Category Archives: Market Intelligence

Is Your Potential Vendor a Dead Company Walking? Part 1

Not long ago we noted that our space is filling up with dumb companies and that this number, at least in the view of the doctor, is likely at an all time high.

the doctor believes that your favourite vendor likely won’t be around, or at least not in it’s current form, within two years (or less), with the doctor predicting a failure rate of 20% (or more); which, while it sounds pretty significant, is actually a mild prediction compared to THE REVELATOR‘s bold prediction that 75% of companies won’t be around, or at least not in their current form, within 18 months. Wow!

Why? First of all, as highlighted in the doctor‘s revised Dumb Company article, the companies that are (finally) starting to panic (internally) are starting to make the classic mistakes that signal the beginning of the end. (Considering the marketing madness, the buzzword overload, and the hogwash still coming from the firehose, you wouldn’t know it yet, but early warning signs are starting to appear.)

Secondly, they have been, or are starting to, make the Dead Company mistakes, first highlighted by the doctor in December, 2008, as well as some scary new mistakes that weren’t as common, or that were overlooked by the doctor, sixteen years ago.

While there are a large number of mistakes, often with individual nuances, that vary from company to company, and an exhaustive list would be too long to digest (if it could even be compiled by one person), there are still a number of common mistakes that can be identified and the elimination of these, or at least an immediate course correction (as some mistakes can’t be undone) with respect to these mistakes, will go a long way to making sure that their company is not the next dead company walking. If you see these mistakes in spades as a buying organization, it’s probably best to steer clear until the ship is righted. (You don’t want to go down with a sinking ship!)

The top 12 the doctor is currently seeing are:

Too Many Assumptions, Too Few Verifications

Too many founders didn’t do their research, assumed that just because tool X they were forced to use at their last job didn’t do something then no tool did it, or assumed that because they were a buyer buying a few categories at one company in one industry they know what every buyer wants. And, thus, they know enough to design the tool that is going to take the Procurement world by storm! This is rarely the case. Especially if they only ever saw three potential solutions of the 40 to 200 that were out there (depending on the module they were looking for, see the Mega Map).

While it’s hard to tell what is in someone’s head, the words, directions (to the marketing and sales teams), and outputs (in terms of product) speak volumes. They tend to focus on how they were a buyer and know all the problems (without even asking about your problem), focus on user experience more than actual process or solution (look how easy it is for Bob to make a request on his phone and see a virtual avatar of Alice receiving it — woo hoo), and direct their marketing and sales team to sell sizzle, not steak.

A shiny exterior is more important than a modern engine

As hinted in our last point, too many founders today are too focussed on the UI and the UX, the “user experience” and not on the processes that the users actually have to do on a daily basis. As a result, while it may taste great to the eyes, it’s significantly less filling as an actual solution and leaves users wanting more, sometimes to the point where they quickly abandon the solution. As such, it doesn’t matter how quick that shiny new intake-to-orchestrate solution can be implemented if there isn’t actually a solid procurement capability backing it up that does more than allow an employee to make a request and see a shiny avatar of Alice saying “your request has been received”. If Alice can’t actually do the Procurement in tool, what good is it?

So if the “intake” demo stops with the intake, run to the hills, run for your lives! Of if when you ask them about a competitive functionality, all they talk about is the experience their solution offers, they don’t actually have deep capability.

Shiny new tech is more important than a tried-and-true methodology

At least 6 in 7 vendors have jumped on the AI-backed/AI-driven/AI-enabled/AI-enhanced/AI-powered bandwagon, even if they don’t have any AI at all and/or any AI that actually solves a real problem in a predictable, valuable fashion. Too many vendors are popping up with “intake”, which the doctor prefers to call “fake-take” solutions that, as per above, can take a request in a shiny web-based UX and then … do nothing with it, or, in the best case, act as an overpriced pay-per-view on your data!

The sad part about this situation is that a number of real, modern Procurement 2.0+ (and esp. 3.0+) applications have had “intake” built in since day one, like Vroozi that has had it since launch in 2013 and Eyvo that has had it since the mid 2010s. Even Coupa had intake support for catalog-based purchases when it launched on Procurement Independence Day in 2006 (and still does to a large extent, although the user-based pricing model does make it prohibitive for many organizations)! And when it comes to AI, the doctor has yet to see any new “AI” play offer any new capability that hasn’t existed, or been in development, since the last decade! (When the doctor did his AI in X today, tomorrow, and the day after tomorrow series for Procurement, Sourcing, Supplier Discovery, Supplier Management, and Optimization in 2018 and 2019 on Spend Matters. These are all still in the Content-Hub archives, so if you have access, check them out.) (Now, while the doctor will admit that Gen-AI can do conversational interactions better, and summarize larger bodies of documentation as it is a bigger model, that is about it … as it cannot do any task that requires basic logic or math, and thus just about any real Procurement task. Moreover, we have had semantic technology that has done a good job since the early 2010s! Sure it might have sounded a bit robotic at times, but it worked just fine.)

