Sixty Years Ago Today

Sixty years ago today, Fortran, possibly the first modern computer language, is shared with the coding community for the first time. Originally developed by IBM, Fortran is a general-purpose, imperative programming language that was designed for numeric computation and scientific computing that dominated science and engineering program for decades.

Updated significantly in FORTRAN II (procedural programming), FORTRAN III (inline assembly), FORTRAN IV (logical data types and statements), FORTRAN 66 (ANSI standard), FORTRAN 77 (structured programming and character-based data), Fortran 90 (array and modular programming), Fortran 95 (high performance), Fortran 2003 (object oriented programming), and Fortran 2008 (concurrent programming), this ancient language is still in use today. In fact, due to the continued widespread use in the scientific community, the next version of Fortran (currently dubbed Fortran 2015) is intended to be completed mid-2018.

What do you think, LOLCat?

Really? Why?

Spend360 – Applying Deep Machine Learning to Spend Analysis

Regular readers will know that, generally speaking, the doctor has not been impressed with the auto-classification and mapping offerings by any spend analysis vendor he’s ever blogged about as all have failed pitifully on tail spend, performed poor on any supplier or category the provider hasn’t processed extensively, and worked poor in new geographies and even poorer in foreign languages.

However, this year, he’s been impressed by two vendors with auto-classification. TAMR, which are trying to tame the data deluge, and now Spend360. While a new name on this side of the pond, it is not a new name across the pond, having opened its doors for business in 2011, after two plus years of intense development. Plus, it is gaining reputation pretty quickly since it’s foray to this side of the pond a couple of years ago and now has over 100 North American clients, which brings its total client base to over 400 global customers, which is impressive for any company in this space. (Even more impressive is the fact that, to date, it has processed over 1 Trillion of spend.)

While it’s still not perfect, and still can’t outmatch the best human expert with a multi-level priority mapping engine, it is decades ahead of its competition and has the ability to learn and evolve and, over time, approach 98%+ mapping accuracy, leaving little that has to be mapped, or corrected, by a human user (which is quite valuable when the user is not an expert in spend analysis but still wants to reap the benefits).

Not only can its deep machine learning identify tail spend suppliers, company specific categories, and even individual items coded in obscure ways, but it can learn over time and adapt to different data models, especially since it can use evolving knowledge bases. Whereas the majority of first generation classifiers used naive statistical classification that could not learn and had to map to a fixed (UNSPSC) model, Spend360’s uses deep machine learning (based on LSTM and encoder/decoder technology) that maps to custom data models using extensible knowledge bases (which can be created and maintained by the organization) that can encode organization and industry specific knowledge (and negate the need for custom mappings or override rules).

The fact that the knowledge base can be extended anytime a mis-classification occurs negates the need for manual mappings or override rules common in so many first generation spend analysis systems is a very powerful concept. It means that every erroneous mapping need only happen once and will never need to be manually corrected again. Plus, the fact that the data model can be extended as analytic needs evolve means that the platform can continue to deliver value year over year over year, unlike most first generation platforms that only delivered top N reports and failed to deliver value after the first twelve to eighteen months.

But this isn’t all Spend360 has to offer. In addition to a powerful classification ability, which can be trained to actually work, it also has a very powerful front end that allows the user to drill through the cube using custom filters in real time, compared to first generation systems that had fixed OLAP with limited filter capability. Reports can be cross-linked and all linked reports auto-update as one is drilled into. And data can be uploaded and incorporated into the cube in real-time if additional data is required.

And, to top it off, based on the 1 Trillion in spend they have classified over the years, Spend360 also has deep spend benchmarks across all of the major verticals and categories, which is often mapped down to UNSPSC level 4. This allows an organization to quickly understand how its spend on a category compares to the average in its vertical. Simply augmenting this data with pricing trend data can give an organization quick insight into where some significant cost normalization opportunities may lie.

In short, Spend360 is a provider the doctor expects you to be seeing a lot more of in the years to come, and recommends that you check out the upcoming deep dive, co-written with the prophet, over on Spend Matters Pro [membership required] if you are able. This is one best-of-breed provider you want to know.

3 More Terrible Reasons NOT to Use e-Procurement

Over on Procurement.World, the procurement dynamo gives us 3 Terrible Reasons NOT to Use e-Procurement, which, sadly, are still used by many organizations in the bottom 40% to 60%, to fight the implementation and adoption of e-Procurement systems.

If the reasons given in the procurement dynamo‘s post were the only reasons, that would be bad enough. But these are just a few of the reasons that Procurement organizations don’t use e-Procurement. In this post we are going to discuss other reasons, and, in particular, reasons that are a bit more believable — which are the worst kind of reasons.

