Category Archives: Technology

Coronavirus/COVID-19 Response: Analytics Can Help Get You Through the Crisis

In the first stage of the pandemic, mines close, processors close, or other suppliers of critical raw materials become unavailable and your direct procurement becomes threatened, and you have to identify new sources of supply quickly to maintain supply assurance, while also making the best selection for the business to keep total of cost ownership acceptable and predictable (as a lower cost risky alternative could put you back in the same position in a few months). You need good analytics to make the right decision.

In the second stage of the pandemic, factories close, certain distribution channels become unstable, and distributor stockpiles run out and indirect goods become scarce and problematic across key categories. And you need to respond. Good analytics will again be key as you don’t want to be going back to market in three to six months, but you also need to keep costs down to insure you have the cash to deal with cost spikes in direct lines where supply unavailability significantly tips the supply/demand balance scale or where costly expedited logistics will be needed. You again need good analytics to make the right decision.

And unless you have a modern best-of-breed Source-to-Pay suite with great analytics embedded or a best-of-breed stand-alone analytics solution, you don’t have anywhere close to what you need. Just a few of the questions you will need to answer include:

  • How much am I paying now for a product, and how much should I pay based on today’s commodity pricing and currency volatility?
  • How do I understand the cost impact of supplier failure?
  • How do I understand the cost impact of raw material availability?
  • How do I identify outliers that might signify future issues or opportunities?

… along with dozens more. So how do you answer these questions? What technologies do you choose? Check out the doctor‘s CORONAVIRUS RESPONSE: Advanced Procurement Analytics — find the risks hiding in your data, prioritize and take action Pro piece over on Spend Matters. Even if you don’t have Pro access, the content in front of the paywall is still useful and might give you some ideas on where to start.

Vendors They Are Complainin’

come gather ’round vendors
wherever you roam
and admit that the methods
around you have grown
and accept it as truth
tech reviews set the tone
if your time to you
is worth savin’
then you better accept it
or you’ll sink like a stone
for the time’s they are a-changin’

come purchasers, sourcerors
rally the call
don’t stand in the doorway
don’t block up the hall
subjectivity
it will cause you to stall
there’s a battle outside
and it’s ragin’
it’ll shake up you platforms
and rattle your apps
for the times they are a-changin’

come buyers and sellers
throughout the land
don’t let vendors fault
what you can understand
as market assessments
are beyond our command
the old ways are
rapidly agin’
push those out of the new one
if they can’t lend their hand
for the times they are a-changin’

In case you haven’t figured it out, SolutionMaps launched last month to the delight of practitioners who can get a 100% unbiased tech. vs customer view, and the disdain of a handful of vendors who (complain for weeks because they) think we should take more subjective factors such as long-term roadmap, innovation, market size, customer size and complexity, product strategy, market strategy, etc. etc. etc. into account (so our maps will look more like the other tragic quadrant and grave reports).

While we all readily and wholeheartedly agree that these are all extremely important factors in your vendor selection, none of these are relevant in platform due diligence, which is the first thing you need to do before considering a vendor for your shortlist. (If the platform can’t do what you need it to do, it doesn’t matter how great the vendor’s organization is.) Since this is the hardest thing for a relatively non-technical Procurement (or Finance) person to do, this is what, and only what, we focus on — verifying that the foundations of the platform are solid and that key requirements for the module / suite functionality we evaluate are there. If a vendor platform gets a good analyst score, you can be sure it’s solid. If a vendor gets a good customer score, you can be sure the vendor has a history of delivering on what they promise and/or providing great service. If a vendor gets good analyst and customer scores, then, for their target market, they are a great fit.

However, as we make clear in this white paper on How to Use SolutionMaps, just because a vendor is great for their current customers in their target market, that doesn’t mean they’re great for you. If their target market is mid-size companies and you are a F500, or vice versa, then they might not be a good fit for you. That’s where you have to do your market research and focus your pre-qualification RFIs — on the business, market, services/support, and other non-tech factors that are relevant to you. With SolutionMaps you know that if a vendor does well, you don’t have to ask 500 feature/function questions in the pre-qualification RFI, only general questions about the vendor’s confidence and capability to support the key processes you are looking to digitize and automate.

Our goal in creating SolutionMaps (and the doctor led the creation of the majority of the common platform elements; the sourcing, supplier management, and analytics maps; and the first iteration of the CLM map, that has only changed about 30% since) was to flip the traditional technology platform RFI process in Procurement on its end as we saw too many companies focussing too much on tech (usually starting from free meaningless feature/function RFIs), which they didn’t know, and not enough on their business needs, which only they know. With SolutionMaps, they have confidence in the technical capability of the vendors, and can focus on everything else that’s important to their organization (and not the subjective whims of an analyst who has to rate a large number of relatively non quantifiable factors. Since all of the elements we evaluate have a pre-defined technical scoring scale, all analysts evaluate the technical capabilities equally and the maps are computed using pre-defined mathematical formulas with no analyst input whatsoever once the scoring is done).

In other words, the maps were designed to help you as practitioners identify a group of vendors to send a pre-qualification RFI to, not for vendors to use as marketing tools (but they certainly can, as it’s undisputable proof they have a great platform if they show up).

So, as you can imagine, after every release,

The Vendors They Are Complainin’

CoronaVirus Response: Dear Procurement, AI won’t save you!

