When Selecting Your Next Supply Management Solution Remember …

All opinions are not equal. Some are a very great deal more robust, sophisticated and well supported in logic and argument than others.
Douglas Adams

This is something that should always be kept in mind when soliciting opinions on a perspective solution for Supply Management. Consider who you are going to ask:

  • Your co-workers.
  • Your peers on a user group.
  • Vendor references.
  • Vendor representatives.
  • Analysts.
  • Bloggers.

Consider their average perspectives.

  • Co-workers: probably didn’t look under the UI covers of potential solutions because, like you, they are too busy …
  • Peers: stuck in a single world view provided to them by their vendor … and they are gonna love it or hate it …
  • Vendor References: peers who absolutely love the solution (or they wouldn’t be given to you) …
  • Vendor Reps: there to sell their solutions, so they will give you the best of theirs and the worst of their peers …
  • Analysts … will give you a reasonably fair comparative analysis of the vendors they know … which are typically the ones that made their quadrant … which are typically the biggest companies and/or their biggest customers …
  • Bloggers … who will tell you everything they know … but unless you pick the blogger who specializes in that area … it won’t be everything you need … but, with the exception of analysts, far better than the rest because they do their research on each vendor they cover …

In other words, when trying to select a solution and soliciting opinions from your internal survey, not all responses should be weighted equal. Insight from those who have done their homework should be weighted more heavily than from those who quickly assessed a UI and decided they like the Amazon-one best (even though a B2C interface may be totally unsuited for the task at hand) or from those with restricted world views (which make them experts on one vendor in the final three but not the other two).

Keep this in mind if you want to truly select the best solution.

Why Advanced Sourcing Is Not Progressing …

“Protect me from knowing what I don’t need to know. Protect me from even knowing that there are things to know that I don’t know. Protect me from knowing that I decided not to know about the things that I decided not to know about. Amen.” That’s it. It’s what you pray silently inside yourself anyway, so you may as well have it out in the open.
Douglas Adams, Mostly Harmless, Chapter 10

Regular readers will know that there are a couple of scary statistics in this space. First of all, almost 40% of Sourcing / Procurement organizations don’t have any modern, Sourcing / Procurement specific, applications tailored for their jobs and are still making do with e-mail and spreadsheets and Microsoft products. Ack!

Secondly, the number of organizations with advanced sourcing solutions, such as modern spend analysis (with predictive and prescriptive analytics), decision optimization, and contract analytics is much, much less. For the former category, we might hit 50% of organizations this year (as spend analysis is all the rage) but for the latter (which is what identifies the real missed opportunities and captures them), maybe 20% of organizations with solutions. Maybe. Ack! Ack!

All this despite the fact that SI has literally spent over a decade trying to convince organizations to buy these solutions, even though the first (and even second generation) were clunky and sometimes difficult to use. (Unlike e-Procurement, which has to be easy to generate value, if a solution can save you 10% on a 100 Million category, you can put up with a bit of pain to save 10 Million. Heck, you can put up with a lot of pain.) However, we’re at generation three now and they are almost as easy to use as search, click, buy e-Procurement systems. They have smart templates, smart workflows, and dozens of validity checks and while you still have to know what you are doing and what the solution does, what used to be days of setup can be accomplished in hours and processing that used to take days sometimes finishes in minutes. They should be ubiquitous, but they’re not.

Why? Because even though the solutions have improved considerably over the past decades, the staff of these Procurement departments have not. They still use old tools and they still believe the solutions now are just more colourful and fanciful versions of the solutions then. And thanks to an utter lack of training (due to budgets being cut year after year after year during crunch times despite all the lip service to the value of talent and training), they don’t know better. And like poor Arthur Dent, they just can’t fathom how the old man walks from pole to pole and crosses space like it’s just not there. (Because that’s what these solutions do. They literally cross hyper-dimensional solution spaces you can’t see like they aren’t there.)

And, like Arthur, they say their daily isolationist prayer because they can’t handle it any other way. But it’s not their fault. It’s management’s fault for cutting the training budget year after year and leaving their team in the Supply Management dark ages. And now we’re all suffering.

Free Procurement Isn’t Free — So Why Are We Going Through This Again?

