Category Archives: Decision Optimization

On the Eleventh Day of X-Mas … (Introducing Trade Extensions)

On the eleventh day of X-Mas

my blogger gave to me
another vendor hyping,
blog posts worth keeping,
l’il hampsters dancing,
thoughts for a shilling,
strategies for winning,
tactics for saving,
five golden rings,
four little words,
tri-focal lens,
two boxing gloves
and a lesson in strategy.

Allow me to introduce you to Trade Extensions. Founded in Sweden in 2000, it offers an optimization-based negotiations platform to European clients (from Sweden and a base of operations in the UK), and now, American clients through its office in Houston, Texas.

Trade Extensions offers a self-service on-demand e-Sourcing platform that is available on a per-event basis and backed up by industry leading optimization algorithms designed by scientists with expertise in algorithms, combinatorial optimization, and micro-economics. Like many other platforms, it offers full featured e-RFX, e-Auction, and sourcing project management, but unlike the vast majority of e-Sourcing platforms on the market, optimization is embedded into the RFx bid evaluation and auctions. It’s your favorite sourcing platform on steroids.

The auctions are lot-based, and support as many items, associated attributes, and prices as you want per lot. In addition, pricing, and ranking, can support arbitrary formulas and comparisons can be made against bid logs and historical transactions. Lots are also color-coded, with yellow indicating fields that only the user sees, brown indicating historical data fields that only the user sees, and green indicating fields that the bidder sees. Example fields include name, description, bidder-entered, type, min-value, max-value, decimals, required, distance-to-bidder, and rank-displayed-to-bidder.

The underlying optimization is sufficiently sophisticated and qualifies as true strategic sourcing decision optimization, as per the requirements set forth in the wiki-paper. It supports a number of different types of constraints, called rules, that are based on filters that can act on any attribute. For example, it supports hard limit capacity rules, soft limit allocation rules, meta-allocation “chunk” rules, and composed rules that specify limits on specific lots or lot components. The rules are template-based, which permit them to be saved, copied to, and applied to any relevant scenario. The filters can work on bidders, lots, bids, plants, and lot fields, among others. Furthermore, it can support alternative bids … allowing tiered bids and certain types of matrix bids. And in addition to standard sourcing and freight optimization, the underlying platform can also support limited multi-level supply chain optimization … which is more than most platforms give you!

Analysis is flexibile and powerful, supporting as many scenarios, and comparisons between scenarios, as you like. The analysis screen also allows you to see the status of each scenario, the award volume, the lane allocation, historic costs, savings, applied rules, and solver data. Reporting is above average and allows you to create your own report templates using a plethora of fields, matrices, formulas, and reporting rules.

Now it’s not perfect, as it doesn’t yet support certain types of discounts through the UI that are occasionally useful (although I’m told the underlying model can support them), certain types of mixed freight bids (which, in reality, don’t occur that often), and the UI isn’t designed to support distribution network optimization (but hey, what tool is?), but it’s definitely a tier-1 solution, and it’s nice to see that there’s more than one company who understands that, to be truly useful to the average buyer at the average organization, strategic sourcing decision optimization needs to be powerful, embedded in an e-Sourcing platform and user-friendly. And, they are improving it every day, unlike some “competitive” applications that haven’t changed significantly in years.

Furthermore, unlike most of their competitors, it’s very affordable. They have an event-based model and an unlimited usage model. Their event-based model starts at 0.5% of the value of the tendered goods and services for a full-service event, and drops to as low as 0.3% of the value of the tendered goods and services for a pure self-service event (if multiple events are committed to). Ongoing licenses start at only 10,000 Euros / month for unlimited use (for up to 10 users). Considering that it was only a few years ago where events started at 100K and annual licenses at 50K a month for less functionality — just for optimization — and Trade Extensions’ platform also contains extensive RFX and Auction support built-in, it’s certainly worth investigating if you have optimization needs.

On the Eighth Day of X-Mas … (Supply Chain Trends in 2009)

On the eighth day of X-Mas

my blogger gave to me
thoughts for a shilling,
strategies for winning,
tactics for saving,
five golden rings,
four little words,
tri-focal lens,
two boxing gloves
and a lesson in strategy.

Hot Technologies in 2009 Will Be Spend Analysis and Decision Optimization

Given the current economic climate, organizations will start to adopt these technologies despite their concerns that they are too complicated (which has not been true for years) or too expensive (which is also not true). The emerging leaders in low-cost self-service optimization, like Iasta and Trade Extensions, will take off, as will services companies, such as Lexington Analytics and Opera Solutions, that use leading spend analysis software like BIQ.

