Category Archives: rants

There’s No Return on Customization.

the doctor does not attend many events, but hen he does one thing he regularly hears is Company B saying that there is no platform that meets there needs so they are buying Solution S from Company X and customizing it through the vendor or a third party.

Before one more organization does this, the doctor needs to scream DON’T! In this day of age there is no return on enterprise software customization … no matter what the vendor or 3rd party may tell you.

Why?

1) Time to Delivery

If the functionality is truly valuable, by the time it is delivered, another vendor is sure to have equivalent functionality on the market ready and waiting for your implementation.

2) Up Front Cost

Custom development is a huge cost — which may never be realized given the average IT project failure rate and the average return.

3) Maintenance Cost

Out of the box functionality is covered under standard warranty and standard maintenance agreements — custom modifications usually require high hourly rates to contract scarce development talent for as long as is needed to fix any bugs or do any required upgrades.

4) Delayed Upgrades

While everyone else gets upgrades and new, free, features on the provider’s schedule, you get to wait and wait and wait until the talent has the time to address, and complete, the necessary upgrades to the custom modifications you made to allow the base system to be upgraded — this can be months (or years) and efficiency losses will add up on a daily basis!

When you put it all together, the costs will typically outweigh the benefits. So put the effort in to finding the right vendor with the right system and when it comes to customization, just do NOT do it! The only company that profits off of customizations is the vendor doing the customizations, because they are the company at the bottom of the money pit while their clients keep shovelling the money in.

LOLCAT Says – Canada, Do NOT Vote Conservative!

LOLCat, the election is coming up on October 19 (2015) and Harperman, the same individual whose party is effectively holding cancer sufferers, survivors, and their affected kin hostage by not matching up to $35 Million of donations unless the party is re-elected (Source: CBC News), wants to be re-elected.

What do you think, LOLCat. Should Canadians vote Conservative and, by definition, put the Harperman back in office? (Remembering that politics in this country does not work like politics in the United States. Whomever leads the party that gets the most seats gets to be Prime Minister, even if he [or she] is not elected in her riding!)

Before you answer, let me remind you that the Harperman is the same individual who:

  • forced Canada into the TPP negotiations
  • withdrew us from the Kyoto Protocol (making us the first developed country in the world to withdraw from this planet saving protocol)
  • cut funding to Veterans Affairs to the point that a Veterans Group has launched an Anyone But Conservatives campaign, Green Party included! (Source: Huffington Post: “veterans launch anyone but conservatives campaign during harper stop”)
  • … and then spent over $700,000 fighting a class-action lawsuit fighting wounded Afghan veterans who just wanted the benefits and care they were promised (Source: Huffington Post: “veterans lawsuit canada harper government”)
  • runs Billion dollar deficits while cutting social programs (Source: They Tyee)
  • introduced controversial bill C-51, which, according to the OSCE, violates Universal Principles of Human Rights and gives CSIS unprecedented new powers to spy on individual Canadians and revoke terrorist propaganda (Source: “alarm bells must ring in response to the governments new anti terror bill”, Conrad Black, National Post)
  • put our safety in jeopardy every time we leave the house by slashing funding across all safety programs at Transport Canada (Source: Global News)
  • pushed First Nations to give up the rights to their land for oil and gas, land that took them decades upon decades to reclaim (Source: The Guardian)
  • spent over 1.3 Million fighting sick moms’ EI disability benefits, wait, what?!? (Source: The Globe and Mail)
  • made a secret arms deal with Saudi Arabia (Source: The Globe and Mail)
  • and who is, in leading Canadian minds, gasp!, pro-war (Source: Globe and Mail)
    and who apparently loves the smell of napalm in the morning
    (how anti-Canadian can you get? There’s a reason we’ve went from being one of the best respected countries in the world to a country that is literally spit on!)

And who has committed more sins than we can document in a single post, but which have been chronicled and made freely available by CUSP (Citizens United for a Sustainable Planet) on The Harper Sin List* page.

What say you, LOLCat?

We agree, LOLCat, we agree. Harper has singlehandedly ignored Canadian ways while destroying our reputation and our cultural heritage.

In the words of Tony Turner:

Harperman, it’s time for you to go!

We’ve had enough of your not-so-benign dictatorship!

