Determine – Determined to Conquer b-pack’s Brave New World Part I

Determine is one of those companies that is a name you know even if it’s a name you don’t know (and a name you should know as it’s a 50/50 company with the doctor‘s seal of approval). It’s a name you don’t know because it didn’t exist until 4th Quarter last year. But it’s a name you should know as it is essentially the merger of the Selectica (founded 1996), Iasta (founded 2000), and b-pack (founded 2000) solutions into one cohesive whole (and not just a Frankenstein solution patched together when one company acquires two others).

Understanding that a true CLM-enhanced Source-to-Pay solution is only valuable if it is one solution that empowers one process based on one workflow, the first thing that the new company did was standardize on one platform — namely, the b-pack platform — and the next thing it did was figure out how to integrate the other two solutions on that platform. Since the b-pack platform is, at it’s core, a business process oriented workflow platform with native Master Data Management capabilities, and not a PO or invoice-driven e-Procurement platform with workflow kludged in as an afterthought, Determine was able to quickly accomplish two things:

  • Convert the Iasta Sourcing platform into an “app” on the b-pack platform
  • Rebuild and integrate all of the core CLM IP from Selectica they were missing native on the b-pack platform

which means that

  • even though you have to load the Iasta app to do your full-featured sourcing events that go beyond simple RFX and include powerful auctions, SRM, and strategic sourcing decision optimization (Iasta is one of the six sourcing samurai), all of the data is stored in the central MDM repository in the Determine core, which means it is 100% available when you start the contracting and/or ordering process (and, similarly, all historical data is instantly available in the Iasta app)
  • even though some more advanced (nice-to-have) features from CLM are still missing, there is sufficient functionality (or workarounds) to meet over 80% of CLM needs (for example, native editing and redlining is not yet integrated, but Word versioning is 100% integrated, which is the solution the Legal team wants anyway)

And the core business process workflows have been extended to cover the end to end sourcing lifecycle as well as the end to end purchasing cycle from both a line item and business object perspective (you can trace a line item all the way from initial sourcing and forward to final return and disposal and you can trace the entire history of each contract, purchase order, invoice etc.).

Plus, all of the unique, non-standard, features of the b-pack platform have been maintained and as soon as an organizational asset has been purchased, an asset record to track the lifecycle of that piece of equipment, software license, or IP can be created (and custom managed by asset type); as soon as inventory appears, appropriate inventory records are created (and pushed to the ERP and/or [W]IMS solution as necessary); as soon as a vehicle is acquired or leased, an appropriate entry in the native (or integrated) FMS (Fleet Management System) is created, and so on. The platform not only enables a true source-to-sink source-to-pay process, but also recognizes that acquisitions and artifacts of the source-to-pay process are the starting points of other business processes and supports those as well. It’s the platform that many sourcerors always wanted but never knew they were missing.

And we’ll tell you more about it in Part II.

Procurement Is Dead! Long Live Procurement! Part IV

Mr. Smith is right. Procurement is dead. It was doomed, entombed, marooned on a desert island, and passed away peacefully in the night long after everyone had forgotten about it. It’s dead and buried. (See: “procurious big ideas video peter smith and the death of procurement” in Spend Matters) And you should thankful that the Romans closed the door on the Egyptian Empire’s burial chamber or you would have been buried with it.

And, as we explained in painful detail in Part II, there is no more need for a purchaser. Like video killed the radio star, the internet killed the purchaser. And good riddance too. The innovations that led to the purchaser’s demise are far superior than even the John Henry of purchasing could ever be.

Procurement is Dead!

But with the death of every monarch, a new monarch is appointed.

Long Live Procurement!

A new age is coming, and Procurement will lead this new age. But it won’t be the Purchasing of old where catalog buyers sat in dark rooms ordering widgets and sprockets, processing mountains of paper, sending requests by fax, and comparing results in lotus 1-2-3 spreadsheets on MS DOS.

It will be the Procurement of new where senior analysts equipped with actionable intelligence make decisions that not only reduce costs, but increase quality and reliability across product and service lines and, moreover, increase the value with each decision made.

