Check out this YouTube video on the evolution of dance!
I wonder if he’ll dance in Transformers 3?
Monthly Archives: January 2010
I Think Time Screwed Up It’s Best and Worst Of Lists!
Time recently released it’s list of the “50 best inventions” and the “5 worst inventions” of 2009. Most of the inventions in the 50 best were quite good, and all of the inventions in the 5 worst certainly belonged on that list, but there’s one invention on the best-of list that I have to take issue with. That invention is “The School of One”.
Now you’re probably asking why someone who writes a blog with the primary purpose of educating, for free, anyone who cares to read it and who believes education is something we all need more of would take issue with an invention focussed on education. Especially when it is a well established fact that some students learn best when they get personalized programs. Well, the problem I have is that, as Time notes, it’s learning for the X-box generation. In my book, that’s a problem. Video games can improve our reflexes, challenge our strategy skills, and even reinforce lessons through simulation … but they can’t replace the instruction that comes from a real person or the learning that comes from actually interacting with peers. It’s one thing to use video games as a learning supplement, but quite another to use them as a foundation. Since that’s essentially where The School of One appears to be taking us, that’s why I have a problem with it and believe it doesn’t belong on the “best of” list. We need a Renaissance Education, and that doesn’t start with video games!
Spend Analysis I: “It’s The Analysis, Stupid.”
Today’s post is from Eric Strovink of BIQ.
James Carville is not my favorite person, but he’s a funny man. And the above bastardization of his (in)famous Clinton campaign quote seems quite apropos, given the current frenetic level of marketing activity around “spend analysis” (I’m always amused by vendors using this term, because… excuse me for asking… “where’s the “analysis?”)
So why is there so much spend analysis marketing activity, all of a sudden? I suspect it’s “Oracle Terror”. For the last nine years, I’ve watched spend analysis vendors promote their “product” — typically a service masquerading as a product — using the same tired strategy: “We classify data better than [those other guys].” Problem is, when you spend so much time and effort dumbing down spend analysis to a simple-minded premise, you open the door for almost anyone, even a sleepy ERP vendor, to steal your lunch. And that’s exactly what has happened. Oracle has neatly synthesized all of the “classification” messages together, packaging them up with some Silicon Valley marketing magic, and the legacy spend analysis vendors are in a panic. You’re absolutely right, folks, Oracle’s messaging is better than yours. Smarter, more sophisticated, priced innovatively — it’s both ironic and funny. The only surprise is that this didn’t happen years ago.
But here’s the point: real spend analysis is so much more than classification, that the whole classification discussion is absurd. It has always been absurd. Classification-centrism is the Titanic of spend analysis, aiming squarely at a snowball on the top of the iceberg, while completely ignoring the massive value beneath. Nevertheless, relentless classification-oriented marketing over many years has warped end-user perceptions, and carried analysts right along with it. Current analyst firm surveys are spending over 90% of their time on classification questions, Pandit’s hopelessly off-target book (previously dissected and dismissed by Sourcing Innovation) is garnering new attention, and so on.
My iconoclastic point of view has been outlined in these (and other) pages before, but put very simply, it’s this: Classification is easy. Armed with appropriate tools, any intelligent person (your admin, for example) can be trained to do it effectively, in about an hour; and the rules they generate can be applied automatically to new transactions, forever after. When you stop to consider that sourcing consultants have been performing effective spend analysis for years, using nothing more than pencil and paper, it’s obvious that the classification Emperor really doesn’t have any clothes.1
In fact, true value lies in the analysis that you perform. Value is about results, and results come from analysis, not from a data classification process that is just a baby step toward value realization, and one that may not even be relevant. For example, consider that spend classification is really only useful for A/P data. There are many higher-value sources of data lying around, and many datasets can be built from them. In most of those datasets, classification has no place at all. By the way, how many spend datasets do you plan on building? One? Just on A/P data? Then you are missing out on value, by a wide margin.
In this series, I’ll discuss the requirements for ad hoc data analysis, and the very real value that results from it. Spend analysis, at the end of the day, is just data analysis; so it’s critical that your data analysis tools provide the necessary power and flexibility to make you successful.
Next installment: Why Data Analysis Is Avoided
1Ironically, based on the datasets we’ve seen from customers who have walked away from their classification-centric vendors, talking a great game on classification doesn’t necessarily mean delivering great classification.
Is Dubai in for a Downfall? And will it take the Middle East Economy With It?
A recent article over on Knowledge @ Wharton last month asked if “Dubai World’s Debt Default Could Spark a Crisis in the Middle East and Beyond” after Dubai World announced in late November that it wanted a six month delay on payments on 26 Billion in debt. In other words, it’s asking for a delay on a loan amount that is greater than the annual GDP of over 110 countries! And, according to the article, that’s just the debt it attributed to it’s overly ambitious real estate subsidiary, Nakheel, which, not satisfied with the construction of Islands in the shape of Palm Trees (Jumeirah, Jebel Ali, and Deira) had to go and construct a massive Waterfront, The World (Wikipedia), and, now, The Universe (Wikipedia).