There’s a reason the Canadian Christians think “Harper’s clock is in Jesus’ office” (mwpr.ca).

Influential Damnation 98: Pundits / Futurists

Pundits and Futurists, who are one in the same, are the third influential damnation we are discussing, having already addressed consortiums and conferences. In order to see how these individuals are one in the same, we’ll start by reviewing standard definitions.

A pundit is defined as a person who offers to mass media their opinion or commentary on a particular subject area on which they appear to be knowledgeable.

A futurist is defined as a person who regularly makes predictions about the future, which is precisely what a pundit typically does when they offer their opinion and commentary to mass media!

Why are these individuals a damnation?

First of all, as clearly explained in Sourcing Innovation’s recent series on The “Future” of Procurement: What’s Old is Still Old! and An Expose of Procurement “Future” Trends: Digging Deep to Reveal the Truth, most of what those bloody futurists are proclaiming as the grand future of Procurement is old news, ongoing blues, or remanufactured shoes. Most of what they have been preaching from the worn out pulpit the last few years is the exact same message that their futurist predecessor were preaching one or more decades (or even centuries) ago!

Secondly, like the purveyors of apps, mobile, big data, and cloud, most of their messages are based in fear. If you don’t prepare for this today, you will go out of business tomorrow. If you don’t get this platform today, you will be relegated to the third world tomorrow. If you don’t jump on this process today, you will bleed red tomorrow.

Thirdly, when they get tired of preaching their tired old messages, they jump on the first vendor that gets a bad rap in the gossip chain as a result of an implementation that didn’t go perfectly, typically before figuring out why and who is really to blame. While it’s usually the case that the vendor didn’t do as good of a job managing the project as they should have done, it’s often the case that the customer didn’t heed the advice of the vendor and tried to rush ahead or do something themselves that was difficult without getting proper training and guidance. Enterprise technology, and especially enterprise technology that relies on a lot of integrations, data, advanced analytics, or sophisticated models, is always more involved and difficult to implement, integrate, and configure than you think it is and trying to do it yourself without an understanding of the nuances and gotchas is just asking for trouble. And while it is true that some vendors charge a lot for this service, it was the customer’s choice to select that vendor in the first place so the blame typically rests as much on the customer as on the vendor. And a pundit that just jumps all over the vendor without getting a full picture of what went wrong and how it could have been prevented doesn’t help anyone. We need to identify failings, their root causes, and solutions so that everyone can learn and move forward. Not encourage Perez Hiltons’ to invade our space.

Anyway, they’re a damnation and that’s why if the doctor is anything, he’s an anti-futurist.

Why You Should NOT Build Your Own e-Procurement Platform

A couple of months ago, SI ran a short series on Why You Should Not Build Your Own e-Sourcing System, which also included pieces on Why You Should Not Build Your Own Spend Analysis, Why You Should Not Build Your Own e-Negotiation Platform, and
Why You Should Not Build Your Own Decision Optimization because he heard that a few public sector organizations have this crazy idea that they can build their own and that it can, somehow, compete with best-of-breed solutions on the market today. As per that series, this is not the case.

Neither is it the case that an organization should build its own C(L)M system, as per SI’s post last week on Why You Should Not Build Your Own Contract Management System. It seems that there are (at least) a few organizations that not only think they can (which is often true) but think they should (which is usually not a good idea). Unfortunately, it doesn’t stop there.

Since basic e-Negotiation and e-Procurement is a commodity, and there are even free and open source solutions for both still available on the net (like WhyAbe and archived versions of open source by Coupa and Bupros), some organizations and public sectors think they can roll their own and, believe it or not, do it cheaper and better than just acquiring a low-cost on-demand solution (which might even cost less than the resources the organization / public sector body would require to maintain their own software and hardware, not counting the dollars they would have to invest up front to roll their own). When it comes to B2B or B2C, building your own in this day and age is, well, ridiculous. With so many options to choose from, the chances of your organization not being able to find a cheap, easy solution that meets at least 80% of your needs, and 90% with a few minor process changes, is low. Not only are there no cost savings (which becomes clear when a full total cost of ownership is done, see this classic SI post on X), there’s no value generated by building your own solution. Inflation is coming back with a vengeance, GDP is slowed to a crawl in first world countries, and risks are multiplying faster than Fibonacci’s rabbits. Wasting money on anything with no risk of value generation is just not something 99.99% of companies can afford to do.

