mean great.

What does that entail? About a dozen different usability requirements, of which we’ve already discussed two — true, powerful, cost modelling and guided sourcing by the way of system-assisted “what-if” support.

But this is just the beginning. Another core requirement, and one the vast majority of systems have missed in the past, is automatic identification of unsatisfiable constraints. In basic sourcing optimization events, as the doctor and the prophet pointed out over on Spend Matters Pro [membership required] in our latest article on What To Expect from Best-in-Class Sourcing Optimization Technology and User Design (Part 3), the “model” itself will only be lightly constrained, as procurement will want to limit the potential inputs to award scenarios (all of which impact price) to one or only a handful of constraints. Quite often these constraints are centred around capacity in potential award decisions. But as stakeholders gather and add more constraints, the potential increases to create a null award set. And if the scenario can’t be solved, the value of optimization can’t be realized.

Sometimes a human can easily figure out which constraints are prevent solution, and sometimes, because there are so many and they all weakly constrain the award and it’s actually a set of 6 to 10 working in unison making the scenario unsolveable, a human can’t. And if a human’s only option to find a reasonable solution is just to delete constraints until the model solves, that’s not likely to generate the lowest cost award or the award that satisfies the stakeholder’s desired constraints to the maximum extent possible. The buyer or analyst really needs to know the exact constraints, or sets, causing the model to be unsolveable so she can modify, or remove, just those and present her stakeholders with the lowest cost / highest value award that violates the smallest number of desired constraints.

But, as you can guess, that’s not all a platform needs to do. For a deeper dive, check out the doctor and the prophet‘s latest instalment in our optimization UX series, What To Expect from Best-in-Class Sourcing Optimization Technology and User Design (Part 3), over on Spend Matters Pro [membership required] and stay tuned for Part IV.