Category Archives: Strategy

Airflip: Flip it to the “S” Side

Airflip is a new, and unique, offering in the Source-to-Pay+ space that offers what they call “analyze-to-intake” and what is actually a new generation of analytics-backed category intelligence that allows a sourcing team to not only identify categories of opportunity, but identify where that opportunity is and what vendors they should be looking at.

Introduction

Airflip was founded in 2022 to help small Procurement teams in mid-sized Procurement organizations be prepared for their next deal. Billing itself as “vendor intelligence for your next deal“, it provides something that most small Procurement teams desperately need, and don’t even know how much they are missing by not having it.

Before we can dive in, we have to step back and discuss where category management is today and where it’s lacking. Today, category management is typically addressed by services vendors who bring their expertise to help you define a category, understand the market dynamics, put together a sourcing strategy, identify the appropriate suppliers/vendors, put together an RFP, put together a should-cost model, identify the evaluation criteria, and the process for selecting a supplier.

The Category Management solutions out there today are good, but they have their limitations. First of all, it is limited to the categories the services vendor has expertise in. Secondly, it is limited to the categories the buying organization can afford to pay for. (Services are costly, and if it’s a complex category, and requires a month or two of an expert’s time, that’s more than an annual license for a niche best-of-breed module in Source-to-Pay+.) Thirdly, it’s not repeatable by the buying organization the next time the category comes due for sourcing.

A technology solution was needed.

There are a few of those out there, but most of these fall into the categories of:

Savings Estimators
(Hybrid Servies-Backed) Sourcing platforms that keep track of identified savings percentages by category (at level 2 or 3 of a vendor standard hierarchy) and/or changes in average market price over time to identify an expected savings range should an organization choose to source the category (at the current time)
Specialist Category Sourcing Platforms
which incorporate market intelligence on supply vs demand, price trends, economies of scale by supplier, and logistics/supply chain costs and guide the buyer through a fine-tuned workflow for the current optimal strategy

And, outside of select categories, don’t really help a buyer:

  • identify which categories have untapped opportunities
  • get insight into current spend and potential opportunity
    (based on spend on-vs-off contract, etc.)
  • identify which vendors they currently source from in those categories
  • identify which other vendors they could be sourcing from
  • get relevant category-based insight on those vendors
  • get insight into how to evaluate the category
  • get insight into how to identify the relevant organizational needs, and what should happen before the sourcing event is kicked off

As most of this insight is limited to research reports from category consultancies or expert services providers. What is needed is a combination of the two solutions.

Airflip is one of the first solution providers to create a platform that bridges the capabilities of today’s “savings estimators” and “category insights” platforms with detailed category insight and guidance tailored to the organization’s current spend and supply base.

It does this by combining analytics (for spend insight), select contract meta data (for on vs off-contract insight), category intelligence [research] (gathered from the web and curated 3rd party data sources), and pre-sourcing category guidance [deal management] into one unified platform.

Analytics

Airflip is powered by a modern spend analytics application which allows the cube to be sliced, diced, shaped, and reshaped to your liking. While it only supports one cube (for now), the dynamic spreadsheet-like interface still puts it on par with a top 10 analytics application as a user can easily map and remap transactions and categories, create customized views using filters on any dimension, and drill down into the individual transactions if necessary.

Like every good analytics application, it has a dashboard that displays standard spend breakdowns by department, category, supplier, and cost center. Standard filters are date, thresholds, category, PO, contract, requester/department, payment method, domain, etc.

The standard spreadsheet view is a split view with the category hierarchy on the left and the transactions on the right, displayed in standard row/column spreadsheet format where the rows can be resorted and the columns reordered and hidden. For easy manipulation, the user can bring up a configuration view on the right that allows the columns to be hidden and unhidden and rows to be grouped in any order, based on any arithmetic formula.