Needless to say, the announcement threw the markets for a loop. As per the article, the Dow Jones Industrial Average quickly fell 1.5% (155 points), European stocks plunged, and oil prices plummeted. Between the end of November 25 (when it hit Bloomberg) and December 9th when the K@W article appeared, a flurry of news articles hit the wire trying to understand what it all meant, which so far has been very little beyond the initial shock. But given that negotiations are still ongoing and nothing has been finalized, a bigger shock could be coming, especially since Dubai World as a whole has debts totalling 59 Billion, which is an amount greater than the annual GDP of over 130 countries! The detailed analysis from the K@W article was that Dubai World’s lenders will work out a restructuring and will supply funds needed to complete the real estate projects that have stalled, because the buildings will be more valuable finished, quoting the burst real estate bubble that Florida suffered in 1926 (and how the excess building eventually drew people to Florida from around the US), but nothing is set in stone. There’s no guarantee that, in this economy, the lenders can even afford to wait six months for their structured payments, yet invest even more money in very expensive (and egotistical) projects that will take quite some time to sell. After all, how many people left can afford to pay 15 Million to 50 Million for their own island? With the major studios shelving scripts left and right, even “A” list actors are having trouble getting steady work at their usual pay rates! (And if the doctor had 15 Million to invest, he’d be launching new companies offering useful software and services [as they’d have revenue potential], not buying an over-priced man-made piece of real estate that really wasn’t needed in the first place.)
Now, while it’s likely that Wharton Finance Professor N. Bulent Gultekin is right in that problems arising from Dubai World will for the most part be contained in Dubai rather than affecting the region, largely because Dubai is the most highly leveraged country in the area, it’s important to note that if Dubai World did fail, it would be the largest government default since the approximately 100 Billion Argentine debt crisis of 2001 and that could spark a chain reaction (like there was during the Russian default crisis of 1998) as there has been a very big jump in government debts around the world as of late. And if a country like Greece, which has a lot of debt mostly held by lenders outside the country, fell, we could be saying goodbye to a quick recovery and hello to a nice, long depression. I just hope the financial decision makers think about this before they raise national debt limits again and risk plunging the world markets into turmoil.
Invoice and Asset Based Lending Goes Mainstream
Venture Finance, the UK’s premiere independent Invoice Finance and Asset Based Lender with 20 years of helping thousands of businesses under their belt, just released a white paper on “the evolution of invoice and asset based lending” that is definitely worth a read. The white-paper, which resulted from a roundtable discussion among UK industry leaders in London late this summer, addressed the evolution of invoice and asset based lending and how it addresses today’s business needs in times of recession and growth.
Today, the UK Invoice and Asset Based Lending (ABL) Industry stakes a strong claim for a place at the commercial finance executive table, growing from £ 7.3B and 13,669 clients at the end of 1995 to £ 46.7B and over 46,000 clients halfway through 2009. This represents a strong, and consistent, growth in an industry which provides security and flexibility when compared with more traditional funding choices, which have proven to be quite fragile over the past 18 months as many banks called in loans and lines of credit with little, if any, notice as a result of the failure of the traditional banking system that started with the collapse of Lehman Brothers. According to research done by Venture Finance across 1,000 UK accounts, in the last year, 58% have had their clients refused credit from banks. As a result, payment times have increased to horrendous levels. Over a third of accountants are now suffering an average payment delay of 14 extra days, and over a quarter are now having to suffer an average payment delay of 30 extra days, which puts a tremendous strain on cash flow when you’re waiting an average of 60 to 75 days to have an invoice paid.
It’s important to note that ABL is not a new concept, having been around in some form or another for centuries, with a history that can be traced back to the glory days of Rome. A few centuries ago, in colonial times, it was common for British merchants to make use of factors to sell goods in the Americas. The industry has evolved significantly in the last 40 years. Whereas its modern beginnings consisted solely of basic factoring and invoice discounting forty years ago, in the 1990’s, we saw the introduction of true ABL that leveraged against stock and plant.
ABL is important because it provides value above and beyond traditional financing. This value includes:
- direct link to business performance
if your invoices are strong, so is your credit availability - flexible and responsive
you can decide how many of your receivables you want to leverage, how much funding you want to ask for, and if your business improves, so does your credit availability - superior service levels
in ABL, it is the norm to ensure face-to-face visits occur at least every six months in order to establish a productive and lasting relationship; this allows a relationship manager to pre-empt any upcoming issues in conjunction with the client and ensure that capital remains available; compare this to the banking industry where visits can be yearly at best from a manager with a large client portfolio
When you consider that ABL has grown during the recession, and that it can take as many as 13 quarters for a full recovery if we use previous recessions as a guide, it quickly becomes clear that, for many firms, ABL is a much better financing option than the local bank. In other words, if you’re not doing it, maybe you should. If you’re in the UK, you can start with Venture Finance and if you’re in the US, you can start with The Receivables Exchange.