Category Archives: The Prophet

Let the Bloodbath Continue!

Note the Sourcing Innovation Editorial Disclaimers and note this is a very opinionated rant!  Your mileage will vary!  (And not about any firm in particular.)

In a recent LinkedIn post, THE PROPHET tells us there is a Consulting Bloodbath starting, especially in the Big 5 (and their strategy firms). All the doctor can say to this is Good Riddance! and It would be even better if they battled it out Gladiator style! (After all, it’s been 28 years since American Gladiators ended, time for a rebrand and a relaunch with a little bit of MXC, which ended 17 years ago.) But we’re getting ahead of ourselves here …

Basically, according to THE PROPHET, firms are worried about the economy and growth headwinds ahead (this is also why investors have yanked money from equities and lessor-rated debt in recent weeks), and this includes tech/dev teams within consulting firms. In some cases lucky consultants are put on the bench and told they have six or nine months to find their next gig, and in others (and maybe the doctor is reading a bit between the lines here) they received their pink slips faster than they could say please Jack Robinson.

The bit about tech/dev teams makes the doctor happy because,

  • these are not tech firms, and they are selling modern analytics/automation/AI solutions they often have no business selling (and no real capability to deliver at even an average level unless they recently acquired a firm that does — remember what they initially got big doing, that is what they do better than anyone else)
  • they are not structured for proper SaaS development and deployment and are NOT SaaS enterprises
  • most of the “talent” they are using are not “top” talent, and if if they are “top” of their class when they are hired, they still need mentorship and experience to become “top” talent, mentorship and experience they are NOT going to get a lot of at a Big X until they start climbing the ranks (as there are too many hires each year for one-on-one mentorships to be practical, it’s usually one mentor per team)
  • the Big X cost structures are too high for mass market penetration; only the F500 / G3000 can afford them, but they still shouldn’t be using them automatically because overpaying for anything that can be commoditized by a SaaS or servifes vendor doesn’t deliver the value they need in inflationary times where supply chains are breaking daily (and instead the Big X should be used for where they deliver the best value — see when should you use a Big X)

And before you chastise me from apparently taking pleasure in people getting fired, think it through! If you do you will realize

  • the true “top” talent is going to end up at appropriate SaaS/Tech companies (or SaaS+IP powered niche automated services consultancies where their true talent/drive really is) where they can get the mentorship they need to grow and reach their full potential (and possibly rejoin a Big X later, either by choice or through acquisition0 because
  • Big X being forced to pull out of (chasing) inappropriate custom SaaS/tech deals/engagements will open up the market back up for those companies that are well positioned, who can start growing and pick up this top talent, and, moreover, give Big X a chance to focus on where they offer the greatest value, can easily guarantee a return on a high dollar investment, satisfy the customer on the first project, and get repeat business for life (see when should you use Big X)
  • the “talent” that is not ready for the tech market will either go back to school or find their true calling (before going down a path where they will eventually get overwhelmed, be unhappy, or both; we can’t have the next generation burn-out in first world countries where a very significant portion of the aging population will not be of working age in the very near future)

Plus, shift happens! (How many of us have been restructured, rightsized, or outsized from a job by financiers and lawyers who think they can run a complex enterprise from a balance sheet or understand advanced technology and engineering when they can barely gas up the Jaguars and Mercedes they drive to work everyday?*) Furthermore, given that the average life expectancy at a job these days is 4 years, this talent might as well learn about, and get used to it, now when parts of the economy will be rebounding (and they have opportunity ahead of them), versus getting their @ss3s unceremoniously throw to the curb next time the market drops.

And if, for some reason, a Big X Consultancy (which did not start in tech but in accounting/tax, operations, strategy, etc.) is where they belong, then let them prove it in a battle royale! Forget about sitting on the bench waiting and hoping to get invited to a sales call where they can sell a project to work on, put them in the Arena! When a Fortune 500/Global 3000 needs a consultancy, force them to make their selection in the arena where the consultant leads will battle it out modern gladiator style! Not just a Dragon’s Den pitch, they have to battle it out to even get the opportunity to pitch — prove they’ll do whatever it takes to deliver value at the hourly rates their employer is charging!  (Yes, we’re kind of joking here, but if it is where they belong, they should have no problem proving their worth!)

