Category Archives: Technology

Perform-IS BizNet

About the same time the maniacs were back in Massacheusetts, scarfing down Boston Cream Pies, I got a call from BizNet asking if I’d be interested in reviewing their SPM solution, which is one of the leading SRM solutions used in the Oil & Gas industry.

My first thought was to send the maniacs, since they were doing such a good job in their Summer Road Tour, but the conversation (over a cell phone; which can be skipped by clicking here), which did not go well, went something like this:

Yakko Yakko’s Yummy Yuletide Eggnogs … you shiver, we deliver!
the doctor Yakko, it’s the doctor. How’s the road trip going!
Yakko Great. We’ve learned a lot this summer. Just a few days ago at Vinimaya we learned all about the power of B2B 3.0 Content Management …
the doctor So you’re in the North East …
Yakko Yep. Just outside of Boston at the moment …
the doctor Great! Put me on speakerphone.
click
Sourcing Maniacs, your mission, if you choose to accept it …
you have to be dramatic to keep their attention sometimes
is to review BizNet’s PerforMIS solution and let me know how good it is for SPM, particularly in the Oil & Gas sector where they appear to be market leaders, at least on a market-share basis.
Dot Supplier Performance Management?
the doctor That’s right, Dot.
Wakko I like managing suppliers!
Yakko Sounds like we’re interested. Where are they?
the doctor Belfast.
Yakko No problem. That’s just one state over!
the doctor Not Belfast, Maine, Belfast, Ireland. It’s just a short flight from Boston …
Yakko Sorry, doc. No can do.
the doctor Why not?
Yakko See, there’s this little thing called the No-Fly List …
the doctor What did you do now, Yakko?
Yakko It’s not so much as what I did, but what Wakko did …
Wakko How was I supposed to know I wasn’t allowed to dress up as a marine when flying on Halloween …
the doctor Well, as long as you don’t impersonate one …
Yakko You don’t understand, doctor. He had real knives, real guns, real bullets … the costume was so authentic the screech let out by metal detector shattered nearby windows …
the doctor Oh. You could charter a boat.
Dot That would take three weeks!
the doctor You could do a European tour!
Wakko Been there. Done that. And I’m not sure they’ll let me back into Switzerland …
the doctor Wakko, I don’t want to hear it. I can’t understand how you could possibly get banned from Switzerland, but I know I don’t want to hear it. So it’s a no-go?
Yakko Not this time, doc.
Background Voice Your pie, sir.
Yakko Gotta go!
click

So, I decided to get on the phone, and the web, and review the solution myself. Here’s what I found out.

 

BizNet has been in business for 11 years, and has been focussing on the Oil & Gas sector for the last 8 years. Starting out as a custom developer and integrator, they found that a significant need at many of their client companies was Supplier Performance Management, so a few years ago they set out to build a solution. After releasing an early version of the platform, their suspicions as to the dire need for supplier performance management solutions was confirmed and from that day on they decided to focus almost exclusively on data (through their capit@l product) and Supplier Performance Management.

Their solution is built to enable their version of the “SPM Loop” which is actually a double-helix that starts and ends with supplier engagement in a continuous cycle. Thus, in addition to being able to define and track user-defined KPIs in a very flexible fashion, a user can also create and manage corrective action plans; produce standard, ad-hoc, and customized reports that are meaningful to them and their supplier; and capture performance data on-line from the web.

The KPI builder is quite powerful. A wizard-based formula-builder, it allows you to build any KPI you want using all standard arithmatic operators (+, -, *, /, root, exp, etc.) and any numeric data fields that the system is tracking. KPIs are reported using the now-standard green-yellow-red traffic light signals (or, green-amber-red if you’re across the pond) in basic reports, and can also be displayed in a geographical KPI map with mouse-over pop-ups of rolled up scores by supplier, product line, or date range.

