Category Archives: Technology

Vince Kellen’s Technology Duds for 2009

Industry Week recently made my day when they published Vince Kellen’s (Senior Consultant of Cutter Consortium) five “anti-trends” for 2009 which stand out as a brilliant counterpoint to the rose-colored predictions of the laissez-faire wannabe analysts that tend to dominate the technology landscape. Probably because they echo my own sentiments and a few of the messages I’ve been trying to get across for quite some time now. So what were they?

  1. Social Networking will Unravel
    Kellen says “at the risk of offending Web 2.0 enthusiasts, most firms, especially those hardest hit in this recession, consider social networking speculative and in some cases frivolous“. Hear, Hear! There’s a reason why “facebooked” has become an urban slang slam, “myspaced” has become a synonym for a late-night booty call, and why the blogger elite (including the doctor and Loren Feldman of 1938 Media) slam Twitter on a regular basis (as the only thing you can do with it is say nothing in only 140 characters). There’s no real value in these technologies, and certainly no commercial value to a productive business.
  2. Mashups will get Peeled Back
    Speculative ROIs or projects not directly assisting with significant savings are going to be difficult for IT leaders to advance, and since the only “Web 2.0” technology that has less ROI and more speculation than a Mashup is social networking, these projects will be axed too. While mashups can be a useful component of B2B 3.0 platforms if they focus on enhancing content, community, and connectivity, on their own they are just useless eye-candy.
  3. Large-Scale VoIP and Unified Communication Implementations Will Be Muted.
    Although such projects promise long-term savings, unfortunately, at least in North America, they represent high up-front investment costs with a long-term payback period due to our still ridiculously high-costs for high-bandwidth access with service SLAs. As a result, these projects will be back-burnered until the economy hits another high-point and executives again don (or is that dawn) their rose-colored glasses.
  4. Analytics and Business Intelligence (BI) Will Lose Luster
    Although a sound data analytics package (you know the one) in the hands of a true expert (you know who they are) will find you limitless savings opportunities, the reality is that most of the offerings on the market are just static data warehouses with static reports in the hands of recent grads with little real-world experience and almost no training. As a result, the majority of solution providers have been over-promising and under-delivering for years, and the market, understandably, has become fed up. As a result, even though these are the times when a real data analysis solution is needed most, many projects will be scrapped and only the true innovators (which are a small minority of the market) will undertake projects to identify and acquire sound BI solutions.
  5. Aged Infrastructure Will Stay in Service Longer
    “More companies with way-past-their-prime architectures will attempt to coax them along for another year“. And this is unfortunate. While I applaud the inevitable push-back on social networking and useless Web 2.0 technologies, and understand the delay on VOIP and BI (as the value just isn’t there in some cases), I am saddened by the truth of this prediction. You see, technology infrastructure improvement offers companies a great opportunity to reduce cost and go green at the same time, thanks to new virtualization, thin-client, and innovative cooling technologies. Not only do green solutions generally offer payback starting in year two, but they last twice as long, effectively reducing your Total Cost of Ownership between 50% and 90% over a five to six year time-frame. And with cash-flush companies like IBM (who had a record profit year in 2008, and predict another one in 2009) able to offer low-cost financing if you can’t afford the up-front purchase and implementation costs, it just doesn’t make sense to delay this investment. (See my posts on greening your data centers, greening your desktops, and calculating your savings for more information.)

The Eightfold Way of B2B 3.0

Last August, I introduced you to B2B 3.0, which promises simplicity for all, in the inaugural Sourcing Innovation Illumination that also explained how B2B 3.0 was the first technology to enable true B2B e-Commerce which consists of simple, fast, low-cost transactions at true market prices. Then, in the follow up Illumination, I explained how B2B 3.0 simplifies B2B for suppliers and that this is revolutionary because simplifying B2B for suppliers enables buyers and lowers costs for all. Then I brought it back to basics and explained how B2B 3.0 elevated e-Procurement to a new level and finally delivered on the promise e-Procurement providers have been failing to deliver on for a decade in the third Illumination. I also penned posts that explain how B2B 3.0 solves the supplier enablement problem, how B2B 3.0 enables an agile supply chain, and a post on how B2B 3.0 is the foundation of Integration-as-a-Service.

