Category Archives: Technology

What Impact Will the BI Megatrends from 2009 Have on Next Generation Spend Analysis?

An article in Intelligent Enterprise last year outlined the “Nine BI Megatrends for 2009” that the author expected to reshape business intelligence and information management in the year(s) ahead. Since spend analysis is a major component of business intelligence in supply chain, one has to wonder what impact these megatrends will have. But first, let’s address the mega-trends presented in the article.

  • Open Source
    Low TCO, mature development stacks such as LAMP (Linux, Apache, MySQL and PHP, Perl, or Python) [or MAMP if you prefer the Mac which, being built on Unix, is fully compatible thanks to Xcode], and new open source offerings from players such as Pentaho are making open-source platforms and foundations attractive, and providing pressure on commercial vendors to bring down the TCO.
  • BI is becoming less isolated
    Many users are now employing reporting, access, and analysis tools that come with functional applications, forcing suites to break down silos to offer value.
  • Users are demanding a richer experience
    The days of simple, canned reporting are finally slipping into the past. BI portals are starting to become richer, more flexible, and more powerful. They’re using Rich Internet Application (RIA) technology to improve the user experience and incorporating mash-ups to allow users to better visualize the data.
  • BI is starting to focus on relationships
    BI used to focus on reports that did not provide any flexibility when it came to investigating data relationships, but new tools are giving users the ability to define their own relationships, cubes, and reports and dive into the data in new and innovative ways and find relationships that, classically, would take weeks of specialist data mining or statistical analysis to uncover.
  • Business Modeling meets MDM
    Master Data Management and emerging semantic models, which could serve business modeling in the same way that data models, schema, and metadata served extract, transform, and load (ETL) tools, are enabling some vendors to create tools that improve business modeling and its data modeling relationship using graphical interfaces that allow analysts to create their own data models without having to learn specialized languages or methodologies.
  • MapReduce meets Large Scale Data Analysis
    Although the most famous implementation belongs to Google, it’s also available in the open source Apache Hadoop framework, and allows organizations to build parallel, virtualized architectures based on server farms using commodity hardware which can analyze more data simultaneously than ever before, allowing for the discovery of new relationships that can prove very insightful to BPM.
  • Column-oriented databases are attacking performance woes
    Some of the leading column-oriented database technologies are employing advanced compression technology and large memory algorithms that is changing the game for BI and data warehouse architectures, allowing complex queries to be answered in realistic amounts of time.
  • Event Processing is opening up new analytical possibilities
    Emergent applications in healthcare, telecommunications, intelligence, IT management, gaming, and web analytics are capturing events and correlating them with analytics from BI tools to give organizations actionable insight.
  • Too Big to Fail
    As more and more queries are run against multi-billion row tables in data warehouses managing hundreds of terabytes of data (and growing daily), we’ll see more and more BI implemented to improve BI.

So what does this mean for spend analysis? With the exceptions of MapReduce and Column-oriented databases, not much. The reality is that It’s the Analysis, Stupid and anything that doesn’t simplify analysis while increasing the analytical power available to the user won’t stay on the radar very long. That’s why I’m pleased to inform you that Eric Strovink’s new series on Spend Analysis starts within a week. As I’m sure it will be as informative and forward looking as his last two (linked in Spend Rappin’), I’m certainly looking forward to it!

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Trade Extensions Demonstrates Optimization is Not Just for the Private Sector

As I just finished my recent series on The Role of Optimization in Strategic Sourcing, I wanted to run a few recent case studies to demonstrate the power and benefits of optimization to make it clear just what you’re missing by not using this wonderful piece of sourcing technology. Since I talk with some of the people at Trade Extensions regularly, I decided to ask them since it seemed like the quickest (and easiest) way to get what I wanted.

Now, I must say that I was a little surprised by what I received, and you might be as well. Now, many of you probably know that Trade Extensions powers BidSmart by Schneider Logistics, that it is used by A.T. Kearney in many of their high-profile consulting engagements and that, like their peers, they have several of the largest Fortune 500 companies in the world as clients. What you may not know is that they also have a significant number of public sector clients in Scandinavia, including the cities of Stockholm and Gothenburg, Greater Stockholm Public Transport and The Swedish National Traffic Agency. The case studies I received detail just a few of their successes within this sector.

Even though optimization isn’t restricted in terms of applicability, when you consider that:

  • most public sector operations, at least in North America, are woefully behind the private sector
  • most public sector operations, at least in North America, require the “lowest bidder” to win the award, no matter how unattractive their bid might be or how poor their past performance was
  • most public sector operations, at least in North America, have so much red tape and politics at play that getting the cross-functional team on-board necessary for success is a pipe dream

the last thing I was expecting was a set of public sector case studies.

So what did optimization do for the very forward-thinking Swedish public sector?