Apparently SpendMap, a relatively unknown provider of Procurement software (compared to the big guys), has decided on the marketing strategy of “Free Procurement” to make a name for themselves and, hopefully, get their software known.

the doctor really wishes they would have consulted with him, or another knowledgeable analyst who has been around for a decade, before making this decision. “Free Procurement” doesn’t exist, and it’s just gonna bite them in the rear if they don’t do the smart thing, like Coupa did, and drop it.

This isn’t the first time, or even the second time, a company has tried this, and it didn’t work then for the same reasons it’s not gonna work now. Most people don’t remember, but way back when Coupa launched on Procurement Independence day, they offered a free downloadable, streamlined, do-it-yourself version of their software. Anyone could download this RoR (Ruby-on-Rails) code bundle, install it, test it, and use it for free as long as they wanted — if they could install it, configure it, get it working to their liking, and deal with any bugs that managed to slip though. (And installation wasn’t a breeze, mainly because you had to get the RoR stack working, which wasn’t a breeze to do in the early days of RoR.)

Then, a few years later, a company called Bupros (remember them, probably not, but they are still around) decided to make the same play. They also released an open source PHP community edition of their procurement software about 3 years after Coupa and still no one knows their name. (And installation of this, despite being three years after Coupa, was even more painful. PHP is a nightmare — unless you are using the same version on the same stack in the same environment it was developed and tested on, something is not gonna work right. Plus, their documentation didn’t quite sync up with their download and the doctor remembers spending the better part of a day for what should have been a 30-minute install just to get basic functionality going. [Remember, the doctor has a PhD in CS and has been a Chief Scientist, Chief Architect, and CTO and has been coding for over 25 years, so when he says something should take X time, and it takes 10 time, you can trust that assessment is reasonably accurate.])

So why isn’t there any such thing as “Free”? And why doesn’t “Free” work?

First of all, when it comes to Procurement software, especially do-it-yourself procurement software, as per our classic post on Uncovering the True Cost of On-Premise Sourcing & Procurement Software, it’s not just the license cost. It’s the cost of the hardware and middleware infrastructure (which could include databases, web servers, third party middleware, etc.) it runs on. It’s the cost of the installation, which, as per above, can take a lot longer than the provider will say it will (because only their developers know all the gotchas to watch out for and avoid), integration with any third party systems that need to push data in or pull data out, and maintenance. It’s the internal training and support costs. And these costs can often be substantially more than the license fee.

And don’t get fooled by a pure SaaS offering either. Just because the license is free and you don’t have to buy servers, there’s still the integration costs (as someone has to figure out how to use the APIs to push data in and pull data out and actually do it), the training costs, the maintenance (as the provider upgrades the platform and introduces new connectivity requirements) and re-training costs (as new features or modified workflows require retraining). And then there’s the back-up costs (it’s free, which means no service guarantees, including no guarantee the platform and/or your data will still be there tomorrow) and contingency plan creation, testing, and maintenance costs (what to do if the platform, or your data, disappears). These add up. And they might be considerably more than just licensing the lowest cost product on the market where you have service guarantees, initial integration, maintenance, and regular (web-based) training or free access to a complete self-training audio, video, and manual library.

So, regardless of the intention of the provider, who might be trying to move you up the ladder or increase the visibility of Procurement software (which is an important component of success), don’t get taken in by free. When it comes to Procurement (or Sourcing) software, there is no such thing as free. Low-cost, yes, because basic procurement and e-negotiation-based sourcing functionality is now a commodity, but not free. Either you’re paying a provider, who can take advantages of economies of scale, or your paying IT and support staff (and possibly paying for more infrastructure). And if you’re small, you’re paying more when you go the free route.

If a company really wants to help small and small mid-size businesses get on a platform and modernize, they’ll go the low-cost consumer-based SaaS route and offer low-cost monthly licenses per user that a user can put on their p-card or credit card and expense monthly and, as part of that service, offer all of the support and reliability of other online service offerings (like SalesForce, Zendesk, etc.). But they will never, ever, offer, or push, free.

The UIX One Should Expect from Best-In-Class Auctions, Part II

Last week we dove deep into the basic general requirements for any e-Negotiation platform, namely e-RFX and e-Auction, and called out the need for easy template creation and easy starting bid population and validation as two necessary key requirements (among a set of requirements). (See: Best-in-Class e-Sourcing Part I and Best-in-Class e-Sourcing Part II.)