Emerging Technologies in 2009 Will Be Specialized Marketplaces and Focussed e-Sourcing Offerings

You’ll not only see an emergence of vertical specific marketplaces like MFG and Co-exprise Energy, but commodity specific marketplaces like cBoxBid.

Sustainability Will Be a Component of Every Sourcing Event

Thanks to Walmart, customers are demanding sustainability, and thanks to the EU, many nations around the globe are in the process of defining and implementing environmental regulations like RoHS and WEEE.

Your Favorite Vendor Will Not Be Around in a Year

This year has seen a couple of big vendors, with credit lines cut off due to bank failures, lost lawsuits, and VC belt-tightening, go through a number of layoff rounds. Two of the largest vendors in the space, despite claims of “regrouping”, are in serious trouble and could soon be on the block … along with a dozen small companies that took too much VC money, and sold too little product, in the last few years. Some have great products, and will be sorely missed if they don’t get sold and close their doors, but it’s a harsh reality when you don’t manage for frugal growth, don’t continually focus on innovation not just in products but internal operations as well, and don’t bring in outside expert help when you need it. (It’s too bad that some of these companies don’t understand that consultants are cheap. Unfortunately, many of these same companies are being run by first-time entrepreneurs — who don’t really understand the difference between a start-up, a small company, and the mid-size or large company they came from.)

You Get More Thoughts for a Pound Than You Do for a Shilling

Twenty times more, to be precise.

On the Sixth Day of X-Mas … (Cost Reduction Strategic Sourcing Strategies)

On the sixth day of X-Mas

my blogger gave to me
tactics for saving,
five golden rings,
four little words,
tri-focal lens,
two boxing gloves
and a lesson in strategy.

Six tactics that you can use to save in today’s marketplace are:

  • Reverse Auctions on Commodity Categories in Competitive Markets
  • Sealed Bids on Strategic Purchases of Custom Goods or Services
  • Decision Optimization on High Value Goods
  • Process Re-engineering with Strategic Partners
  • Lane Optimization
  • Distribution Center Optimization

Reverse Auctions on Commodity Categories in Competitive Markets

A recent post on Supply Excellence asks “if you are not sourcing, why not?” … and it’s a good question. Many key commodities that go into the parts you buy, and the energy your suppliers are using to convert raw materials into finished goods, recently hit two, three, and, in some cases, four year lows thanks to the recent decline in global demand. For some categories, it’s the best sourcing market we have seen in years as far as reverse auctions are concerned. So review the reverse auction selection criteria over on e-Sourcing Forum, where you can also find details on reverse auction strategy and reverse auction basics, brush up on the key steps to successful e-auctions, and get sourcing!

Sealed Bids on Strategic Purchases of Custom Goods or Services

If the category is strategic, and you can not use a reverse auction or open-bid methodology and have suppliers compete solely on price, because quality will be just as important, use a sealed bid.

Decision Optimization on High Value Goods

As outlined in my recent posts on e-Sourcing Forum and here on Sourcing Innovation where I asked if you can really afford to leave millions on the table, strategic sourcing decision optimization typically saves you 12% above and beyond what you will save with your best reverse auction, and, even today, still saves you up to 40% on some categories … which is an awful lot of bling if we’re talking about a 100 Million category. So review the decision optimization wiki-paper, select an appropriate solution, and start saving.

Process Re-engineering with Strategic Partners

Streamline processes and increase productivity. This allows you to increase spend under management and the savings you can generate. And if you’re worried about resistance, check out this post on overcoming worker resistance in process improvements.

Lane Optimization

Make sure you are using the right lanes at the right service levels from the right carriers. Otherwise, you could be considerably overspending on your transportation. As Dan Kowal pointed out in his recent Supply Excellence “sourcing opportunities during recession direct indirect logistics” post, the Baltic Panamax Freight Index has dropped 90% since May of this year. The market is rife with opportunities.

Distribution Center Optimization

An inefficient distribution network is costly. Save big by optimizing your network. For details on how, see my post on Bob’s Unique Talents.

The Sourcing Maniacs 2008 Vendor Tour Part X: Iasta

In our last installment of the 2008 Sourcing Maniacs Vendor Road Tour, the maniacs had just finished talking with a somewhat contemplative looking gentleman from GDM somewhere near Denver, Colorado. We rejoin them shortly after their conversation with the somewhat contemplative looking gentleman from GDM.

