Category Archives: Technology

Rant On Jason, Rant On (Procurement Solution Providers Are Doom and Gloom Too)

I tried to post this comment on Spend Matters, in response to Jason’s latest rant on “Getting Angry and Doing Something About It” about doom-and-gloom procurement practitioners, but his comment mechanism is “broken” due to an apparent mismatch between his CFML and Database (but I’m not a Cold Fusion expert, so I can’t say for sure). So I’m posting it here.

Jason, I hope your next rant is about how this is the time for the vendors and solution providers of the space to stand up and seize their opportunity to shine by helping buyers achieve never-before-achieved levels of productivity and savings that will help them shake the doom and gloom of this recession which, as you point out, provides Procurement and Supply Management with one of the greatest opportunities it’s ever had to shine.

Instead of putting their marketing engines into overdrive and making sure that all of the procurement and supply management departments, who desperately need solutions, are aware of their offerings and the problems their solutions can solve, I’ve seen many (of the smaller) vendors slash marketing budgets to 0 to “conserve cash” and reduce marketing and sales head count.

And instead of escalating New Product Development (NPD) to create leaner, meaner, easier-to-use solutions that can be brought on-line faster (and making use of streamlined out-of-the-box ready-to-start SaaS deployments), they’re putting NPD on hold and eliminating Product Managers, Quality Assurance, and Development Positions.

And most importantly, instead of taking their own advice and bringing in external experts who can help them get lean, mean, and thrive in a recessionary price-compression environment, they’ve cancelled all contracts and put a moratorium on external contractors until the recession is over.

As a result, the obvious has happened. Pipelines have dried up. Revenue has dived (as current customers have less to spend). And, in an effort to “survive”, they’ve slashed head-count by 10% to 50%, further impeding their ability to sell, build better solutions, service existing customers, and, most importantly, take on new customers. But, for some, even this won’t be enough as many of the smaller vendor’s aren’t sitting on years of operating expenditures in the bank. Their investors will likely have them on the block before year’s end. (You have to remember that many of the smaller vendors in this space are VC funded.)

There’s a reason I penned the “Dumb Company“, “Dead Company“, and “Your Marketing Really, Really Sucks” series (links below). I’m seeing the same mistakes being made again and again. Mistakes that were made by technology (based) solution providers in the last two recessions THAT ARE NO LONGER AROUND. Having worked for, and with, a number of start-ups and small companies (and collected piles of worthless stock in the process) earlier in my career, I see the writing on the wall. A number of companies that I thought were the more innovative companies in the space are acting like scared-stiff software providers instead of procurement enablers and blindly marching down the path to oblivion. If we lose them, the Big Co’s lose competition, and instead of thinking that solution X doesn’t need to be improved for 5 years, the Big Co’s will become the ERP providers of our space and we’ll be lucky if they update their solutions every 10 years!

So Rant On! Help me shake these dazed solution providers out of their slumber, because if we don’t, all of the buyers we so desperately want to help are going to suffer.

P.S.
If you’re a vendor reading this and you think this post doesn’t apply to you, think again. Based on my conversations and observations over the last three quarters, and my personal experiences working for, and with, a number of failed technology providers during the last two recessions, at least 9 out of 10 vendors in this space are making at least one potentially serious error at this point. And while one mistake won’t kill you, in a prolonged recession, it doesn’t take many. So I advise you … take a good hard look at yourself before shrugging this post off and going back to business as usual. I’ve already removed 3 service provider links from my Company List I hadn’t heard of over the past three weeks … and I’m really not looking forward to removing companies I have heard of, talked to, and rooted for.

Dumb Company

How Dumb is Your Company
Dumb Company
Dumb Company (The Lyrics)
Dumb Moments in Business not Aerospace, Automotive, or Bailout Related
Why Some Companies are Being Dumb

Dead Company

Dead Company
Dead Company II: If You’re Hoarding Cash … (You’re Not Going to Last)
Dead Company III: Fear is the Enemy
Dead Company IV: Avoiding the GraveYard
Dead Company V: More Ways to Avoid the GraveYard
Dead Company VI: New SI Offerings
Dead Company VII: Even More Ways to Avoid the GraveYard

Your Marketing Really, Really Sucks

Marketing is NOT Optional
How to Build a Bat House
The Brain Gives Pinky a Marketing Lesson
Web Marketer, Don’t Be Misled!

Harvard Business Review’s Seven Truths about Information Technology Costs

The Harvard Business Review recently ran a short one-page article on “The Truths About IT Costs” that should be a must-read for every business executive. While they don’t capture everything you need to know about IT, every point they cover is a point you need to be aware of.