The product can be hosted on-site or used as a SaaS product, which is the way it was designed to be deployed by default, and the BizNet team, with their combined decades of experience working with enterprise systems in the Oil & Gas industry, can link it into your ERP and AP systems so that data can be pulled in automatically, sometimes “out of the box” if you’re using a standard ERP such as SAP or JD Edwards. They’re currently looking at ways to pull financial data in from external entities, such as D&B, to augment the overall supplier picture that the system creates, as this helps you with risk management, and they support standard XML formats for data interchange.

The system is scorecard-based, as you would expect; supports automated e-mail task and new report availability reminders; supports customizable workflows with multi-level approvals to insure that scorecards are created, reviewed, and monitored; supports extensive reporting capabilities; and supports an extensive scorecard hierarchy. You can break a scorecard down by division, location, etc. to as many levels as you want, by supplier, and then rollup at each level to calculate overall performance by city, province, country, and globally, for example. And you can use its dynamic filters to determine which suppliers fall into user-defined ranges — such as very poor, poor, satisfactory, good, and excellent — overall or by KPI category — such as quality, logistics, innovation, etc.

One of the more unique features of the tool that caught my attention was the Supplier Risk Management Component which allows you to define risks, probabilities, and impacts and then map risks on an impact vs. probability basis by supplier. You can then use dynamic filters to determine, across the board, the risks in each category. This will help you in risk planning, since you should be starting with the high probability and high impact risks first and working your way down.

The tool was definitely built to support an industry with complex SPM needs, and since no O&G specific language or processes were hardcoded into the tool (and just about everything is configurable or customizable), it should also serve similar industries quite well. In fact, BizNet have indicated that they’ve started to see some uptake in the Health Care Sector, which also have to carefully manage supplier performance to manage risk, and expect that they will be doing more deployments in that sector as well as time goes on.

So, if you’re in the market for an SPM tool, and you have complex requirements, I’d recommend checking BizNet out. As one of the few companies that just does SPM, and not SPM as an afterthought to sourcing or procurement, they have quite a robust solution. It might be overkill for some commodity-based industries that just have to track quality or traceability, but with risk-levels rising across the board, I doubt that there will be many companies that won’t be interested in using such a tool to its full potential.

Broaden Your PLM Footprint for Kick-Ass ROI

A recent Industry Week article, that noted that “adoption of product lifecycle management (PLM) technology is reaching record levels” and that the PLM market experienced a stronger-than-expected 13.5% growth rate to reach an estimated 24.3 Billion in 2007, also reported that implementations can quickly develop returns on investment of 100% to 300%. Considering the needs for manufacturers to find every savings opportunity possible with record-high commodity costs and a global economic down-turn on the horizon, this is one opportunity your manufacturing organization should not miss.

As I noted last year in my post on PLM for trends based industries, a PLM systems, which enables the process of managing the entire life-cycle of a product from its conception, through design and manufacture, to service and disposal, will provide:

  • complete process visibility compared to the limited process visibility that is the norm without a PLM solution
  • a centralized, usually web-based, point of control compared to a lack of control point without a solution
  • one version of the product status and truth
  • workflow management
  • unparalleled control over the product life-cycle
  • an integration point for the various systems used in the various stages of product design, development, and merchandising

In addition, as per the Industry Week article, the broader scope of today’s PLM solutions enables manufacturing managers to collaboratively reach upstream into the early stages of portfolio management as well as downstream into the integration with manufacturing. In other words, enhanced productivity of existing resources is the result of PLM’s ability to integrate the various value chains. This is because, with PLM, multiple views of the product can be quickly and easily shared among different people of the organization in real time and the collaboration features allow people to communicate, share ideas and interact dynamically around a particular product.

Furthermore, PLM is not just for manufacturers — it’s for any organization that buys a lot of manufactured parts, especially if a good percentage of those parts are custom. The best results often come from innovation that arises as a result of collaboration between the buying organization that has the expertise in new product design and the custom manufacturer that has the expertise in product manufacturing. So where should you look for these solutions? I’d start with some of the companies I covered here on this blog in the past, which include Akoya, Apriori, Arena, Co-exprise, and MFG.com. Each of their solutions can help you identify and realize cost-savings opportunities when properly applied in your product life-cycle. And a couple of them can even help you manage your product life-cycle – so check them out, move forward, and see if you can’t get yourself some of that 100% to 300% ROI!

