Category Archives: Technology

Sometimes the Cantankerous Supplier is Right!

Even if they are too late with respect to demonstrating their correctness.

But let’s back up. Recently, on the Purchasing Certification Blog, Charles penned a great post on “the real reason buyers don’t want to give suppliers feedback”, which, in his words, were

BECAUSE WE DON’T WANT TO PUT UP WITH THIS CRAP!

where the crap in question was the salesperson effectively saying, with their incessant badgering that no other company can produce the same product of the same quality at the same price with the same service, that you are stupid. You don’t know how to make a good decision and you don’t know how to evaluate prospective suppliers.

As Charles’ points out, it happens all too often, and most of the time, the supplier is full of crap. But sometimes the supplier isn’t — and this is often true in custom manufacturing and services. I see it in IT all the time. The buyer doesn’t really understand what’s involved in building or customizing a piece of enterprise software or system and goes with one of the low bids and ends up getting a stinking pile of crap that not only costs 50% more due to project and budget overruns, but is delivered full of bugs, doesn’t include 20% of the originally specified functionality, and takes three times as much manpower to support as it should. In the end, by the time all of the extra service and support costs are factored in, it costs three times as much as the high bid from the one firm that really understood what it was doing. The same is true in custom manufacturing. There are some corners that can’t be cut, and accepting a bid that does so leads to long term cost ramifications.

However, the supplier should still back off once the buyer has made an award decision, even if it is the wrong one. Because it is not the buyer who made the stupid decision, but the supplier. If the supplier truly had a better product of a better quality at a better price and service level, then the supplier should have taken the time to provide the buyer with the education she needed to understand that when the supplier had the opportunity. Instead of chest thumping about how great they are and how they are so much better than the competition, the supplier shouldn’t have even tried to sell at all. They should have said “we know we can meet your needs better than any of our competitors, but that’s not important. What’s important is that you understand why we can do that. For you to truly understand how we are better, you need to understand what the major drivers of cost, quality, and service are around this product. So we’re going to help you with that.” And if they truly were the best solution, then the buyer should be able to see that and choose them. (And if they truly were the best solution and the buyer didn’t see it, is that a buyer the supplier really wants to be working with?)

And regardless of whether or not the supplier has the best solution or not, once the buyer makes her decision, the supplier has to back off, and this is the only appropriate response from the supplier.

“We’re very sorry to hear that you chose someone else. We still believe we could provide you the best overall value with respect to your needs and would appreciate the opportunity to try again at the appropriate time. Could you let us know when you expect to be going out to market again for this product so we can contact you again at the appropriate time to request the RFP? Also, if your chosen supplier proves unable to meet all of your needs, please feel free to reach out to us at any time. Thank you again for the opportunity and we hope to have another opportunity to compete for your business again in the future.”

Anything more and the buyer has every right to blacklist the supplier.

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FieldGlass is Determined To Take Off In the Tens

FieldGlass, which provides a unified platform for contingent workforce management, service provider management, and direct hires, is determined to tear forward through the tens, which also happen to correspond to its second decade of corporate existence. Founded in Chicago in 1999, it celebrated its tenth birthday with a bang by adding 33 new customers in 2009 before tearing into 2010 and adding over 30 new customers year-to-date to double its customer base in less than two years.

With localized support for sixty-three (63) countries and counting, over one third (33%) of the new customers it has added in the past year were from outside the US — and they expect this number to rise over time as they add more satellite offices in various countries and continue to add localized support for more countries. And like Coupa, which happens to be one of the many enterprise platforms their solution can peacefully exist with, they plan to keep up the fervant pace of customer acquisition for some time to come.

So how are they pulling this off? It’s a combination of

  • persistence like the little engine that could, they just won’t quit,
  • technology they have a solid platform which gets better every year,
  • limited competition Google might return over 100K hits for contingent workforce management, but only a few players (like IQ Navigator and Taleo) have platforms in the same class,
  • a truly global focus their localized support (which includes local laws, regulation, and policy) for 63 countries and counting is a differentiator, and
  • the economy since no one wants to hire direct full time employees anymore.

So what have they done since our last update last April (which followed the incredibly deep coverage brought to us by the Sourcing Maniacs in their 2008 vendor tour)? Two things of note: they finished flushing out their core BI suite and started working on Active Guidance. And while the latter is still in its infancy, it will be very useful when taken to the next level.

Their BI offering consists of three core capabilities:

  • intelligent benchmarkingacross equivalent job categories in equivalent locations,
  • drill down reporting which lets the user drill through the various spend cubes maintained by the application, and
  • visualization which presents the user with innovative graphs, comparative dashboards, and informative trends.