Thoughts?

 

* If the apocalypse is nigh it is largely because some rich benefactors, not even involved in the day to day running of the company, and likely never involved with the company at all, looked at their spreadsheet models and forced the engineers who actually know how to build things out of the C-suite, allowed Gen-AI to tell them how to do technical jobs, and then elected populist pinheads as Prime Ministers and Presidents to tell them balance-sheet management is okay. And let’s not forget that, as per the OECD PISA data, statistically most of them shouldn’t even be able to do high school math competently!

Commenting on The Prophet‘s 2024 Procurement / Supply Chain HR Advice

Note the Sourcing Innovation Editorial Disclaimers and note this is a very opinionated rant!  Your mileage will vary!  (And not about any firm in particular.)

Don’t be Afraid of Going “In-House” If you Have Tech Expertise

In this recent LinkedIn article, The Prophet notes that, in the past, he’s always recommended a stint in consulting given the presentation and analytical skills it builds where consulting can also imply “outsourcing” or “managed services”. But for 2024 he think[s] the time is right to consider going “in-house” if you’re debating a career change in procurement or supply chain and you have technology skills.

the doctor fully agrees, with a mild caveat. Specifically, “in-house” must also be capable of being interpreted to include new-age niche service providers that, as The Prophet himself pointed out in his 9th Prediction that “SaaS Management Solutions Start to Eat Services Procurement Tech“, we’re going to see new categories of blended consulting/service providers that offer not only consulting but power engagements with in house (SaaS) tech that blends tech, data, and automation in new ways to provide enhanced service packages to clients based on service fees, data fees, platform fees, and consulting fees, depending on the engagement. These plays will need the above above average talent to bring it all together, and could prove to be the most fruitful jobs this talent can get both in terms of compensation (especially if they get a small piece of the company) and job satisfaction (solving problems in less time with more value than any Big X did before).

The Prophet also notes that many consulting orgs are still on hiring freezes or cutbacks and a bunch I know aren’t raising salaries this year and that if you are an expert “grinder” versus someone with deep commercial/sales or product knowledge, you might be better valued in a company in 2024. the doctor agrees.

Moreover, the doctor believes that this will be the year that Big X Consultancies will, in tech, finally be hit with the triple whammy of:

  1. a market unable to afford their (sometimes ridiculously) high rates
    especially relative to the average service they provide (as the market has to accept what we’ve known since The Limits to Growth was published in 1972)
  2. an exacerbated brain drain
    as the companies who let talent slip in favour of DEI quotas recruit good talent back in house (which is easy when talent who went to consultancies sees their salaries freeze & their careers stall)
  3. a dose of reality as the smarter companies see what some of us analysts* have seen for years that when it comes to modern tech or industry leading service offerings, at consultancies that have under-invested in tech, you have one group leader who is stellar (and worth whatever the firm charges), two or three handpicked recruits that are above average (and worth double or triple their market value because you can’t get that talent easy), and then thirty to forty average bench warmers fresh out of school who aren’t capable of doing anything original due to lack of real world experience and can only follow the playbook written years ago by the group leader and only updated sparingly as the handpicked recruits have time.

Why?  Because the best consultancies, mid-market and Big X alike, will do something about it  (and already are — either acquiring companies to get pools of talent, focusing more on training the talent they have, or forcing team leaders to do more mentorship of the junior staff to raise them up), and bring the same value to tech that they bring to other areas.  (See when should you use Big X?)

If you don’t believe the doctor when he says that the big consultancies are much shorter on the above average tech talent they claim to provide you, then ask yourself this:

How are Big X and Mid-Sized consultancies supposed to hire talent during tech booms when some tech companies will pay 250K+ for an intermediate developer (which is twice the average average salary in some well educated markets, and at least 2/3 more than the average salary#) and 500K+ for a superstar?

