Category Archives: About us

Eric Strovink of BIQ: Why I’m Sponsoring SI

Today’s guest post is from Eric Strovink, CEO of BIQ. I asked him if he’d be willing to share why he chose to sponsor Sourcing Innovation (SI), knowing that BIQ, as a small company with a limited marketing budget, has not done very much in the way of advertising in the past.

It’s very simple: I know that BIQ users read and respect Sourcing Innovation, because they tell me so. Our customers and prospects are among the best-informed and most demanding sourcing professionals in the world, and they have no patience for blog posts that provide zero useful information, or just paraphrase the latest corporate press releases. They are looking for information, insight, and education, and they find it here.

Michael Lamoureux is unique in the blogging space — he has a PhD in Computer Science, and he’s a leading thinker on the application of optimization theory to supply chain. He’s not pretending to be an expert on procurement technology — he’s the real deal. That means he’s not fooled by a glitzy new user interface, or a tired old application dressed up in a Marketing tu-tu, or a functionality claim that can’t possibly be true. Even if you don’t agree with Michael’s point of view on a particular subject — Michael and I have many debates whenever he’s in town — you can’t ignore the tasty mix of information and commentary you’ll find on SI. You can also be sure that Michael will post opposing points of view, and conduct a vigorous and informative dialog.

One of the big problems getting to the facts in our space is that a lot of folks tiptoe around the major vendors and the big ERP players — and why shouldn’t they, that’s where most of the marketing money (and therefore their pay check, directly or indirectly) comes from. The major analyst firms (for structural reasons) can’t even consider small vendors in their “quadrants” and “waves,” so it’s very hard for an end user to get a good reading on what’s new and what’s really available. For example, here’s a simple question: Is it possible to go with innovative solutions — and do enormously better on a price-performance basis — rather than simply choosing whoever ends up at the forefront of the “wave” or at the upper-rightmost corner of the “quadrant?” You’ll find some good answers on these pages.

Back in the 1980’s the question when buying a PC was, “Why not IBM?” Funny how the tables turned in the end — “buying IBM” turned into an expensive mistake for procurement organizations that committed to the heavily-marketed and ill-considered PS/2. The “safe” decision was precisely the wrong decision, as it so often is. Instead of paying lip-service to vendor marketing spin, SI proposes real questions that we should ask about procurement strategy, and then answers them with passion and commitment.

SI is the place to go when you need hard information on breakthrough companies like Vinimaya,  Co-eXprise, Coupa, and Trade Extensions. SI is where you’ll be pointed by almost any Google search on our space, because SI maintains over 950 high-content posts online. Michael Lamoureux is a major author of the e-Sourcing Wiki, (co-author and) editor of the e-Sourcing Handbook, and a prolific guest commentator on several other blogs.

So these are some of the many reasons why BIQ is a Sourcing Innovation sponsor. I invite other innovative vendors to join us in supporting SI.

Eric can be reached at strovink <at> busiq <dot> com.

Reminder: (e-Sourcing, e-Procurement, and e-Supply Chain) RFP Help Is Here

I wanted to remind you that, I as indicated last month during the summer slumber, you can find RFP Help Here. When trying to piece together an RFP for your new e-sourcing, e-procurement, or e-supply chain solution, you’ll need to navigate a minefield filled with fine-print, unnecessary and useless features, maintenance and upgrade charges, and extraneous user licenses (thrown in to produce an artificially-low “per license” price) — not to mention enticing offers involving long-term commitments that you absolutely should not be making. As outlined in What Does the doctor Do … For You, one of the services I offer is RFx Construction Help, including, if necessary, a full blown Needs Assessment.

As I have indicated many times in my X-emplification series, my X-asperation series, and in various RFx posts, including Don’t Put the Cart Before the Horse, you should never — ever — use an RFI or RFP “template” from a vendor when going out to bid, regardless of what the solution is for. This isn’t to say that you shouldn’t download them and look at them, but it’s unwise to use them or base your RFx upon them. For example, the Ariba RFP template for an RFx solution consists of page after page of feature-focused questions like “does the product integrate with Business Objects”, “please list your best practice event templates”, and “does the product qualify new suppliers” — the answers to which are most likely of no use to you. Not everyone uses Business Objects, and, more importantly, if the product is good, shouldn’t it be self-contained? If you’re in food service, you don’t give a hoot about best practice templates for petro-chemical manufacturing. Furthermore, an automated tool can never qualify a supplier — only an intelligent human can.

