Despite claims to the contrary, you are not stuck being a sap or hearing prophecies from an ethylene-gas inhaling delphi. You do have options. Acquisitions might have some analysts in a tizzy, but you only need to remember one thing. Don’t Panic.

Ariba & Emptoris were not the only best-of-breed game in town
You still have options, and these options are on both sides of the Atlantic.

Best of Breed vendors eat, sleep, and drink procurement
Unlike do-it-all or ERP vendors, best-of-breed procurement vendors are focused entirely on procurement and, as a result, they tend to be much better at it than do-it-all or ERP vendors, especially supplier enablement, which we all know fuels the e-procurement benefits engine.

Best of Breed on an ERP backbone can offer significant advantages

• Best of Breed providers often know the ERP systems better than the consulting implementation partners, who care more about weaseling their way into long-term strategy consulting than a successful implementation. (For example, there are a couple of vendors with over 100 customer SAP implementations, who know the system way better than a Big 5 consultant on his second implementation.)
• Best of Breed providers have enabled hundred of thousand of suppliers, maybe more, over the years … in all regions of the world … your 347 suppliers aren’t going to make them flinch (and it’ll be faster and cost less, because once again, they’ve been there, done that … a few hundred thousand times.)
• Best of Breed provider’s customers are all former ERP e-procurement / consulting implementation customers … that’s right, most of whom have already failed using the ERP/consultant approach, spent the millions, got 7 punchouts and 11 catalogs implemented … now they spend thousands and get … well, you already know … actual results and benefits.
• Best of Breed providers have to be better than the ERP or broad portfolio providers, because they can’t fall back on their CRM sales or app server license revenue if they don’t deliver.
• And because of all of this, Best of Breed providers have way more references than the ERP providers. Those big ERP guys based in Germany have two significant e-procurement references … one they’ve been using for 3 years, and another from a company I never heard of on this side of the Atlantic … I know of one Best of Breed provider who has 19 published case studies, and has only lost one customer in 14 years, and that was after this company was a customer for 9 years, and decided to outsource IT, and the outsourcer, IBM brought in an ERP to replace all of the internal systems.
• Best of Breed providers’ SaaS-type offerings and supplier networks eliminate the need for your IT department or external consultants to be involved, so they implement faster and less expensively
• The most successful Best of Breed providers have service organizations around the globe to assist with implementations and provide stability.
• Best of Breed providers fill in the gaps where ERP fall short. ERP may try, but it is not all-in-one and they are usually a year or more behind the Best-of-Breeds functionality-wise.
• Best of Breed works and they have the client stories to prove it. Follow SI’s advice and check their references.
• Best of Breed will help your SUM (Spend Under Management) soar.

Consider your options carefully. A Best of Breed solution on your ERP backbone might be the best decision you can make.

In the first three parts (I, II, and III) of this series we discussed the proper RFX process to follow when attempting to select a technology(-based) solution provider (for e-Procurement and e-Sourcing in particular) as a true multi-national. We noted that while most companies more-or-less understand the high level process, most get the implementation wrong, focussing too heavy on feature-function checklists (that are usually put together by vendors, even if they are obtained from third parties) and too little on a vendor’s global implementation and support capabilities.

If your organization follows the advice presented, starts with the customer references, and only spends time and energy reviewing those vendors with a track record that suggests that the vendor could meet your global implementation and support needs, then your organization is off to a great start. But this isn’t the only best practice that your organization should be following in the selection of a vendor for your global technology needs. In this post we’ll cover five more.

The Core Solution Litmus Test
Once the vendor has passed the customer litmus test, the next litmus test is the core solution requirement litmus test. After dividing all of the stakeholder problems into must solves, should solves, and nice-to-solves, make sure that the vendor has solutions (technology, services, or a combination thereof) that address each of the must-solve problems and most of the nice-to-solve problems. The vendor is not right for you unless it is a global, cultural fit that brings the right solutions. (There’s no checking of feature/function boxes at this step.)

Third-Party Claim Verification
Most vendors will make big claims in terms of their platform capabilities. Just like a vendor’s ability to serve your organization globally should be challenged and verified with customer references, so should its ability to fill your technology gaps. Not only should you talk to their partners, but talk to analysts, bloggers, and other third-parties they have interacted with and whom have seen (part of) their solution.