Most of the work has went into improving the benchmarks, to make sure the industry averages presented are for equivalent jobs in equivalent locales, and extending the visualizer, to try and find the best ways to present a lot of information in an easy to understand, but yet impactive, manner. In a few cases, they’ve really hit the mark. The first case is the country-based graphs which allow a user to see relative spending by state on a geographically correct map. These graphs take the concept of Shneiderman diagrams (or visual crosstabs) to a whole new level. The second case is the integrated trend graphs that allow you to simultaneously see the trends across contingent worker, service worker, and direct hire for any job position or category. This is important because whenever spending drops sharply in one category, it tends to increase significantly in another. (Can’t hire any new workers? Service workers. Can’t sign another long term contract with a service provider? Contingent workers. Contingent workers been here too long? New hires.) The third case is the comparative rate-range graphs which simultaneously present the average rate, the range, and the market average for a set of related positions — it makes it really to easy to see where the company is likely spending too much for its contingent and service labor.

However, what is really interesting is their new focus on “active guidance”. Having deep insight from meaningful benchmarks and comprehensive spend reports is one thing, but knowing what to do — and when to do it — is another. For an organization with thousands of contingent and service workers, this can be a challenge. To this end FieldGlass has launched new capabilities that is has bundled under the heading of “active guidance” with more in development. The three capabilities it has launched to date are:

  • Rate Guidanceusing the benchmark data and spending history, the platform will advise the user on the recommended rate range to associate with a contingent or service position,
  • FieldGlass Advisorbuilt on top of their alert functionality, the advisor will let a user know when a certain action should be taken (such as initiating a request for additional funds or to extend a current position), and
  • The Project Management Office Dashboarda quick summary into the past due, current, and forthcoming tasks that require the users attention with respect to payment and procurement, the dashboard is built on top of dozens of user configurable thresholds relating to processes, documents, and spend tracked by the system.

As FieldGlass continues its quest to automatically identify trends and associate them with suggested behaviors,this role-based feature should get quite interesting. The holy grail of performance analysis lies in the ability to take tactical data and derive meaningful strategy.

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Why ERP Is Not Enough for Project Based Manufacturing

A recent article over on Industry Week on “5 Critical Issues for ERP in Project-based Manufacturing” outlined why ERP systems alone are not enough for project based manufacturing (and manufacturing in general).

The issues outlined in the article were:

  1. Bidding and Quoting
  2. Project Visibility
  3. Managing Change
  4. Financial Performance Tracking
  5. Rapid Time to Value

A carefully evaluation of many of the ERP tools on the market will reveal that:

  1. They don’t truly support modern e-Negotiation, and the company will also need a modern e-Sourcing tool (which may have to be integrated).
  2. As far as these systems are concerned, user-defined push alerts, flexible automatic notifications, and real-time reporting is still a pipe dream. A real time data analysis tool will be required.
  3. Flexibility is limited. At a a minimum, good processes will be required. A change management add-on may be required as well.
  4. Lots of data is tracked and stored, but financial analysis capabilities are limited. A real time data analysis tool will be required here as well.
  5. Implementation is rarely quick, and payback typically longer than expected. That’s why supplementary Sourcing and Procurement systems are generally required.

In other words, a good ERP system can provide a great foundation, but it will rarely meet all of an organization’s need.

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Has Coupa Settled on a Coupe? Part III

In our first post, we discussed how, when Davie ran The Coupa Factory, their strategy was innovation focussed and they were constantly charging ahead in their efforts to bring Procurement Independence to the masses but that, lately, it seems that their strategy has shifted to putting customer acquisition first and building a better platform second. In our last post, we reviewed what they have accomplished over the past eighteen months, which isn’t too shabby to say the least (especially compared to some of their peers which do not appear to have innovated at all), but noted that there’s nothing to really shake your foundations … which is a shame considering that had Coupa taken benchmarking and supplier ratings to the next level, they could have knocked your Procurement socks off. This is the subject of this post.

In order for benchmarks to be useful, they have to be meaningful. In order for a comparison to be meaningful, it has to be against like items. And while you can compare apples to oranges, unless you’re comparing the spectra of dried samples in powdered form, it doesn’t make sense. The reality is that savings, request, order, and invoice metrics only make sense if the comparison is against a similar company of a similar size in a similar vertical buying similar products. Consider free-form requests … depending on company size that’s going to range from hundreds per year to tens of thousands per year. Frequency of self-approval … that’s not only going to depend on corporate policies but the types of goods being purchased. If the system is mainly used to purchase office supplies, who’s going to waste time approving every small order? But if the system is being used to buy high priced electronics, different story. PO value will not only vary widely between companies, but within a company. A purchase order for a weekly office supplies order in a small company will be a fraction of a purchase order for a new set of servers. Active suppliers will vary widely depending upon the size of the company and how many different types of products are being bought. Had Coupa defined appropriate verticals, segmented the verticals into appropriate sizes, and insured that the metrics were meaningful (even if that meant waiting until there were more customers in some verticals), this could have been extremely useful. However, right now, it’s interesting at best, and could be dangerous if misunderstood.