In short, I’ve given you a number of Illuminations and posts that describe B2B 3.0 and the benefits it brings but I have not yet given you a post that outlines the essential requirements of a B2B 3.0 technology … until today. In this post I will describe the eight requirements of a B2B 3.0 technology, illustrated with examples from companies that offer B2B 3.0 solutions, and explain why they are important. Just as I gave you the absolute requirements of a true strategic sourcing decision optimization solution in the wiki-paper, these will forever be the absolute requirements of any B2B 3.0 solution.

1 User-Driven
Self service capability, consumer-like usability, and no training required.
Like Coupa‘s On-Demand e-Procurement platform which, based on open-source, was the first platform to truly bring e-Procurement to the masses. (For more information, see Coupa Cabana Cafe Open for Business, The Coupa Sunflower Starts to Blossom, and The Sourcing Maniacs 2008 Vendor Tour.)

2 Content-Driven
The solution is structured around the content which is at least as important as the functionality.

Like Vinimaya’s B2B Search engine that helps companies create “virtual Internet supplier networks” where they can view products AND prices from different suppliers off of the supplier’s own websites side-by-side in real-time. (For more information, see The Next Wave in PCM, The B2B Search Engine, and The Sourcing Maniacs 2008 Vendor Tour.)

3 Community-Driven
The solution enables and simplifies collaboration among the user community.

Like Aravo‘s Supplier Information Management platform that centralizes all supplier information in an organization, allows everyone (with rights) in the buying organization and the supplier organization to access and maintain it in a collaborative fashion, and allows buyers to define initiatives, such as sustainability, based on the information. (For more information, see The Arrival, Supplier Information Management, and The Sourcing Maniacs 2008 Vendor Tour.)

4 Knowledge-Driven
The solution is capable of self-perpetuating improvements.

Like Apriori‘s Virtual Product Environments that allow users in the buying and supplying organization to collaboratively model and improve the VPE as time progresses to accurately monitor the capabilities of the supplier, market prices for raw materials, and overhead costs. (For more information, see The Introduction and The Sourcing Maniacs 2008 Vendor Tour.)

5 Distributed
Users, content, and functionality can be shared across the community which can accomplish tasks in pieces.

Like MFG.com‘s new marketplaces that allow users to locate suppliers, use and refine standard part RFQs, share feedback, and come together to discuss issues in forums. (For more information, see A Community in the Making, Exploding onto the Scene, and The Sourcing Maniacs 2008 Vendor Tour.)

6 Internet-Centric
The solution is designed to leverage the connectivity, content and community of the Internet with no redundancies.

Like Arena‘s PLM Solution which is built on the core internet protocols, employs an advanced security model that allows you to control access down to the IP address, supports a wide array of standard data formats, includes an ever-growing library of on-line training about PLM and the Arena solution, and allows buyers and suppliers to interact, securely, through the same platform. (For more information, see The Introduction.)

7 Services Architecture
The solution can be extended, augmented, and integrated with other service-oriented solutions quickly and easily.

Like Co-exprise’s Direct Sourcing Platform that was built from the ground-up to leverage the interent and all of the inherent capabilities it has to offer, to support and interact with over 1500 file formats, and to plug-in to standard office and manufacturing applications. (For more information, see Kick-Ass Direct PLM Sourcing Part II, Sourcing Lifecycle Management II, and The Sourcing Manaics 2008 Vendor Tour.)

8 Innovative
The technology goes beyond the “same old, same old” and the provider is constantly innovating to make it better.

Like BIQ’s industry-leading data analytics that goes so far beyond your average “spend analysis” solution that it doesn’t even fit in the same category anymore. As many cubes as you want – which can be built on transaction sets of up to ten million transactions in a few minutes of real-time on your laptop. Dynamic(ally derived) dimensions. Built-in statistical analysis and measures. Schneiderman diagrams and innovative tree-maps. Etc. (For more information, see New Horizons I, New Horizons II, and The Sourcing Manaics 2008 Vendor Tour.)

Integration-as-a-Service … What Does It Mean?

