Category Archives: Technology

ThomasNet Takes Sourcing to the Masses

ThomasNet recently launched it’s free Purchasing Tools, based on SourceOne’s (acquired by Corcentric) free WhyAbe (sunset) platform. This platform allows buyers who still haven’t adopted an e-Sourcing platform to test the waters with a basic RFx and Auction service.

The platform, which comes with a complete Buyer User Manual as well as a Supplier User Manual, allows buyers to create a private or private RFX, see their listings on a dashboard (where they can also identify reviewers and block blacklisted suppliers from bidding), and also take advantage of ThomasNet’s engineering, web, and community tools. The RFxs are essentially RFQs where you solicit bids for well a basket of well-defined products and services, and the reverse auction formats are limited to supplier rank and lowest bid, but that’s where most companies start on their e-Sourcing journey.

The auction tool allows you to specify whether or not you want duplicate bids, minimum decrements during bidding (as a number or percentage), and automatic extensions to prevent bid sniping. The product also supports multiple currencies, attachments, and product images as well as e-mails to invited suppliers. It’s not on par with any of the paid Software-as-a-Service offerings, but as I’ve said before, it’s cracking the sourcing mold and offering a free solution that companies new to sourcing and sourcing technology can use and experiment to find out what works for them, what doesn’t, and what they need help on. It’s a great way for a company to test the water as it provides a quick start to e-Sourcing with a price that can’t be beat. Then, when an organization has identified it’s needs, and, more importantly, identified what it can do well in house – and what it can not, it can always upgrade to a more extensive e-Sourcing platform and retain a PSP, like Source One, to help it with those categories that it doesn’t have the experience, or the leverage, to get savings on.

So, let’s give ThomasNet some applause for trying to spread the sourcing word and hope that this convinces more organizations still using e-mail and fax for RFQs to join the twenty-first century.

Vinimaya : The B2B Search Engine

Last November, I introduced you to Vinimaya (rebranded Aquiire, acquired by Coupa) in my post on The Next Wave in Product Catalogue Management. With their agent technology, Vinimaya is a leader in supplier enablement for those companies that need an integrated catalog solution for their e-Procurement platform as their Product Catalog Management Solution (PCM) supports whatever mechanism the supplier already has – be it a punch-out, catalog, market-place, or plain-old web-site.

However, Vinimaya, which is a very stable and profitable company (despite some competitor’s claims to the contrary), is not content to just have the best PCM solution. They’ve spent the past six months improving their core technology and working on additional offerings to benefit the supply management space. In addition to their streamlined agent technology-enabled SmartSearch Buyer, which they are able to implement for an average large customer, who needs hundreds of suppliers enabled, in four to five weeks, they now offer a SmartSearch Supplier service for suppliers, B2B transaction services, and they are working on a new Discovery service that is likely to be launched before the end of the year.

Their SmartSearch Supplier service allows suppliers that require specialized punchouts or catalog formats to support their buyers to offer these formats without having to build these punchouts or specialized (XML, CIF, etc.) formats on their own. The SmartSearch Supplier offering, which uses the same underlying agent technology as SmartSearch Buyer, translates the supplier’s current catalog format (web-site, database, XML, etc.) into whatever format the buyer requires (because they use Ariba Supplier Network, SciQuest, Ketera, etc.) on the fly. In addition, it supports the same price override capability as SmartSearch Buyer, so the supplier can customize its prices to each buyer using a set of pricing rules.

Their B2B transaction services supports internet EDI with seven standard document formats, p-card payments, XML-EDI punchouts, and interchange and is delivered by their partners, including VITG USA and ESIS. In other words, Vinimaya is all about the internet as the network and providing you with the ability to connect with anyone, anywhere, anytime.