One of the more unique capabilities is their semantic spend classification that uses all of the transaction data, their augmented supplier / vendor profiles, and third party data feeds to classify a transaction to level 3, and even level 4, if there is sufficient data, or to a higher level if there isn’t, with high accuracy. (Unlike traditional neural nets which tended to max out at 80% or Gen-AI which tends to max out at 70% or worse.) For example, they can often classify an implementation down to a CPQ software implementation (level 4 under software implementation, under IT Consulting, under Professional Services) vs. web development vs. translation and localization vs. generic implementation services. It’s a level of classification not found in most providers.

Associated with each transaction is a generated vendor overview based on retrieved profile data from the vendor website and any available third party data feeds.

Contracts

As noted above, it’s not a contract management platform — all it can do is integrate with a contract store, suck in all the contracts, process them with semantic AI, extract defined clause types, extract products and services, extract costs and obligations, and use that data to augment transactions and help the user answer questions as to whether or not a contract contains a clause or term.

Right now, it’s a very simple repository where you can sort and filter contracts by supplier. Drilling into a contract brings up the meta-data and key details associated with the contract, and a link to the uploaded pdf.

Research

Their “research” centre provides the category intelligence by subcategory, for example sales/marketing software in back-office software in software. The market research category intelligence provides deep insight into:

  • business area (sales acceleration, workforce management, intelligence, quotes, and contracts)
  • description
  • market leaders
  • (sub) categories (engagement, email, dialer, demo management, etc.)
  • … and in each (sub-) category, with the right license level,
    • the business impact,
    • overview
    • market details
    • key features
    • the (sub-) category leaders and organizational suppliers,
    • the recommended sourcing strategy
    • category risks
    • the related categories,
    • the relevant evaluation criteria,
    • the internal worksheet (for eliciting the necessary information from internal stakeholders)
    • a (starting) vendor questionnaire (that can be extended by the customer)
    • relevant links
    • … and, for each vendor, with the right license level, a research report that specifies
      • what the vendor does
      • who the solution is for
      • why the vendor is different
      • the funding the vendor received
      • known integrations
      • recent product/service launches
      • acquisitions the vendor has made
      • other key facts on the vendor

In most indirect and services categories, it will be more than enough information to identify the right suppliers to invite to the RFX. For direct, where custom goods are required, it will at least allow a buyer to identify those suppliers who make similar products in the (sub) category and get the buyer close to a short-list.

Deal Management

Deal Management is the final part of the application and provides the pre-sourcing category guidance for the product or service being sourced based upon the built-in category research.

The deal management capability walks the category owner through the business owner requirements, the evaluation workflow steps, the necessary compliance considerations, an evaluation of the business impact, an overview of the alternatives (for comparative baselines and negotiation ammunition), the recommended negotiation strategy, an outline of key steps in the strategy (and progress tracking capability), and the estimated savings potential. It can be configured with all the standard steps to help a junior buyer work through a purchase on their own, or a senior buyer expedite a process while ensuring they don’t miss anything important.

In addition, during the research phase, the application contains survey capability for the buyer to solicit the inputs required from the category or business stakeholders in order to properly plan the sourcing event.

Summary

Airflip is a great solution for mid-market companies looking to get platform-based insight and assistance into their category management. While the depth of insight will vary by category and vendor (as it’s relatively new and development is ongoing on a daily basis), it’s considerably more than the average small Procurement team in a mid-size organization will have access to, and a great foundation for success where the team doesn’t have deep category knowledge or insight across the board. So if you want better sourcing strategy support, consider flipping it to the Success side and inviting Airflip to your category management RFP.

Less Than 1/3 of Organizations Have a CPO — How Will They Continue to Survive?

the doctor has yet to see a single study that said that more than 30% of (public) (listed) organizations have a CPO, and some have that number as low as 15%. He has to admit that he just DOES NOT get it. From a basic business point of view, if you go back to the first thing that they teach you in Business 101, it should be easy to see that it is one of the two most critical roles in an organization, and one of the four roles EVERY organization should have.