I recently stumbled upon an article published by Supply & Demand Chain Executive last summer on why “customer-facing integration demands a better approach” that claimed to provide a helpful guide to IaaS (Integration-as-a-Service) … and the last part in particular caught my attention. I’m a big fan of SaaS (Software-as-a-Service) because of it’s instant deployment nature in a manner that keeps the IT headaches with the provider (instead of transferring them to the customer who might not be very technically inclined), and I definitely think the -as-a-service paradigm is the way to go for many businesses who need to focus on their expertise and leave the rest to external experts. But is Integration-as-a-Service really achievable? There are many service companies that specialize in, and sometimes only do, integration … but given that every project is unique, can you really box it up? You can box the tools and the methodology but there’s still a custom configuration component that’s pretty hard to productize because it requires expertise and experience that only exists in a human head. So I read the article … and I was disappointed.

The article, which claimed that demand-side customer integration is much harder than supply-side because customer count can exceed supplier count by a factor of more than 50:1, especially in Fortune 500 companies, is essentially repackaging the marketplace concept, updating it to use a Service Oriented Architecture (SOA), and calling it the wave-of-the-future and a strategic enabler. While I believe that CI will deliver the returns that the author is claiming — 29% revenue increase, 10% margin premium, and 99%+ order accuracy — the marketplace methodology being proposed still has many of the drawbacks that caused them to fail the first time around because it is still stuck in the B2B 2.0 world.

Those of you who have taken the time to download and read the B2B 3.0 Illuminations know that B2B 1.0 solutions failed because of high bandwidth, high integration, high network-access costs, and the extraordinarily high data maintenance costs and that B2B 2.0 solutions, that ushered in the first marketplace boom, failed because of dynamic content limitations, limited search, relatively high access fees, and limited connectivity to your supplier or customer base due to network specialization. It’s true that SOA reduces platform construction and maintenance costs, which should theoretically reduce access fees, that SOA allows for significantly better search capability, and that SOA allows for near-real time catalog updates under a push-model, but it doesn’t help with initial integration because a potential user still has to connect their systems and map their internal data formats to the hub, and it certainly doesn’t do anything about the inherent network restriction to “like” member companies. This means that a company may still have large up-front integration costs, will have to develop and monitor scripts to “push” their updated content onto the network or still update their content manually, and will have to be on multiple networks if it wants to reach the majority of its customers, since many customers, especially in retail spaces where margins are slim, won’t be able to afford to be on many networks. In other words, it’s FAIL all over again because SOA doesn’t fix the primary issues that caused marketplaces to fail the first time around.

Thus, although I think the concept of Integration-as-a-Service — interpreted to mean that you use a Software-as-a-Service vendor who specializes in integration platforms and integration projects to create a virtual network for you to do business with your suppliers, customers, and other trading partners — is a great idea, because an IaaS vendor will have the up-to-date tools, methodologies, and expertise required to quickly, efficiently, and cost-effectively connect each of the systems used by the trading partners you connect with, I definitely don’t think a relaunch of the B2B 2.0 marketplaces is the way to go. I’d look at someone like Vinimaya (recently reviewed by the Sourcing Maniacs), with their B2B 3.0 platform that specializes in enterprise search and content management, for my content management and transaction needs; or someone like Integration Point (also reviewed by the Sourcing Maniacs), with their wealth of experience in integrating disparate (legacy) systems into their SaaS global trade visibility platform, for my trade documentation and trade management needs. Done right, IaaS is certainly a logical extension to SaaS, and achievable in the respect that a third party will do it for you, but it has to be B2B 3.0.

To find out more about B2B 3.0, check out the inaugural Sourcing Innovation Illuminations, now available for quick and easy download with No Registration Required!

1. Introducing B2B 3.0 and Simplicity for All
2. Simplifying B2B for Suppliers Enables Buyers
3. Content Enablement Technologies Enable e-Procurement 3.0

Supply Chain Application Sustainability

Business applications that are not continuously maintained and updated go stale … and this is doubly true for supply management applications. After all, as a recent i2 article on “synchronizing supply chain applications with continuous change” notes, the value of an efficient supply chain and its use as a competitive lever can only come when it is in continuous alignment with changing business conditions and market trends.

These days, more and more companies are selecting out-of-the-box solutions since they provide access to best practices and the latest technological innovations. In particular, many companies are selecting modern, SaaS-based, applications that provide them with the flexibility they need to customize the user interface, workflow, data modeling, and other components they need to align more closely with business needs. But, these applications, however, can only deliver high value continuously if they are flexible and easily maintainable to achieve high-level responsiveness.

