Monthly Archives: November 2024

Dear Enterprise Software Vendor: Should You Fire Your PR and Marketing?

Note the Sourcing Innovation Editorial Disclaimers and note this is a very opinionated rant!  Your mileage will vary!  (And not about any firm in particular, as a few non-isolated incidents opened up a whole new line of questioning.)

In response to a post by eCornell (which is/was here), THE REVELATOR wrote this comment (which is/was here) which is repeated here in its entirety in case it gets deleted, since anytime we tried to have a serious conversation around sales, marketing, public relations, and/or Gen-AI with Big X firms and/or (mid-sized) consultancies and analyst firms, they have quickly deleted our comments, and sometimes their entire posts rather than enter into a real conversation on the subject (and now we have developed an implicit distrust any corporate account and keep copies of everything):

NOTE: The following post was inspired by a comment by Paul Rogers

Despite feeling like someone walking the hallowed halls of Cornell University wearing a “Yeah, Harvard University” t-shirt, sometimes you have to say things that need to be said – which is the purpose of sharing this article.

Ask ChatGPT the following two questions:

? What is the role of the Public Relations professional?
? What is the role of the Marketing professional?

Do you see any mention of end client or customer success as a priority? Whose best interests are PR and marketing professionals focused on? What does the answer to these questions tell you?

Corporate communication has always been about putting a positive spin on business and the brand. It reminds me of the 1986 Richard Gere movie Power – if not a great movie, it is certainly interesting and engaging. Denzel Washington’s role as public relations expert Arnold Billings is worth the price of admission alone.

Unfortunately, beyond the company they represent, are PR and marketing people doing more harm than good?

Thoughts?

To which the doctor responded (which is/was here)

Well, SI, which has repeatedly told companies in our space to fire their PR firms going back to 2008: Blogger Relations, firmly believes that PR firms are doing more harm than good because

  1. you are NOT selling enterprise software to consumers and
  2. it’s not “image”, it’s “solution”!

As for marketing, corporate marketing can be good if it exists to educate and explain, but when was the last time that happened on a regular basis in our space? Over a decade ago … now it’s all AI-this, orchestrate-that, and whatever the bullcr@p of the day is. It’s all buzz, no honey. All show, no substance. All confusion, no clarity. (It’s bad enough that Trump has brought back the Land of Confusion with his populist politics that have taken by storm the first world over, we don’t need it in our workplace!)

So, right now, I’d say at least 6/7, if not 9/10, marketers are doing more harm than good and should be fired with their PR brethren.

There are over 666 companies in our space, and way too many pandering any type of solution you can think of. While we need at least 3-5 in each industry group – market size – geo region – module focus you can think of for competition, we don’t need 30+. Most are not going to survive, especially when most of these don’t have solid solutions built from years of experience that solve real customer problems (as opposed to just offering some shiny new tech that looks good but doesn’t solve the majority of pain points in real organizations).

This means that companies need to focus less on marketing and selling and more on:

  • market research, especially listening to what the real pain points are of the customers they want to sell to (and they need to focus in on a customer group here, you can’t be everything to everyone in our space and any company that thinks it can is the first company you should walk away from)
  • solution (not product) development — not shiny new tech, tried-and-true tech that works
  • market education, explaining what they do, how they do it, and why it solves real pain points after building a solution that solves the pain points they identified in their research

Which means, especially if money is tight, they should forget the marketers and instead focus on hiring researchers and educators. People are getting tired of the 80%+ tech project failure rates. They’d welcome some real insight and real focus on real solutions. If only the market would wake up and realize this!

Advanced Supplier Management TODAY — No Gen-AI Needed!

Back in late 2018 and early 2019, before the GENizah Artificial Idiocy craze began, the doctor did a sequence of AI Series (totalling 22 articles) on Spend Matters on AI in X Today, Tomorrow, and The Day After Tomorrow for Procurement, Sourcing, Sourcing Optimization, Supplier Discovery, and Supplier Management. All of which was implemented, about to be implemented, capable of being implemented, and most definitely not doable with, Gen-AI.

