Category Archives: Technology

And the Software Patent Pirates will Plunder Away …

Recently on Procurement Central [WayBackMachine] Dave Stephens wrote an article about the Software Patent Pirates who plunder patents for storage in their corporate “holds” like hidden weapons. These firms troll the high seas of business in search of easy prey. But unlike real pirates, their actions are completely legal, even if they do leave a bad taste in everyone’s mouth.

And if a few senators have their way, it’s going to get a whole lot easier for the patent pirates to plunder corporate treasuries. As summarized in this CNet article, a new bill, sponsored by Orrin Hatch and Patrick Leahy, called the Patent Reform Act of 2006 has been introduced that proposes a number of changes to the way American patents are awarded and challenged.

Although it has some moderately good points, including a “post-grant opposition” system that would allow outsiders to dispute the validity of a patent before a board of administrative judges within the Patent Office, rather than in the traditional court system, potentially staving off excessive and needless time-consuming and costly litigation, it has some bad points. The worst part of the proposal is that it would shift to a “first to file” method of awarding patents. Whereas now you have to be the first to invent something to be eligible for a patent, if passed, this bill grants eligibility to anyone who is the first to file a patent. In other words, those who can afford to file quickly and often will reap the rewards while real inventors could get the shaft.

More importantly, it could allow patents even more absurd than the one referenced by the Technology Liberation Front in “Yet Another Ridiculous Software Patent”. For example, anyone could start submitting patent applications for minor variations on standard internet protocols that have been around for decades, and be eligible to receive the patent. If the minor variation was useful, it would then be unusable in the public domain, even if completely obvious to a high school computer science student.

As you might have guess, I am also against software patents. If you recall my post on TRIZ in the Purchasing Innovation Series over on e-Sourcing Forum [WayBackMachine], you’ll remember the statistics observed by the followers of Genrich Altshuller who found, like him, that only 4% of patents contained a new concept and only 1% a revolutionary discovery. Furthermore, when it comes to software, I would estimate that the situation is much, much worse. Not only have I never seen a software patent or application therefore that I believe is worth a patent, I have never heard of one either. I’m not saying that there might not be a valid software patent out there, or at least a valid basis for one, but the reality is that the basis of computing, and software, has not changed much in the last fifty years, being based on mathematical fundamentals that are abstract and unpatentable as laws-of-nature. Software patents have avoided this restriction by patenting implementations of “business processes” that are patentable, even if completely obvious.

I just wish politicians were as informed as their peers in the European Parliament in this regard who voted 648 to 14 to quash the Computer Implemented Inventions Directive when it was introduced, maintaining the status quo and preventing software from being patented in Europe.

After all, as Dave Stephens points out, software copyrights insure software isn’t copied, remain in effect for up to 90 years, and still allow you to sue for, and recover, damages in the event you are honest-to-goodness defrauded. It’s good enough for Europe and the publishing industries, why can’t it be good enough for us too?

Customer Data Management

About the same time Aberdeen released “The Spend Intelligence Benchmark Report: Turning Data into Action”, which we discussed last Sunday in There’s No Such Thing as Spend Intelligence, Aberdeen also released “Customer Data Management: How Leaders Attain Tangible ROI” that found more than 85% of survey respondents plan to invest in Customer Data Management solutions within the next 24 months.

Why? Maybe it’s because Aberdeen research reveals use of timely, complete, and accurate information leads to improved customer service levels, reduced operational costs, increased revenues, and higher customer satisfaction and retention rates. In addition above average performers attained >20% annual improvements in these key metrics:

  • Customer retention rates (84%)
  • Data accuracy / match rates (76%)
  • Partner/customer satisfaction rates (68%)
  • Revenues (56%)

Or maybe it’s because good customer data leads to good metrics and good forecasts, and creating the right product at the right time in the right quantity is one of the keys to overall supply chain success. After all, the wrong product results in lost opportunity, an insufficient quantity results in lost sales, and the wrong time results in stale inventories. Moreover, this hurts your customer as well as you, who might leave you for another provider.

Regardless, customer data management is important, and it has a lot in common with the development of a spend intelligence solution, to use Aberdeen’s terminology. Consider the top three challenges identified by the Aberdeen report:

  • Extracting & Normalizing Customer Data Captured from Multiple Sources
  • Verification of Data Accuracy or Completeness
  • Extracting & Normalizing Customer Data Stored in Legacy Data Marts

These are essentially the biggest challenges in implementing a good spend visibility solution

  • Extracting & Normalizing Spend Data Stored in Multiple Systems
  • Verification of Accuracy and Completeness
  • Extracting and Normalizing Legacy Spend Data for Historical and Trend Analysis

Therefore, if you are considering an enhanced spend visibility solution and an improved customer data management solution, you might want to take advantage of the synergies and tackle both projects simultaneously. Chances are, you’ll need to integrating a lot of the same feeds and systems, so you might as well tackle all of your data needs at the same time.

