Category Archives: Spend Analysis

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

In this post we wrap up our deep dive into spend analysis and what is required for a great user experience. We take our vertical torpedo as far as it can go and wrap the series up with insights beyond what you’re likely to find anywhere else. We’ve described necessary capabilities that go well beyond the capabilities of many of the vendors on the market, and more will fall by the wayside today. But that’s okay. The best will get up, brush off the dirt, and keep moving forward. (And the rest will be eaten by the vultures.)

And forward momentum is absolutely necessary. One of the keys to Procurement’s survival (unless it really wants to meet it’s end in the Procurement Wasteland we described in bitter detail last week) is an ability to continually identify value in excess of 10% year-over-year. Regardless of what eventually comes to pass, the individuals who are capable of always identifying value will survive in the organizations of the future.

But if this level of value is to be identified, buyers are going to need powerful, usable, analytics — much more powerful and usable then what the average buyer has today. Much more.

As per our series to date, this requires over a dozen key useablity features, many of which are not found in your average first, and even second generation, “reporting” and “business intelligence” analytics tool. In our brief overview series to date here on SI (on The UX One Should Expect from Best-in-Class Spend Analysis … Part I, Part II, Part III, and Part IV) we’ve covered four key features:

  • real, true dynamic dashboards,
  • simultaneous support for multiple cubes,
  • real-time idiot-proof data categorization, and
  • descriptive, predictive, and prescriptive analytics

And deep details on each were provided in the linked posts. But even prescriptive analytics, which, for many vendors, is really pushing the envelope, is not enough. Great solutions really push the envelope. For example, the most advanced solutions will also offer permissive analytics. As the doctor has recently explained in his two-part series (Are We About to Enter the Age of Permissive Analytics and When Selecting Your Prescriptive, and Future, Permissive, Analytics System), a great spend analysis system goes beyond prescriptive and uses AR and a rules-engine to enable a permissive system that will not only prescribe opportunities to find value but initiate action on those opportunities.

For example, if the opportunity is a tail-spend opportunity that could best be captured by a spot-auction, approved products that meet the bill, and approved suppliers that can automatically be invited to an auction to provide them, the system will automatically set up the auction and invite the suppliers, and if the total spend is within an acceptable amount, automatically offer an award (subject to pre-defined standard terms and conditions).

And that’s just the tip of the iceberg. For more insight onto just how much a permissive analytics platform can offer, check out the doctor and the prophet‘s fifth and final instalment on What To Expect from Best-in-Class Spend Analysis Technology and User Design (Part V) over on Spend Matters Pro (membership required). It’s worth it. And maybe, just maybe, when you identify, and adopt, the right solution, you won’t end up wandering the Procurement Wasteland.

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

As per our last post, in this series we are diving into spend analysis. Deep into spend analysis. So deep that we’re taking a vertical torpedo to the bottom of the abyss. And if you think this series has been insightful so far, wait until we take you to the bottom. By the end of it, there will be more than a handful of vendors shaking and quaking in their boots when they realize just how far they have to go if they want to deliver on each and every promise of next generation opportunity identification they’ve been selling you on for years.

We’re giving you this series so that you can use it to make sure they deliver. Because, as we have repeatedly pointed out, you only have two technologies at your disposal to achieve year-over-year savings of 10% or more. Optimization (covered in our last four-part series, see Part I, Part II, Part III, and Part IV), which can capture the value, and spend analytics, which can identify the value.

But, as we will keep repeating, it has to be true spend analytics that goes well beyond the standard Top N report templates to allow a user to cube, slice, dice, and re-cube quickly and efficiently in meaningful ways and then visualize that data in a manner that allows the potential opportunities, or lack thereof, to be almost instantly identified.

But, as per our last two posts, this requires truly extreme usability. Since not everyone has an advanced computer science or quantitative analysis degree, not everyone can use the first generation tools. This means that, in organizations without highly trained analysts, the first generation tools would sit on the shelf, unused. And that is not how value is found.

However, creating the right UX is not easy. That’s why it takes a five part series just to outline the core requirements (and when we say core, we mean core — there are a lot more requirements to master to deliver the whole enchilada). But it’s needed because we are 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 and when many vendors sound interchangeable when, in fact, they are not.