To make it abundantly clear that you don’t need Gen-AI for any advanced enterprise back-office (fin)tech, and that, in fact, you should never even consider it for advanced tech in these categories (because it cannot reason, cannot guarantee consistency, and confidence on the quality of its outputs can’t even be measured), we’re going to talk about all the advanced features enabled by Assisted and Augmented Intelligence that were (about to be) in development five years ago and are now (or should be) available in leading best of-breed systems. And we’re continuing with Supplier Management.

Unlike prior series, we’re identifying the sound, ML/AI technologies that are, or can, be used to implement the advanced capabilities that are currently found, or will soon be found, in Source to Pay technologies that are truly AI-enhanced. (Which, FYI, may not match one-to-one with what the doctor chronicled five years ago because, like time, tech marches on.)

Today we continue with AI-Enhanced Supplier Management that was in development “yesterday” when we wrote our first series five years ago but is now available in mature best of breed platforms for your Procurement success. (This article sort of corresponds with AI in Supplier Management Tomorrow Part I and Part II that were published in May, 2019 on Spend Matters.)

TODAY

Auto Profile Updates with Smart Information Selection

In our last article, we noted that in first, and many second, generation Supplier Management solutions, a supplier was always forced to create a profile by scratch, filling out a bevy of pre-defined form fields — even if they had all of that data in a well formed (metadata rich) xml or csv file. That’s why yesterday’s Supplier Management solutions contained functionality to auto-complete profiles wherever this data was easily available in standard formats.

But the biggest problem remained — supplier profile maintenance. A supplier profile is only accurate the second a supplier hits confirm/complete. Then, their main contact changed. They changed their mailing address. They moved HQ. They offered a new product. They dropped an old one. And so on. And, of course, they never maintained their profile, and you never verified it until you went to call, mail, or order and that person wasn’t there, the mail got returned, or the order was rejected (because the supplier no longer made the product). Then, you went to the website, found the new main line, called, navigated to the right person, got the right info, and maybe remembered to update the system.

So, as errors were discovered, some critical ones would be corrected, but most would remain unchanged or unnoticed and over the years errors — including information on critical insurance, regulatory approvals, and other key business requirements that put the organization at high risk if not verified — continued to pile up. After a few years, the record becomes more wrong than right. Not good.

So today’s solutions make use of the fact that information typically gets updated somewhere, even if not in the application. They monitor the supplier’s website for changes in contact information, invoices for address and product information, state and country registries for business information, and so on and when changes are detected, automatically update the supplier profile if the changes can be independently verified (through a third party authority, to prevent hacks or fraud from changing the system) or present the new data for approval to the relationship manager. All this takes is simple website and data source monitoring, scraping, reg-ex based pattern matching, and automated workflows. For complex information, a bit of semantic processing. Nothing beyond classical, proven, tried-and-true AI is needed.

Market Based Supplier Intelligence

Today’s supplier management platforms can integrate with multiple marketplaces, communities, partners, GPOs, and specialized compliance, sustainability, and risk data platforms, use rule-based transformations to harmonize all the data, and use built-in algorithms to extract intelligence at a market level.

Your company data gives you one view into a supplier; your vendor-based community, which is usually limited to similar companies in your industry that the vendor was able to sell, gives you another view; but the market gives you yet another view yet. Mathematically, one data point doesn’t tell you anything. If only nine other customers use the vendor and share their data through community intelligence, that gives you 10 data points, which gives you some data on the supplier’s performance and their performance for you relative to others, but 10 data points is not statistically significant. But if 30, 50, 100 data points can be collected from the market, that gives you deep insight with deep statistical significance.

On top of the data, and a few powerful cores (few, not a few thousand), all these platforms need is basic statistical calculations, trend analysis, classical machine learning, semantic processing, and sentiment analysis … all of which have been market ready for over a decade.

Real Time Relationship Monitoring

Relationships are more than just performing to a contract. They are about building a working arrangement that is beneficial to both parties. One where both are willing to admit problems, collaboratively explore potential solutions, and work together to achieve them. One where, when there are no problems, both are willing to find ways to improve.

As a result, relationship monitoring is more than just supplier performance monitoring. Especially since the relationship can be bad even when the performance is (still) (surprisingly) good, and the relationship can be (reported as) good when the performance is bad.

