Category Archives: Procurement Innovation

Coupa + Trade Extensions = ??? … Part II

Back in May, the doctor indicated that at some point after Inspire he’d do a deep dive into the acquisition of Trade Extensions by Coupa. He waited as he wanted to think more on the possibilities and probabilities and get more insight into the potential, but as no additional insight appears to be coming in the short term, in our last post we began to summarize where things are at now from the perspective of a SWOT analysis. Yesterday we outlined some of the key strengths and weaknesses of both platforms. Today we will dive into some of the key opportunities and threats.

Coupa + Trade Extension Opportunities

  • Quick deployment anywhere due to pure SaaS nature
  • The great UX offered by both platforms is extremely attractive
  • Both are true market leaders in what they do
  • Both are deployed, supported, and used, globally
  • The Open Business Network can feed new suppliers and quotes into both platforms
  • All spend can be appropriately placed under management
  • Easy analysis of all spend and spend data can be accomplished between the platforms
  • Collectively, each key step of the full Source-to-Pay platform is supported
  • A large amount of educational content on both fronts that can form the foundation for end-to-end Source-to-Pay education

Coupa + Trade Extension Threats

  • Not the only Source-to-Pay offering
    Jaggaer has better CLM & SXM
    Ivalua is one platform
    etc.
  • Weak CLM and no contract analytics leaves an opening for competitors
  • Weak SPM and no best-of-breed SRM leaves another opening for competitors
  • Out-of-the-Box integrations with on-site systems is limited
    and a great web API is often only great for cloud-based solutions
  • No end-to-end category guidance and management
  • No category templates for common categories for strategic sourcing or group-purchase Tail Spend sourcing
  • The platforms do not integrate and may not for some time …
    while sourcing always precedes procurement, awards need to get from sourcing to procurement and spending needs to be monitored and analyzed against spend and logistics may need to be optimized mid-contract if demands change or factory allocations shift
  • No end-to-end education on how to master S2P to not only maximize SUM but maximize savings and value

    … but most importantly …

  • No clear direction on how the two platforms will be integrated to increase the net value of both.
    Considering there has not yet been a truly successful acquisition of a strategic sourcing optimization platform (where both the acquirer and the acquiree’s platform have thrived), this is a major threat … and worry.
  • The two companies don’t speak the same language. Not even close.

At the end of the day, as we have indicated before, there is a huge potential for both companies and all of their collective customers, but, hiding in the shadows, there is also the potential for catastrophic failure. (This was one of the priciest acquisitions of a best-of-breed platform in optimization history, and Coupa could have done a lot with the money it spent.) The jury is still out, but to be honest, the longer it takes for a clear direction to materialize, the more one naturally starts to worry.

Coupa + Trade Extensions = ??? … Part I

Back in May, the doctor indicated that at some point after Inspire he’d do a deep dive into the acquisition of Trade Extensions by Coupa. He waited as he wanted to think more on the possibilities and probabilities and get more insight into the potential, but as no additional insight appears to be coming in the short term, we’re going to summarize where things are at now, from the perspective of a SWOT analysis.

Coupa Strengths

  • Pure SaaS
  • Extremely easy to use tactical e-Procurement/P2P Solution
  • Compliant e-Invoicing in 30 Countries
  • Open Business Network
  • Integrated Expense Management … on the go
  • Integrated Budgeting
Trade Extension Strengths

  • Pure SaaS
  • Easy to use optimization-backed Strategic Sourcing Platform
  • Most powerful decision optimization platform on the market
  • Extremely powerful fact sheets for upload, verification, and analysis
  • Extensive formula and modelling support to support any category and modelling needs
  • The TESS Academy
Coupa Weaknesses

  • Integration to On-Site Systems is Limited
    (the API is great for integration to other SaaS solutions)
  • Integrated RFX/Auction support is extremely limited, no BoM support
  • Community Intelligence is limited to what is pushed through the platform
  • Large Supplier Network, but limited intelligence on reliability, sustainability, and risk
    (the Riskopy acquisition will hopefully improve the situation over time)
  • Well suited for Tail Spend, but no built-in help identifying categories that should be strategically sourced
  • Contract Management is very limited
  • Focus on just pushing spend through the platform to increase SUM detracts from value-generation opportunities
Trade Extension Weaknesses

  • Out-of-the-Box integration to other systems is extremely limited
  • No repository of out-of-the-box models for standard categories
  • Contract Management is very limited
  • No auto-classification, initial cube construction requires expertise and elbow-grease
  • No Supplier Information Management or integration with an SXM platform

Come back tomorrow where we discuss the opportunities and threats.