So if all the vendor talks about is buzzwords, find one that talks about how they solve your problem. At the end of the day, it is command line code executing on a server somewhere that solves your difficult business problems, not fancy UIs.

Over-reliance on third party tech is a sustainable business, especially if it’s (Gen-)AI

If a lot of your potential vendor’s functionality is dependent on yet another a new third party vendor (or offering that will be pulled if it causes the company to bleed money), what do you think is going to happen when it goes away? Nothing good, and that’s for certain. That’s why you want vendors who build real applications in languages supported on multiple platforms that use data stores supported by multiple vendors and cloud service providers. You don’t want a single point of external failure taking down your entire business. Especially when the third party tech has limited use (on its own) in the first place.

But way too many vendors are building these Gen-AI or intake-plus solutions first, which are totally reliant on third vendor tech that can destroy their company in an instant. And it doesn’t matter if they only build on big company tech from companies like Microsoft or Google that you know aren’t going out of business, because even these goliaths can, and will, end support for tech pretty fast if it’s not profitable. (And, if it looks like one day an application will be very profitable, cut your access to it to prevent competition with their new, inferior, in-house tech.) The fact of the matter is, they are Goliath 2.0 with full armour plating, a helmet no stone is getting through, and a legal team who will bankrupt you if you even try to fight them. So if they decide the tech is done, or at least your access to it is done, you’re done, and there’s nothing you can do. (the doctor has seen this multiple time and experienced this firsthand. And it doesn’t matter if your vendor has a signed agreement in hand, the Goliath’s legal team will find an out clause and that will be it for your vendor.)

So avoid these vendors like the plague. A vendor with great tech can still fail, but it’s not as likely to do so without a lot of early warning signs if it owns the tech and employs the people.

An innovation burst is enough, especially if it is disruptive

Another increasingly common mistake these dead companies walking make is thinking that once they have a shiny new piece of actual tech that they don’t think anyone else has (which is rarer than you think), they can slow down the pace of development and rev up marketing and sales. That’s the exact opposite of what needs to be done. If you want sustainability as a vendor, you need a big lead, not a small one that can, and will, be quickly replicated by the next startup that has the same idea and gets too much money (and is smart enough to, or lucks into, hir[e][ing] the best). Success as a vendor requires consistent product development for years, and the only reason R&D becomes a smaller percentage of the budget as time goes on is because, one the core module(s) of the product (suite) is (/are) ready for prime-time, marketing and sales spending starts increasing from 0, not because R&D spend decreases!

Make sure your potential vendor has a concrete, detailed roadmap for the next year and vision for the next three. Significant function-spanning developments take time, and vendors in it for the long haul realize that — and they start with the foundations first.

Too much investment, too soon, against an overly ambitious plan

This is one of the worst mistakes, and one we’re definitely seeing too much of recently. Too many companies getting tens, or hundreds, of millions of investment just because they are building intake-to-orchestrate or Gen-AI solutions, neither of which do anything on their own, and neither of which do anything significant without a lot of solid tech (and data) to back them up (for the use cases where they are good). In some cases, the investment is at stupid levels an there is no way the company is going to deliver on the investment to the expectations of the investors, which means that the company will likely be dropped faster than a hot potato when the coffers start running dry as a smart investment firm would rather eat a sunk cost than have an ongoing investment sink their entire fund. In the best case, they’ll be sold off to a bigger VC or PE (at a loss) who can right the sails and extract some value as part of a larger solution suite. In the worst case, the company will just be folded entirely.

So, before buying from any vendor, research their investment to sales ratio at investment time and now, and if they took 100M on 0, and still only have a handful of customers, that’s not a good sign … unless they are building to a very specific niche need with the intent to get them scooped up by a bigger player who needs to fill that hole, their chances of long term survival are slim to none.

 

These are just the first six mistakes we’re starting to see too often. Stay tuned for part two where we’ll go over the next six.

M&A Mania is Coming Again … but will it be the same as last time?

the doctor agrees with THE PROPHET that M&A in Procurement, Supply Chain and Finance Tech is Back On For Q4 and 2025, because M&A Mania is part and parcel with the The Marketplace Madness that the doctor told you is coming back in May. The only question is, will this M&A cycle look like the last few during Covid (when every investment firm had to have an online collaboration platform, since they couldn’t do business in person, and an online e-Payment FinTech solution, since they still needed to make, and most importantly receive, payments) and in the late 2010s when companies were getting scooped up left, right, and centre. It was kind of like that first year in Chemistry where you were told to look to your left, look to your right, and look in the mirror and realize that only one of you would survive the end of the course (except the odds had worsened and there was only a 1/6 chance that any of you would be left standing at the end of the M&A cycle and less than a 1/9 chance that more than one of you would be left standing).