In order for supplier rankings to be useful, they have to be against meaningful metrics, and those rankings need to be defined by a majority of affected users. If they are random rankings defined by random users against random products, they are not very useful, especially if they are done by users who have only used the supplier’s products once and not users who have to work with the supplier and its products every day. In order to truly rank a supplier, a company needs to insure that all of the relevant users who use the supplier’s products or services regularly or who interact with the supplier as part of their role rank the supplier. This means that the buyer needs to send out mandatory surveys to these users. While a buyer can easily send out a survey through your standard SIM or e-Negotiation tool, what a buyer normally can’t do through these tools is figure out which organizational users are in the best position to rate the supplier. However, as Coupa enables all spend related to a supplier to be captured in the system, it’s a pretty easy query to figure out which buyers are the biggest user’s of a supplier’s products and which buyers should be ranking the suppliers. If Coupa had enabled the construction of supplier performance surveys which could be sent to the regular users of the supplier’s products in a single click, and then made it impossible for a buyer to requisition anything until the mandatory survey was completed, think of how useful it could be. However, right now, like benchmarking, it’s interesting, but not very useful.

Hopefully these oversights are just the result of Coupa going through the growing pains associated with a brand new management team and rapid customer acquisition. When you consider that The Coupa Sunflower was only starting to blossom, it would be nice to see Coupa return to the days when its releases were much more than coupacetic. After all, why should they settle for a coupe when they can build a dragster? It only takes a little bit of innovation in the right direction to bring back the excitement to Coupa Time.

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Has Coupa Settled on a Coupe? Part II

In our last post we discussed how, when Davie ran The Coupa Factory, their strategy was innovation focussed and they were constantly charging ahead in their efforts to bring Procurement Independence to the masses. However, lately, it seems that Coupa‘s strategy has shifted from “build a better platform and they will come” to “get the customer and then build them a better platform”. While not much of a change, it’s a change nonetheless and it appears to have affected their rate of innovation. Furthermore, it has been accompanied by a shift from groundbreaking new features to even flashier UIs, iPhone apps, and streamlined ERP integration. [Either that, or they’ve been celebrating all those new customer wins with The Coupa Drinking Song. ] While these features are important to the tactical buyer, they don’t add value to the strategic parts of the procurement process.

This isn’t to say that Coupa has stopped developing, or that some of their new features aren’t impressive, especially where the average buyer is concerned, but that their rate of innovation for the last year and a half just doesn’t compare to the Coupa of old. And while it is to be expected that the rate of innovation will drop as a company matures, if the rate drops too fast, the company risks going stagnant, and that would be troubling. However, what is really troublesome is that Coupa hit upon two areas in real need of innovation in their latest release, but appear to have completely missed the point on how to bring that desperately needed innovation to the masses (unless it’s still a work in progress, but why not go for the big win before anyone else beats you to the finish line?). However, that’s the subject of our next post.

For now, let’s review what they have accomplished in their latest release, as a few of the features are quite useful and still unique to the space.

Drag-and-Drop Expense Management

One of the developments Coupa seems quite proud of is the ability to snap a photo of a receipt with your iPhone, e-mail it to your Coupa account, log in to the system, bring up expense reporting, and then drag it to an expense category in an expense report. The receipt is immediately associated with the report and removed from your unprocessed receipt bucket.

Transaction Metadata for OLAP reporting

Coupa has added transaction metadata to each transaction that provides supervisors and CPOs the ability to roll up reports by chart of accounts, reporting hierarchy, and category. They’ve also added more fine grained security to insure that a user can only see spend within her visibility. (Note that they were calling this “data striping“, which, of course has nothing to do with OLAP reporting but data storage on physical mediums as it is the technique, used in RAID, of segmenting logically sequential data across different devices. So if you were confused, this is what they meant.)

Real-time Budget-Based Alerts

Not only does the application allow a user to keep on top of her budget, by way of it’s budget dashboard on the home screen (which is actually useful as most buyers don’t have a clue how much they are spending), but if a requisition puts a user over a certain percentage of her budget too early in the year, the application will alert the user, and the approver before it is approved. It will also let the approver know if the requisition would put the category or department budget over a dangerous (administrator configurable) threshold too early in the year.

iRequest

iRequest is a bookmarklet (bookmark app) that allows the user to add a bookmark to their browser that will bring up a pop-up window that will let them request whatever item is on the page of the external site she is browsing. Not only does it make requesting an item on Amazon.com a breeze, but it eliminates the excuse for out-of-system requisitioning as every item can now be easily requested through the system.

Opt-in Benchmarking

With opt-in benchmarking, a customer can opt-in to sharing benchmarking data anonymously and see how it is performing on a standardized set of benchmarks relative to all of the other customers on the Coupa system. It’s interesting, and could be a powerful tool, but right now, it’s not very useful. More on this in our next post.

Supplier Ratings

With this feature, they’ve essentially added the ratings feature of Amazon.com which allows a buyer to rate the supplier with respect to each purchase, but since the ratings are optional, and since they’re not made against meaningful performance categories, the usefulness of this feature is rather limited.

All-in-all, some useful functionality that I’m sure will go far in convincing the average office manager to accept Coupa with open arms and joy in her heart, but not what Coupa could have delivered to totally knock your Procurement socks off. More on this in our next post.

To be concluded.

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