How do you explain the importance of Procurement to a CFO or CEO?

O’er on Spend Matters UK, the public defender does a great job of figuring out how we would explain Procurement to a (hyper-intelligent) alien race who has no concept of what it is or why it is needed in his post on “back to procurement basics – explaining to an alien”, which is a must read, but I don’t think that would ever be a problem.

Any alien race smart enough to build and pilot spaceships that can exceed the speed of light and traverse vast distances to get from where they are to where we are in a lifespan would obviously be smart enough to understand why beings of lesser intellect have to specialize to do well, and that these beings of lesser intellect would have to work together, and come up with a system (the corporate world) to allow that, as flawed as it may be. They’d get it.

Our real problem is explaining the importance of Procurement to an old-school CEO who still thinks success is all about sales (and marketing to pave the way) and a CFO who thinks success is all about cost control, especially internal, and trying to pay peanuts rather than wages and rates that would incentivize someone to success.

I challenge the public defender to come up with an explanation that an average old-school CEO who only ever studied operations and came up through (Sales or Marketing) Management or traditional Finance would not only understand, but understand to the point that he (let’s face reality, these narrow-minded CEOs are usually male) would embrace Procurement and the value-based vision we run off of.

Bonus points if it changes the viewpoint of someone who graduated Trump University.

Free Procurement Isn’t Free — So Why Are We Going Through This Again?

Apparently SpendMap, a relatively unknown provider of Procurement software (compared to the big guys), has decided on the marketing strategy of “Free Procurement” to make a name for themselves and, hopefully, get their software known.

the doctor really wishes they would have consulted with him, or another knowledgeable analyst who has been around for a decade, before making this decision. “Free Procurement” doesn’t exist, and it’s just gonna bite them in the rear if they don’t do the smart thing, like Coupa did, and drop it.

This isn’t the first time, or even the second time, a company has tried this, and it didn’t work then for the same reasons it’s not gonna work now. Most people don’t remember, but way back when Coupa launched on Procurement Independence day, they offered a free downloadable, streamlined, do-it-yourself version of their software. Anyone could download this RoR (Ruby-on-Rails) code bundle, install it, test it, and use it for free as long as they wanted — if they could install it, configure it, get it working to their liking, and deal with any bugs that managed to slip though. (And installation wasn’t a breeze, mainly because you had to get the RoR stack working, which wasn’t a breeze to do in the early days of RoR.)

Then, a few years later, a company called Bupros (remember them, probably not, but they are still around) decided to make the same play. They also released an open source PHP community edition of their procurement software about 3 years after Coupa and still no one knows their name. (And installation of this, despite being three years after Coupa, was even more painful. PHP is a nightmare — unless you are using the same version on the same stack in the same environment it was developed and tested on, something is not gonna work right. Plus, their documentation didn’t quite sync up with their download and the doctor remembers spending the better part of a day for what should have been a 30-minute install just to get basic functionality going. [Remember, the doctor has a PhD in CS and has been a Chief Scientist, Chief Architect, and CTO and has been coding for over 25 years, so when he says something should take X time, and it takes 10 time, you can trust that assessment is reasonably accurate.])

So why isn’t there any such thing as “Free”? And why doesn’t “Free” work?

First of all, when it comes to Procurement software, especially do-it-yourself procurement software, as per our classic post on Uncovering the True Cost of On-Premise Sourcing & Procurement Software, it’s not just the license cost. It’s the cost of the hardware and middleware infrastructure (which could include databases, web servers, third party middleware, etc.) it runs on. It’s the cost of the installation, which, as per above, can take a lot longer than the provider will say it will (because only their developers know all the gotchas to watch out for and avoid), integration with any third party systems that need to push data in or pull data out, and maintenance. It’s the internal training and support costs. And these costs can often be substantially more than the license fee.