But first, let’s review THE PROPHET‘s reasons why:

Reduced interest rate climate coming
Not necessarily in your country, but in the US and a few other major investment markets, and for global funds, that’s enough.
Valuations back up (including a recent one)
the doctor is seeing a bit of this beyond just over-hyped fake-take and (now failing daily) Gen-AI, which indicates a return to value for real solution capability that solves real problems, and not just glam UX or tech buzzwords, could soon be coming.
Dry powder is the size of an ammo depot
And this is a rather conservative estimate. Broaden your definition of our Source-to-Pay space, and it could go well beyond the 666 providers in the mega-map.
Constrained target/asset pool to pursue
Too many providers not focussed on Gen-AI bullcr@p were not (well) funded and in need of funding to grow and too many providers who raised too much on Gen-AI bullcr@p blew too much on failed dev and marketing and need someone to infuse them with fresh funding while taking in the reigns and refocussing them on core problems.
No clear leader in many markets
Even if you constrain by target enterprise size, vertical groupings, and module, you’re usually looking at over a dozen vendors. Too many. By core module alone, you’re usually looking at over eighty (80) potential providers.
Counter-cyclical sector defensibility as a hedge
Most definitely. the doctor has always said the best time to develop/expand is on the verge of a coming financial or supply chain crisis, and it’s even better if it corresponds with the end of a hype-cycle (when everyone realizes that grandiose claims are just that, claims, and usually not realized and it’s time to return to the next generation of tried and true technology).
Times of increasing global uncertainty favours supply chain, supply and supplier risk management
Yes, and this will be constant for years. The outsourcing crisis the doctor and a handful of others have been predicting for over a decade (which is why he was telling you to near-source and home-source in the late 2000s) materialized during COVID, anti-globalization is at a high not seen in the remembered lifetime of most of the global population (and increasing by the day), we likely haven’t been this close to World War III since the cuban missile crisis of 1962 (since the Soviet radar malfunction of 1983 was caught by an alert Soviet air defence forces officer) putting global political tensions at a near all time high since World War II, ever increasing natural disasters and supply shortages are escalating costs at levels of inflation not seen since the 1970s, and in some markets, since the late 1920s (and the Depression era), and it’s just doom and gloom all around. Only our space has the tech to combat this.
Corporate spend flowing into tech, not new jobs
This is unfortunately true since

  • most executives don’t realize that tech only increases productivity and success in the hands of a human, it doesn’t replace them (since Aritificial Idiocy can’t even replace real idiocy, how can you expect it to replace Human Intelligence [HI!])
  • big companies don’t like high fixed costs, and the see people has the highest fixed cost
  • the dream of the new robber baron billionaires is to replace people with machines, which they think will help them realize their vision of constantly increasing profits from constantly increasing revenue (from a workforce that never needs to take a break) at a constantly declining cost to serve (not possible, but that’s their dream)
Nearly all big tech firms (ERP, business applications and stack) aside from SAP have not made any material moves yet — and will need to at some point
You can’t wait for a lumbering giant … by the time they buy someone, it’s ready for sunset. Remember IBM and Emptoris? A sad end to the APE circus! That means that the time to strike as an investor is before they awake!

Add add the following:

  • money has been idling in these funds from lack of investment over the last couple of years (as they got antsy last year with the predicted recession and the SVB failure and the fallout of both), and their investors aren’t happy
  • many of the more progressive funds have realized that fintech is useless if there’s no money moving through it, which means you have to look for broader business solutions that can assure the flow of money as well as information
  • companies are starting to realize that ridiculous 10X, 15X, 20X valuations are a thing of the past (or at least until we get a whole new generation of freshly minted investors who didn’t bother to study their history, like the new generation of founders that didn’t study theirs) and that if you can get a solid 5X to 7X valuation (which is the most a company can expect to realize at an aggressive 40% annual growth rate, which is the most they can hope to realistically support) for tech, that’s great, and this makes acquisitions a lot more attractive than during the last cycle when you’d have to bid 10X on something that might not scale as an investor just to get invited to the table

The M&A market is returning. But there will be some differences this time. The last two times it was valuation run up until the money ran dry or there were no companies left that were worth it. This time will be more reminiscent of the first M&A Mania to hit our space in the late 2000s and it will come with a little kiss, like this:

1. Valuations will be more realistic.

As simply stated, 10X, 15X, 20X growth doesn’t happen in five years for anything but a Unicorn, and even then it’s rare, and investors aren’t going to pay this any more. That being said, they will invest for value and firms who focussed on building real solutions, not slick UX with no substance, will be valuated quite well (at first).

