Author Archives: thedoctor

Analytics Is NOT Reporting!

We’ve covered analytics, and spend analysis, a lot on this blog, but seeing the surge in articles on analytics as of late, and the large number that are missing the point, it seems we have to remind you again that Analytics is NOT Reporting. (Which, of course, would be clear if anyone bothered to pick up a dictionary anymore.)

As defined by the Oxford dictionary, analytics is the systematic computational analysis of data or statistics and a report is a written account of something that has been observed, heard, done, or investigated. In simple terms, analysis is what is done to identify useful information and reporting is the process of displaying that information in a fancy-shmancy graph. One is useful, one is, quite frankly, useless.

A key requirement of analysis is the ability to do arbitrary systematic computational analysis of data as needed to find the information that you need when you need it. Not just a small set of canned analysis on discrete data subsets that become completely and utterly useless once they are run the first time and you get the initial result — which will NEVER change if the analysis can’t change.

Nor is analysis a random AI application that applies a random statistical algorithm to bubble up, filter out, or generate a random “insight” that may or may not be useful from a Procurement viewpoint. Sometimes an outlier is indicative of fraud or a data error, and sometimes an outlier is just an outlier. Maybe the average transaction value with the services firm is 15,000 for the weekly bill; which makes the 3,000 an outlier, but it’s not fraud if the company only needed a cyber-security expert for one day to test a key system — in fact, the insight is useless.

As per our recent post on a true enterprise analytics solution, real analysis requires the ability to explore a hunch and find the answer to any question that pops up when it pops up. To build whatever cube is needed, on whatever dimensions are required, that rolls up data using whatever metrics are required to produce whatever insights are needed to determine if an opportunity is there and if it is worth being pursued. Quickly and cost-effectively in real-time. If you have to wait for a refresh, or spend days doing offline computation in Excel to answer a question that might only save you 20K, you’re not going to do it. (Three days and 6K of your time from a company perspective is not worth a 20K saving if that time spent preparing for a negotiation on a 10M category can save an extra 0.5%, which would equate to 50K. But if you can dynamically build a cube and get an answer in 30 minutes, that 30 minutes is definitely worth it if your hunch is right and you save 20K.)

Analysis is the ability to ask “what if” and pursue the answer. Now! Not tomorrow, next week, or next month on the cube refresh, or when the provider’s personnel can build that new report for you. Now! At any time you should be able to ask What if we reclassify the categories so that the primary classification is based on primary material (“steel”) and not usage (“electrical equipment”); What if the savings analysis is done by sourcing strategy (RFX, auction, re-negotiation, etc.) instead of contract value; and What if the risk analysis is done by trade lane instead of supplier or category. Analysis is the process of asking a question, any question, and working the data to get the answer using whatever computations are required. It’s not a canned report.

Analytics is doing, not viewing. And the basics haven’t changed since SI started writing about it, or publishing guest posts by the Old Greybeard himself. (Analytics I, II, III, IV, V, and VI.)

Advice For Dealing With The PROCUREMENT STINK from Leading Consultants!

Last week, the doctor asked fellow niche/independent consultants as to how we can help to dispel the PROCUREMENT STINK which is permeating the space as a result of poor choices, bad information, and sometimes bad actors, which include the reasons we described in that article as well as many more.

Why? Because it’s going to take a collective effort among analysts, consultants, and vendors to dispel the stink permeating the Procurement space, and no one on his or her own will have all the solutions. As expected, some of the greats chimed in with their thoughts and ideas and these thoughts and ideas need to be given center stage, so this is what we’re going to do today!

James Meads

Clarity and transparency on your business model is key, especially if you have revenue streams from solution providers.

As Patrick Van Osta echoed in the comments, the uphill path to recovery, I feel, is for consultants to reclaim the position of sole trusted advisor, and there’s no way we’re ever going to be trusted advisors if we are not clear and transparent in our operations and goals. If we’re hiding our intentions, or upsides, how will the client know whether or not our goals actually align with theirs?

Joël Collin-Demers

I’m 100% on-board with the need for transparency and taking decisions based on what’s best for the client long term. Your job is to make yourself redundant as soon as possible!

In Procurement, there’s always another project. ALWAYS. You don’t have to milk one for life, with your help and guidance, you can open the client’s eyes as to not only how much there is to do, but how much they can do better, for a great ROI, with your help. Just like there’s well over 25,000 (or 35,000) species of fish in the sea, there are tens of thousands of unique aspects to Procurement in a modern enterprise. And just like you have to know where to fish, what hook to use, and what bait to use to catch a type of fish, you need to know the equivalents for each category, methodology, and process.

Jon W. Hansen

Practitioners stop looking at technology as the “silver bullet” solution but instead focus on doing the real and hard work while Solution providers stop selling shiny paper and “falling in love” with your own technology. … and us consultants have to help the practitioners do the work, understand what they need, and steer clear of the vendor with the shiny new tech (that doesn’t actually do anything [more than cheaper, proven tech]).

Paul Martyn

Consultancies (and their clients) need to Provide performance based compensation with uniqueness. For example, provide specialist consultants with compensation that includes equity. In short, align compensation to customer value (revenue growth and retention). Because, right now, most of the good consultants that can generate the ROI a client should expect are not incentivized to do well on point-based projects (like an Affordable RFP), but instead are incentivized to work on, and sell, long-term “solution” oriented consulting that lines the firm’s (and not the clients’) pocketbook (i.e. keep doing the fishing vs. teaching the client). As a result, most of the good consultants move out of the roles they are needed in to the roles they are incentivized to take.

