What is Procurement Getting in 2016?

A lot of technology is being hyped yet again for 2016. For example, Juniper Research (courtesy of Entrepreneur) says the big trends to expect this year are:

  • Virtual Reality
  • Social Robots
  • Wearable Technology
  • Supercomputer Cell Phones
  • Multi-System Screen Sharing
  • Bitcoin
  • Cloud-Based Video Gaming
  • Professional Video Gamers Make it Big
  • Better Data Protection
  • Crowdfunding

Not only is there nothing new here (as some of this technology has been emerging for over two decades), but there is nothing that really helps business operate better.

  • Virtual Reality can create more immersive training simulations, but most business don’t need that.
  • Social Robots can take the automated attendant to the store, but it’s still just a fancy kiosk.
  • Giving everyone Google Glass isn’t going to make the world smarter (although it may make the NSA happier).
  • We don’t need a super computer in our cell phone.
  • Platform standardization makes multi-system screen sharing easy, especially if you are running virtual machines in the cloud. (And the now defunct SunRay made this a reality 15 years ago.) And if you don’t have the right information in the first place, who cares what screen it’s on.
  • Bitcoin is no more secure than the person holding the key.
  • If Psy’s Gangnam Style has wasted over 16,000 many years by June, 2014 (Source: The Economist), how many million of man years are being wasted by MMORPGs that are emerging in the cloud?
  • What has the world come to when “sport” is playing a video game?
  • Data protection always gets better, and is always better than 99% of people and organization’s need.
  • Crowds aren’t always wise. They have a history of lynching.

And since Procurement is still often treated as the Island of Misfit Toys, if the business isn’t getting anything good, what is Procurement getting?

Contract Lifecycle Management — Do You Have Your Platform and Process in Place?

By now you should, especially since 8 parts of the doctor‘s and the maverick‘s series on Contract Lifecycle Management (CLM) have been up for your reading pleasure over on Spend Matters Plus (registration required) since October, but if you don’t yet have it in place, now’s a good time to review the current series end-to-end and get a grip on what your platform should contain.

While contract management is not new, and many first generation platforms have been including contract management modules since the late noughts, many features of next generation contract management platforms are reasonably new, and some are much more valuable than others. That’s why the focus of this series was on must-haves, should-haves, and nice-to-haves for contract management platforms since it’s almost impossible to implement a good process without a good platform, and selecting one is becoming harder and harder as more and more e-Sourcing and C(L)M providers, including those who started in the Sales / Legal space, hit the market, and not all are created equal (or anything close to equal).

For example, while a clause library is only a should-have capability and multi-tier contract management and drafting a nice to have capability, especially for a Procurement Organization that does fairly standard direct materials and indirect services contracts, some CLM providers will push them as essential (which they may be for Legal organizations that handle commercial [building] development contracts with a lot of work being outsourced to specialist providers) for every organization, this is not the case and for some organizations these features will not be used at all. Similarly, some CLM providers without native MDM integration (which is a should-have) and, gasp, expiry and renewal management (a must-have) will try to down-sell their importance, which is critical in an organization with a lot of auto-renew evergreen contracts (which can cost the result in the organization overspending by 10% or more on multi-million category) and price data in third party systems.

Plus, with so many e-Sourcing technologies, and a plethora of acronyms which mean similar, but not the same, things (for instance, do you know the difference between S2S, S2P, and P2P — don’t fib!), it’s hard to tell where CLM even fits, why you need it, and the extent of capabilities your organization is missing out on with an outdated system. (This is critical as good CLM can result in significant year-over-year cost savings. While the percentages aren’t as high as supplier relationship management, spend analysis, or strategic sourcing decision optimization (which can tops out at an average year-over-year cost savings of 12% in the last case), annual savings from an effective end-to-end CLM process, backed up by the right platform, have been known to generate 4% to 6% savings that go straight to the bottom line (and get Procurement credibility with Legal and Sales, who can all be on the same system), and that’s nothing to scoff at!

CLM is critical as good contract management, coupled with good supplier management, is what ensures that the sourcing plan is realized, and this is key to capturing the savings that Supply Management works so hard to negotiate. It’s pointless to negotiate a 10% savings if only 6% of it gets captured due to bad contract management practices (which result in poor supplier management, maverick spend, inferior order management, expedited shipment, lost credits, etc.). And this is the case in many organizations without good contract management practices. (And has been for many years, as chronicled in AMR’s (now Gartner’s) classic series on “Reaching Sourcing Excellence”.)

In other words, if you haven’t, you really should read the Series to Date on Spend Matters (membership required):

  • Part    I: An Introduction
  • Part   II: The CLM Platform Model
  • Part  III: The Upstream and Downstream Phases
  • Part   IV: The Traditional Solutions
  • Part    V: The Core CLM Solution
  • Part   VI: The Standard CLM Platform
  • Part  VII: The Extended CLM Platform
  • Part VIII: The Importance of Being Earnest Integrated

Procurement Sustentation


It’s Procurement for the Damned
Our back’s against the wall
We turn into the light
We’re burning in the night

 

After our year-long series chronicling 101 Damnations and our warning that it will only get hotter, you know that, at least for the time being, Procurement is damned.

As we pointed out last year, the CPO is the Rodney Dangerfield of the C-Suite in the 9% of organizations lucky enough to have a CPO that sits at the table, and Procurement still don’t get no respect. But no respect is just the tip of the iceberg. When it comes to a day in your life, if no respect (and the perpetual kick-me sign taped to your back) was all you had to deal with, you’d have it easy. But from the time you get up in the morning until the time you pass out from exhaustion, it’s one emergency after another, one demand after another, and one impossible goal after another. You’re expected to perform eight miracles before breakfast, Monday morning. Demands get tougher after that.