2. The cycle will have 3 parts.

2A. Existing Growth Opportunities

Look for PE firms to buy suites or modules that can be sold and grown stand-alone or as complementary solutions to offerings in their stable. The market for these solutions could mature quickly as the Gen-AI and intake hype cycles crash and the global situation destabilizes and risk-focussed Sourcing and Procurement become paramount. This will be done at fair to very good valuations, depending on the offering and the financial situation of the firm being acquired … those that can wait and play the field will get better valuations.

2B. Fill the Gaps

As new competitors enter the scene, existing providers with aging tech are going to want to counter them and will start buying up point-plays to fill the gaps. This will take two forms.

  1. stable, stand-alone players who can survive without investment will wait for the right offer, get a very good to great valuation, and survive relatively unscathed in personnel and offering (and will continue to be available standalone for some time)
  2. cash-crunched desperate players who won’t survive long without a cash infusion will be bought in a fire sale, folded in quickly, and only key personnel will remain

2C. Liquidation Opportunities

Everyone loves a steal, err, deal. Investors included. As companies start to run out of money left, right and centre because they were underfunded (and struggled to compete with the overfunded overhyped companies) or overfunded and burned money like it grew on Central American fruit trees that produce two healthy crops a year, investors and buyers will be looking for companies with pieces of tech they can use to enhance their offering for pennies on the dollar. These companies will be broken up across talent and technology, with the acquirer keeping only what they want.

Questions to Ask Your Optimization Vendor

This is an update of a post that originally ran way back in 2007. Yes, two, double-o seven. Seventeen years ago. It is being updated because

  1. it needs a re-posting
    (as very few of you will find it that deep in the archives)
  2. most of the vendors originally mentioned are gone

However, if you read, and remember, the original, you’ll realize that, like my article where the doctor goes mental on optimization myths (which was recently shared on LinkedIn), it doesn’t need much updating and what was written seventeen years ago is still valid to this day. (When you write to inform vs. to create meaningless buzz, it really does stand the test of time.) Let’s begin.

Not all optimization vendors are equal … and, more importantly, not all vendors that claim to have strategic sourcing decision optimization (SSDO) actually have it (since the underlying algorithms and model needs to meet a stringent set of requirements to be true SSDO), with some systems, to this day, barely qualifying as decision support. Thus, since the need for optimization is as desperate as it has ever been with costs again skyrocketing, risks rising rapidly, carbon control being critical, and supply assurance necessary for sustained operations, it’s time to make sure you know how to qualify a potential provider. This means you need to not only understand the basics of what SSDO does (see the archives), but also how to distinguish between the relative strengths and weaknesses of the different offerings, as well as how much strength you really need.

You need to buy optimization at the strength, and usability level, that you need — especially if the vendor is pricing it according to its power, or computational requirement. And while there is no such thing as too much, the reality is that a 95% solution is often more than enough as the entire point is understanding the optimal solution against each dimension (cost, risk, carbon), the cost of compromise between the trade-offs, and the cost of going with a preferred, versus calculated, vendor award. And doing this for EVERY sourcing event. Once you factor in enough discounts and constraints, it’s almost impossible to calculate the best award in a spreadsheet, and the insight of what you could be spending, versus what you are, how low your risks could be, versus what they are, and how much you could alter your carbon footprint, vs what your footprint is today, is invaluable. Even if you never select a recommended solution, the key is understanding how good your (preferred) award actually is.

Before we get to the (starting) question list, it should be pointed out that it’s almost impossible to cover every question, as many of the questions you should be asking depend on the answers you receive to your first few questions, but the question list below is a good starting point.

1. Does the product meet the four criteria for strategic sourcing decision optimization?

  • Sound & Complete Mathematical Foundations : such as MILP solutions based on simplex, branch and bound, and interior point algorithms as many simulation, heuristic, and “AI” algorithms DO NOT guarantee analysis of every possible solution (sub)space given enough time, and, thus, are not “complete” in mathematical terms (and if they incorporate Gen-AI, they aren’t even “sound” in that they may not even compute an award that satisfies the constraints!)
  • True Cost Modelling :
    that supports tiered bids, discounts, and fixed cost components — the model must be capable of supporting all of the bid types being collected, as well as the cost breakdowns
  • Sophisticated Constraint Analysis : at a minimum, the model must be able to reasonably support generic and flexible constraints in each of the following four categories
    • Capacity / Limit: allowing an award of 200K units to a supplier who can only supply 100K units does not make for a valid model
    • Basic Allocation: you should be able to specify that a supplier receinves a certain amount of the business, and that business is split between two or more suppliers in feasible percentage ranges
    • Risk Mitigation: you should be able to force multiple suppliers, geographies, lanes, etc. to mitigate those risks without specifying specific suppliers, geographies, lanes, etc. to take advantage of the full power of decision optimization
    • Qualitative: A good model considers quality, defect rates, waste, on-time delivery, etc., and must support qualitative factors and minimum and average scores across the award
  • What-If? Capability : The strength of decision optimization lies in what-if analysis. Keep reading.