Spend Matters on SCM: If The Prophet is Right …

This is part two of a three-part series.

Yesterday we covered the five — new and improved — predictions of Jason “The Prophet” Bush, the Spend Master of Spend Matters, that he has issued from high (on his soapbox) to the supply management community as part of his fall conference tour. These predictions were:

  1. Procurement becomes as much about staying out of the headlines as it does about getting results
  2. Top performers will follow Teddy Roosevelt’s adage: “speak softly and carry a big stick”
  3. Si hablamos espanol … as the US gets over its love affair with China when it comes to global sourcing
  4. The management of information becomes the holy grail of all procurement and operations success
  5. Metaphorically speaking, the procurement combustion engine (and car) has now been invented — now the focus will turn to everything else that must come along with it

Are they correct? Time will tell. I agree with number four wholeheartedly, and mostly agree with the others, with the exception of number five, because, even though we now have a working engine, parts of it are still quite primitive. However, rather than argue their merits, which should be self-evident, I think we instead need to ask “if the Spend Master is right, what should we be doing?”. Prophecies are good, because someone should be thinking about the future, but results are better. That’s why you go to a doctor, and not a seer, when you are sick.

Procurement becomes as much about staying out of the headlines as it does about getting results.

What does this mean? Fundamentally, that supply management has to adopt the old adage that the buck stops here and take ultimate responsibility for quality control. They can’t rely on engineering or R&D or, as has been too often done the past few years, their suppliers to do that for them. They have to make sure that the proper quality control mechanisms are in place and that they are being followed. This means that they either have to perform site visits to the suppliers themselves, or, if they do not have the technical expertise, accompany engineers or third parties to supplier sites and production facilities to ensure that the required quality controls are in place and being followed. After all, it’s one thing if the new plasma TV your customer just forked over two grand for doesn’t work … but it’s another if your company just poisoned someone’s child. All the cost savings in the world aren’t going to matter when the lawsuits hit and you get shut down.

It also means that you have to ensure all of the regulatory compliance requirements are being met. Otherwise, you’re looking at huge fines, inventory destruction, and possibly even sanctions. Just a minor reporting omission alone can result in a fine equal to the total value of your shipment under the new 10+2 requirements. Banned materials can result in seizure and destruction, and repeated violations can result in country (and continent) wide bans.

Top performers will follow Teddy Roosevelt’s adage: “speak softly and carry a big stick”

Modern procurement professionals recognize that there’s more to procurement these days than just the mallet and the carrot and act accordingly. Generally speaking, you get further with collaboration and trust than with an untrusting dictatorship mentality. That being said, a smart procurement professional still keeps his mallet close-by, just in case a supplier strays from the open road and starts to take advantage of the trust placed in it by the buyer.

Si hablamos espanol … as the US gets over its love affair with China when it comes to global sourcing

Smart procurement professionals realize that it’s a combination of best-cost country sourcing and home-cost country sourcing … not low cost country sourcing … especially when the low-cost country is half-way across the globe! Sourcing across the globe adds cost, complexity, and tons of GHGs to your environmental footprint … which is not sustainable when it’s not necessary. And it’s not best-cost or total cost of ownership … it’s best value or total value management from an entire life-cycle perspective. This means that, given the choice between a slightly higher price from the company down the street that will work with you to improve value and decrease costs over time and a slightly lower price from a company in China that only cares about pumping out product today, you go with the solution down the street. And that you look to your neighbors before you look across the globe. Sometimes you have to go across the world, especially for certain food items and raw materials that are only available in quantity in certain areas, but for the vast majority of materials, products, and services, you can usually get them pretty close to home.

