Category Archives: Technology

On the Eleventh Day of X-Mas (Informance)

On the eleventh day of X-Mas
my blogger gave to me
another vendor hyping,
blog posts worth keeping,
spend vendors lancing,
thoughts for a shilling,
strategies for winning,
tactics for saving,
five golden rings,
four little words,
tri-focal lens,
two boxing gloves,
and a lesson in strategy.

Allow me to introduce you to Informance (merged with QlickiT, acquired by Catalyst IT). A provider of Enterprise Manufacturing Intelligence (EMI) solutions, Informance delivers software and advisory services purporting to enable enterprises to achieve a higher level of supply chain performance with real time visibility and valuable insights into manufacturing operations by addressing the following business areas:

  • Global Visibility
  • Inventory and Replenishment Management
  • Production Efficiency and Cost Reduction
  • Revenue Growth and Capital Investments

These areas are addressed as follows:

Global Visibility
Customizable Performance Dashboard that consolidates information from all global manufacturing facilities and provides real-time information for every product line, down to the factory and individual factor assets.
Inventory and Replenishment Management
A software solution with built-in formulas to allow you to optimally balance cycle time, production efficiency, and production variability from an inventory viewpoint.
Production Efficiency and Cost Reduction
An analysis engine that allows data spanning multiple plants, product lines, and asset types to be analyzed individually and comparatively to allow the discovery of cost-saving transformational improvement opportunities.
Revenue Growth and Capital Investments
The Informance solution tracks utilization levels across the plant network in real time, allowing for real-time order reallocation to insure best usage of capacity and minimal lag time.

The informance platform is designed to support Lean Manufacturing and all that it encompasses, including Total Productive Maintenance, Kaizen, Single Minute Exchange of Dies (SMED)/Quick Changeover, and Overall Equipment Effectiveness (OEE). Now, we all know that Lean (Manufacturing) has been around for a while, and that companies have been selling Lean (Manufacturing) solutions since it has been around, so you’re probably wondering what’s innovative about a company like Informance, especially when lean (manufacturing) is so passé.

Well, even after meeting their CEO earlier in the fall on one of my recent Bay Area trips, I wondered too – but then they simultaneously attracted some of the best marketing and sales talent in the space, including Sudy Bharadwaj, of recent Aberdeen fame, so I took another look – and the answer is simple – usability. Most lean solutions don’t give you enterprise wide visibility, and fewer still are useable. Plus, the new sales, marketing, and business development teams are in the process of revamping Informance’s offerings to make them even more useable and more effective in an average deployment. I know you’re asking what? Why? After all, sales and marketing and business development at most companies exists for the sole purpose of determining how much money can be sucked out of a customer. But you have to understand the caliber and foresightedness of the team that Informance has pulled together. They understand that the best way to make money is to sell a solution that a customer wants – and that’s a solution that solves a problem. Sell them silicon snake oil, and you’ll never sell to them again. Sell them a solution that actually works, and they’ll keep coming back for new and better solutions and services.

So watch out for Informance in the coming year – I think you’ll be hearing a lot more about them.

Spend Matters Not

Not long ago, sometime after my post where I asked Is it the Case that Spend Matters Most?, the posts “Emptoris: Readying the Spend Visibility Armaments for Battle”* and “Ariba: Not Sitting Still in the Spend Visibility Arms Race”* appeared on Spend Matters and generated quite a buzz. I’m now convinced that most of the providers still have not progressed beyond Spend Analysis 1.0 and, more importantly, that spend, or at least the amount of spend, doesn’t matter.

It’s not how much you spend, how you store it, how you cube it, or how you report on it – it’s how much you get, how you profit from it, and how you improve on it. It’s all about value, profit, and continual improvement. The fact of the matter is, sometimes spending more is the right thing to do. If you’re spending more to build higher quality products that allow you to double your profit margins and drastically increase revenue, compared to spending less, building the same products, and having your profit margins shrink to nil because they are not innovative and desirable compared to the rest of the products on the market, then you’ve made the right choice. Just like you should focus on Total Value Management, and not Total Cost of Ownership, when you make your award decisions, you shouldn’t be focused on how much you’re spending when doing spend analysis. It’s what you are spending it on, who you are buying from, the prices you are paying relative to the prices you could be paying and the rest of the market, and opportunities you have to drive value from the spend.