2. Does it support the creation of multiple what-if scenarios per event?

Furthermore, does it simplify the creation of these scenarios? The true power of decision optimization does not lie in the model solution, but the ability to create different models that represent different eventualities (as this will allow you to hone in on a robust and realistic solution), to create different models off of a base model plus or minus one or more constraints (as this will help you figure out how much a business rule or network design constraint costs you), and to create models under different pricing scenarios (to find out what would happen if preferred suppliers decreased prices or increased supply availability).

3. How fast is it for different average model sizes?

And can performance be tweaked? Optimization takes what it takes. That being said, if one solution takes an average of 1 hour for an average scenario, and another solution takes 10 minutes, all things being equal, if you have compressed sourcing cycles, the 10 minute solution might be better. Emphasis on “might”. This is only true if the faster solution is of the same quality – some models, and some solvers, sacrifice quality and accuracy for speed. The best solution will let you trade off “tolerance” and accuracy for speed. Sometimes it’s easy to get within 1% or 2% in a few minutes, even though that last 1% or 2% could take hours. On a model with low total savings potential, getting within 1% may be enough. And when trying to hone in on the right what-if scenario, it’s nice to get within 1% quickly and then allow the right scenario to run to completion over lunch (or if its a huge model, over night) after you’ve quickly analyzed half-a-dozen scenarios and settled on your preferred scenario. Thus, tweaking ability is very important.

4. Is it “true” real-time or “near” real-time?

Thanks to significant advances in processor and hardware performance as well as off-the-shelf optimizer technology (like IBM ILog’s CPlex), it’s now possible to rapidly re-build and re-solve even very large models using off-the-shelf modeling languages in seconds, allowing for e-auction tools that keep the model relatively moderate in comparison, and presolve with seed bids (current prices, market prices, last quotes), to incorporate decision optimization in real-time by simply updating a few parameters and re-solving the model every (few) parameter(s) update (depending on model-size) on a high-powered multi- core server with an appropriately configured and optimized solver (which can spin off copies and have each processor work on a different subspace). However, if the approach the product takes is to rebuild and resolve the model on every update, that’s not real-time, that’s near real time, and the slowdown could be significant for large models. (To clarify further, real-time optimization requires the ability to merge model construction and model solution in such a way that a new bid can be introduced as a parameter change that does not require the optimizer to rebuild the sparse model matrix and start the solution process over from scratch.)

5. Can you describe two or three scenarios you have encountered where you could not model the situation exactly?

And, more importantly, how did you work around the issue, and how accurate was the final result. The real world is messy, compared to models that are clean, only so much data is available, and math can only model as much as the minds who created the model could conceive. As a result, no optimization model can handle every real-world scenario 100% accurately. If a vendor representative says so, he’s either lying through his teeth or not competent enough to be selling the product. (Note that: I’ll have our optimization expert get back to you on that is a good answer from an average sales representative.) This is about the only way to get a decent idea of how appropriate the tool is for you. If the scenarios were complex and the constraints based on business rules you hardly ever, or never, use, then the solution is probably okay for you. If the scenarios were simple and the constraints based on business rules you use all the time, it’s probably not the tool for you.

6. Would you be willing to demo your solution to, and answer questions from, our consultant who understands both our needs and decision optimization technology?

Let’s face it -– just like the right decision optimization tool can deliver huge savings multiples on your investment (10X or more), the wrong tool will simply represent a six (or seven) figure cost that yields little return. If you can’t tell the difference, and there’s no shame in admitting you can’t if you’ve never used this type of technology before, then you should bring in a consultant who can to help you select the right technology, and ensure you are appropriately trained on it, until you are self sufficient and saving an average of 10% or more per project put through the tool.

7. Can we do a pilot project at-cost (or gain-share) before committing to a long term license?

If you like what you hear, but are still unsure, or are having problems getting the budget approved, a pilot is often the way to go! (Note that I did not use the word “free”!) If you’re not willing to sign a license, given the sophistication of this technology and the amount of effort the provider is going to have to allocate to support you through the pilot and ensure you are successful, you need to be willing to pay for services at a rate that is sufficient to cover the provider’s cost for the pilot -– especially considering that many of the companies that offer affordable optimization offerings are only able to do so because they keep their costs and overheads down.

How Dumb Is Your Company?