  1. It reduced the cost of cleaning services by over 6%.
    This amounted to a savings of over 200,000 Euros of up-front saving plus considerable on-going administrative savings as the ability to accept a package bid reduced the number of contracts that had to be administered from 42 to 1!
  2. It reduced the cost of bus services by over 1,000,000 Euros.
    While the average cost reduction was only 2.4%, in the public sector where union wages rise every year (with the cost of petrol [gas])), that’s pretty good — especially when the routes for a bus service are fixed!
  3. It reduced the cost of road resurfacing (while reducing the risk of possible collusion between suppliers) by over 1,000,000 Euros!
    Again, while the average cost reduction was only 2.7%, since union wages and the cost of materials rise every year, this is also quite good! Also, the design of the event (a large number of contracts were split into 2 separate contracts, one for the production and delivery of asphalt to a specific site, and one for the laying of the asphalt) had the desired effect in terms of allowing smaller suppliers to participate in the event.
  4. It reduced the cost of domestic travel (w.r.t. flights) by over 55%!
    Before the Trade Extensions event, which allowed bidders to submit bids on single contracts or a combination of contracts, the average contract cost for the Swedish National Public Transport Agency for the long distance public transport system was about 13,500,000 Euros a year. After the combinatorial event which considered 27 bids from 8 bidders, the cost was reduced to about 6,000,000 Euros a year! Incredible!

If you want more information, feel free to contact Chetan Raniga, Business Development Manager (Americas) at your convenience. He’ll be happy to discuss these, and other, sourcing categories (and case studies) with you.

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Are We Just a Decade Away From Becoming Borg?

Or a return to our Neolithic past?

After reading Charles’ Business Predictions for 2010 and Beyond on the Next Level Purchasing Blog, I have to wonder.

Now, I usually skip “prediction” and “resolution” posts, just as I rarely write them myself (especially around the New Year, I don’t like working on an artificial clock, especially one out of sync with natural cycles), but I know that Charles usually puts thought into everything he writes (even if I don’t agree with it), and isn’t one to push the “post” button on every thought that pops into his head, so I decided to read it. And while I fully agree with predictions (2) and (3), as the airline industry just can’t survive in it’s current form and the amount of value coming out of many of the current purchasing organizations, especially from a certification perspective, is questionable, I was taken aback at prediction (1).

I predict that, just as media went the way of the dinosaur, the devices will either be reduced to one or will go away all together by the end of the decade.

Charles is giving us 50-50 odds that devices are going away all together!

Since I don’t see our ever increasing addiction to media in all it’s various forms decreasing, yet alone disappearing, we’re still going to need something to absorb it. If we take away the device, that only leaves our brain. So either we’re going to become a Johnny Mnemonic capable of hacking our own brains, or we’re going to become Borg and absorb the device.

Now, I could be wrong … we could reach a point of information overload, take a few lessons from the Amish, get rid of all our technology, and begin a slow devolution towards a Neolithic culture. That too would increase our device dependency to zero.

Either way, I hope the odds of zero devices is a lot less than 50!

BravoSolution Collaboratively Optimizes Its Way onto the doctor’s Short List

As many of you know, there are not many vendors out there that (claim to) offer strategic sourcing decision optimization, and fewer still that meet the doctor‘s basic requirements for a strategic sourcing decision optimization platform. Up until a few days ago, I could only certify six such solutions, though I suspected BravoSolution, especially with its recent acquisition of VerticalNet, made the grade as I knew both were close. However, with the recent addition of the infamous Paul Martyn (formerly of CombineNet fame) as VP Marketing, BravoSolution has been reaching out to analysts and bloggers alike and I received the demo I needed to certify BravoSolution (and it’s Collaborative Sourcing platform) as one of the doctor‘s Optimization Sourcing Samurai.

I’ll keep this post fairly short since, by now, you all know the minimum requirements for a strategic sourcing decision optimization (SSDO) solution, and thus what the BravoSolution Collaborative Optimization platform offers by definition, which are:

  1. solid mathematical foundations,
  2. true cost modelling,
  3. sophisticated constraint analysis, and
    • capacity
    • basic allocation
    • risk mitigation allocation
    • qualitative
  4. what-if capability.

What I will point out is the following:

  • They have one of the easiest-to-use constraint definition UIs
    Not only is it wizard-driven, but they have their constraint categories broken down into four primary categories and 15 sub-categories. In addition, their capacity switches and supplier and lane filters make it really easy to define capacity constraints and supplier exclusions.
  • Their switches make it incredibly easy to construct scenarios from varied data sets.
    They have four types of scenario switches:

    1. Functional
      which let you determine whether or not you want to include bundles (to allow you to compare bids with and without bundles), volume discounts, and capacity constraints
    2. Price Component
      which allow you to select your baseline scenario data and whether or not to include (projected) fuel surcharges
    3. Demand Component
      which lets you switch between different historical and forecast volumes
    4. Filters
      which act similar to other providers’ attributes and allow you to determine whether or not you want to include suppliers, groups, carriers etc. and (automatically) define constraints that would exclude new suppliers, intermodal carriers, or suppliers without a valid contract status or force the inclusion of WMOB suppliers, etc.
  • They have a very extensive library of built in reports
    Not only do they have full-featured comparison reports (like any good SSDO vendor), award detail reports, carrier reports, but they have reports by business unit, geography, bid attribute, lane, incumbent, and scenario detail. The last report makes it easy to determine the differences between two scenarios (which is necessary to understand the cost differential) and their award reports include cost differentials that allow a negotiator to tell a supplier how much their prices would have to decrease in order to get an award.
  • They have a very extensive help library.
    The help library has information tailored to each screen, each constraint, and each option and includes a discussion of the possible ramifications of each constraint and option on the model as a whole.

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