  1. Enhancements Don’t Necessarily Deliver Results Commensurate with their Costs
    Consider how much you pay for ERP upgrades, factoring in the upgrade costs and maintenance costs, relative to how much of the new functionality you end up using and compute the resultant impact on productivity and cost savings, especially compared to the acquisition of a new SaaS e-Sourcing or e-Procurement solution that automates a business function that’s currently manual and you’ll quickly realize this.
  2. Projects Are Often Too Big and Take Too Long
    Many projects have pages of “must have” features and functions that are nothing more than requests that came from a single stakeholder who will rarely even use the software. Create a short-list of essential functions that will be required daily and augment it until 90% to 95% of regular daily activity is accounted for. Stop. That’s the initial implementation.
  3. Previously Purchased Applications and Infrastructure Technology are Underutilized
    Invest six figures in your redundant WebsShere environment? Then you certainly don’t need WebLogic! Tell your vendor you want the WebSphere version or you’ll find another solution. Same goes for your hardware. Use what you have. Need a separate environment? No problem – use virtualization.
  4. Project Failure Rates are Too High
    That’s why you have to keep the initial implementation small … and why subsequent phases must also be small as well. The process should also be agile, with regular feedback and testing. That way you don’t spend hundreds of thousands of dollars having a third party build a custom solution that you can’t use because you only find out six months later during implementation that it can’t be integrated with your current platform without another three months and three hundred thousand worth of work.
  5. Technical Teams Often Do Not Have Sufficient Incentive to Deliver High Quality Applications
    Especially at your average chop shop. Just because the third party developer and integrator is charging you $150 an hour for a resource, doesn’t mean the resource is worth anywhere near that amount. It might actually be a junior consultant only two years out of school who gets a flat salary of 60K a year and who doesn’t see a penny of the performance bonus the firm collects if they deliver on-time.
  6. Managers Don’t Know Enough About the Systems that Support Their Areas
    As a result, your tech department is probably overwhelmed with “helpless” help desk costs that needlessly drain costly resources.
  7. IT is Too Risk Averse
    Many old-school IT managers still live by the “No one ever got fired for buying IBM, HP, or Microsoft”, even when those solutions cost three times as much as competitive solutions. There are huge cost savings opportunities just waiting to be found if you go thin client wherever possible (as it costs less and requires fewer costly hardware refresh cycles), discontinue costly (and often unnecessary) maintenance agreements, and embrace open source platforms and applications where it makes sense to do so.

Optimizing Your Procurement Technology Investments

The Sourcing Interests Group recently ran an interesting article on “optimizing your procurement technology investments in 2009”. Although it had some good suggestions, my top five suggestions would be the following:

  1. Get Visibility Into Your Spend (Spend Analysis)
    If you don’t know how much you’re spending on each category, sub-category, product, and service, who you’re spending it on, in what amount, by unit, you need to get this visibility. Get a good spend analysis solution and dive in!
  2. Take Your Strategic Sourcing up a Notch (with e-Sourcing)
    Start with the most attractive savings opportunities that were outlined in step 1. This is your best bet to negotiate big savings in this downturn.
  3. Focus on Contract Compliance (adopt Contract Management)
    You need to enforce hard-won savings by insuring that internal staff and suppliers are compliant with contractual agreements.
  4. Implement e-Procurement
    Done right, this will make it easy for your buyers to buy on contract.
  5. Get a Grip on Global Trade (adopt Trade Visibility solutions)
    Chances are your global sourcing endeavors are needlessly costing you more than you think! As per my recent Illumination on why you need trade visibility, you’re probably paying more than you need to on duty, using costly inefficient processes, paying unnecessary document preparation costs, and making costly errors that are costing you million of dollars a year.

Machine-To-Machine Strategies Could Lower Your Production Costs

A recent article in Supply Chain Digest noted that it was Time for Manufacturers to Take Stock of Machine-to-Machine (M2M) Strategies. The logic is that M2M — which leverages connectivity to communicate directly with one another — carries the potential to serve as a “game changer” that can dramatically reshape a company and how it goes to market.

Done right, M2M could enable companies and their customers to make faster and better decisions as there would be real time visibility into the status of each machine and production line it is part of. It will allow the development of closed-loop applications and processes where decisions can be transmitted and the results retrieved to verify the implementation of those decisions. It could reduce service costs as real-time monitoring of systems will indicate when preventative maintenance is required and could also reduce fuel expenses associated with fleet management.

It’s certainly something worth looking into if your production costs are high.