Category Archives: Vendor Review

Trade Extensions is Redefining Sourcing, Part I

At their recent User Conference in Stockholm, recently covered by the public defender over on Spend Matters UK, Trade Extensions unveiled the upcoming version of their optimization-backed sourcing platform. With it, Trade Extensions are redefining the sourcing platform.

In first generation sourcing platforms, you have stand-alone Spend Analysis, RFX, e-Auction, Decision Optimization, Contract Management and, maybe, Supplier Information Management (SIM) modules where each module feeds into the next in a well-defined linear order: Spend Analysis into RFX. RFX into e-Auction, Decision Optimization, Contract Management, and/or SIM. e-Auction into Decision Optimization and/or Contract Management. Decision Optimization into Contract Management. Contract Management into SIM.

In second generation sourcing platforms, which permeate the market today, these modules are better integrated and data is more fluid. Data can flow back and forth between all of the modules. However, flows are still well defined. Data can flow from any module into any other, but only using well defined, scripted, workflows. You can’t break a process, or enhance a process, with capability from another module. For example, you analyze the spend data, and issue an RFX. You can analyze the costs that come back, and when you do, you can pump additional data into the optimization module. But as it’s not common to output multiple scenario awards into spend analysis, slice and dice for cost variances, and understand how the cost models and bids affect the global supply chain, there’s no easy way to push them into the spend analysis module. As a result, a user typically has to save the scenarios in .csv or Excel format and then import them into spend analysis.

In an optimization-backed sourcing platform, like TESS, that is properly defined all data is centralized in a data store and can easily be accessed by the RFX, Auction, Analytics, Optimization, and Contract Management modules. Because the system works off of common centralized data (known as fact sheets in TESS), cost models, and scenarios and not predefined, rigid, workflows, the user can approach the sourcing event the way they want to approach the sourcing event. They can create RFIs, send them out, get data back, create cost models, send them out for completion, analyze them, optimize them, go back to suppliers for cost concession or innovation requests, jump straight to negotiation and award if they get an innovative proposal, realize that a supplier can only satisfy 75%, cut the contract, and then push the unsatisfied demand back to the RFX for a subsequent round for a secondary supplier and so on. It’s extremely flexible. But it takes a skilled user to understand how to manipulate a tool that requires an advanced understanding of models, scenarios, workflow composition, and analysis. In fact, considering the user may not only have to design the workflows, but also the fact sheets, formulas, constraint definitions, and sourcing process, the skill level required to maximize the value potential of a sourcing is often more programmatic than an average user can handle. It essentially takes a skilled software developer to maximize what the platform can deliver.

And even though Trade Extensions, with their leading, state-of-the-art, optimization-backed sourcing platform has dozens upon dozens of clients making very extensive use of their platform and getting industry leading returns, they have also realized that the best results are from the most capable users and that there is always an opportunity to do better still. And not ones to settle for anything but the best there can be (even though they have the most powerful optimization-backed sourcing platform there is), they decided to figure out how to do better still. However, realizing that they were optimization experts and not design experts, they took a step back to figure out what was needed. After much consultation, soul searching, experimentation, user canvassing, and testing, they came up with an approach that will allow not just the pros, but the beginners, to use the platform with the same ease and achieve the same results, no programming skills, or training, required. And, even though they are already industry leading, that’s how they are redefining sourcing.

So what in particular is Trade Extensions doing?

We’ll get to that. But first, a little background on what’s missing (in Part II).

Basware: P2P for the Global “E” Part VI

In Part V, we noted that since we discussed Basware last in 2014 — where we covered their invoice and payment plan capability, their Basware Commerce Network (BCN), supplier/buyer portal, and their analytics offering — Basware has continued development in each of these areas and their invoice, spend analytics, and payment plan capabilities are quite powerful. But this is not all Basware has to offer.

Their standard e-Procurement capability is also very competitive, and, while you can’t claim to have e-Procurement without good requisition and PO management, Basware does have this down pat. Requisitions can come from every corner of their platform — RFx, forms, catalogs, T&E, and the shopping cart. This allows all spend to be put through the requisition process. Also, approvals can take place through the platform, e-mail, or even a smart phone app, allowing an approver to review an urgent requisition at any time or any place, negating the excuse “there wasn’t time for an approval”.