Living Green

As pointed out in e-Sourcing Forum’s [WayBackMachine] post on Green Suppliers back in May, Interface Inc., the world’s largest carpet manufacturer, was able to save $260m from waste reduction initiatives, as pointed out in a Purchasing Magazine article. But the story continues.

As pointed out by Lindsey Parnell, the CEO and President of Interface Europe, in her article “A Sustainable Future” in CPO Agenda, Procurement leaders need to play their part in overcoming the many hurdles to environmentally friendly business.

The article points that sustainability is about driving enterprises towards maximum resource efficiency, maximum responsibility for any actions and maximum return on investment. It’s about doing well both commercially and in an environmental and social sense and that the development of consistent definitions of industry-specific drivers would increase focus while the establishment of a return feed of used and end-of-life products would allow suppliers to close the loop and view lifecycle costs, not just one-off purchase costs.

Furthermore, even if companies looked only at what could be achieved with the resources readily available to them, the impact would be significant. Consistently demanding the most sustainable products and services available would also help the market’s development, and I believe gravitation in that direction is inevitable.

As I pointed out in staying green, I too believe this trend is here to stay. After all, when you consider Sprott Asset Management‘s recent report “Investment Implications of an Abrupt Climate Change”, which forecasts far-reaching and “dire” impacts of rapid climate change, businesses who do not adapt may go extinct. And, as described in BusinessWeek’s Business on a Warmer Planet, some companies are already adapting. After all, as CIO Insight points out in “The Greening of the CIO”, environmental questions matter more and more for corporate IT, not as feel-good programs but business issues with a direct impact on the bottom line. After all, as pointed out by a recent Supply Excellence [WayBackMachine] post, the European Union’s Restriction of Hazardous Substances (RoHS) has triggered shortages for both compliant and non-compliant electronic components, challenges which will need to be overcome by innovative sourcing professionals. Fortunately, some manufacturers are stepping up to the challenge. Zebra Technologies has fully converted its thermal printers to be in compliance with the EU’s RoHS directive, as described in a recent Supply & Demand Chain Executive article (that is no longer available).

Green issues have an impact on everything from product marketing to employee morale to profit margins, and many of them are closely interwoven with the everyday work of IT organizations and the departments, including procurement, that IT supports. The article suggests that you should think of environmental consciousness as the next level of alignment, an enterprise-wide phenomenon that procurement must lead.

And your job is only getting easier. With companies like new startup SolFocus and Energy Solutions Alberta, you’ll soon be able to run your corporations on 100% renewable green energy from the ultimate renewable energy resources — the sun and the earth themselves. (And some researchers are even looking into ways to capture the energy we waste with each foot step, by taking the science of piezoelectrics, that powers your SEIKO kinetic perpetual timepieces, to the next level.)

Furthermore, it may not be too long before we’ll be able to stop wasting paper and silica and write on water itself as a result of some recent developments at the Akishima Laboratory in Japan. (English article no longer available.) At the very least, we should be able to replace those neon signs with a new generation of technology. (While we wait for that day to come, we will soon have e-paper to tide us over.)

To answer David’s Question in a recent e-Sourcing Forum post, I think Kermit will soon be singing about how easy it is to be green.

There’s No Such Thing as Spend Intelligence

For the last six weeks, I have been exploring problem solving methodologies you could use to help you with your sourcing problems. At a later date, I’m most likely going to take up six sigma and lean, but today I’m going to rant.

There’s no such thing as a Spend Intelligence Solution!

And before you start huffing and puffing about how wrong I am, please read this post in its entirety. Thank you.

A few weeks ago, Aberdeen released its study “The Spend Intelligence Benchmark Report: Turning Data into Action”. This study by Sudy Bharadwaj, Aberdeen’s new Vice President and Research Director of Global Supply Management, and Rick Saia, an Aberdeen Research Analyst, found that companies employing spend intelligence have reduced sourcing cycles by 19 to 25%, reduced the overall number of items they need to purchase by 10 to 15%, and reported contract compliance rates of 31 to 35%, depending on how long the program has been in place. These are some significant results, so there must be something to it.