The usefulness of a vendor RFP template for a software solution is usually limited to the headings on the functionality pages, which can help you to identify features commonly found in that solution category. For example, looking at Ariba’s proposed RFP for an RFx solution, you can be pretty confident that RFx solutions might have some type of navigation, integration support for third party systems, project management capability, supplier tracking, survey creation, reporting, RFx creation, and auction event-management capabilities — and, more specifically, that the features available from Ariba will match the questions perfectly! But that’s all you can tell. You don’t know if the features mesh in such a way to provide the actual functionality you need, or whether the whole RFP is completely off base with respect to what you’re trying to accomplish. You need to ask use-case-based questions that reflect your business and your normal operating procedures. For example, is the reporting module included with the RFx system, or is it an added-cost item? Is the solution a tar baby of interrelated modules, such that you can’t really buy one without springing for all the others, in order to get the “complete” functionality? Has the vendor focused on eye-candy gee-whiz features, to the detriment of core functionality that you’ll really need?

RFx software itself is great example of what should be a mature, smoothly-working technology. eRFx has been around for 10+ years — so it’s easy to reason that surely every vendor has to have gotten it right by now. None of the analysts or major commentators in our space even question this point. Yet, I’m aware of recent RFx efforts using “mature” technology that have nearly failed due to very basic software limitations.

As per my last post, I believe that I am in a unique position to help, given my dual background in technology and sourcing/procurement. I am able to work with you to:

  • understand what you need and do a proper Needs Assessment
  • put together an RFx that outlines the important functionality you really need, not simply produce an exhaustive list of useless features
  • review the initial RFx responses and help you identify the follow-up questions that you need to ask
  • review a potential contract in order to identify:
    • unnecessary modules
    • missing functionality
    • missing cost definitions (so you don’t get burned later on)
    • and other potential weaknesses
  • if necessary, help you select a third party to assist with implementation or associated services

So if you need help with that needs assessment, RFx, or contract, feel free to reach out at any time. See the contact information in the FAQ.

Note to anyone who doesn’t understand category tagging: yes, this is an advertisement.

the doctor’s Sustainability Solution: The 10% Blogger Challenge

the doctor is a big believer in sustainability. He’s one of the few bloggers in the space who’s been blogging about green since before it became a hot topic. That’s why, even though he is not in the position that you are as a buyer to enforce the production of sustainable goods and services (because your money speaks louder than words to a supplier), he wanted to do something anyway.

So what’s the doctor‘s solution? Donate 10%* of all current and future sponsorship and advertising revenue on the Sourcing Innovation Blog, web-site, and future on-line properties to charitable causes that are pursuing sustainability options. Every quarter, after the sponsorship and advertising cheques come in, the doctor is going to take 10% of the gross revenue and immediately donate it to one or more charitable causes – and then tell you which causes, and how much, he donated.

This quarter, the doctor chose to make two $525 donations. One to the David Suzuki Foundation, which works to find ways for society to live in balance with the natural world that sustains us, and one to Doctors Without Borders, known as Medicins Sans Frontieres en Canada, which endeavors to find ways to respond rapidly and effectively to public health emergencies, with complete independence from political, economic, and religious influences. I’m a big fan of both of these organizations. David Suzuki is a tireless crusader on behalf of our planet Earth, and Doctors Without Borders recently started trying to mass produce Plumpy’nut, a very simple food that does wonders in keeping young children in third world nations healthy. (There are lots of videos on YouTube that describe its success.) I look forward to being able to make additional donations to both of these charities on behalf of Sourcing Innovation in the future.

Unfortunately, the doctor is not as dim as he looks (or, at least according to some trusted colleagues) and realizes that, on his own, he’s not going to make much of a difference. Even if this site was fully sponsored, at what the doctor perceives it’s market value to be, he’d only be donating thousands a year. A nice number for an individual donation, but peanuts in the grand scheme of things. But the doctor has a solution!

