Category Archives: Blogologue

Are the Seven Suites Sailing the Seven Seas Sans a Sextant?

Post Edit: The summary on LinkedIn has been removed. Note that this is an opinion piece and read why it was removed from LInkedIn in the Social Media Policy.  [Also note that this is about [marketing] direction, not about the actual platform, which we have covered, or advised the coverage on, here or on Spend Matters (in the past)!  (See the end of this article for links.) We have recommended all of these suites and will continue to recommend them from a product and platform perspective where they are a great fit (even if we lament the [marketing] direction).]

You knew this was coming. It was foreshadowed in our top 10 ways to be labelled as a (Procure)Tech Noise / TroubleMaker article. (Where satisfaction was guaranteed if you followed the advice.)

Basically, in this new age where hype trumps straight-shooting, fake Gen-AI* trumps HI (Human Intelligence), intake and orchestration trumps the ability to actually do Proper Prudent Procurement, and carbon calculation trumps the ability to actually do anything about carbon reduction, the question becomes are the senior stalwart suites, who have an install base, good recurring revenue, and the ability to weather storms, staying the charted course or straying off towards the rocks and the siren’s call?

More specifically, are the seven suites that have ruled the enterprise Source-to-Pay Solution Maps since those maps were introduced still staying the course and slow and steady moving towards the next generation of real Source-to-Pay solutions that will solve real customer problems, or getting lured in by the siren’s call and sailing towards the rocks (and inevitably delaying the next great version of their platform)?

After noting we have links to previous in-depth coverage at the end of this article (so you can get the full picture), let’s take them one-by-one:

(SAP) Ariba

As far as we are concerned, SAP has been sailing without a direction since they acquired Fieldglass and Concur in 2014 (after acquiring Ariba in 2012) and formed the Intelligent Spend Group in 2015 (which has since seen numerous changes in leadership, direction, and even interpretation). They started off with a great idea (like Jaggaer who came up with “One” in 2018 after acquiring Pool4Tool and BravoSolution in 2017), but never really did anything significant with those acquisitions. (We can’t say why, but numerous leadership changes suggest disagreement on direction and priorities.)  They are still, more or less, three solutions, on three stacks, which aren’t deeply integrated … unless, of course, you buy their new brand-spanking new Spend Control Tower which will integrate all your Procurement, CWM, and T&E spend, as well as your HR/payroll spend and other un-captured spend if you have other SAP modules or modules that integrate with SAP.  (Or augment it with an orchestration interface that was built for SAP.)

Their top of page message about “automating spending processes and actively manage more spend for better control, greater value, and more savings” and “managing all sources of spend for increased control and business resilience” is pretty good, and one might think they are staying the course … still a decade behind the times in some ways (as Control Towers were so early 2010s), but staying the course. Unless, of course, you were paying attention to their most recent announcement pushing “SAP Business AI built into your procurement processes“. Even though they first announced an AI Co-pilot in 2018, it received pretty low fanfare, and was kept in the backroom, until this year, where it is now “super-charging” its AI Co-pilot with Gen-AI and other new capabilities!

While a bit behind the times (which makes sense for them as their enterprise customers don’t want to be suffering hit-and-miss innovation on the bleeding edge), everything was looking pretty good in our books until they started diving all in on the (Gen-)AI Co-pilot.

We’re especially saddened by the new, deep, focus on the (Gen)-AI Co-pilot because, and while this is as much on the SAP side as the Ariba side, they seemed to have been making some very good progress on the improvement and modernization of the direct side — catching up to the big specialists (namely Ivalua and Jaggaer) that were, through their DirectWorks and Pool4Tool acquisitions, respectively, working hard to build a better direct mousetrap and take SAP customers away).

Coupa

Well, you know our opinion here … the way things are going, this could be Coupa’s Third and Final Act. They replaced BSM with MMM, which they say stands for Make Margins Multiply, but what does that mean?

Even worse, they’ve apparently now gone all-in on AI, recently releasing 100+ AI powered innovations in their spend management platform and redoing their tagline to “optimizing your spend with the #1 AI total spend management platform“. Which is sad for us. It’s acquisition of Trade Extensions made it the #1 sourcing optimization platform and its acquisition of Llamasoft gave it the ability to optimize supply chain networks as well. It could literally optimize your spend across Souce-to-Pay and Supply Chain better than any other source to pay platform out there and yet it too has gone all in on AI, which does NOT optimize!

Ivalua

Ivalua, which, like Coupa, has been tracked by SI since the early days, was one of the platforms we felt was on the right track. Especially since it was one of the few platforms that was built up on one native, integrated, code base that allowed for true, integrated, end-to-end S2P processes that felt fragmented on other suites that built up their functionality by acquiring modular vendors and loosely integrating them.

At first glance, it seems like they are still on the right path. Off the top its “SIMPLIFY PROCUREMENT with a Unified Source-to-Pay platform” messaging is on course. Moving on to “complete transparency, seamless automation, and enhanced collaboration” elicits a hear, hear. “It will make you #LoveProcurement“. Doubtful in our books (unless you love it already because, if you love procurement, you love the process and not the tech). But you certainly won’t hate it with a good platform. “Make your spend matter with a complete, future-proof platform to manage all spend.” Not quite all spend, but certainly enough to make a big difference!