Once a requisition was approved, POs can be created from scratch, a blanket order, an approved purchase plan or saved shopping cart, and flipped from a requisition. The PO can be entirely processed in the Basware system, with complete history tracking and audit trails, and distributed to the supplier using e-mail, the supplier portal, EDI, or the BCN.

In addition to great invoice management, the system also has great p-Card management. The buying organization can integrate the platform with their p-Card provider, import the transactions, and automatically match the transactions on the monthly p-Card invoices with purchase orders and goods received. Once each transaction is matched with an associated, approved, business document, the invoice can be automatically approved and queued for payment. And if a transaction cannot be matched within a certain time window, the transaction can be flagged for manual review and brought to the front of the list for manual review.

The T&E capability, not yet covered, is also quite good. It goes beyond simple gathering, approval, and re-imbursement of travel and expense management and allows for the creation of entire travel plans for preliminary review, approval, and eventual claims. Rules can be set up so that if claims come in for approved expenses within a threshold (and with receipts for any amount above a threshold), the claim can be automatically paid, minus any advance. This is a very powerful capability. Once a plan is approved, if the employee sticks to the plan, the expense report doesn’t even have to be touched by human eyes. Good Procurement is only approving something once, and only looking at at something again if there is an issue. In addition, the solution can also integrate with banks and credit card companies and allow receipt amounts and claims to be automatically validated, especially if the expense is not on the corporate P-Card. Finally, the solution also collects all data required for tax authority reporting and tax authority claims (if the organization is entitled to reimbursement) as it implements VAT compliance for dozens of EU countries.

But perhaps the best capability is the Basware early payment discount management capability where it’s not only easy for buyers to manage an early payment option and a supplier to sign up, but for buyers to manage early payment discount campaigns when they first introduce, or re-introduce, early payment discounts. It’s set up on a e-mail marketing campaign system, which just about everyone understands.

There’s more, but for a much deeper dive into the platform, as well as a detailed SWOT analysis, check out the upcoming in-depth Spend Matters Pro [membership] series from the doctor, the revolutionary, and the prophet. This is one of the most in depth, most complete, and most accurate reviews you will find of this European juggernaut anywhere, and worth your time if you are looking for a truly global P2P platform.

Basware: P2P for the Global “E” Part V

When we last discussed Basware two years ago, we did a deep dive into their solution, particularly with respect to their invoice and payment plan capability, their Basware Commerce Network (BCN) and supplier/buyer portal, and their analytics offering. You can review this coverage in our four part series: Part I, Part II, Part III, and Part IV.

Since that coverage, there have been a few updates to the platform in these areas, but the biggest news is the recent Verian acquisition that extended their procurement offering, and we’ll cover this shortly.

From an invoice processing point of view, the match algorithm has been improved, as has the interface to the invoice. The upgraded UI makes it very easy to see not only unmatched invoices, but unmatched data, the closest match purchase orders, and all associated history of both. The pop-up windows allow a user to view the invoice and PO side by side, as well as the full audit trail if need be. From a payment plan point of view, the solution supports very powerful rules that allow a payment plan to match as many invoices as needed, and be automatically paid and approved subject to the rules.

From the BCN point of view, it’s growing year over year, at a transaction growth rate of 37%+, and should be processing 250M invoices by the end of 2018 and continues to add digital signature and tax compliance as more and more countries add regulations and allow digital signatures. The supplier portals have gotten a face lift, and it’s easy for a supplier to not only manage all communication, but multiple versions of their catalog for multiple buyers, as well as multiple price lists for different order volumes.

Their analytics offering keeps getting extended and improved as well, with the standard reports and dashboards now meeting 90% to 95% of what a typical buyer or AP clerk would ever need to look at. The reports have been grouped into three categories: spend, which are focussed on actual spend; procurement, which are focussed on overall process metrics and quality; and AP, which focus on financial data, process metrics, and overall end-to-end P2P KPIs.