So, how do you figure this out? Analysis. Flexible, powerful analysis that allows you to aggregate, slice and dice, associate, break-out, normalize, aggregate, and slice-and-dice again. Analysis that allows you as the user to see the data any way you want to see it, any time you want to see it, any how you want to see it. A rigid view on a fixed set of dimensions might tell you that you’re spending 30% more on supplier X, but it might not tell you that you’re spending 60% more on servers, 10% more on workstations, and 10% less on laptops compared to other suppliers. In other words, a rigid cube analysis might lead you to conclude that you should be dropping supplier X for suppliers Y and Z, when really you should only be dropping them as a server supplier, aggressively negotiating with them on workstation pricing, and routing more laptop purchases through them for a larger discount.

I have to agree with Eric (Strovink) of biq (acquired by Opera Solutions, rebranded ElectrifAI). It’s the analysis. The value added services, especially those provided by Emptoris (acquired by IBM, sunset in 2017) in their new release, are great, and they can be used to create some top notch reports that will knock the socks off of your stodgy old CFO, especially compared to what you can pull out of a traditional ERP, but that’s not how you drive maximum performance. Drop the spend. Focus on the value. Which supplier is giving you the highest value ratio (the most quality product for the least spend)? On which categories? Why? Which categories are performing the worst? On which categories? Why? Which suppliers do you have multiple contracts which? Any way to leverage the volume? And so on. You need to be able to build a cube, analyze it, slice off dimensions, extract a sub-cube, aggregate the data, run a report, and then compare it to a report generated off of another sub-cube for a different, but complementary, data set.

After all, it all comes down to the bottom line. It’s not what you spend. It’s not the revenue you take in. It’s not your operating costs. It’s how much profit the business makes at the end of the day and the value it returns to its shareholders. And that requires smart spend management based on actionable intelligence – the kind enabled by next generation spend analysis and visibility solutions. Everything else is just reporting – sometimes really, really, really good reporting – but just reporting.

And if the user can’t hack it … then the user needs to be trained or be replaced. Commodity prices are going up. After the third reverse auction, there’s no more fat left to trim. Once you’ve implemented the latest IT system, there’s little room for productivity improvements. That simply leaves collaboration, innovation, and smart spend management.

On a side note, I applaud Iasta for basing their new spend analysis solution on BIQ’s solution instead of trying to build their own from scratch. It takes years to build a good spend analysis solution, and since they are on-demand, they can easily integrate BIQ’s on-demand solution into their platform and extend it with value added services, which is where the real value is. This complements their core strength, the executable sourcing cycle, with a SaaS solution that helps the user determine the best category candidates for dedicated eSourcing events. Furthermore, as time progresses, they can build up baseline cubes and reports for common categories to jump-start the process for new customers and junior analysts. And, since it’s a partnership and not an acquisition, you don’t have one company swallowing another. Although this sounds great in principle, what usually happens is that the development teams merge, the new blended company adopts “one focus”, and a lot of the distinctive expertise that made the acquired company the best at what they do gets masked or disappears. BIQ is going to continue to build a better, differentiated, spend analysis product, Iasta is going to continue to develop better services around the product for the sourcing professionals it serves with its end-to-end executable eSourcing suite, and everyone is going to win. The only thing keeping it from being a perfect solution is the ability to easily integrate 3rd party data sources for spend augmentation and market-based reporting. But I’m sure that will come in time.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Is it the case that Spend Matters Most?