In each part of the series to date (What To Expect from Best-in-Class Spend Analysis Technology and User Design Part I, Part II, and Part III), over on Spend Matters Pro [membership required], the doctor and the prophet have explored three to four key requirements of a best-in-class spend analytics system that are essential for a good user experience. Here on SI, we’ve covered three of these to whet your appetite for the knowledge that is being kept from you.

In The UX One Should Expect from Best-in-Class Spend Analysis … Part I we discussed the need for real, true, dynamic dashboards. Unlike the first generation dashboards that were dangerous, dysfunctional, and sometimes even deadly to the business, true next generation dynamic dashboards are actually useful and even beneficial. Their 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 one of the keys to true analytics success.

In The UX One Should Expect from Best-in-Class Spend Analysis, Part II, we pointed out that one cube will NEVER be enough. NEVER, NEVER, NEVER! And that’s why procurement users need the ability to create as many cubes as necessary, on the fly, in real time. This is required to test any and every hypothesis until the user gets to the one that yields the value generation gold mine. Unless every hypothesis can be tested, it is likely that the best opportunity will never be identified. If we knew where the biggest opportunity was, we’d source it. But the best opportunities are, by definition, hidden, and we don’t know where. Success required cubes, cubes, and more cubes with views, views, and more views. But this is just the foundation.

Then, in The UX One Should Expect from Best-in-Class Spend Analysis, Part III, we indicated that success requires appropriately classified and categorized data. But good data categorization is not always easy, especially for the average user. That’s why the third key requirement is real-time idiot-proof data categorization, which, while a mouthful, is a lot easier to say than it is done. (For details, check out the articles.)

But, as you’ve probably guessed by now, more is required. Much more. In What To Expect from Best-in-Class Spend Analysis Technology and User Design (Part IV) over on Spend Matters Pro [membership required], the doctor and the prophet dive deep into a couple of additional key requirements for a best-in-class spend analytics solution. And, like the previous requirements, these are intensive. Quite intensive.

The one we are focussing on today is support for descriptive, predictive, and predictive analytics. First generation solutions stopped at descriptive. They simply reported on what happened in the past, and stopped there. And usually the description of the past was so far behind that the reports were not always that useful. So next generation moved onto predictive, and computed trends, taking into account historical sales data and current market data to describe opportunities so that, even if the data was a bit outdated, at least the analyst had a good idea of direction.

And as platforms got faster, and more powerful, and more real-time, the predictive power got better, and more useful. And organizations realized more value … but not nearly what they should realize. Because it’s not always enough to know that there may be an opportunity, to realize that opportunity, one needs an idea on how to capture it. And if one’s not a category or market expert, one can be completely lost. But if the system supports prescriptive analytics, then the analyst has an idea where to start. And that is key to a great user experience.

But is that everything the system needs for a great user experience. Nope. And we’ll continue our overview in the next, and final, part of this initial series. (We’ve written the first few chapters, but believe us when we say the book has not been written yet.)

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

In previous posts, we took a deep dive into e-Sourcing (Part I and Part II), e-Auctions (Part I and Part II), and Optimization (Part I, Part II, Part III, and Part IV). But in this series we are diving into spend analysis. And this time we’re taking the vertical torpedo to the bottom of the deep. If you thought our last series was insightful, wait until you finish plowing through this one. By the end of it, there will be more than a handful of vendors shaking in their boots when they realize just how far they have to go if they want to deliver on all those promises of next generation opportunity identification they’ve been selling you on for years! But we digress …

We’ve said it multiple times, but we are going to repeat it again. The key point to remember here is that there are only two advanced sourcing technologies that can identify value (savings, additional revenue opportunity, overhead cost reductions, etc.) in excess of 10% year-over-year-over-year. One of these is optimization (provided it’s done right, useable, and capable of supporting — and solving — the right models; see our last series). The other is spend analytics. True spend analytics that goes well beyond the standard Top N and report templates to allow a user to cube, slice, dice, and re-cube quickly and efficiently in meaningful ways and then visualize that data in a manner that allows the potential opportunities, or lack thereof, to be almost instantly identified.

