Category Archives: Technology

P2P On a Budget … Is There Any Other Way?

About the same time I was authoring my rebuttal on why there’s nothing more important than a good “test drive” — even in e-Procurement, yet another e-mail from the SSON hit my inbox. This one started off promoting P2P on a Budget … and all I could think was “is there any other way?“. After all, as per my previous post, the only requirements for a P2P system is that it permit e-Procurement, possibly through a (n integrated) third-party (e-Procurement) platform that permits electronic ordering, and that it permit payment approval, possibly through a(n integrated) third-party (e-Payment) platform. That’s not a lot of functionality, and definitely not a lot of value, so you shouldn’t be paying that much for a P2P solution in the first place.

That being said, since most people still don’t know the difference between P2P, EIPP, and e-Procurement (see my last post for an explanation), I thought I’d check it out in case some of the “experts” they gathered didn’t know the difference either and offered up valuable e-Procurement advice in place of relatively valueless P2P advice.

When the editors said that sometimes you have to spend a little to save a lot and that investment during all but the most terminal of cash crises can result in savings that can make the difference between success and a very final failure, they’re right. Right now, small investments in spend analysis, sourcing expertise and supporting systems, expert consultants (like yours truly), and e-Procurement systems to minimize your transaction costs, prevent maverick buying, and enforce negotiated prices can save you a small fortune (or, if you’re particularly inefficient, which at least 85% of companies are given that only 15% have a CPO in the C-suite, a large fortune).

However, the article on how to get the best from your procure-to-pay process was pretty useless as the contributors were all over the map. The contributor from Eli Lilly talked about the importance of speedy invoice management, which doesn’t really save you anything. The contributor from Lockheed Martin discusses the importance of JIT delivery, which is off-topic. And the contributor from Schneider Electric took a broad brush to demand management, spend management, and cash management without any apparent understanding of where P2P fits in a discussion that tackled (human) resource allocation, contract management, differentiated spend management, demand management, centralized invoice management, and process standardization. Finally, the contributor from Emerson Argentina talked about stock reduction, volume leverage, and extended payment terms. And it got worse from there.

In my view, it was a wasted effort on SSON’s part and a total waste of any reader’s time because getting value from P2P is easy. Here’s the magic formula.

  1. Standardize your processes and make them e-Procurement friendly.
  2. Adpot a low-cost SaaS end-to-end e-Procurement platform that supports purchase orders, invoices, and electronic requisitions through “cart-based” interfaces that can be “integrated” with your current AP and e-Payment systems through standard XML interfaces and securely transmitted data files or feeds.
  3. Load your catalogs, integrate your punch-outs, define your buying rules, and, most importantly load your contracts and price tables and make sure they override catalog and punch-out prices (or obtain a compliance monitoring solution).
  4. No requisitions not through the system.

That’s it. Instant value. Buying rules ensure that no purchases can be made off-contract without authorization. Price rules ensure that suppliers don’t “accidentally” change punch-out pricing and buying rules can be defined to insure that “approved” products don’t get replaced with “unapproved” ones. Authorizations insure that no one spends above their allowance without approval. And the net result is you never pay more than the contract price, discounts and rebates are captured up front, and unnecessary spend is stopped dead in its tracks. This means you don’t have to pay a consultancy $10K to help you find and recover $100K in over charges from your office supplies vendor or $50K to help you find and recover $500K in overcharges from your hardware provider who’s best price on a system configuration that hasn’t changed in a year only declined 0.3% a month when most hardware depreciates 3% a month.

Of course, if you want to take the hard road, you can do it the hard way and read the 20 or so pages provided by the SSON which does a great job of leading you in circles and never getting to the point.

Did We Need Yet Another Study To Tell Us That Slave-Driving Isn’t Productive?

A recent study from the University of Melbourne, covered by Computer World, found that workers are more productive if allowed to use the internet for leisure. Duh! Anyone with two working brain cells in IT should be able to tell you that.

Specifically, it found that People who do surf the Internet for fun at work – within a reasonable limit of less than 20% of their total time in the office – are more productive by about 9% than those who don’t. The explanation given is that people need to zone out for a bit to get back their concentration. Duh! Anyone who’s taught can tell you that. Every 17 to 20 minutes, you lose 1/3 of your audience if you don’t shake things up a bit, change the topic, wake them up, etc.

And even more insightful, the press release notes that it is important such browsing is done in moderation, as internet addiction can have the reverse effect. Duh! If you spend 8 hours a day following the twits that comprise the twittersphere, then you’re obviously not going to get anything done.

At least the computerworld article had the good sense to state the obvious points that should have been made.