As per my Noteworthy last week, Iasta (acquired by Selectica, merged with b-Pack, renamed Determine, acquired by Corcentric) is about to release it’s new Spend Analysis platform SmartAnalytics, Emptoris (acquired by IBM, sunset in 2017) building on it’s acquisitions of Zeborg and diCarta, just released the new version of its enterprise suite with its new and improved Spend Analysis Solution, and earlier this year Procuri (acquired by Ariba, acquired by SAP) consumed TrueSource to offer TotalAnalytics – and Zycus is gaining ground everyday. It looks like the time has finally come for the big spend analysis vendors. And none too soon. After all, how can you identify your ripest targets for strategic sourcing without understanding your spend? And as Jason points out over on Spend Matters, spend visibility and analytics applications can become an invaluable solution for tactical everyday procurement activities as well as areas that are truly strategic on the board level. It’s definitely a growth area for the eSourcing vendors – especially the on-demand ones.

But is it ready for prime-time? Not only are some of these offerings new and relatively unproven in the field, but they also require a level of sophistication well beyond your simple RFXs and reverse auctions that are still the mainstay of many eSourcing users. And I know there are still many individuals that believe a centralized ERP will give you the spend visibility you need to do proper spend analysis – which is not the case, and you should check out Tim’s response in the comments to Jason’s post for a real world example as to why.

In most cases, I know the solutions are there. Zycus is one of the only remaining pure players and has a very attractive offering based on its success stories alone. Zycus has amassed numerous wins over its seven year history and Procuri has successfully integrated TotalAnalytics to amass some success stories of their own. As noted in Spend Matters, Consider the case of a pharmaceutical company — who will go unnamed — which has used TotalAnalytics to help quantify and accelerate procurement cost savings synergies in three multi-billion dollar acquisitions. This company has used the solution’s capabilities to define and track over 60 category management programs, enabling them to leverage spend and rationalize suppliers across acquired and existing divisions. This leaves us with Emptoris and Iasta.

Iasta’s solution makes the cut since they based it on one of the most powerful on-demand spend analysis engines available, integrated it into their platform, and extended the out of the box reporting capabilities available. I’ll have more to say after the formal release, which is forthcoming in the very near future.

Emptoris has also had some big wins, and has had their eSourcing suite with their initial spend analysis solution ranked #1 by Forrester in Q4 of 2005. So they are definitely a real player, but I’m a little concerned if their new solution is ready for prime time from a usability perspective. It is probably the most aggressive spend analysis offering on the marketplace today, with a new Spend Data Classifier, a new Real Time Spend Classifier, new import / export facilities, and a slew of add-ons for government watch list, credit score, and diversity rating integration, among other features. Now I know that Emptoris knows their stuff, it’s a challenge to find a question on an Emptoris product or capability that Kevin (Potts) cannot answer and Avner (Schneur) is absolutely correct when he says that with accurate and granular spend visibility, companies can gain greater control over and impact on their bottom line through improved sourcing and supply and contract management – and they have already delivered significant results. But when your average eSourcing user is still daunted by basic spend classification and decision optimization (just look at the recent Purchasing Survey), I wonder if they are going to be able to digest Emptoris’ new offering, especially considering Emptoris is still a traditional installed behind-the-firewall application where you only get maximum value from maximum deployment? I know it looks great in a power point presentation, but it can be hard to hide that much underlying complexity. If you’ve seen it in action, used it, or have your own take, please feel free to leave a comment.

The Talent Series VIII: Talent Acquisition Strategies

Back in June, Aberdeen Group released The “Talent Acquisition Strategies” Benchmark Report: Sourcing and Assessing the Best of the Best that address the criticality of investing in a talent acquisition strategy as a way to identify, attract, and engage high performers given that today’s organizations are facing a market with not enough qualified employees to fill necessary job roles, i.e. The Talent Crunch.

According to Aberdeen, talent acquisition involves the planning, sourcing, assessing, hiring and on-boarding of top talent. Sourcing candidates is a way to identify and attract qualified individuals whether they are actively looking or not and assessment involves the skills tests and behavioral assessments necessary to evaluate the ability of the candidate in a given role.