Open Book Negotiations
In addition to third-party claim verification, don’t be afraid to force a vendor to prove every claim, statement, and assumption. This should not stop at current, successful, customer references. The vendor should let you speak to analysts it has relationships with, consultants who have implemented their solutions, auditors to verify their financial stability, and even ex-customers if asked.

End-To-End Total Cost of Ownership Elucidation
What is the true cost of the solution to your organization AND your supply chain? This goes beyond the end-to-end platform cost, as discussed in this classic post on Cost Model Calculations in SI’s Enterprise Software Buying Guide series, but also includes any costs that will be borne by your supply base. It’s often the case with e-Sourcing/e-Procurement solutions with Supplier Information Management, Supplier Portal, or Supplier Network functionality that a vendor will charge your suppliers an access fee. An access fee that is just going to hit your organization with interest in a year when your suppliers raise their prices to cover the fees you caused them to incur. In Procurement, a penny saved today at your supplier’s expense often translates into a quarter spent tomorrow. (And if you don’t believe me, then you need to work on understanding the cost of capital throughout your supply chain. Remember that sound, conventional financial management is NOT good for supply chains.)

Open Finals^*
Typically, the final negotiations in this space are more secret than what goes on beyond closed doors at Area 51, scientology headquarters, and the backroom of the club where Wall Street mega deals really happen. This is dumb. Blind auctions may be okay when buying commodities, but it’s the last thing an organization should do when buying a critical piece of functionality where a failed implementation will cost (tens of) millions or more. Not only should each vendor be aware of whom it is up against, but vendors should be asked to promote their strengths and counter their opponents weaknesses. They should be instructed to tell the truth, even when asked tough questions (about customer retention and defection to a competitor), and penalized for false answers. Remember, good vendors are honest, especially about the occasional (big) mistake that they made, learned from, and put measures in place to prevent ever repeating it.

If your organization implements the best practices covered in this series, then chances are, it will have no choice but to prepare for success!

In order to get you started, if you are a multi-national looking to roll-out an e-Procurement solution in a multiple countries and languages, want a single solution provider with a global presence that can manage all aspects of the solution implementation including integration to the back-end ERP and supplier on-boarding and support, and has a proven track record of delivering globally, your short list should probably include: Wallmedien, Hubwoo, and Capgemini/IBX. If you are looking for e-Sourcing, your short list should probably include BravoSolution, GEP (Global eProcure), and growing up-start iValua.

^* Nothing to do with tennis, folks!

In this post we continue our series on best-practice vendor selection for your enterprise e-Procurement and e-Sourcing solution. As per Part I, this series specifically relates to the selection of technology(-based) vendors for your enterprise software needs, and e-Procurement and e-Sourcing solutions in particular (as reiterated in Part II).

What is the ultimate goal of your organization’s technology acquisition project? To get an e-Procurement/e-Sourcing system? No. To increase efficiency / save money / get more spend under management? No. To get satisfaction? No.

The ultimate goal is your organization’s success. That’s the only metric you care about when initiating the technology acquisition project (TAP) dance . And if your organization is a global multi-national, then your organization’s success depends on the vendor’s ability to deliver globally. Not how many boxes the vendor can check on some random feature / function check list. Because, as we discussed in our last post, where large-scale roll-outs are concerned, there are only a few standalone best-of-breed sourcing and procurement technology vendors that will make the shortlist for a given organization.

One thing that your organization needs to be aware of is that this is not 2002, this is 2012 and both e-Sourcing and e-Procurement functionality is more-or-less commoditized among the established vendors. Sure, some will have features G, H, and I while others have features J, K, and L, but they all have critical features A through F. And as for features G through L, if they are valuable, the other vendors will catch-up, and the time it will take them is usually less than six months nowadays, and if a feature is made a contingency of a deal, the catch-up time is probably shorter still!