… and use “IVA to supercharge procurement with Gen-AI“. NOPE! It was a great start when they tried to be the first S2P vendor to create a true cross-platform search capability through a single search bar. Their early chat-bot interface which allowed for the execution of platform functions through simple statements, which could be learned and remembered, as they would be interpreted the exact same way every single time, was good for people who didn’t want to jump around through menus and modules and quickly access reports, documents, and simple system functions.

But when you introduce Gen-AI, you have unpredictability, the need to answer six or seven questions to explain, and get, what you hopefully want, and the opportunity for inappropriate (and if you hook it up to the web, even bad) data to be retrieved, which means bad decisions and bad results. In our view, they were so close, but now … we’re hoping they reverse course just a little bit.

Jaggaer

As we noted above, after the acquisition of Pool4Tool and BravoSolution in 2017, Jaggaer announced “ONE” in 2018, but under Accel KKR, they never achieved “ONE”, and, in fact, they didn’t even come close to true cross-platform data integration (level 1 on a 5 level hierarchy of integration) in our deep assessments (which included SolutionMap evaluations at the time), largely due to all the layoffs and operational cost reductions. It wasn’t until Cinven (who flipped them to Vista Equity earlier this year) acquired Jaggaer in 2019 that they started serious integration efforts (and, in the early 2020s, made very good progress).

Since then, they have continued to focus on:

1. “Harnessing the power of ONE intelligent S2P platform to turn procurement into a value-adding force with Jaggaer’s AI-powered, S2P solutions and supplier collaboration platform“, which is great.

2. “Unlocking the shared value in your procurement ecosystem to accelerate business outcomes, automate complexities, and manage spend with Jaggaer’s intelligent S2P and supplier collaboration platform“, which is greater.

3. “Accelerating your autonomous commerce journey to turn procurement into a value-adding force with Jaggaer’s AI-powered S2P solutions and supplier collaboration platform“, and there it is. Autonomous is okay when “autonomous” is just automating tactical tasks. But AI powered … especially when they are now going down the Gen-AI path, not good. Not good at all in our books. They have all the know how between old SciQuest (Indirect), Pool4Tool (Direct), and BravoSolution (Complex Services) to be one of the few suites that can handle any type of buy using best-in-class processes and capabilities. Continuing to bring that together, magnifying the opportunities, and continuing to introduce new capabilities and streamlined workflows and interfaces around that would not only be a huge differentiator, but one of the biggest in our book. Wasting talent on Gen-AI conversational interfaces which carry the risk of exacerbate as many complex events as they simplify, the exact opposite.  (As per our previous, grudging, admission, we believe Gen-AI has very few valid uses in Procurement, and believe that for most of those uses, Jaggaer already had better tech and approaches — and all that was needed was some streamlining and UX improvements.)

Edit: 2024-Nov-06: Jaggaer has reached out and indicated that while they believe in using Gen-AI wherever they think it has value, it is fully optional and they are more concerned with maintaining their focus on full platform integration and utilization of the right AI for automation where tactical processes can be automated.  Hopefully marketing can balance the messaging more going forward so people don’t make inferences to the contrary.

GEP

GEP used to be all about “SMART” Procurement. They named their suite, which was a complete re-write from scratch as a fine-tuned integrated suite, “SMART” back in 2013. They were playing a bit of catch-up, but it was a good, well oiled, integrated suite. Then they built NEXXE, so they could do supply chain, which, while not quite on the scale of a Big dedicated Supply Chain player (like Blue Yonder or Infor), given that they are also a full-service company, was more than good enough to support end-to-end S2P and Supply Chain for many of their G3000 clients.  (And if you knew who some of their clients were, you’d be amazed.  They support big names with very complex sourcing, procurement, and supply chain problems.)  By the end of the 2010s, the UX needed updating in both, but if you look at the Spend Matters Solution Map scores, it was more than enough to do the job. A few new advanced capabilities in a few areas and it was a great solution for their target market (G3000 who wanted end to end software and services across S2P and Supply Chain).

So where are they now? “GEP’s AI-First approach seamlessly integrates strategy, software and managed services, enabling enterprises to rapidly establish the infrastructure and capabilities necessary to build and run high-performance procurement and supply chain organizations.”

Why, why, why? First of all, in our experience, customers don’t buy GEP for AI-First, or even UX, they buy because they want the one-throat-to-choke solution-and-services model that works that GEP offers across source-to-pay and supply chain, which is something only SAP and Oracle can offer, and, more importantly, neither of them can offer it as a company that started as a S2P, and then Supply Chain, specialist (as SAP and Oracle both started as ERPs and also split focus across so many other areas — HR, CRM, etc.). Secondly, they want their their Procurement and Supply Chain managed, not run by a dumb bot who may or may not make random decisions on anything at any time. Thirdly they want predictable, repeatable results that they can bank on, as well as the ability to get to the root cause when something is screwed up. None of this says, or even implies, AI.  And definitely not Gen-AI!  Ugh.

Zycus

While much less visible in North America over the last few years, Zycus for a while was making a splash as the “affordable” solution that could be obtained in the six (and not seven) figures and do the majority of what most large mid-markets (LMM) and enterprises needed, especially in industries that didn’t require a lot of “direct”. It was a great solution for LMM multi-nationals on the rise to true global enterprises. And their messaging was straight to the point: the “Power of Procurement” through their Source-to-Pay Procurement Suite. It was clear what they did, what they offered, and why you wanted to use Zycus to go digital. Even the most novice of Procurement practitioners could understand it. Heck, they were one of the first to build a custom intake module (iRequest) for their entire platform a decade ago. (It should have been built in at the core, but not many suites would admit this oversight halfway through their journey and actively work to correct it.  Zycus deserves big props for this.)