  • It gets personal things off your mind.
    It’s hard to work distracted. If you can pop-on the internet, and get an annoyance like paying a bill, pre-ordering take-out, or getting out a message you can’t forget to deliver over with, you free yourself of distractions and this enables you to concentrate (providing you turn off those twitter feeds).
  • It converts unnecessary real-time interactions into asynchronous ones
    Nothing destroys deep concentration more than a five minute “pop-in” by a colleague who just feels the need to “talk”. If it’s unimportant, they can write you an e-mail, and you can read it later when you’re not in the middle of something important.
  • It makes work enjoyable.
    No one is productive in workplace hell where bosses spend all their time reciting garbage along the lines of “personal time steals from the company” and doing everything they can to squash happiness. Happy workers are productive workers. Productive workers create value. And that’s what sells in today’s economy.

So keep your workplace fun and free of too many unnecessary restrictions. As long as employee behavior is responsible, you’ll get your money’s worth.

What to Look for in a Talent Management Application

A recent Industry Week article on “talent management technology: automate and analyze your metrics” claimed that the combination of technology, tech saviness, and concrete planning ultimately guarantees best-in-class talent management. Although I would disagree, as this leaves out the facts that you need a solid understanding of what “talent” is and what “talent” needs to do in order to effectively manage it, technology, tech savviness, and concrete planning are still necessary conditions of good talent management and any good advice you can get on these aspects is good advice you can use.

The article provided good advice in the form of five factors that you need to consider when selecting a talent management application, which will form the foundation of your talent management activities. The factors were:

  • Establish Clear Business Goals
    What are the primary goals of your talent management — better retention, improved knowledge management, ROI? You need to understand what you need before you can select the right application.
  • Think Smart, Think Strategy
    How is the tool going to help you? Performance evaluation support? Key trend identification? Surveys? Skill / Knowledge Tracking? This helps you select a tool with the right functionality.
  • Seamless Integration
    How well will it integrate with your current HR and Knowledge Management Platforms? If you have to rekey data through manual processes, it’s probably not the right solution for you.
  • User Friendly Software
    An application that isn’t easy to use isn’t used.
  • Proven Client Satisfaction
    Talk to long-term clients of the provider and make sure that the tool is still working for them after the initial shine has worn off. You want a solution from a provider who stands behind it for the long run.

And they are definitely factors you can’t overlook when selecting any software solution, not just talent management.

Information Technology Cost Management

Supply & Demand Chain Executive recently ran an article on “managing information technology costs in a challenging economy” that claimed right-sizing your IT budget and avoiding long-term harm to your company’s bottom line was a four step effort. Not sure it’s that easy, but it’s certainly worth some consideration.

The approach presented is as follows:

  1. Get a handle on the TCO of IT to the business
    Don’t overlook the “device propagation” that results every time a new application is added to the data center, the energy costs, and the support costs.
  2. Focus on the Cost Drivers
    Energy? Hardware? Software? Projects? Where’s the money going, and why? Treat the IT organization like it is a business and balance the supply and demand.
  3. Be relentless in Valuing IT services
    Examine the cost structure through the eyes of your customers and segregate functions and services into value-add and commodity categories and drive the associated costs accordingly.
  4. Be creative in meeting demand and sourcing work
    Examine the people, process, and technology infrastructure carefully to determine if there is a more cost effective way to deliver the necessary services.

I think this might be an over-simplification in some respects, as it does not address the identification of necessary vs. optional services, but one thing that I am sure of is that the answer, as the author points out, is not the typical five-step approach of (i) killing the capital projects, (ii) tossing the contractors out the door, (iii) deferring maintenance on existing systems (and letting the renewals laps), (iv) canceling training, and (v) slashing the travel budget to zero. That’s just a five-step plan to disaster.

There’s Nothing More Important Than A Good “Test Drive” — Even in e-Procurement!

While my esteemed colleague at Spend Matters might believe that you can’t “date” where e-Procurement is involved (as per “Don’t Test Drive e-Procurement, Make the Right Decision First”, I have to disagree. You see, e-Procurement, like e-Sourcing, is a multi-step process that doesn’t conclude until you seal-the-deal.

You see, despite the continually propagated misconception that e-Procurement, EIPP (Electronic Invoice Presentation and Payment), and P2P (Procure-to-Pay) are essentially the same thing, nothing could be further from truth.

By definition, the only requirements for a P2P system is that it permit e-Procurement, possibly through a (n integrated) third-party (e-Procurement) platform that permits electronic ordering, and that it permit payment approval, possibly through a(n integrated) third-party (e-Payment) platform. A P2P “solution” could be as simple as a “punch-out” to a supplier catalogue and “punch-in” to your accounts payable system, allowing accounts payable to process the returned invoice and pay it (through e-banking) as soon as you indicate the goods have been received.