The first thing that they teach you is for a business to survive, it has to be profitable, and

Profit = Revenue – Expenses

This says that one of the two most important roles in an organization is the (acting) CRO, who is responsible for bringing the revenue in that is required for the business to operate. In a startup, the acting CRO could be the CEO who has to sell, sell, sell (or raise, raise, raise) until she has enough money to hire a CRO, but without revenue, there is no business.

This also says that the other most important role is the (acting) CPO, as the business will need products. Even a pure services business needs products to operate (equipment, software, office supplies, MRO, etc.), and those need to be obtained at a total cost that is less than the revenue available to pay for them. If the company is primarily a product company, then the majority of its spend will be on these products (and not products for operations or personnel), and the CPO is super critical. Now, in a primarily services company, this role may be fulfilled by the CEO (if the CEO is not sales oriented, but an ops or HR person), but will likely be fulfilled by the CFO or the HR Director/VP until the company is big enough, and spends enough on internal products, to hire a CPO.

Furthermore, this would imply that the third most important role is the CFO that ensures the money coming in and money going out are appropriately tracked and the budgets appropriately allocated and the financial reports and taxes appropriately filed with the government agencies. (But, if there are no funds flowing in and out, you don’t have a business, and, thus, don’t need a CFO.)

Finally, logic would dictate that the fourth most important role is the CEO that defines the strategy, direction, and enables each of these roles needs to be as successful as possible.

This also means that organizations that over-focus on the

  • CSO (Strategy): have their head in the clouds because strategy needs to be executed, and you don’t necessarily need a full time person in this role — a good exercise once every year to three (depending on your market) lead by a strategic expert could be enough
  • CMO (Marketing): are over valuing marketing because, while it’s important to get attention, you have convert leads into prospects into sales … and it’s the CRO that manages that entire process
  • C(R/C)O (Risk/Compliance): are putting the cart before the horses so they can’t leave the stables; while risk is critical, it has to be managed in a sales and procurement context
  • CTO (Technology): are not seeing the big picture; if you are a software organization, having a solid platform and infrastructure is critical, but if you are not selling the product, or you are not able to attract the talent you need to build the product (which may or may not be the CTO’s skillset), it’s suddenly less important

And, of course, this means that Head of Sales, R&D Director, VP Product, etc. also become secondary as sales is only part of the funnel, some R&D can be outsourced or acquired (since design can sometimes be one time), and without the ability to acquire the talent and goods you need, you can’t create the product.

But every organization has a CFO and CEO, the second most important positions. The majority have CMOs and CTOs, the third most important positions. And they all focus on Sales VPs, R&D, Products, etc. which are essential, but the fourth most important positions from a foundational and C-Suite perspective. But when it comes to CROs, less than 15% of organizations have them and when it comes to CPOS, less than 30% of organizations have them. It boggles the logical minds!

Now, the doctor knows he’s going to get a lot of flak for this for calling CMO, CTO, etc. third and fourth on the importance scale, because they are critical roles in many organizations, but if you go back to basics, logically they are not the most critical roles that must be filled.

There are NO Perils of Big Data in Procurement!

First of all, no organization has enough data, and those that come close don’t have big data.

Secondly, the more data you have, the better.

Third, if you think you have too much data, you’re not getting it!

So where’s this rant coming from? The rant-inducing headline du jour. The CIO Review recently published an article on The Perils of Big Data in Procurement which is complete non-sense, as there are no perils to having more data (because there’s never enough), unless it’s bad data (but the assumption in the article was that all the data was correct), just perils in terms of how that data is presented and accessed.

The perils in terms of how that data is presented and accessed can be significant, but that’s not due to having big data, that is due to poor system design — and that’s a different issue!

According to the article, buyers and procurement managers … have available a huge and unprecedented amount of data … [and] start to measure everything in order to manage it and that with this approach, several data lakes are created, feeding various dashboards, scorecards, reports, and metrics as procurement professionals try to understand spend analysis, price trends, market fluctuations, volume, cost savings, negotiation performance, and other essential factors. And this is true.