Where are they now? “Make Procurement Intelligent: World’s first Generative AI powered S2P Platform that helps you achieve 10X speed and efficiency in procurement.” All-in on the Gen-AI hype train! (And given how many specialists launched on Gen-AI over the last couple of years, and how they are usually showing up after the party starts, following a best value approach, we will tell you that while they are one of the first, they are definitely NOT the world’s first.  However, in fairness, we will note that they were undeniably one of the first to investigate and deliver automated spend classification, and were so early in doing this they could have been the first full source-to-pay suite to have it, all depending on your definition of suite.)  Basically, more of our hopes and dreams that the big suites are resisting the Gen-AI hype are dashed.

Interlude

So where are we now? That’s six suites all in on AI, and, for the most part, Gen-AI, and, in our opinion, sailing the seas sans a sextant (at least with respect to their marketing direction)! (After all, despite the fact that it continues to perpetrate the Gen-AI hype, Gartner recently reported 85% failure rates in AI projects last year — and Bain is now reporting technology project failure rates of 88%, an all time tech failure high! This should be more than enough to turn away from Gen-AI, even without a discussion of all the problems Gen-AI comes with and all the risks Gen-AI entails. [Hallucinations, sleeper code, implanting false memories, etc. etc. etc.])

This is very sad in our view as these are six suites that grew and attained their status by attempting to, and then building, real solutions that solved real customer problems sufficiently enough to sign big customers, keep big customers, and grow big customer accounts. Since, with the possible exception of Ariba (that might have been added on by a SAP ERP customer), these aren’t ERP vendors with ERP lock in, you know they had to, and have to, be doing something right! Why risk that track record on unproven (and usually inappropriate) (Gen)-AI?

Now, as per our Coupa coverage, we hope we are dead wrong, that they all have a plan to continue building great solutions without Gen-AI (dominance), that they will continue to remain strong suites, and that we will be covering them for years to come (if they ever return our emails and messages and answer our demo requests).  We’ve invested almost two decades covering these solutions, and, more importantly, we have recommended and strongly recommended all of these solutions in the past and fully expect to keep doing so.  (Some clients need a suite, and we base our recommendations on current product capabilities, not how good the vendor is at marketing those capabilities.  That’s the advantage of having a deep understanding of technology!)

This just leaves us with:

Oracle

Specifically, their Fusion Cloud Procurement, which, to be honest, was the one suite we would almost never put on a shortlist for a company looking for a specialist S2P solution since they were usually less extensive and less feature-rich than the other suites that started as best-of-breed. (But definitely would for Oracle Shops that liked strong S2P integration with the ERP.)

However, when you go to their page, you see their messaging is all about asking if “your procurement suite can automate procure-to-pay, strategic sourcing and supplier management processes“? Then their messaging about how their “Fusion Cloud Procurement capabilities, built-in collaboration and analytic insights drive agility, manage risk and increase margins“. Moreover, “Oracle Fusion Cloud Procurement is an “integrated source-to-settle suite that automates business processes, enables strategic sourcing, improves supplier relationship management and simplifies buying resulting in lower risk, improved savings and greater profitability.” And, finally, it consists of modules for supplier management, sourcing, procurement contracts, purchasing, direct procurement, and procurement analytics.

Moreover, not a single mention of ANY AI on their main page. Just straight to the point messaging an average buyer and executive can understand. Moreover, searching for AI immediately takes you to Oracle AI for Fusion applications where you have a list of traditional AI for spend classification, predicted shipment and cycle times, dynamic discounting, supplier recommendations, demand sensing, anomaly detection, etc. No Gen-AI out of the box. If you dig deep, you find that you can have a Gen-AI based Procurement Tool with Natural Language Queries if you want it (and you are willing to custom build, configure, and train it), but they aren’t pushing it, you have to look for it, and ask for it. In other words, if you really want it, you can have it (because some customers will want it without researching it and they do give customers what they want), but they recognize you don’t need it for value, so they aren’t focussed on selling it (or even marketing it). (Just like they didn’t fall for The Cloud is a Crystal Ball hype, they ain’t falling for the Gen-AI Hype [yet].)

And that makes them the only suite that might not be sailing the seven seas sans a sextant (at least as far as their marketing direction is concerned). Now, we’re not saying they’re the best at using the sextant and charting a course, as they are typically behind most of the other suites in leading S2P functionality, but the simple fact they know that getting to your destination requires staying the course says something, and, in our book, that now makes them definite short-list material. Plus, like SAP, most of their customers are big enterprises that don’t want leading (and definitely don’t want bleeding) edge and instead want tested tried and true solutions.  And that’s why they’re going to be around for their 50th anniversary in 2027 and, if they so desire, might even be around in 2077.

In other words, they might be the tortoise, but we know in the end, if it stays the course, it eventually wins the race. (And this is something we never thought we’d write about Oracle in the early days. After all, Davie left Oracle to start the Coupa Factory in 2005 because he didn’t think they’d ever get where was needed in a timely fashion. How times have changed!)

Markets evolve, suites evolve, and messaging evolves.  Maybe when the Gen-AI hype dies down, we’ll see clearer messaging and be able to see the routes the suites are charting.  Only time will tell.