Shortly after its release, this report sparked a considerable amount of coverage on the blogs. Jason Busch of Spend Matters challenged* the thinking behind Aberdeen’s use of the phrase spend intelligence. The main points of his post were as follows:

Consider how in a recent study, Aberdeen adopted the term “spend intelligence” to describe the broader spend visibility and analytics market. The purpose of my post today is not to rip into the findings — the study itself is highly useful — but to challenge the thinking behind Aberdeen’s use and definition of the phrase, “spend intelligence,” which at this point feels dangerous to me, just as overly political language feels dangerous to Orwell. Why? As an attempt to shoot some Botox into a segment of the Spend Management market that can be challenging to explain and position, Aberdeen’s choice of language shortchanges and over simplifies a concept, potentially corrupting how the market will look at a key Spend Management business process. …

The problem is that spend visibility and analytics is much more complex, requiring data cleansing, rationalization, classification and other efforts which go far beyond what is needed to gain insight into basic HR, financials, IT and other internal information, which fall cleanly in to the BI camp. …

Fundamentally, “spend intelligence” should exist both inside and outside the organization, but Aberdeen’s usage might lead companies to think that everything they need lies within. The problem with this thinking is that supply market information changes all the time …

… by focusing too much on the final insight itself, “spend intelligence” conjures up images of the end-result, rather than the journey or path to get there (which can be as insightful as the data crunching itself). For example, in data gathering efforts, procurement can learn just as much about spend categories by talking with design engineers and operations team members as reading the SAP tea-leaves where dirty data resides.

Not long after, Tim Minahan, who used to occupy Sudy’s position at Aberdeen, of Procuri (acquired by Ariba, acquired by SAP)came to the defense of Aberdeen’s Spend Intelligence Moniker on his blog Supply Excellence [WayBackMachine]. The main posts of his post were as follows:

As an analyst, every software vendor — … — touted their spending analysis capabilities. The caveat: you just needed to give them the data in a cleansed, classified, and structured format. … In short, most vendors pitched building a data cube or data warehouse from which you could run analyses and reports as spending analysis. They were wrong. And they confused the marketplace (possibly intentionally).

It is the automated and repeatable classification of spending information to a structured schema (e.g., UNSPSC, eClass, proprietary schema, etc.) and then the enrichment of this data with related business information (e.g., parent-child relationships, financial risk scores, contracts, performance information) that turns spend information from “dumb” data into true spend intelligence that a company can use to make fact-based sourcing and supply decisions rather than gut-based or hunch-based decisions.

The distinction between spend data and spend intelligence is an important one. Bravo Aberdeen for calling out the difference between dumb data and actionable intelligence.

And just a few days ago, Purchasing Magazine sponsored a webinar on the report where Sudy presented the main findings of the report and Brett Mauser of NCR, a corporation that recently implemented Zycus‘ spend management solution, discussed how spend intelligence has kicked NCR’s spend management program into overdrive. (Note that Zycus was one of the sponsors of the Spend Intelligence Benchmark Report.)

According to the study, and reinforced in the webinar, companies with best-in-class spend intelligence solutions have a process maturity that is twice that of their counterparts, and those processes are almost twice as likely to be aligned company wide. In addition, those processes are twice as likely to be automated. And mature, automated, processes get results. So why am I insisting that there is no such thing as a spend intelligence solution, when it appears that these solutions not only exist, but get great results?

Let’s start with the definition of intelligence.

Intelligence is a most complex practical property of mind, integrating numerous mental abilities, such as the capacities to reason, plan, solve problems, think abstractly, comprehend ideas and language, and learn.

And since spend management solutions are software, let’s review a definition for software.

Software is the (collection of) program(s) that enable a computer to perform a specific task, as opposed to the physical components of the system (hardware), where a program is the collection of source code and libraries which have been compiled into an executable or otherwise interpreted to “run” in (active) computer memory, where it can perform both automatic and interactive tasks with data.

Simply put, intelligence is a property of mind and software is a property of machine. And despite the efforts of the artificial intelligence community, I do not expect the property to cross the chasm anytime soon. Artificial intelligence is simply a collection of very sophisticated algorithms processing large data stores, instruction sets, and probabilities very quickly to come up with reasonable responses to queries – it is not thought, although it might appear to be thought since today’s computers can perform billions of calculations in a second. And that’s where my beef with the term spend intelligence lies.

Furthermore, as Jason Busch of Spend Matters points out, the term is very misleading and overlooks the fact that results from enhanced spend visibility and analytic efforts require data cleansing, rationalization, classification and other efforts which go far beyond what is needed to gain insight into basic HR, financials, IT and other internal information, which fall cleanly in to the BI camp.

So if you want to call it spend visibility, actionable spend, or maybe even spend knowledge, I’m all for it. But since the real intelligence lies in the user of the tool who takes the actionable data and uses it to get results, there is no spend intelligence software, only spend intelligence enablement software. And when you get right down to it, that’s what you really need as an expert power procurement user – software that helps you make the right decisions, not software that purports to make those decisions for you.

However, regardless of what you call it, check out the “The Spend Intelligence Benchmark Report: Turning Data into Action” while you have the chance. Just like the “On Demand Supply Management” report, it is top notch research, whatever you want to call it.  After all, as Tim Minahan pointed out, the distinction between spend data and spend intelligence is an important one, and the Aberdeen report is one of the first reports to call it out, even if I may take issue with the impreciseness of the terminology used.

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