Category Archives: Technology

Has the Death of the Enterprise Suite Been Exaggerated?

There’s a big movement towards best of breed in many Procurement, and a bigger promotion on the part of many vendors towards such a movement. It makes sense, given that there are few suite vendors in the space compared to point-based best-of-breed vendors, which constitute the majority of vendors. But does that mean that the end of the enterprise suite is near?

Over on deal architect, the disruptor asks are enterprise suites dying? He notes the big disconnect between vendor and customer talk, including the facts that:

  • the last generation of vendor suites disappointed
    and that most customers ended up buying a number of “ring fence” applications and customizing the packages to meet their needs
  • the concentration of dollars with a handful of suppliers led to “lock-in” and bad vendor behaviour
    and the promise of economies from vendor reduction just stayed a promise
  • enterprises are finding a wide array of cloud applications
    that they themselves are weaving together

And these are true, and yes many burned CIOs are now anti-suite, but does this mean the suite is dead? There are still a number of managers and executives out there with the one-suite solution dream. Plus, as best-of-breed solutions pile up, the number of solution providers an organization has to deal with gets unmanageable for those CIOs who are under-staffed and under-resourced. So even if they don’t like the current suite providers, as too many solution providers creep in, they’ll like that situation even less.

So, while suites haven’t lived up to their promise, as Procurement organizations try to support their operations end to end with platforms, they are going to want less providers, not more. While they may not centralize on one suite, chances are they will want to centralize on a small number of multi-application vendors, and isn’t that just the definition of suite?

The Big Bad Blockchain

It’s not just the big bad wolf you have to worry about, it’s the big bad blockchain … especially when it becomes disassociated with bitcoin.

Bitcoin, which is neither good nor bad (it’s just another currency), is powered by a special type of blockchain — one that is decentralized, open, and auditable by anyone using the system. And one that is extremely hard to alter because altering a block (to steal the currency) would require not only require that every other block after it were regenerated, but all copies of such block (and there can be multiple as all nodes participating in the decentralized system can store a copy of the block) be replaced simultaneously.

Theoretically, this can be used to record supply chain transactions because we could create a virtual currency for any real world unit we want to trade (such as CELLcoins, RAMcoins, etc.) but could also encode other related information in the hash and serve as a fully auditable record of ownership of the corresponding products end-to-end, source-to-sink, but this would require that a similar, truly open, system be developed.

But right now, when you get down to it, the most “open” blockchain proposals are akin to the most “open” supplier networks … and there are no truly open supplier networks. Every supplier network of note in existence is owned by a for-profit company and even those with “open” APIs or “open” integration are not really “open”. Yes, there is an API that third parties can integrate into, but in every case there is a “catch” — either the integration is limited or integration is only permitted at a “price”. It’s not open and free — and “openness” is only “open” as long as the network decides they are “open”.

If any company owns the blockchain, then it is not truly open, and not truly decentralized, open, and auditable by anyone and everyone. And that is necessary for a true block chain solution. So until a global non-profit conglomerate with Procurement punch and tech-chops steps up and creates a truly open, decentralized, non-corporate controlled block-chain solution, let’s stop pretending blockchain is the solution we’ve been waiting for … because all we’re going to get is a prison for our data that will come with hefty prison maintenance fees. And then we won’t just be talking about how Ariba doesn’t have customers, it has prisoners. We’ll be talking about how BlockChain Company X has everyone’s supply chain data as prisoner.

So while you continue your Bitcoin Buoyancy, we’ll keep our expectations realistic.

Procurement is Global. Platforms should be Global. Truly Global.

And, in particular, as previously noted, those platforms should form the foundation for Virtual Procurement Centres of Excellence. But just acquiring a platform is not enough. It has to be adopted — and not just in the center of excellence, but in every local purchasing department around the globe.

This means a global rollout, but not an instantaneous one. Big bang roll-outs usually end up in big blow-ups. The biggest supply chain disasters in history have often been the result of big-bang ERP or technology projects that tried to update the entire system all at once, often in a bet-the-company endeavour. Such a project even brought down a 5B company. (Remember Foxmeyer? Probably not, but that’s because a big bang ERP project resulted in a big bust.)