* Gen-AI stands for Generative Artificial Intelligence but should stand for Generative Artificial Idiocy as none of the generic Gen-AI LLM tools are intelligent and, moreover, can’t even do basic reasoning. Only the “generative” part is accurate, as generative literally means “make stuff up” and that’s what this hallucinatory technology does all the time!  (And that’s why SI is so scared when vendors start trying to rapidly incorporate it into their products.  As per previous coverage, their aren’t many valid uses cases with high reliability.)

Now, in full disclosure, SI hasn’t reviewed any of these solutions, except for two discrete modules in Coupa (Sourcing Optimization and Supply Chain Solutions), in the last 2 years, but this is not for lack of trying. SI has reached out (multiple times) to all but two of these companies, and, despite being one of the first sites to cover some these companies in the past (and do so in the early days when no one else would), has either been declined or completely ignored. (All the suites seem to care about now is Gartner and sometimes Spend Matters.)

First Coverage of:

  • Ariba: one of the few vendors that would not talk to SI in the early days, first covered by the doctor on Spend Matters in a 2-part piece in 2018 on Sourcing Decision Optimization Part 1 and Part 2#
  • Coupa was first covered in 2006 on the first Procurement Independence day
  • Ivalua was first covered in 2010 in a two-parter on end-to-end sourcing and procurement (Part 1 and Part 2)
  • Jaggaer is rebranded SciQuest, which was another vendor that wouldn’t talk to SI in the early days, even though the majority of its acquisitions, including AECSoft, Upside Software, Spend Radar, CombineNet, Pool4Tool, and BravoSolution, all did; the doctor did advise on Jaggaer coverage on Spend Matters as Lead Solution Map Analyst, but did not cover them directly;  he would advise checking out Spend Matter’s coverage if you have access: (S2C 1, S2C 2, and
    S2C 3 as well as P2P 1, P2P 2, and P2P 3)
  • GEP was not covered on SI, even though it acquired Enporion which was, as GEP was not highly relevant for SI’s market (focussed on companies who wanted insight into DIY platforms); the doctor did work with Xavier Olivera, Pierre Mitchell, and Jason Busch to do a deep dive in 2019 (Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7) which was the 6th most popular PRO article of the year! (Source)
  • Zycus, unfortunately, was not covered on SI as they never made our radar until the doctor started contributing to Spend Matters, where he advised on coverage, but did not do the vendor coverage (which included the 2018 Vendor Analysis, which we recommend: Part 1, Part 2, and Part 3)
  • Oracle, another of the original vendors that would not talk to SI, was never covered on SI, and while the doctor did consult on their platform capability during Solution Map capabilities, never contributed to a write-up (but would recommend anything Xavier Olivera or Jason Busch ever wrote about them, including Cloud Surprise, Part 1, Part 2, Part 3, and Update 1)

# Note that the Spend Matters site migration of June 2023, in addition to removing all articles pre-2013 and many more pre-2020, also dropped co-authors on many articles as well. Most of what the doctor wrote in the early days was always co-authored with Jason Busch who usually received lead credit (and, thus, was the author who survived the migration).

We Might Just Need A New Funding Model For (Procure)Tech StartUps!

This article was inspired by the same LinkedIn Article by Gaurav Sharma that inspired my last article on We Need Better Events!

Basically, Gaurav posted the following:

My Buyer’s mindset is bugging me on this point!

The average cost of a CPO 3-4 day business trip on a conference: USD 10k at a minimum (Conference tickets, Business Class travel, stays, network lunch, etc).

If 70 Smart CPOs can pool this sunk cost into an investment pool, it can become a seed investment for a Procurement tech startup. Advantages?

  • Instead of just “talking” about Ideas at a conference, you can be part of a “builder community.”
  • Own the Equity.
  • Your own customized solution; hence, your Opex will be reduced by getting rid of your dated tech stack!
  • You still get networking benefits!

And he was right about how much is wasted on many of these events, but, as I pointed out, it’s peanuts to what is wasted by vendors to attend just one 2 to 3 day big procurement event and get lost in a sea madness.

But if we held better events, as I discussed in my last article, and saved a lot of money, then the question of what we do with it becomes valid. Unfortunately, CPO-led funds are not the answer. Why? As I pointed out in my comment(s):

  1. You’ll never find 70 CPOs who (think they) have the same problem; sometimes it’s hard to find just 7!
  2. CPOs are definitely NOT CTOs – they have no idea what it takes to build a product!
  3. … many are not founders either – they have no idea what it takes to build a company! (And when many try, they don’t do so well … that’s why many of the 666 companies on the mega-map won’t be around in a few years, going the way of many, many companies before. (See SI’s historical vendor day reprise and count how many of those are left … extrapolate that % and it’s about accurate for survival rates beyond a few years.)
  4. Many CPOs need to learn, and startups need to be taught what they need to do, especially since, right now, we have too many vendor offerings and most don’t solve the right problems. (Again, see the Mega Map.)
  5. Even if you get a MVP out of that 700K (not likely), you’ll need a next round to make a real enterprise grade product, and then another round to grow the company enough to support it across those 70 organizations.