Today’s post is a little lengthy, so it’s broken up into Interlude and Inquiry, which contains the vendor content.

Interlude

Yakko, Wakko, & Dot We dig dig dig dig dig dig dig
through our data the whole day through
To dig dig dig dig dig dig dig
is what we really like to do
It ain’t no trick to get rich quick
If you dig dig dig with a shovel or a pick
In a large data mine! In a large data mine!
Where a million diamonds shine!
Dot Where Next?
Wakko I think it’s called e-Sourcing Place now.
Dot sneering
Wakko!
Wakko Sorry!
Dot Any more G’s?
Yakko Lots of services companies! Global Procurement Group (Global Supply Training). Global Sourcing Specialists. Greybeard Advisors.
Dot Can you think of any technology companies?
Yakko Besides Google, not today.
Dot So on to the H’s then.
Yakko Hiperos?
Dot SRM. Hmmm … let’s file them under services for now.
Wakko Hyperion?
Dot Oracle, remember?
Yakko I guess we’re skipping the H’s too this time around. Where do we start in the I’s?
Dot I seem to remember this punky little upstart by the name of Iasta from our Ariba days.
Yakko I heard they were just 4-guys in a garage with a simple e-RFX tool.
Dot Well, that’s what we used to say they were. But when was the last time we actually paid any attention to them …
Yakko Uhm … err … I can’t remember.
Dot Neither do I! Should we check them out?
Wakko Well, I seem to recall the doctor mentioning them quite a few times on SI … there must be something to them.
Dot Might as well go for it. And with our e-Sourcing background, maybe we’ll even understand what they do!
Wakko So where are they?
Yakko Indianapolis, I believe!
Wakko Race car city! Cool!
Yakko Super Overdrive!
Wakko Wakko breaks out his best rendition of Super Overdrive by Billy Idol.

 

Inquiry

  The maniacs head off towards Indianapolis, on the scenic route. We catch up with them again a few days later.
Dot This is it. I hope they talk to us!
Yakko Their CEO is a blogger, and they sponsor the e-Sourcing Wiki, which hosts some of the best wiki-papers in supply management that you’ll find anywhere. I’m sure they’ll talk to us.
Wakko Wakko breaks out his mini-mallet.
Let’s find out!
Wakko taps on the door.
A minute later, a smiling man with a moustache steps out.
Wakko Who are you?
Smiling Man I’m the CEO of Iasta.
Yakko, Wakko, & Dot And we’re …
CEO The Sourcing Maniacs.
Yakko, Wakko, & Dot You know of us?
CEO Yes. I’ve read about your exploits, and Eric Strovink from BIQ warned me that you were making the rounds.
Dot Well, hopefully you’ve only heard good things about l’il old us!
CEO Checking that the door behind him, and more importantly, to the server room, is locked (see Where Pinky and the Brain Devise a Plan to Market Their Strategy for a reason why).