The Solution: The 10% Blogger Challenge!

the doctor is hereby challenging all bloggers who generate advertising or sponsorship income off of their sites to donate 10% off the top (off the gross for you financial types) to sustainable charities of their choosing from all advertising and sponsorship income they receive, and to do so at least yearly, with quarterly donations being preferred. Furthermore, each blogger should advertise the charities they are donating too, and why, and try to convince their readers to persuade their companies to also donate 10% of at least one revenue line, off the top, to sustainable causes.

Just think of the difference it would make if every organization in the developed world took 10% of their revenue and applied it to sustainable causes (charities, community programs, green energy investments, etc.). And since you can supposedly take 10% off the top of everything when buying, there’s no good reason you can’t spare 10% yourself. (Maybe your company would have to do away with the private box at the track, or cut back on it’s over-priced private art collection, but does it really need those?) So join me, and let’s show them that us bloggers are the future, on-line and off.

*The fine print. 10%-off-the-gross of all sponsorship and advertising revenue from the Sourcing Innovation Blog and the Sourcing Innovation Website in 2008 will be donated to registered charitable causes on a quarterly basis, after the revenue is received. This excludes any revenue that is due to a partner through a joint effort or due to an individual or enterprise that sells sponsorship or advertising on behalf of Sourcing Innovation. So, if a quarterly Sourcing Innovation sponsorship is sold for $10,000 by itself, $1,000 will be donated to a registered charity within 3 months of receipt of the funds; and if a partner, with a 30% gain-share agreement, sells an advertising slot for $1,000, then $70, or 10% of the $700 net, will be donated to a registered charity within 3 months of receipt. Furthermore, the doctor is open to having his books audited by any sponsor or advertiser who makes a minimum $1,000 donation to a registered charity of the doctor‘s choosing, as long as they agree to a rigid non-disclosure agreement and make the donation up-front.

(e-Sourcing, e-Procurement, and e-Supply Chain) RFP Help Here!

Here’s irony for you: as a Purchasing and Procurement professional, some of the most complex products and services you will source are the very tools that you have to acquire in order to be successful. That’s right, I’m talking about e-Sourcing tools and e-Procurement systems.

If you’re a regular reader of Sourcing Innovation, you know that I don’t pull my punches when it comes to reviewing e-Sourcing and e-Procurement tools. I’ve seen it all, and I can assure you that there are very real differences between them — differences that can and will have a profound impact on your success.

I can help you find the tools and solutions that are right for your company and your needs.

Unlike industry analysts, who are paid by the very vendors they “review,” I do not have any skin in the game with regard to a particular approach or a particular vendor. And, unlike armchair “experts” who opine on technology without having any technology background, I am a technologist by training (a PhD computer scientist, in fact) who cannot be fooled by a pretty user interface or a piece of Marketing drivel. When I get a vendor brief, I insist on looking inside the cookie jar. I’m not satisfied just admiring the glaze on the outside. If the vendor won’t open the jar, I assume the worst, and I’m usually right. (And they don’t get a nice blog entry on Sourcing Innovation either!)

There are numerous mistakes that are easy to make in the RFI/RFP process. You should not be embarrassed if you have made some of them, because both vendors and analysts are aggressively pushing strategies that ultimately benefit them, not you. It’s very hard not to fall into the traps they’ve set for you.

For example:

  • Never, ever, use an RFI or RFP “template” from a vendor. At best, this is just a way for the vendor to sell you the exhaustive, but often mostly useless, set of “features” they happen to have. At worse, it is a way for the vendor to sow “poison pills” that other vendors will have difficulty answering, so that the scoring algorithm on the RFx will cause them to appear better than the competition, whether or not this is true.
  • Never use an analyst’s report to generate a list of “features” that the analyst believes a product should have. The analyst doesn’t know anything about you or your business, and typically knows very little about the products, either (other than what he or she has been told by the vendors who are paying him or her or his or her company).
  • Never use vendor marketing materials to decide on the “key features” that you need. Vendors often compete with each other on irrelevant points that have no bearing on the functionality that your business requires, and analysts tend to repeat these irrelevancies until they achieve a life of their own.
  • Never assume that a product is “stable” or “bullet proof” just because it’s been out there for years. I’ve seen mature RFP software utterly fail, when RFP software (after years and years of development!) ought to be a slam dunk. I’ve seen “enterprise” e-procurement systems where the price actually charged by the vendor does not match the catalog price (you’d think they could at least get that right!). By the way, neither of these examples involve small vendors.
  • If a claim seems outrageous, it almost always is. For example, no static report can replace an opportunity assessment from a trained professional. Don’t imagine that you can base a procurement strategy on the output of an automated tool.