It goes on to say it is very easy for a person to be lost in the sea of numbers and details and miss the big picture entirely because you don’t know what is the crucial data that would give you critical insights. And if that wasn’t enough, it goes on to say it is the same as someone that enters the hospital with a broken leg but has everything else checked. WTF?

This is so dumb it makes you angry!

  1. If a person gets lost in the sea of details and numbers it’s because they don’t know what they should be looking for and how they should be looking for it, not because there’s too much data.
  2. If they don’t know what is crucial, it’s because they don’t know enough about the project they are doing to identify what’s critical and what’s not.
  3. What health practitioner is going to be so stupid as to not see a broken leg on a triage? Come on now! And what Procurement practitioner would check all but one dashboard randomly and then not check the last remaining dashboard? (And that’s what the article is implying with its ridiculous statement.)

In other words, the headline, and claim, is bullcr@p. Don’t blame a mountain of data for a lack of capability in your people, poor vendor technology choices (that bury you in useless dashboards), and your unwillingness to train your talent in modern technology and best practices so they can do their job properly.

And while the author is completely right in that you need to

  • understand what matters
  • start with a top-down view
  • have people who are good at interpreting the data

It still misses the point in that you need to, for any application you buy and any project you wish to undertake

  • define what’s relevant up front
  • find a solution that is configured/configurable to show that up front
  • make sure the data is easy to interpret, is accompanied with written guidance, and that your talent is trained on how to properly interpret the data and
  • if the goal is opportunity finding, the solution needs to identify and present the top opportunities across all of the analysis done, with deep supporting dashboards buried under the high level summary dashboard

More data is always better, especially if you want to use machine learning. In other words, it’s not the data, it’s the application, or the people, so don’t blame the data for your organization’s shortcomings.

The 39 Steps … err … The 39 Clues … err … The 39 Part Series to Help You Figure Out Where to Start with Source-to-Pay

Figuring out where to start is not easy, and often never where the majority of vendors or consultants say you should start. They’ll have great reasons for their recommendations, which will typically be true, but they will be the subset of reasons that most benefits them (as it will sell their solution), and not necessarily the subset of reasons that most benefits you now. While you will likely need every module there is in the long run, you can often only start with one or two, and you need to focus on what’s the greatest ROI now to prove the investment and help you acquire funds to get more capability later, when you are ready for it. But figuring out how much you can handle, what the greatest needs are, and the necessary starting points aren’t easy, and that’s why SI dove into this topic, with arguments and explanations and module overviews, both broader and deeper than any analyst firm or blogger has done before. Enjoy!

Introductory Posts:
Part 1: Where Do You Start?
Part 2: Where Should You Start?
Part 3: You Start with …
Part 4: e-Procurement, and Here’s Why.

e-Procurement
Part 5: Defining an e-Procurement Baseline
Part 6: There are Barriers to Selecting an e-Procurement Solution (and they are not what you think)
Part 7: Over 70 e-Procurement Companies to Check Out

Interlude 1
Part 8: What Comes Next?

Spend Analysis
Part 9: Time for Spend Analysis
Part 10: What Do You Need for A Spend Analysis Baseline, I
Part 11: What Do You Need for A Spend Analysis Baseline, II
Part 12: Over 40 Spend Analysis Vendors to Check Out

Interlude 2
Part 13: But I Can’t Touch the Sacred Cows!
(including Over 20 SaaS, 10 Legal, and 5 Marketing Spend Management / Analysis Companies to Check Out)
Part 14: Do Not Stop At Spend Analysis!