Another thing your organization needs to be aware of is that starting with a short-list of vendors that it is fairly certain can meet its needs will not only significantly reduce the length of the evaluation process (as it is no longer a question of “can the vendor meet my needs” but a question of “is this the best vendor to meet my needs”), but also significantly reduce the organization’s risk. If the organization needs to operate in forty countries and twenty languages, and doesn’t do it’s homework, it could end up wasting six months evaluating three vendors who don’t have a reference outside of the US and UK and who don’t support customers in a language other than English. If it has a deadline of nine months, what does it do? Either it takes the last vendor in the pipeline, if any are left, or rushes out to find another one, with no time to consider how appropriate the vendor it is for its needs or its organizational culture.

Which is another point that is often missed in the traditional implementation of an RFX cycle. Cultural considerations are typically ignored in technology selection, ignoring the fact that people have to use these systems — people who work, think, act, and like to conduct business in a certain way (and like to interact in a certain way with technology and technology / service providers). As a result, good technology selection is not just a matter of check-the-box when a strong vendor interaction is required. If two or more vendors are more-or-less equal from a functional/process selection, the tie-breaker should be cultural alignment. Does the vendor have the same goals? Work to the same metrics? Conduct itself in a similar manner? Give your customers and suppliers the same respect? These are important, but often overlooked, questions. Don’t forget them.

In our next post we will dive into more best-practices to truly take your technology acquisition project to the next level now that your RFX process is back on the rails.

Today we continue our series on best-practice vendor selection for your enterprise e-Procurement and e-Sourcing solution. As per yesterday’s post, this series specifically relates to the selection of technology(-based) vendors for your enterprise software needs, and e-Procurement and e-Sourcing solutions in particular.

In yesterday’s post we reviewed the traditional RFX process at a high-level, which is more-or-less correct, and then reviewed how this process is typically interpreted, which is where the problems begin, especially where multi-nationals are concerned. We noted that there are three big problems with the standard interpretation of the process, which occur in the first part of the RFI process. In particular, we noted that most supply management project managers ask for the wrong information when they:

• ask stakeholders for product/service requirements
• ask stakeholders for preferred vendor recommendations
• ask vendors for capability information and self-assessment

This last request in particular is especially futile as the last thing a vendor who wants your business is going to do is say that they can’t meet your request, even if their chances of success are dismal. You need to start by verifying that the vendor has the potential to serve you, independent of the vendor. To do this, you need to start the process where an average organization ends it. In particular,

Start with the Reference Interviews

Too many organizations do this:

• Collateral-Driven Vendor Identification
• Request for intent to bid
• Request for proposal and quote
• Shortlist
• Negotiations
• Final List
• Reference Interviews

By the time a typical large organization gets to the reference interviews, it’s too late. Months have been spent on the project, which needs to be wrapped up shortly. As a result, the buyer gets stuck with one of the finalists, even if none of the finalists are good solutions for the organization.

If you’re a multi-national organization, you have to start with the reference interviews. If you’re a small company, only do business in one or two countries, and only conduct official business in English (and all your international suppliers are Chinese with english-speaking reps), then it doesn’t matter because just about every vendor can serve you. But if you’re a multi-national that:

• has offices in over twenty countries,
• conducts official business in seven languages (English, French, Spanish, Italian, German, Russian, Portuguese, for e.g.),
• has suppliers that speak six more languages (Mandarin, Cantonese, Vietnamese, Thai, Korean, and Japanese, for e.g.),
• and has to support customers in over forty countries

then not every vendor in the space is going to be able to support you. In fact, despite the plethora of companies in this space even after the recent M&A frenzy, the number of pure-play best-of-breed companies that will be able to support your global e-Procurement or e-Sourcing initiative is likely countable on your fingers, thumbs optional.

And the only way you can have any assurance that a vendor is going to be able to support such an initiative is to start with reference interviews with customers who are similar in size, scope, and needs.
While this doesn’t mean that the vendor has to have offices in each country that you are in, support every language that you need supported, and have a success story for each of the forty countries you are selling into, it does mean that the vendor needs to have a global presence, should support at least a dozen languages (that meet a majority of your language requirements) with a track record of being able to add new languages quickly, and should be in dozens of countries with a history of successful roll-out initiatives to new countries.

In other words, unless you have been convinced beyond a reasonable doubt that the vendor can support your organizational needs, they shouldn’t even get a detailed RFI. Because it’s not about who can survive the funnel, it’s about who deserves to even be in the funnel. And that’s a very simple determination, as we’ll discuss in the next post.