What I’ve heard varies. How can I help you?
Wakko What do you do?
CEO e-RFX …
Yakko yawn
CEO e-Auction …
Dot looking very bored
CEO Smart Optimization
Wakko Com-bin-a-tore-e-ul Op-ti-my-za-shun?
CEO Yes Wakko, we do strategic sourcing decision optimization … and we think it’s one of the best solutions out there. And we do Contract Management …
Dot perking up
CEO and we’re in the process of preparing our first Supplier Relationship Management release, better known as SRM.
Yakko Really?
CEO Really. And when you add in our built in project management and our Smart Analytics solution, based on BIQ’s leading spend analysis product, you see that we have one of the most complete end-to-end e-Sourcing suites on the market.
Dot So you go head to head with Ariba and Emptoris?
CEO All the time!
Yakko And win?
CEO More often than you’d be led to believe!
Dot How often?
CEO Let’s just say that we have well over 100 global customers, many in the Fortune 500, and that both our annual North American User Conference and our annual European User Conference are very well attended by happy customers who enjoy learning how they can do even more with the platform they have already bought, and at a very attractive price point I might add.
Wakko How attractive?
CEO We’re a True SaaS provider, so we are very competitive with our basic solution prices.
Dot Under a Million?
CEO We start at under one hundred thousand a year for our entry-level solution.
Dot shocked
Under One Hundred Thousand?
CEO Yes Dot, under one hundred thousand for our basic Smart Source solution. You don’t have to buy everything to start, and even if you do, unless you also buy a considerable amount of services support for your organization, it’s still under the seven figure mark that you liked to charge.
Dot still shocked
How do you make money?
CEO Economies of scale enabled by SaaS, and smart spending. We eat our own dog-food and follow our own advice. We keep our costs reasonable, which allows us to give our customers good service at a great price, and in return we keep them. We believe we have one of the highest customer retention rates in the sourcing space. But I’m sure you’re not here to discuss our success stories. What would you like to know?
Yakko How you’re different.
CEO Well, we think our product is better than our competition, but if you limit yourself to a “check-the-box” comparison, as so many analysts are prone to do, you’d see that our major solution differences when we are compared against your average sourcing vendor are our strategic sourcing decision optimization and supplier relationship management capabilities. These go well beyond your standard bid-negotiate-award-track capabilities found in your average e-RFX, e-Auction, and Contract Management applications and allow you to focus on identifying the best value for your money and then ensuring that the savings you negotiated, and contracted for, are realized.
Wakko But don’t a number of companies claim to have Op-ti-my-za-shun?
CEO Very few have true optimization, Wakko. Most just use heuristic decision support algorithms that they try to pass off as optimization. We use true Mixed Integer Linear Programming and best-of-breed industry solvers, like ILog CPlex, underneath a true strategic sourcing decision optimization model that meets ALL of the requirements outlined by the doctor in the wiki-paper.
Wakko And that’s important because?
CEO Because you need all four types of constraints — capacity, allocation, risk mitigation, and qualitiave — and costs — unit, usage, and freight — to accurately model your average real world sourcing scenario. Otherwise, the scenario you end up with is only approximate, which means the solution is only approximate, and, if you missed key constraints, not realistic. Without all of the constraints, and some “competitors” only provide a subset, you either get a result that’s too good to be true, and is, because you can’t implement it, or the result isn’t as good as you can get, because you couldn’t specify all of the constraints and discounts.
Wakko And it works?
CEO Remarkably. As covered in recent posts by the doctor on Sourcing Innovation and our own e-Sourcing Forum, we’ve had two events where we’ve saved over 20M on two projects of roughly 80 Million and 110 Million, respectively. We also find that we do hit the industry average of 12%+ above and beyond e-Auction savings alone when we apply the technology.
Yakko It must be hard to use. You need a team of PhDs to drive it, right?
CEO Not at all! It’s quite easy … your average intermediate buyer can drive it very successfully after just a few hours of training. You create the constraints using wizards and english sentence fragments. You can import the cost data from Excel or from your e-RFX. You can create a new what-if scenario by copying an existing scenario and changing only what you want. Your power-users will teach themselves to be experts in the tool in a matter of hours. I bet even you could use it Wakko.
Wakko But I don’t know how to do Com-bin-a-tore-e-ul Op-ti-my-za-shun!
CEO You don’t have to. Our tool does all the heavy lifting. If you can fill in a spreadsheet, use drop downs, and enter numbers in web-based text-boxes, you can use it. It’s really that easy.
Wakko Wow!
Yakko And what about SRM. Is that easy too?
CEO As you would say, yassuredly.
Dot So what’s it do?
CEO It’s still in development, and we’re aiming for a late 2008 / early 2009 release, but what it’s going to do is streamline data capture and sourcing processes for the buyer and supplier alike. The first addition to our suite is a new supplier self-registration portal, backed up by a workflow-driven custom survey development tool. This pair of tools, the first for the supplier and the second for the buyer, is going to allow a buyer to define what information they need from every supplier, and then what information they need from suppliers in certain verticals and / or what information they need from suppliers who wish to supply certain types of products or services to the buyers. Then, when a supplier logs in and enters their basic information, as well as specifying the products or services they offer, they only have to fill out the surveys specific to them.

The survey construction tool, which will look similar to those who have tried our relatively new contract management tool, is based on the same underlying concept that the user should be able to define what fields, and meta-data fields, are of interest and allow the buyer to define what information they want, and how they want it. In addition, our survey construction tool, which builds on our RFX creation abilities, allows a user to define survey pages, and then makes uses of wizards to guide the buyer through survey construction. And, of course, all of this data is indexed, searchable, and easily managed. Furthermore, as with contract management, the buyer can define triggers on certain events (survey completion, changes to key data fields, etc.) and certain values (expiry dates, renewal dates, etc.) which will send off alerts or e-mails when certain events happen or certain actions need to be taken.
Dot Well, that sounds pretty common sense. A few companies have that already. How’s it different?
CEO What’s different is where we’re going with it and, most importantly, the approach we’re taking. We realize that the “R” in SRM stands for “relationship” and that is something that can not be accomplished with software-based tools alone. You can only have a relationship if there is interaction between the buyer and supplier on a regular basis. This means that there are only two ways a tool can help: enable communication or disable the roadblocks that prevent it. The most common roadblocks are the various tactical tasks that keep getting in the way, specifically, the tasks around collecting, organizing, tracking, and reporting on data.