These senior analysts will amalgamate market intelligence from raw material and commodity markets (food stuffs, metals, petroleum, etc.), credit and risk providers (Dunn & Bradstreet, Bureau van Dijk, CreditSafe), CSR providers (Ecovadis and Sedex Global), third party auditors, and so on; integrate this data into extensive cost and risk models; and then compare them across suppliers to determine the real cost of each product and supplier from an organizational perspective now, 12 months ago, and with reasonable certainty, what it will likely be in 12 months. They will be able to make decisions that balance cost, risk, and quality, and also take supplier innovation into account.

But this is just one thing that these senior analysts will do. Because they will also have deep insight into best practices and processes across the supply chain, they will also have deep insight into best practices and processes that can help each organizational unit. Not only will they have insight into buying office supplies, and sending out RFPs for custom manufactured products, but they will have deep insight into best practices for

  • Marketing Spend Management
    their insight into production can be levied into managing both print runs and media production
  • Human Resources
    as their insight into services management can be extended into managing temporary labour
  • Legal
    discovery services, standard contracts, and market intelligence are similar to specialized HR services, other market intelligence services, and standard publication acquisition
  • Warehousing
    as their total cost modelling capability will be just as applicable to modeling the operating cost breakdown of a warehouse as it is to modelling the production cost breakdown of a super widget
  • etc.

These analysts will do more than just send out simple RFQs and make simple purchasing decisions. They will define category, supplier, and even supply chain strategies and execute them strategically — starting with spend and value-based analysis, continuing with the collection of the right supplier and product information, followed by the right bidding and award strategy for the situation at hand (be it multi-Round RFX, e-Auction, re-negotiation with incumbent, etc.), which could even include a supply chain redesign, and concluding with a contract-based award to one or more suppliers that will be managed through the lifecycle of the contract. No more set it and forget it. Milestones for certificates, certifications, and reviews will be set and completed. Purchase orders will be regularly reviewed for completeness, correctness, and appropriate responses. Performance will be monitored and, if necessary, corrective action plans put in place and executed. Supplier Relationship Management (SRM) with strategic suppliers will take a front seat. Tactical processes and data collection will be automated as much as possible so that only exceptions will be addressed as needed and more time will be available for education, best practice improvements, supplier, and Procurement development and improvement.

Procurement will listen to the needs of the key stakeholders, synthesize them into a cohesive whole, and insure they align with the goals of the business to make sure that the right purchase — not the lowest cost or most readily available — is made every time. They will be strategic leaders that lead the way vs. tactical soldiers that just execute last year’s market plan. And they will generate more value than was ever generated simply by taking 5% (or 10%) off the top.

And we will continue to describe the tools, technologies, methodologies, and innovations that Procurement will use to form a new Procurement to replace the purchasing that has finally been entombed like the pharaohs of old.

Procurement is dead! Long Live Procurement!

Procurement Is Dead! Long Live Procurement! Part III

In Part II we left of noting that not only is Mr. Smith right and Procurement really dead, having passed away peacefully in the night long after everyone had forgotten about it, it’s dead and buried with the radio star (because Video Killed the Radio Star) 6 feet under.  (see: “procurious big ideas video peter smith and the death of procurement” on Spend Matters) The internet has killed the purchaser just like the industrial revolution laid waste to the armorer, blacksmith, glassblower, and dozens of other occupations.

But I’m sure you’re all shocked that in yesterday’s argument we left out the most important fact of all about the purchaser:

He could process a mountain of paperwork that instills fear and loathing in even the most die-hard career AP clerk.

Paper? Who cares! The only paper (not counting the unnecessary printing of e-mails by managers who can’t read on the screen) any organization with a modern platform needs is the signed contract in jurisdictions that still need ink on the page to recognize a contract. Modern platforms take requisitions from anyone in the organization, allow a buyer to flip them into a purchase order to the under-contract or awarded supplier, allow the suppliers to flip them into invoices when the goods have been issued, queue the invoices for processing upon goods receipt from the warehouse, auto-match the invoice to the goods receipt and the PO, and if everything matches (or is within pre-defined parameters), send it to AP for (pre) approved payment (who make an ACH to your bank account). No paper required.