However, it is the SmartSearch Discovery offering that they are currently working on now that really got my attention when I caught up with them last week. Right now, they allow you to search multiple sites seamlessly through their SmartSearch Buyer, which is more than any other catalog solution allows you to do. However, in the near future, it sounds like they will also allow you to search third-party marketplaces at the same time, in the same view, and seamlessly integrate the best of B2C with the best of B2B. Right now, you can search by product, category, part, and supplier location – everything you can do with your standard catalog. But with this new service, you’ll also be able to search by component, manufacturer, third party rating, and any other piece of information that is out there on third party marketplaces. And there’ll be better integration into your current e-Procurement and e-Sourcing platforms. What will it look like? That’s a topic for a later post. So stay tuned!

Hackett Hacks Away at Recession Declines

Hackett recently published a research piece on how “G&A Spending Cuts Can Offset 21% to 45% of the Anticipated Decline in Pre-Tax Profit During Recession” as part of their Enterprise Strategy Series which noted that their 2008 benchmark data reveals a savings of 184 – 400 Million for a typical global 1000 company that’s worth a re-read. Unlike most of their pieces, this was available to the public (registration required), and, if it’s still available, you should definitely download it – as it is jam-packed with more information than a single blog post can cover.

The piece starts off that by noting that while mandated G&A cuts are the norm in times of recession, arbitrarily cutting costs across the board can lead to serious deterioration in service-delivery capacity. It’s critical that cuts are made in ways that minimize impact on business value delivery, but this requires an understanding of the strategic alternatives, current cost structures (as compared to those of world-class organizations), and clear-eyed risk assessments. Furthermore, Hackett found that average companies can reduce G&A cost between 15% and 41% simply by optimizing process cost. Furthermore, reduced technology spend can take out another 6% to 7%.

The research brief also points out that you should not determine a savings target before understanding what a “normal” spend level is in a world class organization. For example, a typical Global 1000 company (with 23.4B in revenue and 56,100 employees) spends 3.6% of its revenues on four core principle G&A functions (Finance, HR, IT, & Procurement), but world-class companies execute significantly better by combining process excellence with technology leverage. They perform at lower cost levels (22%+) and enable the business to succeed by producing improved financial results and cash-flow; by recruiting, training, and retaining talent; by driving costs out of the supply chain; and by making superior use of technology.

The research brief also identified 10 targets for G&A reduction across the four core functions that, when combined, should allow for a cost reduction of at least $158M in a typical Fortune 1000 company in process costs alone (labor and outsourcing) that can be achieved by way of best practices, simplification, and standardization. Specifically, the 10 functions, and potential cost savings were:

  • Infrastructure Management : 25.1
  • Revenue Cycle : 22.7
  • Application Maintenance : 21.6
  • General Accounting : 17.9
  • Application Development & Implementation : 15.8
  • Compliance Management : 13.4
  • End-User Support : 12.7
  • Transactional HR : 11.7
  • General Disbursement : 10.6
  • Purchase Order Processing : 6.4

The research brief identified a cost difference of 55.6 Million in technology spend between average and world-class organizations.

Hackett also identified another 74.9 Million in cost savings that may be available through globalization (and outsourcing).

So how do you start identifying these cost savings? You start by reading the research brief and focussing on the specifics in the identified areas. You also apply the expertise the doctor and his fellow bloggers have imparted to you over the years while noting that most of the savings opportunities are in technology (75.2), finance (51.2), and procurement (19.8). If you have been paying attention, this should screen one acronym to you: SaaS. If you’re currently using bloated behind-the-firewall software, switching to SaaS will simultaneously reduce your infrastructure (the largest), application maintenance (the third largest), application implementation (the fifth largest), and end-user support (the seventh largest) costs. Plus, if it’s e-Sourcing or e-Procurement, you’ll also reduce your revenue cycle (the second largest), compliance management (sixth largest), general disbursement (ninth largest), and purchase order processing (tenth largest) costs. That’s eight cost reductions with one decision! How can you go wrong?