Thus, in our view, a good SRM tool enables communication — and that’s why we’re building a new supplier portal, starting with our registration site — and centralizes all of the tactical data collection, organizing, tracking, and reporting in one location for the buyer — and that’s why we’re building a new supplier administration module, starting with surveys and scorecards, that is integrated with the rest of our suite, including contract management and meta-bid enabled optimization, which will allow the buyer to track agreements, expirations, certifications, insurance, and performance data in one place. Sometime next year, the tool will also allow senior buyers to define workflows around supplier contracts and interactions, which will guide the buying team through the organization’s best-practice supplier interaction processes. And we’re also building in new commodity-based classification hierarchies that will allow buyers to better segment their supply base and define hierarchical scorecards by commodity category and location to help them get a better view of total operational performance and how a supplier is impacting that.
Dot And it’s all going to be integrated in one platform?
CEO Seamlessly. Unlike our competitors, who have been on acquisition binges for the last decade, we built everything from the ground up on one platform, in one core language. That allows us to seamlessly integrate all of our products into one application in a way that most companies would envy. That’s why we think our SRM will succeed where many have failed before. It may not have all of the bells-and-whistles of some of the best-of-breed stand-alone products, but we believe it will have the core functionality that everyone needs, plus provide the advantage that you only have to deploy one platform. It’s the classic 80/20 rule — 80% of the functionality, for 20% of the cost, and effort, for our customers. When the full platform is released next year, we believe that the majority of customers will find that it does more than what they need. And that’s what we feel the market needs.
Yakko That’s a very interesting take.
CEO And a practical one. Most of the mid-market just needs basic functionality in sourcing and procurement to get through the day. There’s only a few Fortune 500 / Global 2000 companies that are advanced enough to productively use every bell and whistle you can imagine. We’d rather serve the 90% of the Fortune 500 / Global 2000, and, more importantly, the mid-market at large, who have been underserved for years due to the big-platform price tags that have traditionally put the traditional e-Sourcing platform solutions out of their reach.
Wakko I think I get it. 20% of the Fortune 500 would give you 100 companies, and it’s hard to get 20% of the Fortune 500. But if you got 10% of the Global 10,000, that’s 1,000 companies, and there are still 9,000 other companies who need a solution, and a lot fewer companies serving them.
CEO That’s right, Wakko. It’s about building a great company with a great tool that brings great value to, and enables, the mass market. That’s what we’re shooting for. And we think we’ll get there. And with that, I must get back to work. Have a good day.

 

The Road Tour will continue on Thursday.

 

The Sourcing Maniacs 2008 Vendor Tour Part VII: Emptoris

At this point in the story, I ask the Sourcing Maniacs to jump ahead and discuss their expedition to Massachusetts for Empower and what they learned.

This is a long post, since the maniacs love to go on and on and on at times, so I’ve broken it up into Preamble and Discussion. If you’re short on time, you can skip the pre-amble, which doesn’t have a lot of content.