When the VC and PE money flows, startups, which are cool and an opportunity to get rich if you ride the next unicorn, are more attractive than starting at the bottom rung of a consultancy. Thus, in these times, especially when the consultancies need bodies for all the implementation projects (because when the economy is pumped up by tech, a lot of companies buy tech), they hire what they can get — which is not the above average talent (of which there isn’t even enough for all the tech companies when you look at the paltry number of STEM graduates each year, the number of those who are actually qualified [which is less and less every year, not only do you have the double whammy of severe grade inflation and below par DEI-agenda admissions that The Prophet pointed out, but also overworked Professors who are forced to grade on a curve] and then calculate the number above average). Some of the “talent” graduating is so bad that you’re lucky if they understand the concept of a boundary condition when coding or calibrating when installing a piece of hardware [but fortunately they don’t end up, or stay in, tech very long — it’s easy to weed these individuals better suited for other careers out fast]. (Remember, the doctor used to be a Professor, keeps in contact with Professors, and the situation gets worse and worse each year. It’s all about maximizing dollars — from out-of-province/state students who’ll pay more, international students who’ll pay way more, and then hitting those quotes for massive DEI-based subsidies. It’s not about admitting, training, and turning out the best and the brightest. Only the rich and the rainbow.)

Now, the doctor should again point out that he’s not totally bashing the Big X and Mid-Sized consultancies — in traditional (management/operational/finance/strategy) consulting domains, many of them are great — and way better than an average company  In fact, he has a whole article on when should you use Big X?. But in tech, you’re often lucky if they’re average.  (Some are way above average, having recently acquired specialist vendors and consultancies in tech, analytics, and/or AI that instantly gave them a pool of world leading experts, while others have more or less ignored modern areas of tech until the AI hype reached full steam and are playing catch up.)  And when it comes to advanced tech, if you’re trying to find a true leader to take on your project, and you don’t know what you’re looking for, your odds are about equal to snake eyes when you roll the bones. (Your cost will be too high and your odds of generating a real return too low unless you first do your homework. You can’t throw an incomplete project request over the wall and hope for a good return from anyone!  This means identifying your needs in detail, reviewing the proposals in detail, and vetting the talent that is proposed.)

* even if many analysts can’t speak the truth because their firm’s success hinges on the success of the vendors who pay for their research, which in turn hinges on the success of the consulting partners they use for implementations …
# even though these same vendors will then wonder why they go bankrupt or have to do massive layoffs in two years

The Prophet’s 2024 Predictions [2024] (Collected Links)

The Series

Bonus

The Prophet‘s 2024 Procurement Prediction Number 10

A “CFA-like” Credential Emerges in Procurement and Supply Chain B+.

The Prophet says that the procurement and supply chain industries, similar to most others, excluding finance, are lacking any certifications/credentials, by those “in the know,” as a superior qualification for a job than even a top degree from a world-class or specialized university which is totally true.

The Prophet also says that organizations such as CIPS, ISM, SIG, etc., might disagree with this viewpoint which is also totally true. The Prophet does note that he supports all of these organizations, which the doctor does as well, and that he believes their training materials are highly valuable, which the doctor doesn’t across the board. (the doctor has seen some of their training materials. While some of their training materials provide a very good foundation, some of their training materials are not so good. Most of these organizations are very weak when it comes to analysis, tech-backed processes and practices, government/industry specific compliance requirements, risk management in today’s increasingly fragile global supply chains. etc. But when so many Procurement departments are struggling with the basics, understanding what their role is, and how ethics should enter the equation, we do need these organizations and that is why the doctor supports them while reminding you to do your homework when it comes to training. Use them for their strengths, not their weaknesses.)

The Prophet then suggests that in 2024, credentials will take on new meaning, and the best ones, particularly those challenging to obtain and requiring rigorous exams (which many fail), similar to the CFA in finance, will begin to take on a new significance in Procurement.

the doctor agrees with the principle, but does not agree it will happen this year, or even next year. Why? This will only happen with industry regulation, and that only happens in two situations.