However, if you turn that semantic and sentiment analysis that was typically done on market data and public comments on internal communications, you can start to build up a picture of the overall viewpoint and sentiment on the relationship from both sides, what successes or issues are contributing to that, and if the situation is improving or deteriorating over time (by trending the number of spikes in communication with sentiment that is overly positive or negative). It’s not foolproof, as both sides could adopt strict, formal, communication no matter what, but since people are human, they tend to get hotheaded and lose tempers (and let the words fly) if they are really upset or jubilant when they are really happy (and let the praise fly), and while minor changes in relationship sentiment might not be caught (within tolerance), major changes will. Moreover, you’re not going to get rigid, controlled, strict, formal communication until threats of a lawsuit fly, but then it’s too late!

Automated Resolution Plan Creation, Monitoring, and Adjustment

Not only can supplier management platforms automatically detect issues (by rapid increases or decreases in trends or metrics), they can also correlate them to included resolution plan templates, automatically instantiate them and customize them to the issue in question, walk the supplier relationship manager through the resolution process, monitor progress, and automatically adjust the plan, and timeline, as needed as new information, good or bad, comes in.

Each default template can be correlated to a particular metric, trend, or sentiment driven situation, so selecting it is just a lookup. Instantiation is just filling in the blank with the appropriate category, product, service, and metric information, through reg-ex matching and search and replace. Robotic Process Automation (RPA) walks both sides through the process. Monitoring alerts either side when something is updated or not completed on time through more RPA. And adjustments can be made to trend lines based on average timelines on similar projects and current trends at each milestone.

Automated Risk Mitigation Strategy Identification

It’s one thing to detect risk, which is pretty easy along many dimensions when you have a lot of data at your disposal, and relatively straightforward to predict the likelihood of some risk events, but it’s a lot harder to determine which mitigation strategies should be employed when it looks like a risk is going to materialize.

But that doesn’t mean it can’t be done, or isn’t doable by the best of platforms. Just like a platform can come equipped with issue resolution plan templates, it can also come equip with standard risk mitigation strategies, which are essentially action plans to be automatically customized with the specific category, product/service, logistics, and supply line details. This is just pattern matching and semantic contextual awareness.

When all of this is combined with (near) real time monitoring across data sources, that are continually looking for relevant news sources, changes in metrics / prices / trends, etc, it’s like magic (although it isn’t). The platform detects risks, finds the most appropriate mitigations, and present it to the relationship manager. An all it uses is math, traditional machine learning, and traditional semantic/sentiment analysis. And, of course, a lot of up-front human intelligence (HI!) in the creation of this solution.

Automatic Real-Time Resource Re-Alignment

Corrective action plans and risk mitigation plans have something very important in common — people. People who create them, approve them, execute them, and monitor them. This requires resources to be constantly assigned, monitored, replaced as soon as they are unavailable or needed on more pressing assignments, and reassigned as the issue is resolved or the mitigation complete.

And while it will often be difficult for a project manager, or even a resource manager, to determine when to remove an organization’s best problem solver from a critical corrective action project to address a less critical risk mitigation project, or vice versa, even when the manager can’t think of someone else who could address the less critical risk mitigation project effectively, even when there is another moderately experienced problem solver that could step into the critical project, the software will be able to compute when that should happen if the organization defines the rules as to when that will happen based on hard metrics.

For example, if you define assignments to correlate resources to the projects with the highest cost (should the issue persist or the risk mitigate), and you define the cost of an issue based on its expected impact if unsolved, and the cost of a risk as its expected impact if unaddressed (using a fixed cost or a formula if those 10,000 processors don’t arrive and you have 10,000 vehicles you can’t complete), and you associate a seniority with each resource, it’s simply rank ordered matching.

If there aren’t enough resources for all problems, you can apply simple optimization to maximize the impact of your most senior resources. And, again, there is no Gen-AI needed!