Fortunately for you, I’m in a unique position to help. With my dual background in technology and sourcing/procurement, I can work with you to:

  • understand what you need and do a proper Needs Assessment
  • put together an RFP that outlines the functionality you need, not an exhaustive list of useless features. Vendors want you to focus on irrelevancies; you need to focus on core value.
  • review the RFP responses and help you identify the questions you need to ask, like I did generically last year in my X-emplification and X-asperation series
  • review a potential contract in order to identify:
    • unnecessary modules
    • missing functionality
    • missing cost definitions (so you don’t get burned later on)
    • and other potential weaknesses

So if you need help with that needs assessment, RFP, or contract, reach out at any time using the contact information in the FAQ. No job is too big or too small as I know that you don’t put the cart before the horse.

P.S. Yes, as per the categorization, this is an advertisement for the doctor‘s services. I’d hoped I wouldn’t have to state the obvious, especially since I classified it as such, but it appears I have to.

 

Sourcing Innovation Welcomes Lexington Analytics as a Lead Sponsor

Sourcing Innovation is pleased to welcome Lexington Analytics as a lead sponsor. Lexington Analytics is a very appropriate sponsor for Sourcing Innovation because it believes in pushing the innovation envelope by using advanced data analysis techniques to find hidden savings opportunities in PxQ (price X quantity) data. Lexington Analytics was founded by Bernard Gunther, who has in the past been kind enough to post How much do you know about your spending? and Do you have a plan? right here on Sourcing Innovation. Bernie was one of the co-founders of The Buying Triangle, and has a long pedigree as a partner in several leading sourcing consulting firms.

Over the last few years, The Buying Triangle surprised skeptics by performing project after project for Fortune 500 companies that not only identified millions in savings opportunities, but also recovered millions of dollars in overspending and overcharges. Lexington Analytics has taken this key IP forward, continuing to refine those techniques to become one of the few consultancies to aggressively apply market-leading spend analysis technology and business intelligence techniques to commodity-specific procurement. LA typically builds not only an A/P view of spend, but also dozens of commodity-specific cubes to drill down on concrete savings and refund opportunities. Bernie and his Lexington Analytics team bring decades of data analysis expertise to each and every project.

The Lexington Analytics solution is based on the traditional prepare-analyze two-step, but with a crucial difference: with LA, it’s a continuous feedback cycle, as they employ state-of-the-art analysis tools (including BIQ) that allow them to rapidly create, analyze, and throw away data cubes until they identify a high value savings strategy. They don’t just create one cube, run a standard set of reports, and give you a “top ten spend” report. They create multiple cubes, run some analytics, look for anomalies, then drill in, out, and, if necessary, drill sideways until they’ve uncovered the hidden opportunities that canned analysis reports completely miss — opportunities that can often translate into massive additional savings.

For example, Lexington Analytics personnel helped a regional bank with $770 Million in spend develop a plan for saving $85 million. Using that plan, the bank was able to deliver $93 million in savings over the next 18 months. LA helped a financial services provider discover that total enterprise spending with a certain vendor with whom they had a $1.5 million contract, and who was classified differently in different systems by different departments, was actually billing $14 million, translating to substantially better discount levels. A national insurance company had established a corporate purchasing program with an office supply vendor, but employees were also using their corporate cards to purchase from the vendor’s retail outlets. This represented 20% extra cost for 3% of their total spend. Using the information provided by LA personnel, the vendor was able to return 0.6% savings to the company without making any changes to behavior or programs. And that’s just a few of LA’a success stories. They have many more (which they’d be more than willing to share if you contact them).

Please join me in issuing a sincere welcome to Lexington Analytics. If you are in the market for assistance in starting a spend analysis program, performing an opportunity assessment, improving your current spend analysis program with invoice-level analysis, or simply need some training or a jump-start to help your staff take your current program to the next level, I would recommend that you add LA to your list of potential partners. I’d also recommend that you take a few minutes to visit their site (through a Sourcing Innovation link) to let them know that you approve of their decision to support Sourcing Innovation – your #1 independent source for education and innovation in sourcing, procurement, and supply management.