Preamble

 
Guys, if I may interrupt, can we jump ahead a little bit?
Yakko, Wakko, & Dot startled, probably forgetting I was even in the room as I’ve been rather silent to this point during the recounting of their massive summer road tour
Wha …
Dot You’re still here?
the doctor Of course! I’ve been listening intently to your story.
Wakko That’s right! We were telling you the story of our summertime blues …
Yakko I’m gonna raise a fuss, I’m gonna raise a holler
About a workin’ all summer just to try to …
the doctor Yakko!
Yakko Yes?
the doctor Can we jump ahead in the story to where you return to Massachusetts in your quest to sneak into Empower?
Dot I thought you wanted to here about our journey as it happened.
the doctor I do … but I just want you to jump ahead and tell me about your recent trip back to Massachusetts, because I know Emptoris is on everyone’s mind these days … and don’t you want to fit the “E” in at an appropriate place? Besides, as soon as you’re done telling me about your recent side-trip, we can return exactly to where you are now in your story.
Dot Promise?
the doctor Yes Dot, I promise.
Wakko? Wakko!
Wakko just lit four roman candles that he pulled out of his backpack and he is starting to juggle them.
You need to put those out now!
Wakko But juggling candles helps me focus!
the doctor But those are Roman Candles!
Wakko So?
Yakko & Dot They explode!
Yakko and Dot quickly grab the candles from Wakko and snuff them out.
the doctor So, can we jump ahead a little bit? Does it make sense?
Wakko Cents … don’t you need copper to make those?
Yakko Wakko!
Yes, doctor, I think it makes sense.
the doctor Then take it away!
Dot Wow, Vinimaya was awesome!
Yakko I never knew you could integrate more than one catalog in one view before!
Wakko … and simultaneously bring up every vendor of baloney in the world with their current pricing and get the best possible deal for your money today! I’m hungry …
Yakko & Dot You’re always hungry! Didn’t you just eat an entire Boston Cream Pie?
Wakko … and it was yummy! …
Yakko Look … way up ahead … I think that’s Pinky and the Brain!
Wakko I think so too!
Dot Let’s hurry!
the maniacs pick up the pace …
soon after, Pinky and the Brain round a corner
when the maniacs round the corner, they see Pinky and the Brain enter a resort ….
they approach … a guard is guarding the door
Dot Quick! They’re in there!
Guard in a French accent
Halt! No en-tray for yoo!
the maniacs come to an abrupt stop
Dot Do I know you!
Guard Yoo furry little hamzterz again? Yoo are not welcome here either!
Wakko We’re not hamsters!
Guard But yoo still zmell like elderberriez, yoo pointy-eared Ratatouilles!
Yakko What are you doing here?
Guard I go where dey send me!
Yakko What do you mean?
Guard I work for RAG … Rent-A-Guard!
Now go, or I shall taunt yoo again!
Yakko Let’s go … this guy is still crazier than us!
Wakko But …
Yakko We’ll have to find another way to find out what’s going on with Emptoris.
Dot But … Pinky …
Yakko Maybe we can catch them on the way out.
Guard I make fun-nee facez at yoo!
Dot OK … I’m getting weirded out …
Wakko Wakko starts making funny faces back
Pzzzt!
Yakko Wakko! Let’s go.
  The maniacs take their leave.

 

Discussion

the doctor So, you didn’t get into Empower? Did you lean anything? Is there a point to this story?
Yakko We did overhear a few conversations at the local restaurants …
the doctor So, nothing more than rumors then …
Dot Some we heard a few times …
the doctor Well, with respect to those that you heard more than once, did you overhear anything that is more informative than what I already read on Spend Matters and heard from attendees?
Yakko Spend-What now?
Wakko Cost Matters, dude! It’s all about getting as much as you can for whatever you’re selling! It’s all about the mighty dollar!
Dot After all, it wouldn’t be Prada if it were cheap now, would it?
the doctor OOO-Kay … back to topic … let’s discuss what my readers probably already know and see if you have anything to add to it. Sound good?
Wakko Of course they sound good! They’re Bose speakers!
the doctor learning quickly that interrupting the maniacs does not lead to predictable results
Let’s start with the numbers. Any idea how accurate the headcount numbers reported on Spend Matters are? In other words, does Emptoris have almost 450 people, with 150 staff members in engineering and QA?
Yakko I never heard anyone at the local restaurants talk about headcount numbers.
Wakko They were more concerned with losing their shirts, though I don’t know how you lose something that you wear snugly around your body.
the doctor I think they were using a metaphor to refer to the current economic crisis, Wakko.
Wakko Wakko looks … thoughtful.
the doctor It’s unfortunate that you can’t add anything. I’d like to know more about the current R&D breakdown, and, in particular, QA vs. maintenance and support of existing products vs. development of new products vs. mid-term to long-term research?
Yakko Why?
the doctor 150 is a large R&D organization, esprecially in this space. If I had that many people, and they were the right people, I could do some great things. And the more they have on new development and mid-to-long-term R&D, the more you can expect from them in the future.
Yakko After our road tour this summer, I don’t know what to expect anymore! I used to think the solution our former employer developed was very comprehensive and kicked-ass … but now I know it only solved a small part of the problem and that there’s a lot more to sourcing than I thought, and a lot of new solutions out there to help companies address their problems.
the doctor That’s right, Yakko. It’s a wide world of sourcing, with great tools to help you if you know where to look. Let’s move onto the new developments coming down the pipe that Emptoris released details on at Empower.