Now, a global Procurement platform roll out is not replacing the ERP and a failure likely wouldn’t bankrupt the company, but it certainly would be very costly and knock Procurement back into the dark ages it’s trying to crawl out of. So it has to be done right. So how do you do it right?

1. Take it in steps.

Start with just enabling the center of excellence so that the Procurement leaders can get familiar with the platform before the questions start rolling in. After all, they will be the trainers, leaders, barkers, and bugle-men of the solution, and need to be prepared the lead the charge. After that, enable just a few locations at a time until each is up and running.

2. Get the data model right before a single implementation.

Remember, you have to control the information and financial chain with the platforms, and this will require integrating with data from dozens, if not hundreds, of systems and sources. Without a good data model, integrations will be difficult and time consuming.

3. Identify the systems of record for each data component.

The days where the ERP is the system of record are long gone in leading organizations. These days, organizations have a financial system as the system of record for invoices and payables, a supplier management system for supplier (and sometimes catalog) data, local catalog management for products and services that are primarily sourced locally, a CAD/CAM system for product designs, a MRP system for custom product designs, and so on. Make sure the integrations with each of these core platforms is complete and accurate before using the new system for the first Procurement event.

4. Define small test projects that can be used to evaluate the implementation adequately before continuing with the roll-out.

Pick a few representative, but not mission critical, projects that can be completed in weeks (not months or years) that will adequately test the system, define milestones and checkpoints, and evaluate at each stage. Only continue when any issues or bugs are identified and corrected.

5. Make sure you have experienced, expert help for the roll-out.

Each office will have its own particular process needs, regionalization (in terms of language and currency), audit trail requirements, and so on. Expert help can not only help you identify these requirements but appropriate system configuration options for maximum performance and minimal complexity at each location.

In other words, create a reasonable plan, with expert help, and stick to it. Things will generally go smooth if you realize that, like every evolution before, the advancement of the Procurement function is a journey. You can’t always afford to stop and smell the roses, but you can’t afford to run through the thorns either.

Supply Management Risk Management Needs to be Cranked to 11!

SI has been preaching the message of the need for strong supply chain risk management for a while now, given that the chances of your organization NOT experiencing a significant disruption over the next 12 months is about 1 in 10 and dropping fast. In fact, the doctor recently authored an entire risk management series for Ecovadis:

But given the uptake in deep supply risk management solutions, SI is not yet preaching to the choir. Don’t worry, this is not another post preaching from the pedestal, unless, of course, you are a vendor.

You see, even the best solution doesn’t have what you need to suitably address risks in today’s risk-laden supply chain. Consider the current enabling technology components, as addressed in the Supply Risk Management Landscape Report, co-authored by the doctor with the prophet and the maverick.

  • basic portal and information tracking capabilities which tracks all suppler and product info and allows a supplier to manage their end
  • risk analytics and reporting that focusses on relevant spend, supply, and supplier metrics that provide good risk indicators
  • risk intelligence feeds that report on current real-world (third-party) metrics and events that can effect your supply chain
  • commodity management enablement with price benchmarking and forecasting, availability projections, price risk exposure, etc.

These are good, but all these let you do is identify potential risks. Once a risk is identified, you need to do something about it. But a solution that only tracks, reports, augments, and projects — while it may give you some ideas — doesn’t let you do anything about it.

Some providers (like Resilinc) give you a command center that allow you to create disaster recovery plans for specific occurrences, or run what-if reports/scenarios based on decisions on how to mitigate a risk, but this doesn’t help you identify how to mitigate the risks appropriately.

And that’s why supply risk management platforms need to crank it to 11. And how will they do that?

The answer, as the doctor outlined in the aforementioned co-publication with the prophet and the maverick, is to also contain support for:

  • supply chain re-design and optimization based on decision optimization, supply chain modelling, predictive analytics, and “what-if” scenario planning

Now, not a single supply chain risk management solution supports even one of the four core capabilities required (although some will claim they do), but hopefully, now that the flashlight has been shone, they will … or maybe, just maybe, a true SSDO (strategic sourcing decision optimization) provider will hire a few risk experts and build a risk management platform on the right underpinnings. Only time will tell. The most important thing is that you realize when you go to market for a supply chain risk management solution is there is no perfect solution and more innovation is needed.