And don’t get fooled by a pure SaaS offering either. Just because the license is free and you don’t have to buy servers, there’s still the integration costs (as someone has to figure out how to use the APIs to push data in and pull data out and actually do it), the training costs, the maintenance (as the provider upgrades the platform and introduces new connectivity requirements) and re-training costs (as new features or modified workflows require retraining). And then there’s the back-up costs (it’s free, which means no service guarantees, including no guarantee the platform and/or your data will still be there tomorrow) and contingency plan creation, testing, and maintenance costs (what to do if the platform, or your data, disappears). These add up. And they might be considerably more than just licensing the lowest cost product on the market where you have service guarantees, initial integration, maintenance, and regular (web-based) training or free access to a complete self-training audio, video, and manual library.

So, regardless of the intention of the provider, who might be trying to move you up the ladder or increase the visibility of Procurement software (which is an important component of success), don’t get taken in by free. When it comes to Procurement (or Sourcing) software, there is no such thing as free. Low-cost, yes, because basic procurement and e-negotiation-based sourcing functionality is now a commodity, but not free. Either you’re paying a provider, who can take advantages of economies of scale, or your paying IT and support staff (and possibly paying for more infrastructure). And if you’re small, you’re paying more when you go the free route.

If a company really wants to help small and small mid-size businesses get on a platform and modernize, they’ll go the low-cost consumer-based SaaS route and offer low-cost monthly licenses per user that a user can put on their p-card or credit card and expense monthly and, as part of that service, offer all of the support and reliability of other online service offerings (like SalesForce, Zendesk, etc.). But they will never, ever, offer, or push, free.

What Makes a Good UX? Part II “Smart Systems”

A couple of months ago, after we sang Bye, Bye to Monochrome UIs, we indicated that we were beginning a series that chronicles what makes a good UI, and more importantly, a good UX (User Experience) in a modern Sourcing or Procurement system. This is critical because systems that are not useable do not get widely adopted, and systems not widely adopted never deliver the promised value.

In our first post on What Makes a Good UI where we noted that the full series was being published over on Spend Matters Pro [membership required] as it is the result of a deep long-term multi-blogger collaboration (led by the doctor and the prophet) designed to identify what should be (and not what ay given vendor will try to promote based on what they have), and sponsored by Spend Matters, we outlined some of the fundamental requirements of a UI / UX for any Supply Management application which include, but are not limited to:

  • integrated, pervasive, guidance
  • … that is based on true expertise and historical use
  • “touch-less” automation wherever possible
  • extremely context aware
  • mobile support and mobile first in the field
  • messaging as a competitive advantage

(And if you want deep coverage on these topics, see the first instalment of our full series on “Measuring the Procurement Technology User Experience: More Than Just a Pretty Screen” over on Spend Matters Pro [membership required].)

But, as we stated, these were just the absolute base-line requirements. In Parts II and III of our full series, we outline the next set of core functionality that should be pervasive across any Supply Management platform that you acquire. And in future articles, we dive into e-Negotiation, e-Auctions, Optimization, Spend Analytics, SXM, CLM, Requisitioning and Shopping, Procurement and Catalog Management, and Invoicing … just to start. But we’re getting ahead of ourselves.

One of the core requirements we reveal, and dive deep into, in Part II in our article on Smart Systems and Messaging, Chat, and Collaboration is smart systems.

As per our article, smart systems drive integrated guidance leveraging new “AI” techniques -— better termed automated reasoning (AR), as software isn’t truly intelligent —- that adapt and learn over time. They do this by mixing semantic technology, sentiment analysis, key-phrase driven expert systems and other machine learning techniques with history to determine what the user is doing and what the user wants to do.

For example, a smart system in sourcing will detect if there has been a full event/process before run by a user or similar peers in an organization, and allow the user to instantiate a new instance (by copying the template or previous event). Or, in the case of one-time requisition in which competition could benefit the outcome, a smart system can detect an automated spot-buy event that can be run against prequalified suppliers hands off, which the system suggestions.

And that’s just the beginning of what a smart system could, and should, do for you. For deep insights into not only where the bar is today (as leading providers start to release first versions of these guided systems), but where the bar will be by 2020, check out our post, which also dives deep into the Messaging, Chat, and Collaboration functionality [MCC] that a modern system should support. [Hint, more than just integrated e-mail or first generation chat!]

And stay tuned for the next part, coming later this week, on the final set of core requirements that we feel a modern Supply Management System cannot be without!

P.S. If you are a vendor invited to the Sourcing, SRM, CLM, or Spend Analysis Solution Map, this is a series you do NOT want to miss!