And, more importantly, will you be among the 20% who will be completely gone within two years (as per the doctor‘s predictions, and remember that he has been following this market for almost 25 years and seen all the ups, down, startup explosions, M&A manias, and the following implosions) or the 75% who won’t last in their current form (as per THE REVELATOR‘s predictions).

the doctor first asked this question to the space on November 7, 2008 when he saw the first implosion (which had all the signs of the first major enterprise back office tech implosion in the 2000 crash) coming (which wasn’t the last, as there was another one in the latter part of last decade that followed the next big wave of M&A and startup mania), but this time the forthcoming implosion looks to be the biggest our space has ever seen (and while the space is too crowded with vendors who aren’t actually providing any new, solid, innovative Procurement solutions, this implosion could also wipe out a large number who are, and that would not be a good thing).

So, it’s time to ask this question again, except this time we’re focussed entirely the vendors. Last time, it was directed at all organizations generically, including buying organizations that, sensing a market correction (which was worse than expected in 2008 and 2009, were putting off much needed Procurement technology purchases which could have saved their hides during the crash) as well as poorly run vendors. But this time, it’s all on the vendors and the investors (namely VCs and PEs investing way too much in companies without any real solutions, hoping to profit from the hype cycle before it crashes). So, without further ado, here are 10 of the most common dumb mistakes we’re seeing.

1. Doing Away With the Perks

Even if money is getting tight (or the PEs are telling you to tighten your belts because they just realized they aren’t going to sell low value solutions for a Million bucks a pop), this is the last thing you want to do. For an employee, it’s the first sign the company is in trouble and for a good employee who is talented and in demand enough to get a job elsewhere, the first sign to accept the next offer that is more-or-less equal to her current renumeration package.

2. Delaying Time-Saving Technology Purchases

Your developers, back office, sales, and marketing personnel need tools too, not just your potential customers. This doesn’t mean that you should buy the first tool they request, because if everyone is on a different tool you’re not achieving economies of scale and spending 30% to 40% more on SaaS than you should be, but that for every task they do regularly that they could do much faster with an appropriate tool, they get an appropriate tool. For e.g. SalesForce isn’t the only CRM, there are a lot of marketing tools for expediting content to multiple business and social networks, and a lot of back office suites that are quite affordable, especially in the small business / mid-size business market. You just have to take the time to look.

(As we all know, just like you’ll never get a Mega-S2P Suite in our space for less than 1M a year, you can get mid-market suites with all the functionality a mid market actually needs 90%+ of the time for less than 250K. The same holds true in other enterprise technology markets too.)

3. Postponing Actual New Product Development

Remember, business need actual solutions more than ever — and this doesn’t mean wrapping a shiny new third-party Gen-AI tool and claiming success. This means researching their problem, identifying actual process-bases solutions, and coding those processes (with configurable rules-based workflows) in an easy to use manner. Now, you can use ML/AI as appropriate to analyze data and trends, and even Gen-AI to summarize available natural language documents and data, and present these insights to a user as intelligent augmentation to help her make a decision, but the tool works without it in a way everyone can trust.

4. Strangling the Travel Budget

National and global business requires national and global travel. There’s only so much that can be done (or that old school business people will allow to be done) over Zoom and Teams. Now, this doesn’t mean that travel should be granted willy nilly for every prospect, conference, etc., but at key points during the marketing, sales, and implementation cycles, on-sites will be needed. (Nor does it mean that travel budgets should be fully unsupervised, for anything over a trivial amount, at least one other employee at an equivalent or higher rank should agree it’s worthwhile.)

5. Cutting 10% above the Board

Now, the Big X like to to this, but this is one of the reason the doctor keeps hearing examples of how their remaining AI and analytics teams are not delivering value relative to the price tag the Big X charge (relative to what mid-markets can charge and deliver). (Because the Big X kept hiring whomever they could during a tech boom and then kept cutting the worst as an ongoing “correction” to their over-hiring of under-skilled, under-educated, and/or under-experienced individuals, relative to the value they wanted to bring to the market, the best believe that just one mistake, or one bad quarter for their team, and they could get the axe no matter how good they are, so many left for what they perceived as better opportunities as soon as those opportunities came their way). That’s one of the two reasons the bloodbath started earlier this year (and is still ongoing). You can’t continue to charge 2X (or more than) the niche firms, especially if you have junior people who deliver 1/2 the value (or less) and expect customers to keep putting up with that, especially during non-growth and recessionary times. (So while this strategy is great for weeding out under-performers and bad apples in good times, in bad times it scares the top talent away.)  You have to charge less or increase value.

Only cut people who aren’t working out (and only after giving them time or support to find a job more appropriate to them elsewhere), and avoid hiring people who aren’t likely to fit in the first place!  (Side note: identify your core values and focus on that.  Just like there are situations when they should use Big X as a client, there are situations where they should use you as a client!)