The spend reports capture actual invoice data and payments and summarize, among other things, spend under control in a reference period, spend by supplier, spend by category, percentage of supplier spend under control, payment terms, and top n suppliers. The Procurement reports are focussed on quality and metrics. The quality reports focus on supplier quality and summarize active suppliers, (average) quality metric summary, rank by quality, rank by category, etc. The metrics focus on value. PO counts, by supplier, and by value. Average total order time by supplier, by category, and geography. Average procurement task time (for requisition approval, PO flips, etc.) and duration. The AP reports focus on finance, process, and KPIs. The financial reports summarize cash flow, cash flow forecast, discount availability, discounted invoices, discount trend, and similar financial data. The process reports summarize invoices — open, exception free, resolved exceptions, and average resolution time; tasks and durations; and average supplier acknowledgement/response times. The KPI reports summarize overall e-Invoice metrics, spend under control, auto-match performance, on-time payment, and average cycle times. It’s a very complete set of reports.

In other words, even though everything discussed above was quite good when we reviewed it back in 2014, Basware has kept developing and improving and streamlining, but that’s not all Basware has to offer. In our next post in this series, Part VI, we will discuss the other capabilities Basware has to offer.

DirectWorks: SaaSifying Co-exprise

Co-exprise was founded back in 2004 with a goal of building a new-type of direct sourcing solution not yet available in the North American marketplace. The goal was to integrate the new sourcing tools of the day — namely RFx, auctions, project management, collaboration, product information management [PIM], dashboards — with bill of materials, supplier engagement and management, and workflow management — capabilities not found in standard sourcing tools but desperately needed by manufacturers to handle their direct sourcing needs. In fact, it was so revolutionary that the doctor described it in 2007 as the first solution on the [North American] market to make a serious, honest, effort to address the complex direct sourcing problems that other systems cannot handle because these types of problems are unique and require a distinct solution.

The Co-exprise platform was relatively unique in its day in that it was built on a number of basic building blocks, including workflow management, business process rules, collaboration technologies, a centralized repository, project management, cBOMs (collaborative Bills of Material), cost models, and analytics, that were inherent to, and invasive across, the platform. This meant that all of the technologies were integrated into one collaborative workflow where all of the common data required by a direct sourcing professional was always accessible and analyzable. But, fast forward a few years, the platform had one failing — and that was that it wasn’t designed to be multi-tenant SaaS from the ground up.

Why? Back in the early 2000s, fast internet wasn’t pervasive, third party data center and application management was expensive and, most important, manufacturers wanted to keep their proprietary data in-house and valued deep security over remote manageability. But now that cost is paramount (and SaaS is always cheaper than in-house for non-IT enterprises), the cloud is accepted, and multi-tenant SaaS managed by professionals is often more secure than the corporate intranet, the playing field has changed and modern manufacturers want a SaaS platform.

So, shortly after a regime change, Co-express decided that it needed to go true multi-tenant SaaS, and that it would re-build from the ground up … as DirectWorks. Doing this would allow them to take advantage of new web development capabilities, such as better UI and distributed processing, that might not be doable if they just tried to do a straight port. So was this the right thing to do?

Yes and No. The new platform has a very easy to use and clean UI. Is extremely simple for the mid-size manufacturers that still use a traditional BoM sourcing approach that it was designed for. It allows manufacturers to organize items into products and products into programs so that sourcing and management can be done at the appropriate level. It still has good RFQ capabilities and a supplier repository. And a graphical dashboard with reporting capability.

But it still doesn’t have many of the features in the original Co-exprise product. There are no auctions. They may not be common, but sometimes it’s the fastest way to source commodity raw materials and items at market prices. Co-exprise had a fair amount of configurability and a workflow manager with some capabilities to customize the application to the buying organization, and the new SaaS product doesn’t really have either yet. The BoM structure and sourcing process is very inflexible, and there are no hints of true SRM.

However, while the indirect sourcing platform space is quite large, the direct sourcing space is quite small. The only players are DirectWorks, Pool4Tool, and SupplyOn — the last of which is mainly oriented around electronic interfaces and document exchange (but which also includes proposal, auction, and contract management capability). And while Pool4Tool, which used to lag in usability and integration among its modules, has now caught up and surpassed DirectWorks, Directworks has managed to port over half of the capabilities they built over ten years in two years, so it’s conceivable in two more they could be back to their glory days and a major fighting force on the market. Time will tell. And SI will be watching.