And while we recognize that, historically, up to 15% of invoices will come in with errors and the exceptions need to be processed even in e-form, the reality is that modern rules-based workflow driven cloud-based m-way match system will auto-detect (and sometimes auto-correct) the discrepancies, flip them back to the supplier for correction (or acceptance), and then, when they are correct (or at least within pre-defined tolerances), send them to AP for (pre-approved) (automated) payment. Since most suppliers will correct an (honest) error, and since most omissions (PO Number, address, routing number, etc.) can be filled in with corresponding documents, at the end of the day, less than 2% of invoices will need to be manually processed.

When you look at all of the innovations the internet has given us, not only is there no need for a purchaser, there’s no desire for his resurrection either. After all, it’s so much better to be able to find any product you could ever need with a single search at any time and have it within one business day then it was to have to wait. In the old days, if you discovered at 6 pm on a Friday you needed a part Monday, and the purchaser had already left for the weekend, what could you do? Typically nothing. Today, you do an internet search, place an order, request expedited same-day shipping, it ships out first thing Monday morning, and you have it late Monday afternoon. Maybe you are a day late in delivery, but if you had to wait for the purchaser to return, get his attention, maybe he gets the order in Tuesday and maybe you have the part Wednesday. And today, if you really have to have it now, you can order it Friday night, request special courier shipping on Saturday, finish the product on Sunday, and still make the Monday morning deadline. (It will cost more, but it can be done.)

And who would give up the automated m-way matching? It used to be that a large organization needed a roomful of AP clerks to process the 20K to 40K invoices it got a month, and even then it could only verify 10% of them 100%, leading to an average overspend (on overpayments, duplicate payments, and fraudulent payments) of 1.5% to 3%. Today, all invoices are processed 100% in real time, missing data is automatically appended, and erroneous invoices are flipped back to the supplier (with explanations of errors and acceptable corrections) … leaving less than 2% to be manually processed by a junior clerk who can get through all of them.

The purchaser is no longer needed.

Procurement is Dead!

But with Procurement’s death, we have a new beginning.

Long Live Procurement!

To Be Continued.

Procurement Is Dead! Long Live Procurement! Part II

Mr. Smith is right. Procurement is dead. It was doomed, entombed, marooned on a desert island, and passed away peacefully in the night long after everyone had forgotten about it. It’s dead and buried. (See: “procurious big ideas video peter smith and the death of procurement” on Spend Matters.) And you should thankful that the Romans closed the door on the Egyptian Empire’s burial chamber or you would have been buried with it.

Just like the industrial revolution laid waste to the armorer, blacksmith, glassblower, and dozens of other occupations (and just like Video Killed the Radio Star), the internet has killed the purchaser. (May he rest in peace with the radio star.)

Let’s face it. Why would a modern organization need a purchaser anymore? What did a purchaser do?

He could find the one product you needed in a wall of catalogs in a minute and have it expedited to you the next day.

But with Amazon for Business, Alibaba, and about a dozen vendors offering integrated and federated catalog search capability that will allow the organization to integrate the third party catalogs of all of their suppliers into a single interface, who needs a paper catalog? Who needs to even remember the supplier or the name of the product? Today’s catalogues are heavily laden with meta-data with full search capability and anyone, anywhere, and at any time can use them to find exactly what they need, order it, and get it. No catalog expert needed.

Create and fax 3 copies of the RFP to the top 3 organizational suppliers in that category and ensure there were timely responses.

Today’s RFX programs, which support not only RFX templates for supplier information, proposals, and bids, but also support mail-merge template capability for creation and electronic distribution, e-Fax, and portal access, allow a buyer to send the same RFP to 30 potential suppliers in the same amount of time as it takes to send to 3. Plus, since everything is online, all of the data is automatically collected into the same online spreadsheet for instant apples-to-apples comparison, and if offline is needed, formatted spreadsheet output is instantly available. No data (re) entry required.

He could shave 5% off a hard-nosed supplier’s bid with hard-nosed negotiating tactics.