6. Killing the Training Budget

In fact, you need to double or triple it. If you think that Gen-AI, intake-to-orchestrate, AI-backed/AI-driven/AI-enabled/AI-enhanced/AI-powered, supplier insights, or some other overhyped buzzword is the answer, then you don’t actually know what the majority of Procurement organizations need and what you should actually be building. So train your product managers on real Procurement practices and processes and how to do actual market research (or at least identify a niche consultant who can help them).

7. Shifting Focus from Infinite-Growth to Indefinite Belt Tightening

Just because you overspent on marketing hype and a sales force (who couldn’t sell because you didn’t actually have anything worth selling, or at least worth buying at the ridiculous price tag the investors hoped for), that doesn’t mean that you’ll survive if you just cut costs across the board. The only way to survive is to start building actual process-based solutions now that take a people and process centric first approach (what do our target users need to do everyday and how can we best enable that in an easy, minimal, step-by-step process with an intuitive UX), and educational messaging that will help hit this point home (and make your solution stand out from all the other hogwash that these businesses are fed up with hearing about).

8. Freezing the Marketing Budget

Just because you overspent like Montgomery Brewster in Brewster’s Millions and have nothing to show for it, that doesn’t mean you’ll do any better with $0 in the budget either. The key is to do consistent educational marketing that informs your audience not only that you exist, but on what your solution does and how it will help them solve their daily problems. And to do it through channels relevant to your industry, geography, and the communities these buyers are a member of. (Not one-time “look how great we are” conference booths that no one remembers, or one-time “groovy vendor” write-ups with limited reprint rights from overpriced analyst firms, or splashy advertising in the biggest publication you can afford.) Consistent, month after month education in small pieces such as short webinars or podcasts, bite-sized white-papers (with an e-book on your site if they are interested and/or for your sales people to use during a sales cycle), info-adverts in targeted publications. By the time the next budget season hits, you should be a name they know and trust because you took the time to learn about problems, instead of pushing magical solutions that will never work (the new silicon snake oil).

9. Stifling Real Innovation to Reduce Risk

Because optimization, machine learning, analytics, and other “real” methodologies that, with a lot of blood, sweat, and occasional tears, will actually produce solutions that actually work, is hard, requires top people (who command top salary), and has some risk (in that it could take a lot more time to get it right than you think — but at least you can get it right and it will work, as some of the best minds at the best companies in our space have demonstrated for over two decades). The biggest risk is not advancing towards a solid, trustable, usable, solution that the market will actually want!

10. Retreating into your Moated Castle

This is still the doctor‘s personal favourite. Often the first thing to go these days after the employee perks is the consulting budget — and it’s often by far the dumbest thing your average newly funded company can do (because, as has been repeatedly stated, just because you can sell an investor on what you think a buyer needs doesn’t mean you can sell a buyer, especially if you don’t really know!). Often the only way of introducing significant, meaningful, cost-saving revenue-generating improvements into your company is to bring in an outside consultant who specializes in one or more types of solution-based business innovation. A consultant who can tell you what technology roadmap is right for you, even during a recession. A consultant who can help you maximize your marketing budget. A consultant who can help you save money and avoid unnecessary costs in an intelligent, non-destructive, fashion. And a consultant who can keep you on the innovation path and out of the cost-cutting abyss that ultimately spells a cruel demise to what could have been a very successful business model with just a few tweaks.

And, FYI, the doctor has seen a lot of dumb over the years. That’s why he did a 5-part series on 15 common mistakes in hopes some of these founders would read it, reflect on it, and not make the same mistakes over and over again.

Fortunately, the corporate intelligence scale from 16 years ago doesn’t need updating. Start with 10 points and subtract 1 point for each of the above that you are currently doing (and be honest):

Score Rating Comments
10 Genius Congratulations! You are a true market leader.
9 Intelligent Quite Good! You’re best-in-class.
8 Smart Not Bad. You’re above average and on the road to stardom.
7 Average You’ve got some work to do, but if you set your mind to it, a bright future awaits. In fact, with the right effort, you just might have to wear shades!
6 Dull You’ve got your work cut out for you.
5 Deficient You’re handicapped, but if you’re handi-capable, with hard-work, perseverance, and a devout focus on change, you can be average in no-time!
4 Feeble You’re seriously lacking in corporate know-how, but if you open your heart to innovation, and bring in some expert consultants, you might just be able to get back on the right track.
3 Dumb You’re going to need a serious corporate make-over to survive. the doctor wishes you the best of luck!
2 Moron Find a Leprechaun! You’re betting on Lady Luck at this point!
1 Imbecile Start writing your corporate obituary. It’s just a matter of time.
0 Complete Idiot Congratulations! The Sourcing Maniacs lay their bells at your feet. It should be impossible to be this idiotic and still be alive (and you must have received an absolute shipload of private funding to still be around), but you’ve proven that nothing’s impossible. Have some bubbly before the money runs out.