In the last few years, a number of vendors have been pushing artificial intelligence. Some vendors have even been pushing AI-based suites as the future of sourcing and procurement. And for a time they had a great argument. There are too many low-value, straight-forward, simple and/or tail-spend categories that are not getting appropriately sourced in an average organization that doesn’t have enough people power or hours in a day to properly address all organizational spend in a strategic manner and identify the range of savings and opportunities available to the organization. So why not let technology take over some of this spend, especially where it can’t do any worse than what is being done now?

After all, while there is no true AI, and we won’t have anything close for at least a decade, given the computational power of modern machines, intelligently coded and applied software with advanced analytics, machine learning, and evolving model paradigms can do quite a lot for us, and with respect to some specific tasks where intensive amounts of calculation are required, computer can do it better. Where some insight and intelligence is required, computers can still use advanced analysis and probabilities to get it 95% right 95% of the time and if the right outlier rules are coded, kick it out to a human when it’s likely the computer will get it wrong.

So, given the coronavirus-related chaos going on now, and your inability to deal with the majority of day-to-day tactical tasks and regular category sourcing as you have to constantly deal with new sources of supply interruptions, new challenges of working remote, and, in most industries, declining demands or revenues for the foreseeable, you’re probably thinking now would be the perfect time to invest in AI technologies to get a few workload monkeys off your back as you’re overwhelmed. Something that can take low-value, non-strategic, or commodity category management off your plate sounds like a dream come true.

However, now that you need it the most, I’m sorry to say that now is not the time to try AI. Moreover, adopting AI now would simply result in more catastrophic failures across the organization.

Why? How? Read the doctor‘s unlocked PRO on how AI won’t save you, but rules-based automation might! over on Spend Matters. There’s no miracle cure* for the damage caused by COVID-19, and now would be the worst time to try and adopt what would simply amount to silicon snake oil in these tumultuous times.

* But there was ample opportunity for prevention, and had you listened to the doctor a decade ago when he gave you the answer, you wouldn’t be in this mess right now. But that’s a rant for another day.

Digital is Decades Old. Don’t Get Fooled (Again)!

When se said that Digital. Digitized. Digitization. Digitalization. Are the New Buzzwords for Outdated Tech we were actually understating the reality. Digital may have been the buzz of the 90s … yes … the 90s (three decades ago), but, in reality we entered the digital age in the 70s – FIVE FULL DECADES AGO!

The first digital electronic watch prototype was developed in 1970 by Hamilton Watch Company and Electro Data and it hit the market in 1972. And while the first digital watch had a price tag of over $2,000, by the end of the decade, they were readily available for under $10 a unit and universally used. And they were … that’s right … DIGITAL!

It was only five years later that the world’s first digital camera was invented by an employee of Eastman Kodak. And while the first digital camera was not sold until 1989 in Japan and 1990 in the US, it existed. Since it used digital storage, it represented the move from digital to digitized. Again proving our point that the 90s is when we really entered the digital age.

The first digital mobile phone debuted two years after that, paving the way for Digitization … almost 30 years ago!

And then four years after that, digital satellite dishes 18″ in diameter hit the market, which were the best selling electronic devices in history at the time after VCRs. We were truly in the age of digitization by 1996. Almost 25 years ago.

Then, in 2000, we saw DVDs hit the market, and we truly hit digitalization as everything was not just transmitted, but stored, in 1s and 0s across all mediums. Two decades ago.

So, do you REALLY want to buy digital technology from a vendor that could be two decades old? Think about that before you start singing along to Laura Clark!

Remember, you’ll get what you sign up for … and you won’t necessarily like it!

So the next time you hear the word Digital or any variation of it, we recommend blaring The Who at full volume! Won’t Get Fooled Again!

… And No Modern Platform Will be “Our Way or the Highway”

You’ve all heard one of the following lines from either your current or prospective vendor:

  • we do it this way because that’s the way all our customers want it
  • we studied dozens of customer processes and this is the best practice
  • it works better for everyone when we use one process we can collect standard metrics on and guide you
  • the more flexibility you have, the more chances of error, so it’s better this way
  • without a standard taxonomy, we can’t cultivate community intelligence

In other words, they know best, and if you’re not happy with their way, it’s the highway, but they are convinced that you won’t take the highway, because, well, as far as they’re concerned, they’re right.

But they’re wrong.

With the exception of the needs to:

  • maintain security and authenticity and audit trails
  • support any necessary regulations
  • enforce process integrity and organizational rules

NO process is fixed across all organizations and all situations. Nor does it need to be. Elements might need to be fixed. Key data elements might need to be fixed. Audit logs and security requirements might need to be fixed. Access might need to be limited by role or responsibility. But other than that, the number of steps the organization desires to undertake. The number of approvals. The order of each, that’s up to the organization. And to be told you cannot do it your way when there’s nothing wrong with your way is ridiculous.

And a modern vendor realizes that. That’s why they will offer you a platform that can be configured to your processes, your taxonomies, and your needs. If the vendor needs a standard taxonomy to support the community intelligence, insights, or metrics they offer up, they will map your taxonomy to theirs. If the vendor needs to track standard steps or actions for metrics or KPIs, they will map your steps to theirs. And so on. And the platform they offer will not only support the configurability you need to model your processes, but that they need to map the steps and metrics backs to what they need.

Configurability. Workflow. Apps/PaaS. These are among the core foundations of a modern platform. Don’t settle for anything less.