The management of information becomes the holy grail of all procurement and operations success

Great procurement professionals realize that great decisions are actionable decisions based on great information, which is their number one asset. They utilize solutions that gives them the data they need, when they need it, in the form that they need it and use all of the external data sources available to them to improve their understanding of market conditions and make better decisions. (They also read Sourcing Innovation daily, but that should be obvious.) To this end, they utilize best of breed technology that is capable of extracting, organizing, and displaying relevant information on a daily basis. And this leads into …

Metaphorically speaking, the procurement combustion engine (and car) has now been invented — now the focus will turn to everything else that must come along with it

In some cases, today’s technology is more like the (in)famous Model T than a new Ferrari, but the Spend Master is right on this point: more-or-less, a procurement professional, who’s willing to open her mind and use multiple best-of-breed solutions in conjunction with traditional ERPs and data warehouses has access to all of the tools she needs. Some will be ugly, others will be a kluge, and others will require some custom development in house (or through a 3rd party custom development house), but when we look at the sourcing and procurement cycle, logistics and transportation, inventory and warehousing, forecasting, PLM, and the other fundamental areas of SCM, we have technologies that, collectively, more-or-less cover the key points of the full cycle. Now, it’s true that it’s still the case that not a single player in the best-of-breed category has, as a whole, a best-of-breed fully-integrated end-to-end e-Sourcing or e-Procurement solution (despite what a few may claim) built on a common platform, but a few have end-to-end solutions that are pretty damn good (and much better than the horse and buggy that many shops are still running on, metaphorically speaking) and the solutions are getting better every year. As Hackett’s research clearly pointed out, the best shops have the best people that make use of the best technology to get the best results. Thus, if you don’t have a good end-to-end solution (which you might have to cobble together from as many as half-a-dozen vendors, depending on your needs) that fully enables your processes and best-practices, you go out and get one. Furthermore, as long as you stick to best-of-breed players who embrace openness and give you open APIs and full import/export capability through XML, you don’t have to worry about being stuck on the same platform for the next ten to twenty years, as many companies that spent eight and nine figures on ERP systems are now stuck on.

In other words, the best procurement professionals:

  • Take control of quality.
  • Get a handle on compliance.
  • Collaborate and trust …
  • … but keep a big stick nearby, just in case.
  • Don’t jump on a LCCS bandwagon, but focus on best-cost countries …
  • … and total value management over a product and / or relationship life-cycle.
  • Constantly strive for better information.
  • And ensure that they have the right tools and technologies in place to take their processes and best-practices to the next level.

Come back tomorrow for part three.

Spend Matters on SCM: Same Old, Same New

This is part one of a three-part series.

At the recent 6th International Symposium on Supply Chain Management sponsored by PMAC and the DeGroote School of Business at McMaster University, Jason “The Prophet” Bush of Spend Matters gave his trademark “Emerging Issues in Procurement and Supply Chain Management Soapbox Presentation. For those of you who’ve heard it a few times before, it was the same speech he gave last year (and the year before), except it wasn’t … it was the same speech, updated to take into account the topsy-turvy roller-coaster of a year that we’ve been having and reflect the most current issues on the plate of supply management professionals everywhere.

Although I don’t have the space to cover the entire 48 page presentation within a single post (since my fellow blogger would do an auctioneer proud with the speed at which he delivers his observations and musings), I will try to highlight some of the more prominent points, and, in particular, the new points that the Spend Master is making in his fall conference tour.

In brief, costs are skyrocketing (as it now costs almost twice as much to make a penny and a nickel as they are worth), the trade climate leading up to the election is not a great one, stagflation is back, and the financial markets are melting down everywhere, which is in turn causing liquidity concerns and restricted access to desperately needed capital for your suppliers. This is, in turn, leading to economic declines and reactionary corporate cost cutting. The net effect is that we essentially have the perfect storm to upset the apple cart. And things could still get worse before they get better, especially since supply risk is also rising by the day. (This is where all of the analyst firms agree. The statistics indicate that you will experience at least one supply disruption this year. And this is true whether we are talking about products or services.)