As usual, Aberdeen found that there is a sharp distinction between best performing companies who are tackling the talent crunch and average players who have done little more than adopt a talent mindset. Best performing companies distinguish themselves by leveraging technology to manage the sourcing, assessment, and hiring process and creating long-term strategic plans for talent acquisition that:

  • improve their corporate brand
  • create a pool of qualified candidates
  • improve their strategic workforce planning
  • utilize technology

As proof that a talent acquisition strategy works, Aberdeen offers us the following statistic: 59% of high performing companies have increased their overall workforce performance after implementation of a talent acquisition strategy compared to 41% of industry average and 33% of laggard companies.

The report found that Job Boards and Employment Websites are number one – with companies spending over 80% of their talent acquisition budget on job boards and company employment websites (according to the “Enterprise Talent Management” study), which is probably due to the fact that job boards have an increase in the quality of hire (48%), a decrease in the cost per hire (38%), and time per hire (44%).

Furthermore, the report found that 90% of Best in Class companies have aligned talent acquisition to their company’s overall strategic plan. Furthermore, best-in-class companies have a yearly hiring management plan that covers all hiring levels and includes contingent plans for unanticipated hiring needs.

The Aberdeen report offers the following recommendations for action:

  • align talent acquisition strategy with the overall corporate strategic plan
  • measure workforce performance based on quality of hire over cost per hire and time per hire
  • recognize that “one size does not fit all”: what works for talent acquisition in one company might not work for every company
  • eliminate paper and spreadsheet based processes and use technology solutions
  • focus on a long-term plan for talent acquisition
  • manage the whole workforce

These are all good recommendations, but you should also note the following:

  • job boards and employment sites are great, but with their increasing popularity you need to remember that the same candidates they deliver to you will also be delivered to dozens of your peers, so make sure you have a compelling brand to fall back on
  • your best channel will always be referrals from your own top employees, make sure to track each and every one – even if a candidate referred to you is not available now, or not the right candidate for the position you need to fill today, it does not mean that she will not be available tomorrow or the best fit for the next position that opens up
  • metrics are good, but positions filled with highly capable individuals are better – and it’s really hard to measure “quality” (on the other hand, productivity is often more easily captured if you make a product or bill a service)
  • although spreadsheets are not the best solution, don’t throw away Excel just yet – a good product will integrate with Excel and save your staff from having to learn a new interface (and save you training time and dollars)
  • one size may not fit all, but that doesn’t mean you shouldn’t at least explore ideas that have worked for other firms – sometimes only a few small tweaks are required

Noteworthy (Developments in the e-Sourcing Space)

Rearden Commerce (rebranded Deem) announces a new relationship with American Express Business Travel that will resell the Rearden Commerce platform under the name American Express Intelligent Online Marketplace or AXIOM. There is quite a lot of buzz, including:

  • Rearden Commerce Press Release
  • Wall Street Journal Article
  • Spend Matters Coverage
  • American Express Flash Introduction to AXION
  • Sourcing Innovation’s Rearden Commerce Introduction
  • Prior Spend Matters Rearden Commerce Coverage*

Emptoris (acquired by IBM, sunset in 2017) launches a new version of its new integrated suite this week with enhanced spend analytics and spend management capability. Check back here on Sourcing Innovation later this week. I’d also keep an eye on Spend Matters which has had some great coverage of Emptoris in the past.

Iasta (acquired by Selectica,merged with b-Pack, renamed Determine, acquired Corcentric) just launched it’s brand new website in preparation for its forthcoming SmartSource 7.0 release which will integrate with their new and improved SmartAnalytics and be supported by their new Spend Velocity programs. Also, hidden betwixt the pages is their announcement of their new annual Iasta reSource user group conference next May. With the Indy 500 only two weeks after the conference, there are sure to be some great lead up events going on in town at that time. I’ll be covering the new Iasta release here on Sourcing Innovation in a week or two, so keep an eye out.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.