  1. when an industry-led body gains enough support from the majority of professionals in an industry to make it a de-facto requirement in any employer of any size to get a high-level procurement job; no organization yet has that weight, and we’re not going to see the NLPA, SIG, APS, etc. all fold into the ISM, and definitely not into CIPS, which is pseudo-global (as it has made progress in some of the Commonwealth); this means that we’d need to see a new industry initiative that gave all parties representation and allowed them all to contribute to the standard and exam — for this to form, a certification to be adopted, and a test accepted will take years
  2. when a government forces a requirement that can only be met by a certification (and either creates their own or adopts one); governments move slow, and when we have the situation in the US where
    1. the republican focus is on ripping democrats apart for what they didn’t do, rolling back human rights to the fifties, and installing a wannabe dictator as President-for-Life
    2. the democrat focus is on shaming the republicans, selectively protecting the human rights they want, and taking up the former republican war mantle (since Trump just wants to be a dictator, which doesn’t profit the military complex) and doing everything they can to back Ukraine and Israel (including risking World War III with their Middle East bombing of Yemen vs. just destroying every Houthi vessel launched into the water)

    and the situation in the UK where

    1. the conservatives are too busy trying to keep Dishy Rishy from making them the laughing stock of the political world (as he’s so far disconnected from the common person he has no clue)
    2. the liberal (democrats) are too busy trying to counter the conservative support for the global wars and lack of focus on the situation at home by being extra woke (and we know how that fared in America) …
    3. when we look at the NHS mess and postal service mess and their apparent unwillingness to do anything meaningful about it (for longer than should be humanly possible to ignore a crisis), it seems that good procurement is the last thing on their mind

which are the two countries that would need to lead such an effort (as the EU is very focussed on climate change and AI and struggling to hold itself together now with active protests in about a third of its member states on any given day; heck it’s too focussed on attacking the farmers, already forgetting what happened when Stalin called the Farmers the enemy of the state. (See this article, for example).

Thus, while such regulation is sorely needed, it’s not likely to happen, if it happens at all, until the later part of the decade (unless, of course, The Prophet and the The Public Defender want to once again band together and take up the charge and lead the effort to bring all the necessary parties together).

The Prophet was dead on with three of the primary reasons we need it.

  • GPAs are no longer a measure of academic performance in many universities.
    The Prophet notes that, according to the Yale Daily News, “Yale College’s mean GPA was 3.70 for the 2022-23 academic year, and 78.97 percent of grades given to students were A’s or A-’s,” including the hard sciences and engineering! He also notes that the Michigan State Broad Business School (which includes the Supply Chain and Procurement degree programs) also experiences significant grade inflation, with 80% of students in 3 out of 5 undergraduate classes earning a 4.0. (Source)
    The situation is even worse in China where you don’t even get accepted to some Universities unless you are an A- or better student, and where you are under intense pressure to maintain that A, to the point where a student will drop out (or commit suicide) rather than risk being thrown out for not maintaining it. Now, this would be great except for the fact that As are often contingent on rote memorization and learning to do the work the “state way”, not always with any free thinking whatsoever. (And then graduating ONLY if they think you’ll agree to share what you learn when they allow you to go outside China for that Post-Doc/Professor position).
    The situation is better in Canada [except Quebec], but there are some Universities / Departments that are under great pressure to remain competitive to maintain grant and industry funding, and others where the professors are so overworked that they don’t even bother to confirm that a Master’s student in Engineering can manually calibrate an oscilloscope or a Master’s student in Computer Science can appropriately identify and test for all boundary cases in a simple procedure. (Remember, the doctor has been a Professor, and maintains regular contact with Professors and knows this to be truth.) How could you trust either to validate your equipment or your code? (He couldn’t!) (Regarding Quebec, the current premiere is taking Quebec’s status as a nation within a nation and essentially discriminating against anyone who is not French and willing to speak French as a first, and only, language. [See this article, for example.])
  • DEI/affirmative action preferences, which still exist (despite the supreme court ruling and their illegality if they enforce admitting or hiring a less qualified candidate), have removed objective academic criteria in both degree-based programs and industrial training programs. This has resulted in candidates who might only be a D being admitted to programs because of their minority status while non-minority candidates with Bs were excluded.
  • The best talent may no longer be pursuing traditional college or graduate programs. There needs to be an objective means of evaluating hard and learned skills for those who cannot afford or do not wish to invest time in university studies, especially those who have taken industry training programs or annex courses specific to what they need as well as obtained relevant real world experience under a mentor. (There’s a reason there used to be apprenticeships; some learning onlly happened under the guidance of a mentor.)

