Author Archives: thedoctor

Best Practice Technology Vendor Selection for True Multi-Nationals 2025 Reprise Part I: RFX – You’re Asking for the Wrong Information!

This is a repost and reprise of a series that last ran (for the second time) in 2015. It’s as relevant, and important, today as it was then, if not more so, thanks to the I2O Hype and AI BS!

It’s that time of year again. Your budget is about to be approved — a few months later than you’d like — and you’re ready to begin the process of obtaining that Spend Analysis, e-Sourcing, e-Procurement, Source-to-Contract (S2C), Procure-to-Pay (P2P), Source-to-Pay (S2P), Supplier Management (SXM), Third Party Management (TPM), Intake-to-Orchestrate (I2O), or some other system you’ve been dreaming of that you believe is going to revolutionize your Sourcing and Procurement.

You think you know what you want, but you have to go through an RFP and, more importantly, you know that you’ve only had time to look at a few options while building the business case as you were doing it evenings and weekends on your own time because the project wasn’t approved. Now you want to go to market and either verify that you’ve identified the best solution or find the best solution to meet your needs. Since you are a sourcing organization, that process demands an RFP. However, this RFP is not like your RFP for direct materials or indirect spend. This is a very specific technology solution RFP for a platform to meet your needs and support all of the other RFP / sourcing / procurement / supply management processes of the organization. It’s crucial to get it right.

That’s what we are going to discuss in this series — the proper process and approach to acquiring the right Spend Analysis / e-Sourcing / e-Procurement / S2C / P2P (I2P/AP) / S2S / S2P / SXM / 3PM / CLM / & I2O solution for your needs. Furthermore, let us clearly state that this series is specific to the selection of technology and technology-based vendors to provide enterprise software platforms, and/or implementation services, back-office (processing) functions, or technology-driven consulting services for your multi-national organization. While some of the best practices contained herein should also apply to the selection of (strategic) suppliers for high-value and/or complex products and/or services, this series particularly relates to the selection of a vendor to provide an enterprise software backbone, and, in particular, a backbone for e-Procurement and/or e-Sourcing technology for your Supply Management organization. As one size does not fit all where RFX and category selection processes are concerned, no claims, express or implied, are made with respect to any other vendor selection process and, in fact, if you’re only buying paper and pencils, some of the best practices contained herein will, in all likelihood, be overkill.

Now that the preamble is out of the way, let us begin by noting that the traditional RFX processed is well understood, and well documented in many places, including in the e-RFx for Total Value Management wiki-paper, co-authored by the doctor on the classic e-Sourcing Wiki (now only available on the WayBackMachine) over seventeen years ago. And, in the wiki-paper in particular, the high-level process is still more-or-less correct almost two decades later.

As per the wiki-paper, you start with a two-stage RFI before an RFP, which is solution focussed (and not cost or contract focussed), which is issued before a final RFQ, which is when you collect quotes and start the actual selection / negotiation process. Specifically, the high-level process is:

  1. RFI #0: Stakeholder Requirements (collected internally)
  2. RFI #1: Vendor Interest
  3. RFI #2: Vendor Pre-Qualification
  4.    RFP: Solution Inquiry
  5.    RFQ: Clearly-Defined Specifications

So what are you doing wrong, especially if you’re a Multi-National? To answer that, let’s look at how this is typically translated:

  1. Product Needs, Service Needs, Preferred Vendors
  2. Vendor Info. Request, Vendor Interest, NDA
  3. Product & Service Capability Profiles
  4. Solution Design Request
  5. Explicit requirements, process definition, and bid request

See the problems?

  1. Stakeholders typically don’t know what they need in a solution. They aren’t technology experts. They aren’t supply management experts. They are domain experts. And if you ask them what they want, you are just going to get whatever the vendor spending the most on marketing is saying they need, or whatever they can find in a “Free RFP” (and There are NO Free RFPs). It doesn’t matter what they think they need in a product or a service, it matters what problems they are having today. You need those solved, not an array of feature/functions that will never be used! You need to ask the stakeholders what the problems they need to solve are, so that you can ultimately select a vendor with the solution that solves as many of your stakeholder’s pain points as possible. (And if you need that translated into more technical requirements that the vendors will understand, you hire a neutral consultant who does NOT have any vendor partnerships and does NOT do implementations, specializes in Project Assurance, and whose sole goal, and continued compensation, is based on your success (not the vendor’s and not the implementation partner’s).
  2. A preferred vendor is one that can offer you the best product or service from an organizational perspective, not from a single stakeholder / department perspective. For example, a stakeholder (team) might rate a vendor A+ because the representatives always responds quickly. But this is not necessarily indicative of great service (and is often indicative of desperation for a sale, which is never a good sign). If their answer to every system issue is always “we’ll get someone to fix that with 72 hours“, and you need the software up 95% of the time, that’s still poor service if the software crashes regularly because 3 days downtime every few weeks will not support an operational level of 95%.
  3. Asking a vendor if they can provide you with the necessary functionality or service levels after you have shortlisted them as a possibility based upon a review of their collateral is not likely to get you anything other than a “yes we can”, especially if the vendor also offers consulting or “value added services” (or the rep desperately needs to make a sale to keep his job because the company took too much funding at too high a valuation and everyone’s job is on the line). One has to remember that most (big) consulting (and value-add) organizations are driven by partners with a strong desire for as many dollars as possible, and the associate’s job security is dependent on constant sales and up-sells, and the reps are told to always say yes and take on as much work as possible, leaving the question of how to get it done (if the organization is already stretched or weak in that area) until after the ink on the contract is dry.