However, as we explained in our last post, the requirements for auctions go quite deeper than the requirements for RFX. In our latest article over on Spend Matters Pro [membership required] on “What To Expect from Best-in-Class Reverse Auction Technology and User Design (Part 2)”, the doctor and the prophet dive deep into specific capabilities required of modern e-Auction platforms in order for a user to have a great experience.

In our article, we define three absolutely requirements, as well as two requirements that will soon be absolute, for every e-Auction platform that wants to be a modern platform, including real-time connectivity monitoring.

As we state in our article, internet and software connectivity should never be taken for granted. This is a lesson one of the authors originally learned over 15 years ago (first hand) when helping run early online sourcing events at FreeMarkets. However, even today, many platforms still take this for granted, assuming that everyone has the reliable, redundant internet infrastructure of a modern first world data center. This is still simply not the case. Your supplier representatives are probably located at their factories in the middle of Nowheresville in the Lost State of Third World Country and might still be on a 1.54 Mbps T1 connection, which is only up on good days. Their data centers might be located in the nearest city, which barely has enough electricity to meet demand on a good day (when the AC or Heat is cranked up in every home and building), and subject to occasional rolling brown-outs. And so on.

The fact of the matter is the software should assume that suppliers can, and at least one supplier representative will, lose connection during an event. And if this happens, the supplier still needs to be able to bid. A modern platform allows for each supplier representative to designate one or more proxy bidders, in priority order, and if the main rep is unable to establish, or maintain a connection, the software will detect that and automatically switch the bidding designation to a proxy (who will be view only until he or she needs to take over bidding). In addition, the loss of connectivity and change of delegate will be noted and the buying organization notified.

In addition, it will detect if multiple supplier representatives lose connectivity, assume there is a major issue, automatically suspend the event, and notify the supplier representatives through other means (e.g. backup emails, fax, and/or even SMS) that the event has been suspended and will pick up either the designated back-up time or at a time to be communicated by the buying organization as soon as the issue has been identified and resolved.

This is necessary not just to maintain good supplier relations, but to prevent costly legal challenges, especially in the public sector, if an organization lost because it couldn’t bid through no fault of its own (and could prove that it was willing to make the lowest bid which, in many jurisdictions, requires the award to be given to that organization). But yet, a [large] number of auction providers (of the 50+ that the authors collectively know about) do not provide this capability.

Curious to know what the other four requirements are? Then check out our full piece over on Spend Matters Pro [membership required] on What To Expect from Best-in-Class Reverse Auction Technology and User Design (Part 2).

The UIX One Should Expect from Best-In-Class Auctions, Part I

In our last two posts we dove deep into requirements for e-Negotiation platforms, namely e-RFX and e-Auction, in general, highlighting the need for easy template creation and easy starting bid population and validation as key requirements. (See: Best-in-Class e-Sourcing Part I and Best-in-Class e-Sourcing Part II.)

However, the requirements for auctions go quite deeper than the requirements for RFX. In our latest post over on Spend Matters Pro [membership required], “What To Expect from Best-in-Class Reverse Auction Technology and User Design (Part 1)”, the doctor and the prophet, dive deep into specific capabilities required of modern e-Auction platforms in order for a user to have a good experience.

In our article we discuss three key requirements that every platform must meet, one of which is extensive format selection and parameterization.

As we lay bare, there’s a reason there are more than half-a-dozen different auction types. One of the co-authors of this report first wrote about the application of advanced auctions models (e.g., Vickrey) to strategic sourcing back in 1999 and the other co-author has been developing, consulting on, and/or writing about auctions since 2001. Auction types include Yankee, Dutch, Japanese, English, Vickrey and Brazilian. One format doesn’t suit all category, supplier, supply market or procurement organizational needs. In fact, the ideal format(s) may change over time, even for a similar event.

Furthermore, as we point out the application of different auction models is not just a question of categories or supply market conditions. It also needs to be a cultural consideration within the buying organization itself. In different parts of the world, different formats are more accepted and just work better (even within the same company). As a result, if these auction formats are not supported out of the box, the configuration capabilities should be sufficient to more or less to mimic the core of most of these formats.

And all of these need to support extensive configuration. Because, not only is it not one-format-fits-all, it’s not one-kind-of-format-fits-all. For more details, check out our deep dive over on What To Expect from Best-in-Class Reverse Auction Technology and User Design (Part 1).