And this brings us to the funding issue. One thing that Gaurav got right is his implication that current funding sources aren’t always doing the job we need done. Right now, most (Procure)Tech funds come from:

  1. PE funds that only back growing, successful companies that the PE fund thinks they can grow and charge more for (or increase profits by reducing the operating expenses, scaling back on R&D, and potentially running the company into the ground over the long term)
  2. VC funds that play the numbers game (invest equally in 10 potential winners betting 1 will be a unicorn, 3 will be successful, 4 more will fail but be salvageable for the tech team and 2 will be a write off completely covered by the unicorn win)
  3. Angels that follow their fancy

And no funds come with a purpose to solve a particular business or technology problem. So maybe we need to follow the charity / endowment model in education / the public sector and establish

d. “Startup Funds” that

  1. identify common problems that need to be solved and create a fund for each problem
  2. pool money from companies that want those problems solved into each fund
  3. look to invest that seed money in a startup once the fund reaches a certain value (1M+) and the right startup is identified with a plan that can create an MVP (that can be shopped to VCs or bought by beta companies) for that investment level

Then CPOs, and even tech companies, with a similar need can pool their money towards a certain goal.

Thoughts?

Demystifying the Marketing Madness for you!

The marketing madness is returning, the incomprehensibility is increasing, and the terminology almost terrifying, so here’s the simplest easy-peasy guide the doctor can make to interpreting what the messaging is actually saying, if it’s saying anything at all!

AI-enabled/AI-backed/AI-enhanced/AI-driven: We don’t actually have any capabilities that you won’t find in one to three dozen of our peers, but since they’ve all jumped on the “AI” bandwagon, we will too and use the exact same meaningless messaging. (Remember, there are NO valid uses for Gen-AI in Procurement and most valid uses for “AI” are constrained to specific use cases, the rest of the time it’s just rules-based RPA/Automation.)

Autonomous Sourcing: If you configure enough rules, or, even worse, turn on our Gen-AI auto-negotiator, the platform, given a demand, will auto configure and run a sourcing event to the point it selects a supplier and sends out an award notification, with little to no guarantee it’s what you wanted (if you turned on Gen-AI).

Delightful Procurement: terribly sorry, but even the doctor can’t translate this one!

Intake-to-Procure: Takes a request in, but doesn’t do anything with it … unless you have a Procurement system it can automate or punch into. (As the doctor has said, intake on its own is Pay-Per-View on your data, and something that SHOULD be included in every proper Procurement solution because you should not have to pay another third party to see YOUR data!)

Margin Multiplier: Our ROI isn’t much better than other best-in-class solutions appropriately applied (the difference between the savings achievable from an average Strategic Procurement/Source-to-Pay and a Best-in-Class Strategic Procurement/Source-to-Pay platform appropriately applied is typically less than 2% [unless one platform includes appropriate SSDO and the other doesn’t] … i.e. you might get 12% savings instead of 10%), but since it’s best in class, you might be able to multiply your margin if all the math works out (3% to 6% instead of 3% to 5.8%), and Margin Multiplier just sounds so much cooler!

Orchestration: Cloud-based middleware that allows you to connect platforms using their APIs through a UX and build data-based workflows that pulls data from one platform and pushes it to another while controlling a multi-application process. Unless it supports integration beyond source-to-pay applications, likely not that useful as it just ADDS to solution sprawl when you can just direct connect the S2P applications yourself using the APIs and rules-based automation to push and pull data (as they all work on essentially the same data).

Smart Procurement: Procurement powered by rules-based workflows, but smart just sounds cool, eh?

Spend Orchestration: We don’t do anything different than all the other orchestration providers, but it sure sounds cool!

Sustainable Procurement: Generally speaking, this simply means you can see supplier / product sustainability (carbon, etc.) data when sourcing, but we don’t actually help you identify more sustainable suppliers or, more importantly, how to work with your supplier to decrease the carbon footprint, raw material utilization, fresh water footprint, etc.

Supplier Insights: An extensible, centralized supplier information/relationship management platform that can be augmented with ALL related supplier finance, product, location, compliance, risk, ESG, and other relevant data. A capability offered by a few dozen platforms, which means this platform isn’t that special.

In short, all of this new marketing gibberish is essentially complete bullcr@p and I have to echo the desire of Sarah Scudder and Dr. Elouise Epstein for Procurement solution providers to tell us what your solution actually does and, in the doctor‘s words, CUT THE CR@P!

Yes, Jon. Some Analyst Firms Do Stink!

Last Saturday, Jon The Revelator penned a piece on how Going “off-map” is the key to finding the best solution providers, which he correctly said was critical because Gartner reports that 85% of all AI and ML projects fail to produce a return for the business. As per a Forbes article, the reasons often cited for the high failure rate include poor scope definition, bad training data, organizational inertia, lack of process change, mission creep and insufficient experimentation and, in the doctor‘s view, should also include inappropriate (and sometimes just bad) technology.

The Revelator asked for thoughts and, of course, the doctor was happy to oblige.

Starting off with the observation that while it is impossible to give precise numbers since companies are always starting up, merging, getting acquired, and shutting their doors in our space, statistically, if we look at the average number of logos on a module-quadrant map (about 20), and the average number of providers with that module (about 100, ranging from about 50 for true analytics to about 200 for some variant of SXM), for every provider “paying” to get that shiny dot, there are 4 going overlooked. And given that the map represents “average”, that says, statistically, 2 of those providers are going to be better.

Furthermore, maps should NEVER be used for solution selection (for the many, many reasons the doctor has been continually putting forth here on SI, heck just search for any post with “analyst” in the title over the past year). A good map can be used to discover vendors with comparable solutions, and nothing more.