Specifically, such a system needs to be able to:

  • integrate existing legacy systems until their functions are replaced
  • allow rapid prototyping of business ideas through what-if modeling
  • enable procurement users to define and adjust process flows without IT intervention
  • link multiple disparate applications in a business process flow
  • provide for data synchronization and harmonization across existing systems

And this will require constant maintenance and regular updates because business continually face the following challenges:

  • operational
    all businesses experience turnover and all business need to retain operational knowledge despite the turnover
  • evolutionary
    dynamic business conditions spawned by continuously changing demand requirements, competitive pressures and supply arrangements require applications that evolve in parallel
  • organizational
    business needs change as market dynamics change
  • infrastructural
    new hardware and middleware is continually introduced to the environment as the business tries to capture the new innovations they bring to the table

So how do you make your applications sustainable? Start by:

  • Following a Standard Maintenance Program
    Out-of-the-box applications — be they traditional behind-the-firewall or modern SaaS — come with standard maintenance, and update, programs. Be sure to use them to their full advantage as they will help you overcome many of the operational and infrastructure challenges you’ll face on a regular basis.
  • Regularly Reviewing and Tuning Your Solutions
    Applications will inevitably get out of synch with business requirements as small changes accrue over time. Applications should regularly be reviewed by subject matter experts who can identify misalignments, gaps, or missing opportunities and the best way to address them. Often, simple tune-ups result in 20% improvements in key metrics.
  • Synchronizing with Business Changes
    If you select a well-designed application platform with a loosely-coupled architecture, it will be possible to make adjustments economically to keep the platform tightly aligned with business changes.
  • Conducting a Strategic Impact Analysis
    With every deployment, key metrics and targets for improvement need to be identified and tracked against a well-defined baseline. This allows the organization to monitor the health of the application and determine when it needs to be tuned and when it needs to be replaced to keep the procurement operating at peak productivity … which it needs to do to achieve peak savings.

Working with Your Users is Key (to Spend Management Success)

Today’s guest post is from Bernard Gunther of Lexington Analytics.
He can be reached at bgunther <at> lexingtonanalytics <dot> com.

Getting key people involved with the design of any system is good advice. This is especially true for the design and usability of your spend analysis system. The key users for any single commodity include the sourcing manager and the business line owners who drive demand for the commodity. These business line owners may include multiple people from different divisions with different responsibilities. For example, for PCs, the users could include someone from technology who ensures the machines conform to corporate IT standards, as well as someone from a major business line that drive the demand for a specific unit.

Rather than thinking of working with users as a burden, think of it as an opportunity to engage and educate your users and refine the work process. Collaborating with users will help you:

  • create a better commodity structure,
  • demonstrate that you value their input,
  • get user buy-in by incorporating their feedback,
  • find out what’s important to them, and,
  • establish a process for working with each type of user going forward.

A working meeting should cover the existing spending – showing users their spending by commodity, vendor, cost center, and GL codes – both summary and over time. You should ask for input on the commodity structure, the vendors used, the preferred vendors, and any vendors they think are missing. You should ask how they use the data; what value they get from the data and what they would like to have in the system or reports that they don’t have now. If you are doing category cubes, you should review spending patterns, contract compliance and ways to improve the information that exists. The meetings can be formal sit-down sessions with new users, or can be done by email / telephone with users who regularly work with the data and are already providing feedback.

These meetings will probably involve a lot of give and take, but they are essential to improving communication and producing a structure that makes sense to the people who have to live with it. Don’t assume everyone fully understands why these working sessions are important to the company. Let them know why their input is critical. And don’t be concerned if users initially resist these meetings. Their resistance will drop once they have an “a-ha!” moment and start getting value from the data.

In addition to an initial meeting, other milestones that may warrant follow-up meetings are:

  • When someone new takes over responsibility for a commodity. The more they know about their new position, the better they will perform. If you start out providing value, they are more likely to come back for more.
  • At the end of a sourcing event. Ensure that all the learning and changes in the category is properly reflected in your spend cube.
  • On a regular basis, say every 6 to 12 months, ensure that the key users are actually using the data. If they aren’t, why not?

This may sound like a large number of meetings, but, when all is said and done, these users are your “clients”. Is there a more productive way to spend your time than meeting with your client and making sure the service you provide is valuable to them?