1. Our Processes are Not Supported in the New System

While it’s true that the processes used by organizations that are still operating like it’s the last century are not supported out of the box, modern procurement platforms come with adjustable workflows that can be tailored to support just about any process the organization needs, good or bad. This may have been an excuse with first generation systems with fixed rules and workflows, but it’s not an excuse anymore.

2. The system won’t work with our current ERP or AP system

Most organizations require that all POs get in the ERP, all invoices in the AP, and all goods receipts in the inventory system. Because no recommended e-Procurement system will integrate with these systems out of the box, anyone against the implementation of such a system will insist it won’t work. And, again, wile this may have been an excuse with first generation systems that were almost impossible to integrate with anything, it’s not an excuse anymore when most e-Procurement vendors realize that their systems have to integrate with other systems and have published data models, open APIs, and middleware that enables the easy integration with such systems.

3. We don’t need Supply Management System X, we need Supply Management System Y.

Sometimes, knowing that a system they don’t want is inevitable, an opposing employee will suggest that a system is needed, but the system under consideration is not the right one and a totally different system is needed. For example, you are looking at a P2P and they will insist that a S2C is needed, or vice versa. Or they will insist that the ERP needs an upgrade. Or so on. But it will all be a distraction.

Systems will always be opposed, but when they are needed, they need to get implemented. The key is to select the right one. But with proper homework (and many posts on this blog will tell you how to do it), the right one can be selected.

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.

How Do You Maintain Coherence Between Sourcing, Procurement, and Accounts Payable

This spring, Spend Matters UK published a great paper on The Five Principles of Sourcing by the public defender which outlined five key principles that must be followed for successful sourcing. They were alignment, openness, rigour, commerciality, and coherence. Coherence is key — if the entire sourcing process doesn’t work together, it doesn’t work at all.

But while a successful sourcing event is a necessary condition for a successful Supply Management, or Procurement, organization, it is not sufficient on its own. It doesn’t achieve any of the organizational goals, which always revolve around savings, profit, or brand recognition. Identifying 10% savings does not realize 10% savings. Identifying a free value-added service offered by a new supplier does not realize the value of the value-added service. And identifying a product or supplier that can provide a brand boost does not realize the brand boost.

Savings (which don’t really exist) only materialize when they are captured, and they are only captured when the plan is adhered to during the purchase process. Value from a value-added service is only realized when the service is utilized, and delivered, according to plan. And brand recognition is only achieved when the right products are maintained and the right messaging is put out.

But all of this only happens if there is not only coherence within the sourcing, procurement, and accounts payable process but between the processes as well. Procurement not only has to pick-up as soon as Sourcing leaves off, but has to continue in the intended way at the intended time. And when the invoice is delivered and goods are received, accounts payable needs to pick up and process the invoices at the right time in the intended manner against the right POs or payment plans.

So how do you insure coherence at the hand-off points? Make sure the needs are well documented and well-understood.

You can’t just throw a contract price list over the wall and expect success. The optimal award depends on ordering the right product from the right supplier location at the right time in the right quantity and making sure the right transportation company does the delivery using the right vehicles on the right routes. The optimal award, defined using intensive analysis and optimization, is only optimal when all of the required conditions are satisfied.

Typically it’s a matter of balancing unit costs against transportation costs against tariff costs against storage costs and taking into account transportation constraints against warehouse constraints against regulatory trade constraints, and if all of these costs and constraints are not respected during the Procurement process, then the optimal award — which is necessary to achieve the savings, value, or brand potential — will never be realized.

Coherence between Sourcing and Procurement isn’t a price-list or a contract, it’s a detailed step-by-step execution plan combined with a set of instructions on how to handle variances or minor disruptions and business continuity and/or disaster recovery plans that detail what to do when things go terribly wrong (after notifying Sourcing that an emergency sourcing event may need to be conducted) to allow for operations to continue in the short term.

Similarly, coherence between Procurement and Accounts Payable isn’t just giving AP access to the purchase order system and contracts with monthly invoices and expecting them to process invoices accurately. It’s working with them to set up the automated invoice matching and payment rules, making sure all payment plan contracts or agreements against which invoices will be received are properly defined along with rules for automatic acceptance, and defining how to handle missing information or exceptions. If the tolerance is low, maybe the invoice can be automatically approved, or flipped back with a suggested correction for automatic approval and payment. And it’s creating a process for AP to flip an invoice back to the right buyer when it cannot be matched, or approved, and a dispute needs to be started that should be handled by Procurement, not AP.

It does not matter how coherent the Source to Contract, Contract to Receipt, or Receipt to Pay processes are because success is realized only when all the processes sync up. So make sure there is coherence between as well as within.