Vinnie Mirchandani

The web lulled a number of procurement (and IT) folks into expecting vendor, negotiation etc intelligence for cheap, if not free. Vendors are not afraid to spend on sales and marketing. Procurement needs to adopt a similar mindset to even the game.

The best things in life may be free, but the best things in business are not. (As the Arrogant Worms pointed out over three decades ago, you get NOTHING FOR NOTHING!) And if you don’t have the right tools that enable the right processes powered by the right intelligence, you’re not going to win the game. Remember that all of the best sports teams use high-tech sports tech backed by science and data analytics to help their athletes reach peak condition. Raw talent only gets you in the game. You need the right training to win, or, at least, the right guidance and tech to enable you as you learn.

There’s a lot of STINK out there now, but if you follow this advice, you’ll go a long way to removing it. After all, you can’t solve everything with a pressure washer.

Proper Project Planning is Key to Procurement Project Prosperity! Part 2

In Part 1 we noted that we wrote about the importance of Project Assurance, and how it was a methodology for keeping your Supply Management Project on Track, ten years ago and that this typically ignored area of project management is becoming more important than ever. Given that the procurement technology failure rate, as well as the technology failure rate as a whole, hasn’t improved in the last decade, and is still as high as 80% (or more) depending on the study you select, that’s a problem. Especially when, for many companies, theses projects typically start in the million dollar range. (Even if the annual license is only 100K, by the time you multiply that by 3, the minimum term any vendor will give you, the annual maintenance fee by 3, and then add the implementation, integration, training, and ongoing integration maintenance costs and ongoing training costs, it’s well over 1M.)

But we also noted whereas there might have been a time when this was enough to tip the odds of success in your favour, it’s not quite enough anymore. Given the complexity of modern procurement (which hasn’t had as many complex problems to deal with simultaneously in over two decades) and modern technology (which is now AI enabled, AI backed, AI powered, AI enhanced, and or AI driven, even if it isn’t), when most organizational users are still struggling with basic technology (not enabled, backed, powered, enhanced, or driven by [fake] AI bullcr@p).

We told you we were going to dig into the project steps and help you understand what you need to do to get it as right as you can and greatly increase your odds of success. But first, there is one critical action you need to make that is common to all steps that is critical for your Procurement Project Prosperity and that is:

  • Engage an independent expert to guide you through the entire process and help where needed, including assurance.

As noted, this individual

  • cannot be an internal resource, even from a different department, as they are still subject to the internal pressures from the C-Suite (fast, cheap, etc.) that might be counter-productive to project success (that is critical for eventually obtaining the ROI you purchased the platform for in the first place)
  • cannot be a vendor representative as their only goal is to get you to buy more, or at least keep your subscription at the initial purchase level (which likely contained seats you never used, SKUs you don’t use enough to justify, and third party feeds/integrations you aren’t taking advantage of)
  • cannot be an implementation team representative, even if they are a third party consultancy, as the odds are that consultancy has a preferred partnership with the vendor and will be biased towards keeping the vendor and doing whatever is easiest (and thus most profitable for) the vendor to keep getting their implementation referrals

Now, what’s the difference between helping and pure assurance? In addition to making sure each step is accomplished effectively, this person is also guiding you through the creation of the necessary artifacts of each step to ensure success. This person is helping you define the goals, not just ensuring the goals are met. The person is simultaneously a project guide and a project evaluator, bringing the Procurement Best Practices and Technology Knowledge that your organization doesn’t have, and helping you identify the right intersection to take you forward on your journey.

And this goes well beyond just helping you write an RFP (although this is a key step, which is why the doctor has been telling you to get expert RFP help for your Procurement technology RFP for close to two decades, because a bad RFP is one of the leading causes of project failure).

This is because, as we noted ten years ago in our original Project Assurance Series (Part I, Part II, Part III, Part IV, and Part V), project success depends on more than just getting the technical specifications right. Project success also depends on getting the talent right — as it is the people who will have to use the new system. And project success also depends on getting the transition right —- if the changeover is not smooth, significant disruptions to daily operations can occur. And, equally important, they also depend on an often overlooked 4th “T” —- tracery. Organizational success depends on selecting a superior strategy and seeing it through until the desired results are achieved (or the organization changes the strategy). (And since you don’t know what you don’t know, the small cost of engaging an expert, relative to the overall project cost, will generate a return far, far greater than the technology ever will.)

Tracery, which stems from late Middle English, can be defined as a “delicate, interlacing, work of lines as in an embroidery” or, more modernly, as a “network”. Implementing a strategy requires effectively implementing all of the intersecting “threads” that are required to execute the strategy to success. If any one aspect is overlooked, the project can fail. And if you can’t even see all the threads, it should be easy to understand how most projects essentially fail as soon as they begin and why you need a master weaver if you want to beat the odds and actually succeed.

Come back for our next installment where we will dig into the six traditional project steps outlined in our original series and dive into what your independent, third party, Procurement technology project guide (who will be independent from you, your vendor, and the vendor’s third party implementation team) needs to do.