With today’s supply market intelligence, cost modelling applications, and in-depth (predictive) analytics applications that can plot trends across different component and raw material factors across regions and timelines, even a junior buyer has a good idea of how much a product from a supplier should cost and knows when the supplier is quoting a 15% margin (when the industry standard is 10%) and when a simple explanation of facts will be enough to convince a supplier to get in line. Plus, with e-Auctions, open book costing, process analysis, and joint inventory and innovation initiatives, costs can be reduced without any negotiation at all. Who needs a hard-nosed negotiator who only knows the carrot-and-stick method (and always eats the carrot before going into the negotiation)?

Procurement is Dead!

To be continued …

While the Masses descend on ISM, the Masters will have the 50/50 in their Sights.

Today sees the beginning of the annual conference of the 101 year old Institute of Supply Management and the convergence of thousands of professionals upon Indianapolis to take place in the annual four-day revelry of the purchasing profession in the United State of America.

Recognizing that their audience is often more junior buyers than Directors and CPOs, this year the ISM has organized sessions into meaningful tracks to try and help the various purchasing team members understand the basics they need to do their jobs (as few people get any formal education in Supply Management before being thrust into a career, and training budgets are still slim to none in many organizations), with a focus on:

  • Dos and Don’ts
  • Direct and Indirect
  • People & Tools
  • Risk & Rewards

This is a great director for the ISM to go, as today’s buyers need all the education they can get. Unfortunately, there’s only so much that can be covered in a short talk on the critical subject matter a buyer needs to learn in depth to do her job efficiently and effectively (and run the Procurement Value Engine) and less still that can be absorbed, but we should at least applaud the effort of the ISM to make this event worthwhile for their average attendee (and possibly give her some fodder to go back and fight for an actual training budget).

Of course, as usual, the doctor won’t be there as the ISM conference, and the dozens and dozens of vendors with the big marketing budgets that converge upon it, really only represents the average state of Procurement today. As leaders of today and tomorrow, we are interested in the state of the art, what comes next, and what we have to learn — and do — to prepare for it to take our capabilities to the next level because, as we know it, Procurement is Dead and if we don’t redefine our job, and our capability, we will be buried with it.

As a result, in our niche, we don’t need to be bombarded with a dozen, almost equal, Source to Pay platform demonstrations (because we already know what the average platform does and minor UI differences and workflow tweaks don’t add much value) or last decade’s SIM solutions — we need to know which vendors are adding innovative capabilities like auto-correct and auto-suggest to m-way match to eliminate 90% of the “exceptions” that can be automatically handled, data analytics to let us do predictive trending and take advantage of prescriptive (expert-guided) strategies to maximize the value from each sourcing event, and modern SRM platforms that contain development and innovation management capabilities to extract value where the price is already as low as it can go with current materials, production processes, and supply chain designs.

That’s why we will be waiting with anxious breadth for the Spend Matters 50/50 list to find out who the 50 vendors to know are, and, just as importantly, who the 50 vendors to watch are. We need the next advance, and to get ahead of our competitors in tight markets without a significant increase in budget or support, we need it first. And where you are going to find that innovation is in the vendors on this list, and, surprisingly enough, not just the vendors in the “watch” list — some of the bigger vendors in the “know” list, having acquired some smaller companies and top innovation talent, have let their talent loose and there are some amazing innovations in the pipe this year — just not necessarily what, where, and from whom you’d expect.

While the doctor was consulted last year, this year the doctor was heavily involved in the discussion, including the final cut, and can honestly say that not only does this list represents the best cross-section of vendors in the global market, but it will surprise you. And you will be happy it did. And, better yet, there will be a continuation of the deep coverage of all of the vendors on SM (which will include joint coverage by the doctor, the prophet, and the maverick where it makes sense) and on the Sourcing and Complex Procurement vendors here on SI*.

Start the countdown!

* For the most part, SI will not cover the workforce, trade finance, or services providers in depth as SI will remain true to its core focus (which has kept you here for 10 years) on best practices and processes, technology, education, and topics that no one else covers in the Strategic Sourcing Execution Lifecycle (registration required). [However, this still leaves a LOT of vendors.]