And, in the interim, you have to deal with an amount of future sh!t being dumped on you that is greater than the truckload Biff Tannen had dumped upon his head in the original Back to the Future movie, way back in 1985. But, as SI has said before, echoing the great public defender Mr. Smith who said (on Spend Matters), all predictions will be wrong.

But the smug clouds that will be created by the futurists, and the vendors that will propagate their smug, will be smothering and when combined with the fires set upon you, you’ll hardly be able to breathe. And in the darkness you will find very little light, or help, as training budgets are still slashed, your platforms are still out of date, and your processes are still from the paper-age.

And that’s why SI is following it’s 101 Damnations series with it’s Procurement Sustentations series that, for many of the damnations you are facing, will give you some tips and tricks to deal with these damnations thrust upon you. It won’t be perfect, or complete (as there are some damnations you simply have no way to deal with, but it will at least be something to help guide you through the darkness.

Thirty Years Ago Today …

The first meeting of the IETF, the Internet Engineering Task Force, took place. While not many people know about the IETF anymore, this is a very important body as it not only develops and promotes voluntary Internet standards, but it developed and promoted the standards that effectively created the internet, including the internet protocol suite and the TCP/IP stack.

While it started out with support from the U.S. federal government, it has operated as a standards development organization under the guidance of the non-profit Internet Society. While development of new standards are slow, as it uses a rough consensus guidelines and has to interact with a number of other global organizations and standards bodies, it continues to make progress and is a leading force behind IPv6, which is desperately needed if organizations continue to insist we need an “internet of things” on the global “cloud”. (We don’t, but you can’t stop the marketing madmen.)

The internet that we depend upon daily didn’t just happen by magic, it took the hard work and dedication of a number of organizations. The IETF was one of these organizations, and the internet might not have happened without it.

Is it time to Plus-size?

By now, you’ve probably noticed that the doctor has been contributing on a regular basis to Spend Matters CPO and Spend Matters PLUS, the first of which, like SI and Spend Matters classic, is free, and the second of which is paid (and costs 19.99 / month).

You’re probably wondering why, as SI has always been, and has always been free, as Spend Matters basic, and the doctor will not promote any blog that is not free, because of his belief that if you’re going to have a blog with the intention to inform and educate, you make sure its accessible to all.

However, Spend Matters PLUS (a subset of their PRO business offering) is not a blog, and, sometimes blogs are not enough. Why?

Unless a blogger has a large amount of sponsorship money, or is independently wealthy, (s)he can only spend so much time on the blog on a daily basis, and only impart so much knowledge and wisdom to you. (And if a blogger does generate such a significant income from sponsorships, you have to question how complete the material is as many sponsorships come with a high price tag*.) But, as SI has clearly explained over the past year, you are in Procurement hell, facing dozens of damnations on a daily basis, and the knowledge and wisdom you need to get smarter and more efficient is much, and the amount any one blogger can impart is minimal.

When it comes time to select a new solution, define a new process, or define the next challenge, you need a lot of knowledge and a lot of wisdom, and the chances that any single blog, or blogger, will have recently written everything you need is slim.

You could go to a big analyst firm or a niche consultancy to get a customized report or recommendation, but that costs a lot of money, and if you’re not sure what you need, it could be a waste of money. But if you have more knowledge and insight on the topic, you can narrow in on what you need and if you do need to hire an analyst or a consultant, you can focus them in on your needs, spend less, and get more.

Over on Spend Matters PLUS, the prophet has assembled a team of experts who are contributing detailed pieces on technology, process, and relevant topics that you as a Procurement professional will need deeper insight on, at some point over the next year, on a regular basis. In addition to the prophet, who is an expert on P2P, marketplace analysis, M&A, and solution evaluation, you have regular contributions from:

  • the maverick who is the top analyst and supply management framework developer in the space,
  • the anarchist who is one of the leading operations research, supplier management, and process evaluators in the space, and
  • the public defender who is an expert on procurement process and public sector procurement and an international correspondent

among other experts who chime in from time to time. And the articles are deep. The average length of the articles that the doctor has been contributing on are 4 pages. That’s about 3 times the average length of an SI post. And most of the articles are part of in-depth multi-part series that give you more information on a topic than most analyst firms will.

Now, is it right for you? That depends. If you are a lucky one who works for a progressive Procurement organization, then you might have subscriptions to analyst firm research and market intelligence firm publications or training academies that provide you with a wealth of knowledge and not need much more. But, if you work for an average organization which frowns on you taking the time to even fill out a subscription for a free publication, it’s more than you could ask for given the price.

SI’s recommendation is that it’s worth it. And the recent series the doctor has collaborated on, including multi-part series on Contract Lifecycle Management (platforms), Supplier Relationship Management (platforms), Marketing Spend Management, Direct Material and Commodity Spend, among others, are among the most in-depth and encompassing series on the subjects you will find anywhere. It’s not a replacement for SI or Spend Matters (CPO), but a resource that fills in the gap when your organization won’t pay for the knowledge you need and you’re forced to acquire that knowledge yourself. As this is only the second paid resource SI has ever recommended (the first being the NLPA for new Procurement professionals who still need the foundations), you know there has to be something there.

* It’s sad to say, but some companies won’t sponsor unless they get one or more of the following: final say over what is said about them, final say about what is said (or not said) about their competition, the right to guest post whatever they want on a schedule, the right to whatever marketing or registration lists you have, and/or the right to write their copy and have you stamp your logo on it (and both SI and SM have seen examples of this on “blogs” in the past — sometimes the copy wasn’t even edited and was clearly written by an internal PR person of the company the “brief” was about who couldn’t even run a simple spell check), etc. Finding sponsors who will support pure education, and not request anything more than a simple fact check on pieces on them, is a lot harder than a reader or aspiring blogger might think.