The Revelator replied to this that the first thought that came to his mind was the urgency with which we buy the dots on the map without realizing that many have paid a considerable sum to get the logo spot and recounted the story of why he sold his company in 2001 after he was approached by Meta (an analyst firm eventually acquired by Gartner), in response to the successful results of his first big implementation, who said his company was on the leading edge and that they wanted to “cover” his company. The short story was that, when he said it sounded great, the Meta rep said “terrific, let’s get started right away and the next step is you sign a contract and pay the $20,000 [$36,000 today] invoice that we will send immediately and then we can begin“. Not something easy to swallow for a small company, and even less easy than today when it now costs at least 50% more (in today’s dollars) according to some of the small companies he’s talked to if they want Gartner attention. [And that’s just for basic coverage. Guaranteed inclusion on some of the big firm maps generally requires a “client” relationship that runs 150,000 or more!]

the doctor‘s response to this is that it’s still definitely a pay-to-play game with most of these firms, as per his recent posts where he noted that dozens of the smaller vendors that he talked to this year (who keep asking “so, what’s the catch?” when the doctor says he wants to cover them on SI) said they were being quoted between 50K and 70K for any sort of coverage. Wow!

Furthermore, while Duncan Jones insists it is likely just a few bad apples, those bad apples are so rotten that many of these smaller firms steadfastly believed they couldn’t even brief an analyst if they didn’t pay up (as the rep wouldn’t let them). And it wasn’t just one firm whose name the doctor heard over and over … 4 (four) different firms got over 3 (three), sometimes very angry, mentions across the two to three dozen mentions where the smaller vendor was willing to indicate which firm was quoting them 50,000 to 70,000+ or not willing to talk to them unless they signed a client agreement. (the doctor has reached out to over 100 small companies over the past year, and almost every response indicated that they expected there would be a fee for coverage based on their analyst firm interactions, and when he asked why, the majority of them said they were quoted (high) fees by one or more other firms that said they wanted to “cover” them.)

So yes, most of the smaller firms without big bank accounts aren’t making it on to these maps (because they hired people who could actually build products vs. people who could bullsh!t investors and raise the money to pay these “analyst” firms). (Especially since an analyst from at least one firm has admitted that they were only allowed to feature clients in their maps, and an analyst from another firm has admitted that they had to design the criteria for inclusion to maximize client exposure and minimize the chances of a non-client from qualifying, as they were limited in the non-clients they include in the map [to low single digits].)

And, furthermore, when you look at those vendors that did make it, The Revelator is correct in the implication that some of them can’t carry more than a tune or two (despite claiming to carry 20).

And it seems that the doctor‘s punch hit a little harder than The Revelator expected because he followed it up with a post on Monday where he asked us Is This True?!?, and of course the doctor, who already recounted his tales of rage on LinkedIn in response to his posts that asked Are Traditional Analyst and Consulting Models Outdated and/or Unethical? and Does it Matter if Analyst Firms Aren’t Entirely Pay-to-Play if the Procurement Space Thinks They Are, couldn’t let this one go (because, to be even more blunt, he doesn’t like being accused of being an unethical jackass just because he’s an analyst, because not all jackasses are unethical, and things would be different if all analysts and consultants were as honest and hardworking as a real jackass [can you say foreshadowing?]) and responded thusly:

Well, this was the first year doing his (own) reach-outs [as the client relations team did them at Spend Matters, so he really hasn’t done many since 2017] where a few companies said they wouldn’t talk to him and/or show him anything because if they weren’t being charged, then the doctor is just going to “steal their information and sell it to their competitors“, like a certain other analyst firm whose name won’t be mentioned.

Yes, the doctor is getting a lot more “what’s the catch?” than he ever did! Apparently analysts/bloggers don’t do anything out of the goodness of their hearts anymore, there’s always a price. (Even when the doctor tells them the catch is “the doctor chooses who he covers, when, and DOES NOT actively promote the piece since no one is paying for it“, some still don’t believe him (even when he follows it up with a further explanation that even if he covers you, he likely won’t cover you again for at least two years because he wants to give all innovative or underrepresented vendors a chance, and may even ignore them completely during that time, even if they reach out, because, again, they’re not a client and his goal is to give a shot to as many companies trying to offer as he can).

Also, in the doctor‘s view, this is a big reason that analyst firms need to step up and help fix the Procurement Stink, but you can guess the response he received to the following post on The Procurement Stink (and if you can’t, ask the crickets).

The Revelator concluded his question with a reference to a Jon Oliver assertion about McKinsey, a firm that bluntly stated, “We don’t learn from clients. Their standards aren’t high enough. We learn from other McKinsey partners.” and asked if this was true across the analyst and consulting space. the doctor‘s response was that the Jon Oliver assertion was representative of a different problem. The Big X consultancies are too busy sniffing their own smug to realize that, hey, sometimes their clients are smarter (and so are a few analysts as well, but the problem is not nearly as common in analyst firms as it is in Big X consulting firms).

Our problem as independent analysts who try to be fair and ethical is that a few of these big analyst firm sales reps are ruining our reputation. And the fact that these big firms don’t immediately throw out the rotting trash that these sales reps are is why some analyst firms do stink!

To this The Revelator promptly replied that as always, the doctor isn’t pulling his punches, which is true because …

we’re getting older. We don’t have the stamina to dance around all day pulling punches. Only to hit fast and hard, especially since that’s the only chance of pulling some of these young whipper-snappers out of the daze they are in as a result of the market madness and inflated investments (ridiculous 10X to 20X+ valuations were not that uncommon during COVID when everyone was looking for SaaS to take business online).