Supplier Management
Part 15: Supplier Management is a CORNED QUIP Mash
Part 16: Supplier Management A-Side
Part 17: Supplier Management B-Side
Part 18: Supplier Management C-Side
Part 19: Supplier Management D-Side
Part 20: Over 90 Supplier Management Companies to Check Out

Contract Management
Part 21: Time for Contract Management
Part 22: Contract Management is a NAG: Let’s Start with Negotiation
Part 23: Contract Management is a NAG: Let’s Continue with [Contract]Analytics
Part 24: Contract Management is a NAG: Let’s End with [Contract] Governance
Part 25: Over 80 Contract Management Vendors to Check Out

e-Sourcing
Part 26: Time for e-Sourcing
Part 27: Breaking Down the ORA of Sourcing Starting With RFX
Part 28: Breaking Down the ORA of Sourcing Continuing with e-Auctions
Part 29: Breaking Down the ORA of Sourcing Ending with [Strategic Sourcing Decision] Optimization
Part 30: Over 75 e-Sourcing Vendors to Check Out!

Invoice-to-Pay (I2P):
Part 31: Time for Invoice-to-Pay
Part 32: Breaking Down the Invoice-to-Pay Core
Part 33: Over 75 Invoice-to-Pay Companies to Check Out

Orchestration:
Part 34: How Do I Orchestrate Everything?
Part 35: Do I Intake, Manage, or Orchestrate?
Part 36: Over 20 Intake, [Procurement] [Project] Management, and/or Orchestration Companies to Check Out
Part 37: Investigating Intake By Diving In to the Details
Part 38: Prettying Up the Project with Procurement Project Management
Part 39: Deobfuscating the Orchestration and Fitting it All Together

Procurement Trend #20. Increased Strategic Focus

Seventeen anti-trends still remain. And while somedays it might seem like this series will never end, we assure you it will and now that LOLCat has figured out that the best thing to do is just take a nap, dream of his grandfather’s adventures as an archaeologist cat uncovering lost tombs, and wait for the series that is regurgitating topics of his past lives, we can march on knowing that as long as other LOLCats do the same, the series will do no our poor LOLCats more harm. And in fact, when we lay bare each and every one of the futurists’ lies, you’ll be in a better position to learn the truth and seize upon the real trends that lie ahead and the opportunities they contain.

So why do the historians keep pegging increased strategic focus as a future trend? Besides asphyxiation as a result from breathing in too much of their own hot air, probably because:

  • Supply Management is still tactically focussed in many companies

    on purchase order creation, invoice processing, and other forms of paper document and contract management.

  • Supply Managers are too focussed on survival, not control

    Procurement in many companies is comparable to the Island of Misfit Toys where the toys are all wandering around aimlessly trying to figure out how to find what they need to get through another day, instead of taking control of the situation.

  • Reaction is the name of the game, but Planning is the key to winning

    but most Procurement departments spend their days reacting to requisitions, supplier mishaps, late deliveries, stock-outs, and other unplanned events.

So what does this mean?

Strategic Focus

Procurement has to acquire and implement automation management to reduce tactical focus from mundane processing to exception management to give it time to focus on more strategic sourcing tasks, category planning, process review and improvement, and other tasks that will allow it to not only find any savings it has not yet tapped but identify new sources of value to the organization.

Transition to Farming and Harvesting

When you’re just trying to survive, all of your efforts generally go into hunting and gathering to meet the day’s needs. But in order to get ahead, you have to start farming and harvesting. You have to work together and divide up the work in such a way that someone has time to focus on more long term tasks while others handle the emergency situations of the day. While Procurement cannot avoid doing what it takes to put out the fires to avoid burning to the ground, it has to regularly step back, step up, take a wider view, and come up with ways to advance its methodology and operations and implement those so it can progress towards a path of proactive strategy and not reactive data processing.

Forward Planning

Procurement has to not only look for ways to get better today, but for ways that will allow it to continue progressing in efficiency and capability and potential beyond next quarter and next year. True forward planning looks five years into the future, not five months. While it won’t be able to see that far right away, when it has truly matured as a strategic organization, it will be working on projects for the current the year, next year, and on preparing for projects that will happen three to five years in the future that take a lot of planing and preparation to get right, such as factory and warehouse relocation as a result of a supply chain redesign project.