In fact, supply risk is getting so bad that it’s not enough for a supply management professional to be a sourcing savior … a supply manager also has to be a wizard of risk. According to Jason, today’s sourcing leaders:

  • view procurement as more than just “strategic” but as an integrated business function
  • do more with less by making aggressive use of technology and the competitive advantage that good information provides them
  • focus on risk and performance management, especially in the context of all global activities

They do this because they recognize that sustained procurement results are the result of a complete evolution of the function.

Furthermore, leaders of top performing organizations spend more on technology and people, and save almost three times as much by doing so. Consider the recent findings of the Hackett Group*:

 

Area Average World Class
Annual Procurement ROI 281% 694%
Tech Cost per Proc FTE $12,476 $24,507
Cost per transactional FTE $55,060 $51,001
Cost per strategic FTE $81,574 $106,366
Involvement in Enterprise Budgeting & Planning 31% 55%

 

Finally, leaders recognize that the procurement landscape, including the procurement technology landscape, is changing, and they do their best to keep up. For example, if they heed the words of the Spend Master who predicts that the emphasis on procurement technology will shift away from the world inside to the world outside — to focus on all of the opportunities and associated risks that the outside world brings with it, they will start looking for new technology that enables them to better access and utilize the information sources that is available to them from both inside and outside the four walls of the organization.

After setting the stage and defining what leaders do, Jason concludes with his five — new and improved — predictions on where supply management is going. In the new Spend Matters world view:

  • Procurement becomes as much about staying out of the headlines as it does about getting results
  • Top performers will follow Teddy Roosevelt’s adage: “speak softly and carry a big stick”
  • Si hablamos espanol … as the US gets over its love affair with China when it comes to global sourcing
  • The management of information becomes the holy grail of all procurement and operations success
  • Metaphorically speaking, the procurement combustion engine (and car) has now been invented — now the focus will turn to everything else that must come along with it

Come back tomorrow for part two.

* For more information on the Hackett Group findings, contact Pierre Mitchell at pmitchell <at> thehackettgroup <dot> com.

The Sourcing Maniacs 2008 Vendor Tour Part VI: Coupa

When we left the Sourcing Maniacs, they had just finished learning about Co-exprise and Sourcing Lifecycle Management. We join them wandering the streets somewhere in Pittsburgh, PA.