But, as per our last two posts, this requires truly extreme usability. Since not everyone has an advanced computer science or quantitative analysis degree, not everyone can use the first generation tools. This limits these users to the built-in Top N reports. And as we have indicated many times, once all of the categories in the Top N have been sourced and all of the Top N suppliers have been put under contract, there is no more value to be found from a fixed set of Top N reports. At this point, the first generation tools would sit on the shelf, unused. And that’s not how value is found.

However, creating the right UX is not easy. It’s not just a set of fancy reports (as static reports have been proven to be useless for over a decade), but a powerful 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. And that’s why the doctor and the prophet are bringing you a very in-depth look at what makes a good User eXperience for spend analysis that goes far, far deeper than anyone has done before.

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 and when many vendors sound interchangeable, and when many vendors are fungible in a way that is not necessarily negative, this insight is needed more than ever. And if a few dozen vendors quake in their books when this series is over, so be it.

In the first part of our series, we explored a few key capabilities that must be present from the get go, including, as we dove into here on SI in our first post on The UX One Should Expect from Best-in-Class Spend Analysis … Part I, dynamic dashboards. Unlike the first generation dashboards that were dangerous, dysfunctional, and sometimes even deadly to the business, true next generation dynamic dashboards are actually useful and even beneficial. Their 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 one of the keys to true analytics success. (For more details, see the doctor and the prophet‘s first deep dive on What To Expect from Best-in-Class Spend Analysis Technology and User Design (Part I) over on Spend Matters Pro [membership required]).

In the second part of our series we explored a few more key capabilities, four to be precise, that include dynamic cube and view creation “on the fly”. Given that:

 

  • A cube will never have all available (current and future) data dimensions
  • Not all data dimensions are important;
  • Some of the essential data (referenced in the previous point) will be third-party data updated at different time intervals
  • A user never needs to analyze all data at once when doing a detailed analysis.
  • We have not (yet) encountered a system that will have enough memory to fit enough of a true “mega cube” in memory for real-time analysis.

 

One cube will NEVER be enough. NEVER, NEVER, NEVER! That’s why procurement users need the ability to create as many cubes as necessary, on the fly, in real time. This is required to test any and every hypothesis until the user gets to the one that yields the value generation gold mine. Unless every hypothesis can be tested, it is likely that the best opportunity will never be identified. If we knew where the biggest opportunity was, we’d source it. But the best opportunities are, by definition, hidden, and we don’t know where. Success requires cubes, cubes, and more cubes with views, views, and more views. (For more detail, or information on the other capabilities we didn’t cover in our post on The UX One Should Expect from Best-in-Class Spend Analysis … Part II, see the doctor and the prophet‘s second deep dive on What To Expect from Best-in-Class Spend Analysis Technology and User Design (Part II) over on Spend Matters Pro [membership required].)

But much, much more is required. That’s why the doctor and the prophet recently published their third deep dive on What To Expect from Best-in-Class Spend Analysis Technology and User Design over on Spend Matters Pro [membership required] on the breadth of requirements for a good Spend Analysis User Experience. In this piece, we dive deep into three more absolute requirements (which, like the previous requirements, are so critical the absence of any should delete a vendor from your list) including real-time idiot-proof data categorization.

Just about every solution has categorization, most allow end users to at least over-ride categorization, but, in our view few, relatively few solutions can claim (to approach) idiot-proofness.

So what is an idiot proof solution? Before we define this, let us note that the approach a provider takes to classification is secondary. It doesn’t matter whether the methodology provided is fully automated (and based on leading machine learning techniques), hybrid (where the machine learning can be overridden by the analyst with simple rules), or fully manual (where the user can classify data using free-form rules created in any order they want on any fields they want).

This means that the system must provide a simple and effective methodology for classifying, and re-classifying, data in an almost idiot-proof manner. So, if the engine uses AI, it should be easy for the user to view, and alter, the domain knowledge models used by the algorithms. If it uses rules-based approaches, it should be easy to review, visualize, and modify rules using a language and visual techniques wherever possible. And if the solution uses a hybrid approach, the user should be able to quickly analyze the AI, determine the reason for a mis-map, and then define appropriate over-ride rules that will correct any errors the user discovers so the error never materializes again in the future.