Garbage In, Garden Out: Trash Processing Goes High Tech

Wired recently had a short, graphical, article, on the new trash processing facility in Sydney, Australia that was built by Global Renewables in its effort to shrink the millions of tons of recyclables that end up in landfills every year. A high-tech marvel of a processing plant that uses technology that includes wind sifters, optical scanners, magnets, and electrical currents, it is capable of diverting 75% of a city’s waste stream to recycling. This significantly cuts down on landfill space requirements, methane production (from rotting garbage), and greenhouse gas emissions.

The 6-step plus process, depicted in the graphic linked through the thumbnail below, is quite ingenious.

  1. Robotic Arms open the trash-bags (to prevent workers from injuring themselves on dangerous or hazardous materials) and then workers remove contaminants and toxic materials for safe disposal. The rest of the trash is allowed to proceed on a conveyor belt.
  2. A vacuum separates paper and plastic, which are separated by optical scanners.
  3. Electrical eddy currents subject the trash to a magnetic field which makes the nonferrous metals actually ‘jump’ into a bin.
  4. Electromagnets attract ferrous metals and a small belt channels the material into a separate chamber for compacting and resale as scrap.
  5. A computer-guided camera tracks paper and plastic and air jets blow the refuse into appropriate bins.
  6. What’s left is fed into a percolate tank and washed with warm water to dissolve readily soluble carbon and other organic compounds. The liquid enters a digester which turns the dissolved carbon into bio-gas to power the plant. A composting hall ferments everything else into fertilizer.

CVM: Not Just About Supplier Diversity Anymore!

CVM Solutions (acquired by supplier.io), one of Spend Matters’ Nine Vendors to Watch in 2008, appears to be on a quest these days to conquer the sourcing space, with their intent to offer supplier data enrichment, supplier relationship management (SRM), spend analysis, and a soon-to-be-launched procure-to-pay process management solution. According to Jason, CVM is a “best-kept secret” because of their extensive data enrichment services, supplier portal, and their new uber-workflow and process management engine that creates a level of control and visibility that he’s not seen elsewhere.

Now, I don’t know if they’re the “best-kept” secret, but when it comes to their data management capabilities and their new process management engine, they’re certainly a well-kept secret. Their extensive data management solution allows you to track extensible & customizable information on each supplier of a generic, location-based, contact-based, business registration, financial, capability, diversity, contract, sourcing, SRM, administration, and documentary nature – including scanned attachments which can be easily uploaded by specifying meta-data, printing off a cover-page with a system-generated bar-code, and faxing the document (with a cover-page) to a CVM provided fax number. (Reducing the number of steps in the traditional scan, convert, upload, tag, index.) In other words, their data management capabilities are in the same class as Aravo, a vendor I’ve written about before. However, due to their extensive supplier information databases (as the largest provider of diversity information in the US with enrichment data being culled from over 330 external databases and over half of the Fortune 500 as customers), they can also quickly and easily enrich your data, eliminating the need to integrate a third party’s data stream into your supplier data management / supplier information management solution (SIM), which might reduce the Total Cost of Ownership for a company that needs extensive amounts of third party data (as long as their pricing for enrichment services remains competitive with Austin Tetra and D&B.

For an initial release, I was also quite impressed by their new procure-to-pay process management engine. Although it’s not competitive with either your best-of-breed e-Procurement suites or your best-of-breed e-Sourcing suites when it comes to procurement and sourcing capabilities, with proper use, its flexible design allows you to accurately track all of your ongoing projects, and their current status, with respect to each supplier and each category and manage the process which, for most companies, probably involves at least three or four different systems (spend analysis, e-Negotiation, contract management, e-Procurement, e-Payment, order management, etc.). For example, their default assessment / supplier selection / contract draft / contract approval / transition workflow allows a category manager to document where each sourcing project is, and, when a supplier is selected, track where the project is with respect to contract drafting, approvals, and issuance. This information is then integrated with the data repository, where you can define alerts to notify you when certain quotas are reached / not reached in a time period and when a contract is about to expire. Steps can be added to, or removed from, the workflow, as required by your organization, and it allows you to continue using a collection of best-of-breed products from multiple vendors but still track your project status in one-location (which I believe is critical because there isn’t a single suite vendor with more than 3 solutions that is Best of Breed in everything – and when a best-of-breed solution can squeak out even 2% to 3% more on 100M+ spends, in today’s economy, I don’t think you can justify not going with a BoB solution).