SUMMARY

Now, we realize some of these descriptions, like yesterday’s, are also quite brief, but again, that’s because this is not entirely new tech, as the beginnings have been around for years, have been in development for a few years and discussed as “the future of” Procurement tech before Gen-AI hit the scene, and all of these capabilities are pretty straight-forward to understand. Moreover, if you want to dive deeper, the baseline requirements for most of these capabilities were described in depth in the doctor’s May 2019 articles on Spend Matters. The primary purpose of this article, as with the last, is to explain how more sophisticated versions of traditional ML methodologies could be implemented in unison with human intelligence (HI!) to create smarter Supplier Management applications that buyers can rely on with confidence.

Optimization Still Saves Double Digits — Why Aren’t You Using It?

Sourcing Innovation has been publishing for eighteen (18) years (over which it has published over 6,000 articles — inspired by the GruntMaster), with the first article published on June 15, 2006 with regular coverage since, including a push for all events to use sourcing optimization in Supercalifragilisticexpialidocious.

The reason is simple. It’s one of only two technologies that has been proven to identify savings in excess of 10% for almost 20 years (the other being spend analysis). The International Business Times recently reminded us of the power of this solution when it published an article on how Procurement Expert Sylvia Zhou Reduces Operational Costs by 13% Through Strategic Supply Chain Optimisation.

When we read how Zhou’s shift in sourcing strategies and supplier relations management allowed for a drastic reduction in operational costs by 13%, it reminded us of how decision optimization is not restricted just to sourcing and logistics, where it has traditionally been used, but saves across the supply chain, as discussed in our recent post on comprehensive optimization.

According to Zhou, with her team, she assessed their entire supply network, identifying bottlenecks and inefficiencies. By partnering with suppliers aligned with their operational goals and technological capabilities, they could streamline processes and cut costs. This approach worked so well that post-optimisation, her company reported a 33% increase in profits, attributed mainly to the reduced cost of goods sold and improved operational efficiencies.

And the best way to identify logistics efficiencies, product-based savings, and opportunities for operational efficiency is optimization. Sometimes there’s no better way to identify significant savings. So, go forth and optimize!

Supply Disruption Has Been The Top Procurement Risk For At Least the Past 15 Years

… and it’s too bad it took the worst global pandemic in 100 years, two wars, exacerbated natural disasters (including one of the worst global wildfire years on record), and Panamanian droughts for Procurement leaders to realize this. (Basically, the fact that a Gartner survey finally confirmed this should not come as a shock!)

When you go back to basics (i.e. the business 101 that it seems most business leaders have been skipping for the last couple of decades), there are two truths that all businesses are subject to:

  1. Profit = Revenue – Expenses, which makes the CRO and the CPO the two most important people in the business, and if market conditions prevent revenue from increasing, the CPO becomes the most important
  2. Business that sell product need to make or acquire product to sell. This requires supply and people.

This says that, when you abstract it high enough, your two three primary risks are:

  • supply (no supply, no product; no product, no sales; no sales, no capital)
  • talent (the skilled resources to acquire/make the product economically and run the company)
  • capital (you need money for supply, talent, and operations)

And when you dive in, you see that supply disruption is far and above any other risk because:

  • today’s supply chains are global and require multiple forms of limited transportation
  • with thousands of suppliers in dozens of countries and regions (across 4, 5, and sometimes even more tiers)
  • which are all exposed to the economic, environmental, geopolitical, and societal risks in the locales in which they operate
  • which means you are exposed to all of the economic, environmental, geopolitical, and societal risks in which they operate!

Thus, if your extended supply chain spans 30 or 40 countries, then you are exposed to every risk of those 30 or 40 countries at all times!

Given the drastic increase in multiple

  • economic,
  • geopolitical,
  • societal, and
  • environmental

risks over the past two decades, as well as the increase in cyberattacks, which makes the weakest unknown supplier in your supply chain your weakest link (if a hack into their system provides a backdoor into their buyer one tier up the chain, which then provides a backdoor into their buyer one tier up, until the hackers trace their way back to you through a chain of back doors).

Given that, right now, multiple risks in multiple risk categories are materializing every day on this planet, at a rate that exacerbates annually, we are at the point where no company is going to even go a year without a risk event impacting their supply. (This doesn’t mean they won’t get it, just that it will be late or cost more, and either could cause substantial loss.)

So if you’re not sourcing and procuring with mitigation strategies in mind at all time, start now. Multi-tier visibility is no longer enough. Advance warning is no longer enough if you are not ready to act with another option.