Which brings us to the biggest problems with the current selection process, which we will discuss in Part II.

Your RFPs, That Go To the Wrong Vendors, Suck Because CONTEXT MATTERS!

We briefly covered this in our post on how There are No Simple Answers Because CONTEXT MATTERS, but we feel we have to call it out and cover it again in its own post because, over the past few weeks, the doctor has

  • been asked multiple times for a list of the best vendors for X that just need to do A, B, C
  • been told that Gen-AI can help a client write better RFPs (and that he would like to see the new Gen-AI capabilities in the sourcing/procurement/services/contract management application, which, FYI, he wouldn’t)

when the reality is that:

  • there is no way he can give a short list of relevance without understanding at least the
    • company size, geography, and industry
    • existing S2P/ERP ecosystem and maturity
    • primary pain points

    because

    • company size can dictate minimum vendor size; geography presence, language, or cultural skills; and industry key capabilities that a platform will need
    • unless it’s a rip and replace project, the new module/solution will have to play in the existing ecosystem
    • and nothing defines what is needed more than the pain (not a random list of features that the buyer doesn’t really understand and just assumes will solve their problem)
  • as we have repeatedly explained, there is no Artificial Intelligence, Gen-AI is as dumb as a doorknob, and it doesn’t write better RFPs (although it may write better English) — not even close

Now, we really want to dive into this second point.

You can NOT write a good RFP if you don’t know:

  • what your pain points are
  • why you have them (i.e. process, system, and/or data issues)
  • where gaps need to be filled in your current system landscape (and what that landscape is)
  • how advanced your employees are in their TQ (Technical Quotient) and Procurement maturity
  • who will be using it and for what
  • when it is used in workflow-based processes

And, guess what, Gen-AI doesn’t know that, and doesn’t even know how to elicit that. For an RFP builder to be useful, it has to help you gather this. Which means experts need to encode it with methodologies and questions to elicit all this. Only then can Gen-AI LLMs be used to actually construct an RFP in natural language. So if all the vendor has is a nice shiny LLM wrapper, they have nothing useful. Remember that.

AI Employees Aren’t Real! Don’t Believe The Lunacy!

This should be so obvious that it shouldn’t need to be said, but with multiple companies still promising to (soon) deliver “AI Employees”, it apparently needs to be said.

First of all, why it should be obvious:

  1. There is no Artificial Intelligence. The tools are as dumb as a doorknob. The best you can get is Augmented Intelligence, which, by the way, is what you really need because it can provide almost instantaneous insights that would take a traditional analyst with traditional tools days to weeks (or months) to discover.
  2. An employee is a person. A PERSON! Not a piece of software.
    (As we don’t have AI, we don’t have autonomous robots, so we can’t even have the theoretical argument about whether or not a robot should be recognized as a person for legal means.)

Secondly, we’ve already seen how autonomous software agents don’t work (because they are not intelligent or people). Klarna, one of the first companies to fire the majority of its customer support team with the false claim AI can do that, quickly found it it really can’t and now has to hire back hundreds of support agents because what AI was really doing was the work of 700 really bad agents! And their customers didn’t want to talk to these bots (essentially because of how dumb and useless they were).

Thirdly, there have been no, and nor will there be with existing algorithms, stacks, and technologies, any magical emergence that will suddenly allow these “AI agents” to become intelligent and be able to perform their tasks autonomously. Because

  1. if Neural Networks were the right models, today’s models (constrained to commercial compute capacity) would put them on par with a pond snail, maybe a sea slug;
  2. compute power doesn’t double year over year anymore; Moore’s law is quickly becoming a historical footnote due to quantum limits; and
  3. there’s no more data to train them on — the big AI tech plays have already illegally stolen all of the copyrighted data on the internet, and that’s still not enough (and AI generated data just worsens performance because it’s not real, or good, data).