For those of you who score 6 or below, please get help now to avoid being a casualty!

For those of you who score 3 or below, your theme song is still in the archives!

Why are there so many tech failures?

Those following along know that this is a primary concern of both THE REVELATOR and the doctor because, if we were truly progressing in technology, we wouldn’t still be seeing the same enterprise technology implementation failure rates of 80%+ that we saw two decades ago! (This is why the doctor decided to update, expand, and republish his Project Assurance series series from a decade ago. See Part 1, Part 2, and Part 3.)

THE REVELATOR asked this question again in his recent article on Why is AI such a hard sell?, in comments in my recent piece on Vendor Onboarding for Payment Assurance because it reminded him on how so many vendors miss critical solution elements required by the business in their technology-first push*, and in comments to his recent article on DPW & Comdex.

The answers are varied, and regardless of which one applies in the failure at hand, none of them are good. In fact, they are mostly so bad that THE REVELATOR, who is as fed up as the doctor with all of the sales and marketing bullcr@p, flat out stated in his most recent article that after 40-plus years, I say this with the deepest sincerity -– 90% of salespeople aren’t worth the gum stuck on the bottom of a shoe. And while the doctor would like to think the number wasn’t that high, given the failure rate, it can’t be that far off.

A lot of commentary as to why can be found in the comments to these (and other recent articles), but most of them revolve around the following reality (which the doctor also knows all too well with over 25 years in tech and Procurement).

At the majority of tech enterprises,

  • sales people are compensated on how much they sell, not how successful the solution is for the customer
  • sales people are pressured to hit numbers, or be cut if they have even ONE quarter in the bottom 10%
  • sales people don’t stick around long enough for success to matter — as THE REVELATOR has noted,
    • sales people could make a good living selling next to nothing for 18 to 24 months drawing a good 5-figure salary every month (once they made a few sales and had a “track record”) and then changing jobs as soon as they closed a few mega deals (which could sometimes net them a six-figure departure bonus)
    • sales people make more money by changing jobs just after closing a few F500 clients (and negotiating a bigger salary building on their recent high)
    • … and even more if they can do it during the rapid rise in spending (that translates into top engineers and top sales people at any cost) at the fore-front of a hype cycle (when early vendors believe they can make the biggest sales first if they just have the “best” sales people, defined as those who just closed the biggest deals at their last job with F500/G3000 customers)

It’s all about how much, how fast they can sell … not about actually selling a solution and making a client successful (and building a pipeline for upsell over time as they learn the customers’ business and create newer, better solutions for the clients who would happily fork over fistfuls of dollars to a vendor with a track record of delivering solutions that actually worked).

As to THE REVELATOR‘s paraphrased question with regards to why don’t these sales people care that the solution they are selling is going to fail, it becomes pretty obvious when you consider the above:

  • they aren’t compensated to solve customer problems; only to sell as much as possible as fast as possible and do so at ANY and ALL costs
  • if it’s a big enterprise suite deal with an F500/G3000 being implemented by a third party consultancy, chances are the implementation won’t even be finished before they move on to their next job (and if it fails, then it’s the consultancy’s fault for sending the B-team)
  • caring would weigh down on their conscience until they had to find a new occupation (and if they had no other significant skill, then what would they do?)

And if they are actually caring people?

Then they convince themselves the solution can be configured to work with the right tweaks, even if, in reality, it can’t.

So what is a buyer to do? What the doctor has been saying for years.

Their research!
And, most importantly, get unbiased third-party help with need identification, vendor identification, and proposal review!

Why, because, as the doctor has said many times, including in the comments in response to THE REVELATOR‘s comments, everyone needs to remember:

  • there are no silver bullet tech solutions
  • many “solution” providers riding the current hype cycle are just proffering a new form of silicon snake oil
  • some providers don’t have anything except this snake oil, and the minute the third party fails, so do they
  • relying on the wrong tech is dangerous, just like relying on airplanes made under poor quality control processes … you’ll get a few good flights out of them, and then the door will suddenly blow off as the landing gear falls off on the same flight, and then what do you do? (Unless you have ““Sully” at the helm, you pray to whatever deity you believe in, because at that point, there is nothing you can do.)

* whereas PaymentWorks, chronicled in that piece, started by identifying what their clients’ biggest business issues were, and solving that first — so while it’s not the broadest Supplier Management suite on the market, it is one that contains the necessary functionality to solve a very specific set of pain points that almost no other vendor does; which most of you should find shocking given that there are over 100 Supplier Management vendors, illustrating THE REVELATOR‘s comments that not enough technology providers put solving customer problems first).