I was also impressed by the usability of the application from a buyer’s perspective and a supplier’s perspective – which is important when you want to capture tier 2 diversity information from your suppliers in addition to asking them to use the tool to enter and maintain their basic information. The only thing I didn’t like was the response time – many screens took an average of 3 to 4 seconds to load in the demo (and I’m not willing to blame the internet as I have high speed cable on a 15MB rated network and can sustain 1MB/sec download times on my machine with ease). If you’re going to be maintaining large databases, you’ll need to ask about their SLAs and insure that you have enough processing power and bandwidth dedicated to the application. (Fortunately, with today’s hardware prices, you can do that at very affordable prices!)

I was, as regular readers might guess, not impressed with their “spend analysis”, or, more appropriately, with their classification of their spend reporting program as “spend analysis”. It’s a good reporting package with over 30 pre-configured reports that has all of the day to day reports that managers and accounting and tactical purchasers are going to need … but when it comes to the true analysis capability required by your power buyers, it’s just not there. In other words, like many of the spend analysis applications on the market, it will satisfy all of the requirements of management and your tactical purchasing team, but none of the requirements of your power buyers. However, it is seamlessly integrated with their platform, so if you were willing to augment it with a stand-alone power tool for your power buyers (like BIQ [acquired by Opera Solutions, rebranded ElectrifAI]), it would allow them to focus on true analysis and not have to worry about meeting the reporting requirements of management or the tactical buyers AND allow those individuals to quickly and easily access spending reports augmented with supplier information, diversity data, and standard classification systems such as NAICS and SIC. Plus, if you maintain complete contract pricing information (which is quite easy to do in their solution for commodities), it can automatically generate “offender” reports for accounts payable when you’re over-billed or accounts receivable when you reach the discount volume. So, if you can get a good deal on it, the “spend reporting” solution could be worth the price when you calculate the opportunity cost of a power user of a companion BoB application generating standard reports for management and accounting vs. digging for new opportunities. Plus, and this could be a key selling point for them, they have an add-on Federal Reporting Module that can be configured to automate Federal and State Agency reporting down to the contract level – and anyone who has had to prepare these reports knows how time-consuming they can be.

Finally, they’re also getting into Risk Assessment Reporting, which, after some of the recent supply chain disasters we’ve seen in recent years, is likely soon to be a must for larger corporations. When it comes to talking-the-talk, they’re certainly ahead of much of their competition in understanding “risk” and the importance of measuring it, planning for it, and proactively dealing with it. When it comes to walking-the-walk, their reports appear to be more-or-less comparable to their competition, especially since they can pull in D&B risk scores and supporting data. However, these days, I don’t think a financially based risk-assessment tells the whole story. I think they need to integrate more sources of information, especially for small businesses (like Austin Tetra is doing), to arrive at a more complete risk picture. It’s good for a first offering, but I’d like to see how it improves over the next year before locking in any long-term agreements. This is an emerging market in the sourcing services sector, and I’m not sure if anyone really has a good lock on what the right solution is.

In summary, I think they are a well-kept secret when it comes to supplier data management and, now, sourcing and procurement workflow management, I definitely think they have a lot of potential on the SRM/SPM side and the risk side as well, and even though they don’t have true “spend analysis” (just like the vast majority of vendors who make the claim), I think that their “spend reporting”, and their federal reporting module in particular, is quite good from a usability perspective, especially for non-technical management, accounting, and tactical buyers. They’re definitely a company to look at and keep an eye on, but like other extensive suite providers, they’re not best-of-breed in everything (no matter how good the “eye-candy” UI looks).