I have gathered the following from Spend Matters alone:

  • better attachment handling
  • an enhanced notification & alerting framework
  • an updated preliminary bidding interface as well as optimized auctions
  • incremental awards capability
  • ad-hoc reporting capabilities that plug into Microsoft Excel
  • embedded domain knowledge

and I must say that, with the exception of the third and sixth improvements, they don’t grab my attention. We’ve known how to handle attachments for over a decade now, and open source content management / document management solutions with extensive attachment support have been available since early in the decade; if the architecture properly accounts for events, it’s trivial to send off a notification or trigger an alert on any event that occurs in the system; just about everything plugs into Microsoft Excel these days, and has for years; and incremental awards capability is a pretty logical product extension.

That being said, if the domain knowledge that was embedded was extensive, good, and guided the workflow … that would be incredibly useful to your average buyer and if the optimization was tightly integrated into the auctions, that would seriously rock. However, the later is much easier said than done. So, needless to say, I’m curious as to how far they have progressed down that road.

Can you add anything to this?
Wakko When I was hiding in the foliage …
the doctor You were … never mind … continue …
Wakko I heard a couple of men in suits talk about the new “drillable dashboards” and how cool they were. How they thought they’d be able to drill around their reports in real time and find hidden opportunities and then export the data to Excel and play around some more. They said it’s much better than the reporting they got when they first bought the solution.
the doctor A couple of my sources mentioned that too. I hope they did more than that. First of all, as I’ve said again and again, dashboards are dangerous and dysfunctional as they can give you a false sense of security. Secondly, with a spend analysis solution, which is one of the many solutions Emptoris provides, you can not only build your own “dashboard” reports, but actually drill around the entire data set in real time.

I was hoping that the dashboards were quick access points into their SRM application, since that’s the one place I see them being incredibly useful, and was hoping that you’d be able to provide some clarification.

But c’est la vie. Anything else?
Dot When I was pretending to be a waitress, I heard them talking about something called spend desktop intelligence.
the doctor The Prophet (of Spend Matters) mentioned that too, but I’m fuzzy on the details. Are they packaging up their best practices and market insights that they would have gained from working with their customers across America and Europe, and maybe trying to leverage it the same way Ariba is apparently realizing that it needs to leverage it’s category expertise?
Dot I don’t know. They mentioned how great it was that it worked with Excel and supported more ad-hoc reporting.
the doctor That makes it sound like its just an improved reporting tool, which it may be based on a few things I heard. But I hope I’m not getting the full story and that it’s more than that, especially since it’s been reported that they have a Center of Excellence with over 65 staff that speaks ten languages and works with customers across North America and Europe. With that many staff, they would be developing significant market and category expertise, just like the Ariba Supply Watch team, from working on the large number of customer projects that such a team could support over the course of a year. I want to see them package that knowledge up and build a tool that instantly puts it at their customers fingertips. That would be desktop intelligence!

Anything else?
Yakko I heard a couple of suits talking about something called agile contracting and whether or not the simultaneous amendments and mass amendments would be useful.
the doctor Well, if by simultaneous amendment you mean the ability for multiple parties to simultaneously collaborate in the drafting and rapid approval of a contract amendment, which is what I believe it is, that is very useful. But what do you mean by mass amendments?
Yakko I think it’s the ability to amend multiple contracts at once.
the doctor Well, that scares me a little.
Yakko Why?
the doctor Most amendments to a contract need to be mutual … between both parties. That means you can’t just go modifying a contract, once signed, willy-nilly, and that you definitely can’t go modifying a group of contracts willy-nilly … unless you want to give your legal advisor a heart attack. Now, it’s true that some modifications can be made unilaterally, but they are usually restricted to change of address, etc. Although the feature could prove to be quite useful in larger organizations during contract template maintenance and update, which is a huge task in itself if you have the same terms and conditions across multiple types of contracts, I can see it scaring legal council, who would thus be adverse to using it, especially if they think there’s a chance they could overwrite a live contract. Let’s hope they put out some really good messaging on this capability.

Anything else?
Dot Spend enrichment …
the doctor Yeah … I’ve heard this from multiple sources … but I’m going to cut you off at the starting line with this one. Spend enrichment is child’s play with a good spend analysis system (and if you don’t immediately see why, read the wiki-paper and the spend analysis posts on my blog), and doesn’t need much discussion.