Similarly, by definition, the requirements for an EIPP system are just as weak. As long as the system enables suppliers to submit electronic invoices, procurement to review them, accounts payable to process them for payment, and integrates with one or more e-Payment mechanisms, it’s an EIPP “solution”.

On the other hand, e-Procurement must enable each and every phase of the (up to) 9-step procurement process:

  • Requisition:
    The e-Procurement system must make it easy to create requisitions. This means that it must support up-to-date catalogs and punch-outs and should support virtual supplier networks and B2B 3.0 enterprise search capabilities that allow users to requisition what they need, when they need it, on the appropriate contract.
  • Authorization:
    It must support and require authorizations when a volume limit or dollar amount is exceeded or when a requisition is off contract. The workflow should be customizable to the organization’s approval process.
  • Purchase Order:
    It must support the automatic creation of purchase orders off of approved requisitions.
  • Receipt of Goods:
    It must capture good receipts.
  • Invoice:
    It must allow for suppliers to submit electronic invoices using EDI, XML, or web-based forms.
  • Reconciliation:
    It must support multi-way matching between the contract, requisition, purchase order, goods receipt and invoice and insure that the organization only pays for delivered items at contract prices.
  • Payment:
    It must support payment authorizations and integration with one or more payment systems.
  • Tax Reclamation:
    It must capture the data necessary for finance to reclaim tax payments.
  • Analysis:
    It must enable export of the data in standard formats for spend analysis.

And, most importantly, it must be:

  • easy to use:
    User adoption is the single most important factor when it comes to e-Procurement Success.
  • easy to administer:
    If you can’t keep the platform up-to-date, it will be abandoned.
  • easy to change:
    If workflows, processes, supplier data formats, or related supply chain systems change, it must be able to support these changes.

And this is why you need a test drive.

Brochures, demos, and sales assurances can’t tell you if it’s easy for your buyers to use. And these deomos certainly won’t uncover the limitations and hiccups of the administration process. And unless you can see the APIs and run your own integration test, you’ll never know if you’ll be able to properly integrate it with your current system(s) or not.

Furthermore, an e-Procurement test drive needn’t be rolled out to the whole organization. It can be limited to a small control group of buyers, and organizational users, who would be most impacted by its implementation. Only if it looks promising would the “test drive” need to be extended to additional users. While an e-Procurement system might touch a significant number of users, only a small percentage will be using it regularly. Think about it. How often does Paul Programmer order new machines? Sam Secretary restock the office supplies cabinet? Sally Salesman replace her cell-phone? You only need a few of these users to gauge usability and impact.

Furthermore, if integration with your current payment system is critical, you can have IT, or your third party integrator, dive into the APIs and evaluate the complexity and expected time-frame of integration while you test-drive. And if the configuration and integration requirements are significant, as my colleague suggests they will be, I suggest you say “No Thanks” and move on. With so many EDI and XML standards to choose from, and so many new on-demand and SaaS solutions supporting standards out-of-the-box, if it’s not an easy configuration, then the vendor is behind the times.

Similarly, if the education requirements for basic use require more than an hour of training, keep looking. With the advancements in usability made over the past 10 years, and the fact that everyone is familiar with standard office software, Web 2.0 applications, visual workflows, and multi-media “on-demand” training, your e-Sourcing and e-Procurement applications should almost drive themselves where standard tasks are involved.

Finally, if the primary benefits of the new process enabled by the new solution aren’t obvious, I’d ask if they were there in the first place. We’re a tech-savvy generation who want to use well-designed software solutions because we’re tired of poorly designed clunkers that impede us. If the primary benefits aren’t clear, the system isn’t yet mature.

And you’ll never know the integration complexity, education requirements, or design usability without a walk-through. While it’s easy to fashion a good looking demo (and vendors excel at this), it’s much harder to control a user “test-drive” — and this is where the truth comes out.

So, while if this were 1999 (and maybe even 2004) where e-Procurement systems were on-site, clunky, and required more training and integration than grandpa could shake his stick at, I might agree with my fellow blogger, but this is 2009 and we’re on-demand, streamlined, and self-explanatory. This says that taking a software test-drive should be easier and less committal than test-driving the new vehicle on your automotive dealer’s lot.

The simple truth of the situation is this: you can’t figure out if a software solution is right for you until you use it. So take that test-drive. As long as it’s well designed, well planned, and suitably controlled, you can’t lose.