For a much deeper dive into the new DirectWorks, watch out for the upcoming Pro series by the doctor, the prophet, and the maverick over on Spend Matters Pro!

Serex – Bringing Auctions Back to Procurement

At this point in time, you’d think reverse auctions would be old news in Procurement, seeing that FreeMarkets was running reverse auctions twenty years ago and the doctor has repeatedly bashed their use in strategic sourcing (because they are not strategic), but they’re not.

There are two reasons for this.

1. They have an important role to play in tactical Procurement.

and

2. Companies new to strategic sourcing are still convinced by first generation solution providers with great marketing teams that they are still the greatest thing since the spreadsheet and that the historical savings opportunities are still there.

And while the doctor would like to think that the majority of buyers of these solutions fall in group 1, the reality is that the majority of buyers fall in group 2, and, once acquired, will treat every strategic sourcing event as a nail and use the auction tool as a hammer. So if that is the case, then the buying organization better get the best damn auction tool out there (since they will still need the auction for the tactical procurement nails when they figure out there is a better way to do strategic sourcing, and will actually need the auction tool more).

And these organizations will need a useable solution. The reality is that while just about every suite and point-based sourcing and procurement vendor offers an auction tool, not all of these are good auction tools against modern standards. Many first generation tools have no way to bulk select suppliers, bulk select products, bulk upload starting bids, import historical data, bulk upload attachments, etc. — ease of use capabilities you would think that would be standard. In fact, for the most part, only the newer reverse auction tools from smaller best of breed vendors targetting the mid-market tend to have the usability one would expect.

Usability and efficiency capabilities in an auction tool is key. I’ve heard countless stories about big organizations taking 1 to 3 weeks to set up a large global auction for large bill or materials or global category in a first generation tool when that same auction could be set up in a modern tool in 1 to 3 hours.

And this is where Serex comes in. Serex is an interesting entrant in the e-Procurement space. Originally founded 23 years ago to help clients select, implement, deploy and effectively use CRM and marketing automation systems, something it still does to this day, a few years ago, after a routine meeting with a client that asked if it had systems to support buying, it decided to enter the e-Procurement space when it found out that its client had tried, and passed on, over a dozen auction and sourcing platforms because not one met its need. (Serex was shocked at this as it knew there were a lot of solutions and assumed some were good, but figured it one Global 3000 couldn’t find a useable solution, then there must be other companies in this group that couldn’t find a useable solution either.)

So, after securing beta customer support (and a commitment for monthly guidance from the CPO with over two-decades of cross industry experience in large mid-size and Global 3000’s as well as weekly buyer availability), they began development of a new auction solution that would be developed by buyers, for buyers, and used by buyers. (And it is. Serex’s first customer saved 6M in year one and since full launch this year, its first few clients have logged over 14M in savings. And this is one reason why all of its prospects are large mid-size and Global 3000 organizations, despite the fact that the solution best fits the mid-market, which they have traditionally served on the CRM side.)

The reverse auction solution was designed to enable buyers to quickly set up and run auctions through quick bidder search and selection, quick product search and selection, quicker selection of which suppliers can bid on which products, and default auction parameters (which can easily be overridden). Complete product specs can be defined or uploaded as attachments if needed. Suppliers can send detailed messages during the auction to request or offer alternate delivery dates or substitutions for quicker delivery, and a buyer can update the auction specs as needed. In addition, all auctions are saved and new auctions can be created as copies of old auctions, and then updated as needed, allowing repeat auctions to be setup in just minutes (which is valuable if a product sells better than expected and an auction needs to be repeated on short notice to meet demand). (The auction platform has a built in attachment viewer that displays standard web formats.)

And that’s the solution. With the exception of a product manager sub-component and a bidder management sub-component, there isn’t even an RFX, which is probably the biggest short-coming of this new e-Negotiation tool — because sometimes you just want a simple tool to collect bids and make a decision. This is the biggest weakness of the tool. But Serex built it in a little over a year, and can easily build it out considerably in the next year. SI expects that in two years it will more or less compete on par with the other best-of-breed e-Negotiation mini-sourcing suites aimed at the mid-market along with adding capabilities that will cause larger organizations to adopt it onside their first generation Source to Pay platforms that they are locked into (but which are not useable enough to use on the majority of procured categories).