What else?
Yakko Performance visibility within Contract Management …
the doctor Now that would be cool … especially if they tightly integrated their SRM application within their CM tool and, for any supplier, you could see how well they were doing at a glance, where they were weak, and what needed improvement … and could take immediate action. And if you can see their invoice accuracy, and verify that you are not overpaying, and thus realizing your negotiated savings … that’s useful. What were you able to find out about it?
Yakko Nothing.
the doctor Nothing?
Yakko They left the restaurant just as they started that conversation.
the doctor That’s unfortunate … as I don’t have any details on this either, though I’m told by multiple sources it’s coming. Anything else? Anything?
Wakko Something about A T K.
the doctor Do you mean AT Kearney?
Wakko I think so.
the doctor What did you hear?
Wakko Something about AT Kearney using Emptoris Spend Enrichment exclusively for all of it’s opportunity assessments.
the doctor Are you sure?
Wakko I think so. Why? Is it important?
the doctor Are you kidding? If you heard right, that’s huge!
Dot, tell me what you heard about what they are calling “spend enrichment” … their definition must be more extensive than mine if they’ve won over AT Kearney.
Dot Something about building in an item knowledge base and vendor knowledge base …
the doctor And???
Dot I got called to another table. I had to keep the waitress act up, you know.
the doctor That sucks. I’d love to know how they won AT Kearney … and to what extent AT Kearney is deploying them … I’d bet that to be one of the most important revelations to come out of Empower … after all, with the exception of optimization-based auctions, just about everything else sounds like logical, incremental, expected upgrades to their existing suite. But whatever they did to get the undivided attention of AT Kearney is certainly worth investigating! It’s too bad they won’t talk to us …

Anything …
Yakko They’re hoping to have their next release out soon.
the doctor I’ve heard that too. Did you overhear what’s going to be in it?
Yakko Dutch reverse auctions, dashboard intelligence, and better spend analysis.
the doctor Sounds about right. My sources didn’t provide much insight here, which is probably good since future development plans are always subject to change anyway. Did you hear if they are going to take whatever they have for auction-optimization up a notch? That could be so cool!
Yakko I don’t know. I didn’t overhear anyone talk about optimization at all.
the doctor That’s depressing. I know that I’ve said before that I don’t think it’s the best solution on the market, but let’s face it, you don’t need the absolute best optimization solution on the market to save big money the first time you apply it to a category … a good optimization solution, which they appear to have based on the details they released in a Spend Matters Post (Emptoris Optimization: Setting the Record Straight) and other publications I’ve been able to dig up, will save you a small fortune (especially if it is significantly more affordable than the best solution out there, as there is generally not that much of a difference between a good, solid, optimization solution and a great one, which generally only saves you additional dollars on significantly complex or specialized categories), and from what I understand, they’ve made some definite improvements, at least on the usability front, over the last couple of years and I bet there’s still a lot of categories their average customer could save 10% (or more) on. (And, these days, that’s a lot of money!)

But what should I expect from the market? The true leaders get it, and the laggards, which, apparently, constitute the majority of the space, don’t. I guess I’ll just have to keep educating them that optimization is easy, that they can do it, and that they can save money … significant money … and this is doubly true if they are already using a solution (like Emptoris) that has optimization. (Even though I’m starting to feel like Rob Schneider in an Adam Sandler movie.) I hope that, for the sake of so many companies which are in unnecessary financial jeopardy, it doesn’t take me much longer.

Anything else?
Yakko Not really.
the doctor Dot?
Dot No … I was really much too busy having fun playing waitress …
Wakko I got so comfortable in the foliage, I feel asleep.
the doctor So you didn’t hear anything more than I did. Pity. Because what I’ve been told, by attendees, and heard over the last few months doesn’t go much beyond the coverage on Spend Matters, the news sites (Supply and Demand Chain Executive, ITWeb, and their own Emptoris Connect news site), and the Analyst sites (like Forrester, AMR, and IQPC). And my readers want more than that. They want deep insights into problems, solutions, and vendors who can help them. Not marketing fluff or the superficial coverage, which is often no more than parroting press release, that most of the news sites seem to be content with these days.

On a different subject, did you meet up with Pinky and the Brain while you were in the area?
Dot Pinky came to see me …
the doctor And?
Dot He told me some funny stories.
the doctor Any contain any insights as to what’s going on with the vendor world?
Dot Not really. They were just about the Brain’s latest attempts to take over the sourcing world.
the doctor Tell him to share them with me! It’s been a while since I’ve heard from him.

Well, if there’s nothing else, I should let you get back to your story.
Yakko Where were we?
the doctor Reviewing notes.
Oompa Loompa Doom-pa-dee-do

 

The next part of the story continues after where we left off in Part VI.