In other words, success requires cubes, cubes and more cubes on correctly mapped and classified data that can be accessed through views, views, and more views. With any data the user requires, from any location, in any format. But more on this in upcoming posts. In the interim, for additional insight on a few more key requirements of a spend analytics product for a good user experience, check out the doctor and the prophet‘s second deep dive on What To Expect from Best-in-Class Spend Analysis Technology and User Design (Part III) over on Spend Matters Pro [membership required].) As per the past two parts of the series, it’s worth the read. And stay tuned for the next two parts of the series. That’s right! Two more parts. We told you this one was a doozy!

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

Now that we’ve taken a deep dive into e-Sourcing (Part I and Part II), e-Auctions (Part I and Part II), and Optimization (Part I, Part II, Part III, and Part IV), we are diving into spend analysis. And this time we’re taking the vertical torpedo to the bottom of the deep. If you thought our last series was insightful, wait until you plow through this one. By the end of it, there will be more than a handful of vendor’s shaking in their boots when they realize just how far they have to go if they want to deliver on all those promises of next generation opportunity identification they’ve been selling you on for years! But we digress …

The key point to remember here is that there are only two advanced sourcing technologies that can identify value (savings, additional revenue opportunity, overhead cost reductions, etc.) in excess of 10% year-over-year-over-year. One of these is optimization (provided it’s done right, useable, and capable of supporting — and solving — the right models). The other is spend analytics. True spend analytics that goes well beyond the standard Top N and report templates to allow a user to cube, slice, dice, and re-cube quickly and efficiently in meaningful ways and then visualize that data in a manner that allows the potential opportunities, or lack thereof, to be almost instantly identified.

This requires extreme usability. As noted in our last post, 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. And the tools sat on the shelf when they should be used weekly, if not daily. If a hunch can be explored in an hour, and every tenth hunch uncovers a 100K+ value generation opportunity, that’s a 10X return that would never be realized otherwise as the analyst would never have time to explore ten hunches otherwise.

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 in-depth look at what makes a good User eXperience for spend analysis that goes deeper — far deeper — than anyone has ever gone before. 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 and when many vendors sound interchangeable, and when many vendors are fungible in a way that is not necessarily negative, this insight is needed more than ever. And if a few vendors quake in their boots when this series is over, so be it. Last week, over on Spend Matters Pro [membership required], the doctor and the prophet published our second piece on What To Expect from Best-in-Class Spend Analysis Technology and User Design that continued our in-depth foray into this critical, but often ill-explained, technology.

So what is required? As per our first post, dozens (upon dozens) of innovative and unique capabilities, including the next generation dynamic dashboards that we discussed in our last post. In our deep dive, we explore four more core requirements, one of which is dynamic cube and view creation “on the fly”. Given that:

  • A cube will never have all available (current and future) data dimensions
  • Not all data dimensions are important;
  • Some of the essential data (referenced in the previous point) will be third-party data updated at different time intervals
  • A user never needs to analyze all data at once when doing a detailed analysis.
  • We have not (yet) encountered a system that will have enough memory to fit enough of a true “mega cube” in memory for real-time analysis.

One cube will NEVER be enough. NEVER, NEVER, NEVER! That’s why procurement users need the ability to create as many cubes as necessary, on the fly, in real time. This is required to test any and every hypothesis until the user gets to the one that yields the value generation gold mine. Because, as this blog has previously published (in why data analysis is avoided), if it is too difficult or costly to do an analysis, a gut-feel assessment as to the value that will be yielded will be done. And if it looks like the cost to value ratio will be too high, the analysis will be avoided. The end result is that the organization will never truly know if the potential value was low or high.

In other words, success requires cubes, cubes, and more cubes with views, views, and more views. With any data the user requires, from any location, in any format. But more on this in upcoming posts. In the interim, for three more requirements of a spend analytics product for a good user experience, check out What To Expect from Best-in-Class Spend Analysis Technology and User Design over on Spend Matters Pro [membership required].

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.