Moreover, we don’t need AI Employees. What we need are more productive employees! Employees that don’t waste up to 80% (or more) of their time doing more-or-less nothing but data wrangling trying to turn data into knowledge and knowledge into the insights needed to make a decision. Tasks that are purely tactical calculations and conversions that are precisely what computers were built for. Computers can do trillions of calculations a second error free, while we can only do a few, and not necessarily error free.

Which means what we really need are Augmented Intelligent Agent Assistants that do the computational tasks we need done and either

  1. automate processing that we would do almost thoughtlessly if we determined that the appropriate conditions were met or
  2. present us with the data, knowledge, and insights we need to make a decision and take action, including suggestions for that action if there are standard response patterns

Because, when the 80% time wasting tactical data processing is taken off of our plates, we will be at least 5 times as effective with these Automated Intelligent Agent Assistants, and that is what will propel organizations forward. Not dumb tech, and definitely not false promises of fake AI Employees that do not, and fundamentally cannot, exist.

There are NO Simple Answers Because CONTEXT MATTERS!

If you’ve been following along, over the past few months we’ve had to complain about:

While these may seem like completely different situations that have to be (continually) (re)addressed on their own merits, they really aren’t. They are all interconnected (and taken together they help to define the 88%+ technical project failure rate in our ProcureTech space) and all have the one of the same issues at the core. They all try to oversimplify, which is something you cannot do in any field of technology because CONTEXT MATTERS!

Analyst Firm and Influencer Maps and flashy graphical comparisons on a few randomly selected “data points” are useless because context matters. You can’t create a shortlist of potential solutions without understanding, at a minimum:

  • who the company is and what the department does
  • the platform and skill topography
  • the problems that the existing topography is not solving

Because sourcing is not sourcing is not sourcing, procurement is not procurement is not procurement, and analytics is not analytics is not analytics. Indirect Finished Goods vs Direct Materials vs Services are sourced differently; catalogs vs. one-time buys vs. on-contract inventory replenishments are handled completely differently; and there’s reports vs drill down cubes vs data federation, and each brings different insights. APIs, interface, and integration requirements differ on platforms, core vs. nice to have shift based upon what’s in the ERP, AP, and SCP systems. And the maturity level has a great impact on what will, vs. will not, be used.

It’s NOT SIMPLE! And anytime someone says “keep it simple, just give them a list”, it means they don’t understand the reality of the situation and that, while it is not complex, not hard (and yes, Procurement can be really easy), it’s NOT simple. Context is needed to make the right recommendations and right decisions.

There is NO Autonomous AI Agent and anyone peddling one is selling the new silicon snake oil. (First of all, remember that there’s no such thing as Artificial Intelligence, and it’s still the case that since a computer can’t take responsibility for a critical decision, it should NOT make one.) For an agent to be autonomous, it would need to have, or be able to retrieve, all the data it needs, connect with all relevant internal and external systems, get information not on the web through traditional means (ask people), verify truth from lies, have the ability to adapt to any situation, and the intelligence to know when a decision can be made and when it can’t. Not only does it not have the intelligence, but no software agent in existence meets the rest of these requirements either. (The best that can be created is a support agent that can do all of the data processing, standard analysis, workflow automation, and decision suggestion using Augmented Intelligence that allows it to act as a useful personal assistant that multiplies your productivity. But ONLY if the Agent has the right context — and guess what, YOU have to work with a partner to custom build that agent with YOUR context. It won’t be delivered out of the box and magically trained just by feeding it your data. The myth of emergence has already been debunked. Please stop falling for it.)

There is no Best-In-Class process or methodology guaranteed to work for you. Unless you are lifting it from a company in the same business buying and selling the same products for the same consumer base that is structured the same way and more-or-less does the same thing as you, that best-in-class process or methodology may not even be close to what you need (and no amount of adaptation will get you there). Best-in-Class always works within a context (which includes your maturity level as an organization), and until that is understood, no consultant or analyst can make the right recommendations for where you are today.

So next time someone says it’s simple, and that their map, chart, or infographic will solve all your problems — delete it, because unless they also take the time to qualify the context in which that map, chart, or infographic applies, it is worse than useless for you (and doubly so if it presents a dangerous and dysfunctional dashboard) and may even cause organizational damage if blindly followed.

Finally, just remember, just because it ain’t simple, that doesn’t mean it ain’t easy. It just requires a bit of brainpower and effort to get it right, and, moreover, an amount thereof that is well within our capability!