The only other reason that needs to be mentioned in the doctor‘s view is

  • without a certification, how can you know that any candidate, no matter how experienced and skilled they appear, knows all of the foundations you need them to know? With so many different definitions of sourcing, procurement, and purchasing; so many different thoughts on what an individual should know about analytics, supplier identification, supplier vetting/onboarding/management/development, negotiation, contracting, global trade, logistics, risk identification and management, compliance, finance / finance support, etc., how can we have a solid baseline with a (multi-level) certification program?

It would be great if 2024 is the year that we saw this certification, but while we desperately need it, the doctor believes that, unfortunately, it’s still years away. (But he will challenge The Prophet to step up and make it happen!)

The Prophet‘s 2024 Procurement Prediction Number 9

SaaS Management Solutions Start to Eat Services Procurement Tech A+

More specifically “vendor management systems” (VMS) that are all about the billable hour.

As The Prophet asks, what happens when that billable hour becomes an SOW (either to skirt worker classification requirements or because it really is a complex SOW) especially when consultants, managed services or outsourcing providers need to blend and leverage AI, tech, data and other capabilities to deliver an outcome? You get joint SaaS/[IT] Category (management) solutions that become the new new norm of solutions for taking on certain business functions. And they won’t look anything like today’s VMS or SOW solutions, and will, as The Prophet notes, likely be new generation of todays SaaS/IT Category solutions which will either blend in more services or merge with / be acquired by new-age MSPs that build the offering around the new tech, and not the old tech.

But what will these solutions look like? Good question (that The Prophet did not answer).

More importantly, as The Prophet notes, this convergence will raise a ton of questions.

  • What metrics do you use to set up ideal outcomes in a blended services/tech/AI/data world?
  • “What” is negotiated (hint: it’s as far from the billable hour or a weekly “team” rate as can be)?
  • How do you capture and validate demand?
  • How do you reduce contract risk (including indemnifying (or not) for IP considerations, given recent AI lawsuits)?
  • How do you benchmark (drumroll please) an outcome?
  • What happens when an outcome becomes continuous, a metered service (like telecom) so to speak?

These answers may or may not dictate what the blended deliverable looks like, as the developments are just as, or more likely, to be developed taking into account whatever regulations currently exist or get introduced around the services, data, technology, and/or AI utilized. Plus, the smaller players will likely try to build off of whatever is getting traction from the big players but in a more innovative, effective, and cost effective fashion. (Remember, the big players like to charge you way more than a service can be profitably delivered for. Case in point: spend analysis. Large engagements, which usually start with a massive data cleansing effort, require a lot of analysis and reports, and modern solutions, will usually get quotes starting in the 7 figure ranges when there are a number of mid-sized, niche, consultancies, that can usually do the same work, faster and better, for 250K or less. [Remember, analytics is one of the the doctor‘s area of expertise, he knows the vast majority of vendors, and talks with the best regularly. Solutions 10X better than anything a Billion Dollar Suite or ERP will throw your way cost 1/10 of what they did a decade ago — but we’ll save this rant for another day.] The point is, they’ll let the big players create a market around a new offering, and then swoop in with a better, more cost effective, alternative.

the doctor has to admit this is one area where the answer has not yet revealed itself, one of the few areas where he’s not sure what the first solutions will look like (beyond a blend of current SaaS tools pre-integrated with third-party data feeds, semi-dedicated personnel performing regular tasks, account managers monitoring progress, and consultants doing quarterly checkups and advisory), and how long it will be before new workforce regulations get passed that change how such services can be offered (or how workers must be paid).

It will be an area to watch, and the doctor bets that Andrew Karpie will be watching it closely, so be sure to read anything he writes about it. It will be the first shakeup the VMS industry has had in decades.