Not to mention, we’ve heard and seen it all at least twice before, probably three times on The Revelator‘s end (sorry!), and we know that there is very little that’s truly new in our space under the sun. With most companies, it’s just the new spin they manage to find every few years to bamboozle the market into thinking their solution will find considerably more value (with less functionality) than the less glitzy solution that came before (and which has already been proven to work, used correctly, at dozens of clients).

Of course, we first have to accept there is no big red easy button and that, gasp, we have to go back to actually TRAINING people on what needs to be done!

Another problem we have is that when the Big X listen to Marvin Gaye and Tammi Terrel, they hear:

“𝘓𝘪𝘴𝘵𝘦𝘯 𝘣𝘢𝘣𝘺, 𝘢𝘪𝘯’𝘵 𝘯𝘰 𝘮𝘰𝘶𝘯𝘵𝘢𝘪𝘯 𝘩𝘪𝘨𝘩
a𝘪𝘯’𝘵 𝘯𝘰 𝘷𝘢𝘭𝘭𝘦𝘺 𝘭𝘰𝘸, 𝘢𝘪𝘯’𝘵 𝘯𝘰 𝘳𝘪𝘷𝘦𝘳 𝘸𝘪𝘥𝘦 𝘦𝘯𝘰𝘶𝘨𝘩, 𝘤𝘭𝘪𝘦𝘯𝘵
𝘧𝘰𝘳 𝘮𝘦 𝘵𝘰 𝘴𝘢𝘺 𝘵𝘩𝘢𝘵 𝘺𝘰𝘶 𝘮𝘪𝘨𝘩𝘵 𝘬𝘯𝘰𝘸 𝘴𝘰𝘮𝘦𝘵𝘩𝘪𝘯𝘨 𝘐 𝘥𝘰𝘯’𝘵
𝘕𝘰 𝘮𝘢𝘵𝘵𝘦𝘳 𝘩𝘰𝘸 𝘴𝘮𝘢𝘳𝘵 𝘺𝘰𝘶 𝘳𝘦𝘢𝘭𝘭𝘺 𝘢𝘳𝘦
s𝘪𝘯𝘤𝘦 𝘵𝘩𝘦𝘳𝘦’𝘴 𝘯𝘰 𝘨𝘳𝘦𝘦𝘥, 𝘵𝘩𝘢𝘵 𝘳𝘶𝘯𝘴 𝘯𝘦𝘢𝘳𝘭𝘺 𝘢𝘴 𝘥𝘦𝘦𝘱
𝘢𝘴 𝘵𝘩𝘦 𝘨𝘳𝘦𝘦𝘥 𝘪𝘯 𝘰𝘶𝘳 𝘩𝘦𝘢𝘳𝘵𝘴”

The whole reason of their existence for a Big X firm is to continually sell you on what they know, whether it’s better or worse, because, once they have a foot in the door, you’re their cash cow … and the sooner they can convince you that you’re dependent on them, the better. Remember, they’ve stuffed their rafters with young turkeys that they need to get off the bench (or fall prey to the consulting bloodbath described by THE PROPHET in the linked article), and the best way to keep them off the bench is to make you reliant on them.

Unlike independent consultants like us (or small niche, specialist consultancies with limited resources), they don’t want to go in, do the job, deliver a result, and move on to something better (or a new project where they can create additional value for a client) … these Big X consultancies want to get in, put dozens of resources in a shared services center, and bill you 3X on them for life.

(If the doctor or The Revelator sticks with you for more than 12 to 24 months, it’s because we keep moving onto new projects that deliver new sources of value, not because we want to monitor your invoice processing for the rest of our lives, or star in the remake of “Just Shoot Me!”)

(And to those of you who told the doctor he was mean, he’d like to point out that while he was, and is, being brutally honest because that IS the modus operandi of some of the Big X consultancies, he’s not insulting anyone in particular). [For him to do that, it would require firsthand knowledge of one or more employees purposefully engaging in unethical practices.  Not just following your playbook that is well known to anyone who wants to do their research.])

This brought the reply from The Revelator that:

In another article, he discussed the fact that VP Sales and Marketing people change jobs every two to three years.

As far as The Revelator could tell, they are put in an unwinnable position of hitting unreasonable targets based on transactional numbers rather than developing relationships and solving client problems. That is not a fair position because the focus shifts from what’s working for the client to hitting quarterly targets where, in many instances, the only client success is found in the press release.

The Revelator remembers many years ago talking with a top sales rep from Oracle who said that with his company you are only as good as your last quarter. When he said good, he was really talking about job security.

Ultimately, the most powerful testimony regarding the inherent flaws of the above approach is Gartner’s recent report that 85% of all AI and ML initiatives fail.

To this the doctor could only respond:

He can’t argue that. This is one of the problems with taking VC/PE money at ridiculous valuations (of more than 5X to 6X, which is the max that one can expect to recoup in 5 (five) years at an achievable year-over-year growth rate of roughly 40% without significantly increasing price tags for no additional functionality). The problem for Sales and Marketing is they now have to now tell the market that, suddenly, their product is now worth 3X what they quoted before the company took the VC/PE money at the ridiculous multiple and that if the customer pays only 2X (for NO new functionality, FYI), the customer is getting a deal. The problem is that the investors expect their money back in a short time frame WHILE significantly bumping up overhead (on overpriced Sales and Marketing), which is not achievable unless the company can double or triple the price of what it sells. This is often just not doable even by the best of marketers or sales people, which forces them out the door on a 2 to 3 year cycle. (Because, as you noted, as soon as they manage to get a few sales at that price tag, suddenly, as the investors realize they also need to add more implementation and support personnel as well, increasing overhead further, the Sales and Marketing rep quotas go up even more and all of them will eventually break if they don’t get out and go somewhere else just before they just can’t hit the unachievable target.)