Yakko Enterprise Cost Management and Predictive Analytics.
Wakko True Spend Analysis.
Dot Sourcing Lifecycle Managment.
Yakko The Sourcing World is sure a whole lot bigger than we ever thought it was!
Wakko Maybe it was good we got canned.
Dot We’d never have learned all of this if we were still locked in the corporate boardroom.
Wakko So where next?
Yakko Good question! Do we stay with the C’s or move onto the D’s?
Dot I’m curious what that little upstart by the name of Coupa is up to.
Yakko So am I. When they first appeared, I remember we laughed about the idea of an on-demand SaaS e-Procurement application … but after everything we’ve learned so far on this journey, I’m thinking that maybe we wrong and they were right … that maybe new technology is the future of e-Procurement, not legacy behind-the-firewall ERP add-on technology.
Dot After all, new best-of-breed sourcing technology appears to be revolutionizing sourcing, so maybe procurement can be revolutionized as well!
Wakko So where are they?
Yakko I think they’re back in California!
Dot I don’t want to go back to California just yet.
Wakko So what do we do?
Yakko They’re SaaS … and I hear they’re covered regularly by new media – so that should mean that everything we need to know is online. Let’s use the web! I think that’s a cyber-cafe up the street.
  The maniacs enter the cyber-cafe.
Dot So where do we start?
Yakko Coupa.com, of course!
  The maniacs go to Coupa.com and start surfing.
Yakko Wow … what a diverse customer base. Government organizations, science institutes, universities, mid-size companies, even a hockey team.
Dot Multiple major releases a year … I remember that sometimes we couldn’t even get one major release out in an 18-month period!
Wakko And look at that Pricing! It’s even more insane than I am! How can they possibly start at only $295/month and make money? We’d be losing money hand over fist at $2995/month if we were still at our old job!
Yakko Must be something to do with SaaS. Let’s read more about that.
Yakko surfs.
Here’s a great article by the doctor on the e-Sourcing Wiki. According to the article, SaaS allows for great economies of scale, a single multi-tenant instance, and a total cost of ownership that is much, much lower than the traditional on-premise model that we used to promote. Plus, as per this article I found on Sourcing Innovation, they deploy on the Amazon cloud that allows them to keep their infrastructure overhead ridiculously low and only pay for the computing resources they use.
Dot Is on-Premise really that much more expensive? I thought we had a great TCO in the old days.
Yakko I just found this great on-premise vs SaaS TCO calculator on the Coupa site that allows you to factor in license, support, upgrade costs, database costs, application server costs, implementation costs, and annual internal support costs for an equivalent procurement system and it’s surprising. If you managed to score a great deal and get an installed e-Procurement license for only 50K, with an annual industry average support fee of about 20K, and get it installed for 25K, and your tream trained for 25K, your first year cost would be $158,000 and your five year cost would be over $350,000! On the other hand, an enterprise level coupa license for a mid-size business with 1000 users, that costs about 17K with equivalent training costs, if my math is right, would only cost $42,000 the first year, and have a five year cost of only $110,000 … which is less than 1/3 of the five year cost for an on-premise application.
Wakko Wow! That’s less than my annual baloney bill!
Dot And what I spent on Gucci when we had a full time job!
Yakko I guess SaaS really stands for Sumptuary Allowances Actuate Savings!
Dot You’ve been reading the dictionary again, haven’t you?
Yakko It’s almost as interesting as the Universe.
Wakko But I thought you already knew all of the words in the English language!
Yakko I did … but they keep adding more! Did you know that almost 20,000 words are added per year?
Dot Plus all the ones you invent!
Yakko Yassuredly.
  At this point the sourcing maniacs really get off topic and start arguing how many parts of the brain it takes to source, so we’ll skip ahead until they get back to their Coupa discussion.
Dot So what we we doing before Wakko demonstrated how to eat sphaghetti with chopsticks?
Yakko Investigating Coupa I believe.
Wakko And their wacko pricing that’s less than my annual baloney bill!
Yakko And SaaS … which appears to totally rock …
Wakko … almost as much as I rock America!
Dot So, I guess the big question is … at that price, does it do what it needs to do?
Yakko Well, according to the doctor, who wrote an introductory e-Procurement Wiki Article, e-Procurement has up to 9 steps, with the first seven being key: requisition, authorization, purchase order, receipt of goods, invoice, reconciliation, and payment.

Now, according to the Coupa site, it supports requisitioning, multi-level rules-based and workflow-based authorizations, purchase order management, goods receipts and inventory management, invoicing, and integration with existing platforms which allow you to do reconciliation and e-payment.
Dot Shouldn’t it do reconciliation and e-payment?
Yakko Considering that the data you need for reconcilation is probably in your ERP or CM system anyway, built in reconcilation probably isn’t that important, and considering that not only do many companies use AP systems to pay, but that most e-Procurement platforms don’t include a built-in e-Payment mechanism, and simply interface with external e-payment systems, it looks like it’s pretty competitive.
Wakko Okay … there’s got to be something missing at that price! We would have charged $500K a year for this back in the day!
Dot Heck, we would have tried for a million! Gucci and Prada ain’t cheap, you know.
Yakko I guess we’ll just have to try it out!
(Coupa has a 30 day free trial!)
  Silence ensues for about 15 minutes while they try it … all of it … out.
Yakko That was …
Wakko, Yakko, & Dot Awesome!

Editor’s Note: For more information about Coupa, see this list of indexed posts.

Also, since I’m a little tired of typing, we’re going to break for a week or so … and pick up where we left off early next month.