We Want to Be a Smart Company — What Else Can We Do! Part 1

We’ve read the dumb company: how to avoid the fork in the road (part 1 and part 2) and dead company walking: avoiding the graveyard (part 1, part 2, part 3, part 4, part 5, part 6, part 7 and part 8) articles, taken them to heart, admitted we’re making some mistakes and that we’re not doing some key functions as well as we could. Most importantly, we know we need to do more to avoid becoming a casualty of the next mass corporate extinction that’s coming. So, can you tell us what else can we do to avoid becoming a dead company walking (or, even worse, a zombie company*)?

01) Get Help to Identify Where You Need Help

We’ve (kind of) said this many times, but we’re saying it again. You don’t know what you don’t know. Get help from an expert who’s been in this space for at least a decade (and seen what’s worked pre- and post- the last two consolidations), and preferably the last two decades (as this cycle is going to be the worst since the late 2000s and most of the new generation of “thought leaders” and “experts” might not have a handle on what’s coming). There’s still a few of us left. See this posting where the doctor freely directs you to long-time experts in the space (which include areas he’s not the best suited to help you and areas he is … if you’re offering a solid solution to an industry segment that is currently helping your customers, he’d rather you get help and survive than not).

02) Improve Blogger / Independent Analyst Relations

Let’s face it, you’re probably not going to get much help from the big analyst firms. They’ll take your money and throw you their standard research that is mostly useless to you (because you need research customized to your niche and your needs); then take more of your money and only give you a mostly useless write up (with limited reprint rights in that you could do the write up yourself, but then you won’t have the logo) in return; then take even more of your money and put you on the map that everyone knows mostly consists of the same big companies year after year (due to limited analyst time) who are usually paying customers (as the analysts know them best) and typically only suited for F500/G3000s (because they are high priced suites); and then, if you still have any money left, take the rest of it and write about whatever tech you want them to and provide great shill for your marketers. But not once will they tell you if you’re going in the right direction or help you innovate (only if it is the current perceived market direction). It’s not their model.

03) Double Down on Education

It’s not just about what your product can do, but what your customers need to know to advance on the Procurement maturity ladder (where the majority of organizations are still on the floor reaching for the first rung, despite all the work done in the 2000s on how to climb the ladder). You need to educate them on what they should be doing, why, and then teach them what types of technology can help them even before you tell them about your technology. As per our dead company walking: avoid the graveyard series, education first is how you win in the end. Pace yourself while your competition runs themselves into the ground and drops dead. Always remember it was the tortoise (who can live 30 times as long) that won the race!

04) Thought Leadership Trumps Marketing Madness

Not only do you need to double down on education, but once you walk them from where they are to where they should be, and show them how your solutions solves a significant number of their primary problems, you still have to show them the wonders that lie ahead and accompany them on their journey through the dark forest until they, one day, reach the light. You have to convince them up front you are going to do this, do this through the implementation, be there every step of the way through the first few months as they get their tech legs, and then always be there to lend a hand when they need it.

While it might be time consuming at first, this won’t be as time consuming or strenuous as you think on an ongoing basis if you teach them how to learn for themselves and solve problems, as time goes on they’ll call on you less and less. It will eventually just be a quarterly check in to see how things are going and offer new thought leadership to help them up their game.

05) Focus on the Community

Find where they are engaged and go there, or, if they don’t have a place to engage, create one and bring them to you. Do you have a local chapter of a professional association where senior buyers or procurement leaders regularly engage? If so, go there. And, most importantly, leave your tech behind. Just educate them on an important topic and what they should be doing to ensure they are handling it appropriately. Seeing a big problem in tail spend in your clients, educate them how to identify it, manage it, and track it before high priced or unapproved purchases get out of control. Seeing a lot of companies unprepared for a new legislative requirement about to come into effect, show them how to identify which relationships need to be better managed, which contracts might need to be updated, and how to identify which risk mitigations are appropriate. Etc. If you impress them with your knowledge, they’ll come to you if they need help identifying a solution. Then, if yours is the right fit, and they’re a private company, they might even skip the RFP.

Stay tuned for Part 2!