The Revelator also noted that he now makes money through a low monthly fee that includes his experience and sales expertise, and that it’s a model he first used when he started his blog because making money is not bad when it is reasonably priced in relation to the services and value being delivered, and the doctor wholeheartedly agrees

in fact, the doctor used to do that too … but good luck finding more than one or two companies these days that honestly care about reader education and not just pushing their marketing message down a target’s throat … that’s why SI sponsorships are still suspended (and will be until he finds 4 companies that are willing to return to the gold old days where education came first — which, FYI, is one of the keys to long term success).

SI sponsorships included a day of advisory every quarter and a post covering the vendor’s solution (in the doctor‘s words, not theirs), which could be updated semi-annually if warranted and a new article whenever the vendor released a new module or significant new functionality (and it was the doctor‘s call as to what significant was).

At least The Revelator can still go back to Coupa or Zycus for sponsorship … EVERY SINGLE SPONSOR SI had pre-Spend Matters (when sponsorships were suspended on SI for obvious reasons) was eventually acquired (and why they all eventually dropped off).

(Just to be clear, the doctor is NOT saying it was the SI sponsorship, or even the doctor‘s advisory that resulted in their success [although he hopes it contributed], but he is saying that companies who are willing to listen and learn from experts, and who care more about educating and helping clients then just shoving a message down their throat, tend to do very well in the long run. Very, very well.

This is something the new generation of know-it-all thirty-somethings popping up start-ups in our space every other week don’t seem to get yet and likely won’t until they have their first failure! It’s just too bad they are going to take good investors, good employees, and beta/early clients down with them when there is no need.)

All Hail The Gruntmaster 6000!

It was more influential than you think!

The Gruntmaster 6000, first introduced in the The Name, and eventually realized by Infomercial is, more importantly, a great foundation to explain why the doctor started Sourcing Innovation and why it is still going SIX THOUSAND (6,000) published articles later (even though the GruntMaster 6000 ended up being an exercise machine with a graviton generator)! (And yes, this is the 6,000th published article on Sourcing Innovation.)

In The Name, it all starts with the team, including Dilbert, being challenged by the PHB (Pointy-Haired Boss) to come up with a new product (to replace the product that killed everyone who used it), starting with the name — which he believes is more important than whatever the product ends up being! A name that has to ultimately be approved by the CEO, who, of course, also believes that the name is the most important thing ever!

It’s an attempt to clarify, in a humorous fashion, both the absurdity of modern marketing for technology products and modern “suit” management who, when they are running a company they fundamentally don’t understand (still a big problem today, and we’ve had multiple recent examples of why accountants, bankers, and lawyers should NEVER run tech companies), over focus on details that just don’t matter.

And, more importantly, propagate the belief that all you have to do is select the “right” product, where the “right” product is obviously the one from the most successful company, because if a company is successful, the product must be good, right? And how do you identify the most successful company? The one that looks most successful, and, obviously has the most successfully sounding product name, right? Right?

WRONG! It’s the propagation of this problem into Procurement which is why Sourcing Innovation exists. The belief that you can pick a few successful companies, throw a problem over the wall, and get a good solution. And while you theoretically can, if you don’t pick the 3 best companies for you, the odds of you getting a good solution are not good. In fact, the odds of you getting a good solution are vanishingly close to zero! (That’s why at least two thirds of technology projects fail. Standish Group’s CHAOS 2020 report analyzed 50,000 global projects and reported 66% failure rate. And that’s one of the lowest reported failure rates the doctor has ever seen. Many of the reports he’s seen over the last two decades report 70% to 85% technology project failure.)

And you can’t pick good companies unless you know

  • what makes a good product
  • what makes a good company
  • … and, most importantly …
  • what you need the product to do
  • what you need the company to do

And that requires education. Continual, never-ending, education. Education that no one was giving you in the sea of (marketing) madness. That’s why Sourcing Innovation exists, and why it is still going SIX THOUSAND published articles later.

And, FYI, because the focus is on education, with the exception of a few hundred posts on products that no longer exist, the vast majority of what was written in the early days is as valid today as it was then. For example, the doctor, thinking ahead to the inevitable conclusion of outsourcing (and understanding EVERYTHING wrong with it*), has been preaching the desperate need to return to on-shoring, near-sourcing, and even home-shoring for the past fifteen (15) years! And every single one of the 101 Procurement Damnations still exists today! So feel free to jump back to the second post on Strategic Sourcing Innovation Defined published on 2006-June-10 and start reading forward. the doctor is sure you’ll learn something from almost every single post! And the best thing about going back to the beginning, you can read an hour a day every day for the next year and still not make it to 2024! (At roughly 5.8 MILLION words, and an average reading speed of 238 words per minute, the average reader will have over 406 hours of reading!)

* as he did study the history of trade as well as pre-recorded history, early history, archaeological, and anthropological methods [even though sometimes he thinks a better understanding of cryptozoology might help him understand modern business better] … and he’s even gave a presentation on the archaeology of spend analysis, as many of the best algorithms for spend analysis have their roots in the algorithms developed by mathematicians for archaeologists …