ClientLoyalty – Ironic Name, Straight-Laced Solution

Supplier Relationship Management is quickly becoming the “hot topic” among progressive Procurement organizations that want to advance on their supply management journey, and materializing as a slew of checkboxes that are appearing on product selection and evaluation checklists. But Supplier Relationship Management, while a hot topic among buyers, and a hot topic among marketers, is not a hot topic among developers. While many suite suppliers have supplier management solutions, the reality is that the majority of these fall into the classic Supplier Information Management or the slightly more modern Supplier Performance Management buckets.

The reason that SRM is a “hot topic” but not a common offering is that to truly support the relationship “R” in SRM, the software has to go beyond simply tracking information, performance metrics, and action plans. It has to track, measure, and manage feedback — from the organization and the supplier, monitor measures that track the evolution of the relationship — and not just performance, and allow for the collaborative creation of action plans to improve the relationship.

While many platforms will track all relevant supplier information — such as locations, contacts, products; and all performance metrics — such as on time delivery, defect rate, and target cost performance; few will go beyond that. Only true best of breed SRM platforms will address the relationship aspect. One of these, and possibly the newest entrant to the SRM arena, is ClientLoyalty.

ClientLoyalty was founded with the desire to bring true relationship management to companies that realized that in order to get the most value for their money, and the best performance from their suppliers, they needed to actively measure, manage, and improve the relationship. Therefore, they built a tool that allows an organization to track, measure, and manage performance, experience, risk, and reputation and integrate this more holistic 360-degree view into a single relationship strength indicator using net promoter scores.

The net promoter score is a customer loyalty metric developed by Fred Reichheld, Bain & Company, ad Satmetrix Systems, and introduced by Reichheld in a HBR article in 2003. Calculated as the difference between positive responses and negative scores, the net promoter score is positive if the overall experience is generally positive and negative if the overall experience is generally negative. If the relationship is improving, then the net promoter score will improve over time and if the relationship is degrading, then the net promoter score will degrade over time.

The ClientLoyalty NPS Loyalty metric is the (possibly weighted) average of performance, experience, risk, and reputation. Performance is calculated using a net promoter score over hard performance metrics calculated and tracked by the organization and hard performance metrics submitted by the supplier. These metrics will generally differ as both parties will generally have different definitions and calculation parameters. For example, the buyer might define on time delivery as the truck in the yard at 8 am and the supplier might define on time delivery as the driver reporting a delivery on the same date. Because of this, the buyer might have an on time delivery rating on the supplier of 80% and the supplier might have an on time delivery rating for the buyer of 98%. In this situation, the supplier would have a negative NPS due to the buyer’s lower appraisal of the situation – and this discrepancy highlights an issue. In addition, the platform comes with over 90 built in KPI definitions that the organization can use to get started, and more appear with every release.

The platform also supports extensive document management capability. Users can upload and tag critical documents in a central storage system for easy search, reference, and tracking. Contracts can be specially tagged as contracts and additional metadata and tags defined for contract status tracking and monitoring. Attachments can be correlated as well.

It’s a rather unique offering as it appears to be the only one with true, 360-degree, NPS scores and a home-grown sentiment analysis algorithm that can monitor social media sources and news sites to identify relevant comments and stories and extract the sentiment from the sites and stories and integrate it into a consistent score and one of the first platforms built from the ground up with full data import and export capability through CSV, XML, and APIs and extensible document capability.

But, like any new platform, it does have its weaknesses. There is no out of the box support for major procurement and ERP platforms; no ability for automated meta-data identification and extraction; and no innovation management. An action plan is a corrective action plan, not an innovation management solution.

However, especially given the relative dearth of true SRM providers compared to SIM providers and Sourcing/Procurement suites, ClientLoyalty is still one to watch and one to likely put on the shortlist, especially in North America.

For a deep dive into this wily provider, check out the recent in-depth coverage by the doctor and the prophet over on Spend Matters Pro [membership required]. (Part I, Part II, and Part III)