While most P2P functionality is straight forward, and the cycle, which has more steps than pre-contract Sourcing, is simpler as it is more tactical in nature, a few requirements, while simple in theory, are actually quite complex to implement technically. In particular, the following three functions are quite demanding to implement technically.

Requisition Management

While the process of managing an approved requisition is no more complicated than managing any other e-Document, the process of approving a requisition can be quite complicated as it could require one or more approvers in one or more departments with the rules for determining who approves dependent upon the item, it’s category, it’s dollar value, it’s (un)approved status, the overall amount of the requisition, and whether or not any affected budget for the buyer, category, or department would be exceeded if the requisition was approved. The approval chain could actually consist of multiple approval chains that need to be executed in parallel, which can possibly be overruled by the last approver in the sub-chain or the entire chain (if it had to get final approval from a VP or CXO because of the amount), and which might need to be approved all-or-nothing for the requisition to help the requisitioner. This implies the need for powerful, configurable, and flexible workflow management that is rather time-consuming and sometimes tricky to implement and not always going to be available in an open source solution that you can easily integrate into a roll-your-own solution.

Purchase Order, Invoice, & Good Receipt Management

Not only do all of the these e-Documents have to be tracked, but they have to be cross-correlated in many-to-many-to-many relationships. For example, a purchase order may need to be split across multiple vendors, each of whom may ship the order in pieces due to geographic stock location and customer locations, and issue multiple invoices, and then the shipments might arrive in pieces, requiring each invoice to be associated with multiple good receipts, or which might arrive in unison, require one goods receipt to be associated with multiple invoices. Similarly, a shipment might arrive before an invoice, requiring goods receipts to be associated with one or more purchase orders. There’s a lot of cross-correlation logic here. Plus, documents can come in as XML, EDI, CSV, PDF (which need to be processed using OCR), or platform specific formats – so there is a lot of pre-processing that needs to be done as well. And then an m-way match has to occur against each line, because, otherwise, the platform is not very useful.

e-Payments & Tax Reclamation

These days, an organization that wants to go e-Payment has to support ACH and wires, and do very difficult secure integrations into a bank; Paypal, Stripe, and similar online platforms for small businesses; and credit cards so its employees can use their P-cards, and integrate into a credit card processor. It’s a lot of integration work that has to be done precisely, because if anything is not done up to Bank, Paypal, or CC Processor spec, and it gets hacked, it will be on the hook for all of the fraudulent payments that will result. And that can add up to hundreds or thousands or millions of dollars very quickly. Very, very quickly. This is one example of just because you can, it does not mean you should.

You’re not buying running shoes here. Just don’t do it.

Procurement 2020, Are we on Track?

Long time readers, including those who worked through last year’s mega series on The Future of Procurement and The “Future” Trend Expose already know the answer to this, but with only 5 years left to go, it’s worth exploring this topic that was all the rage 5 years ago but now no longer a whisper, even from the voices that were once the loudest in their great proclamations.

Why the silence? Because, to be frank, we’re not even close to their predictions, predictions which, to be honest, should have already been met by now.

While there is a lot of cannon fodder to go back to, let’s take Sourcing Innovation’s post from four summers past, which was penned at the height of the 2020 blathering, and which took us back to a report released by Hackett in 2008! In the first of the grand prophecies, which laid out the hierarchy of supply, rather than make grand projections, Hackett simply laid out a set of seven core competencies that businesses would need to acquire. And even though leading providers have offered next generation solutions for each of these since the end of the last decade, progress along these paths is still few and far between.

Business Process Sourcing

Many companies are still taking a scattered approach to process sourcing and outsourcing and indirect spend in general. Some are using BPOs, some are using GPOs, some are using both, and some are simply hiring contingent labour to handle the processes the business does not want to do, or does not have the skills to do, in house.

Supply Performance Management & Supplier Management

Formal Supplier Management is still weak, or non-existent at many companies, and fewer companies still have, or use, modern platforms to manage the performance of their supply base, even though there are a number of second generation platforms out there that have quite extensive capabilities. (The capabilities that are out there will be described in detail in the next platform-based Spend Matters Pro series on Supplier Relationship Management, starting after the CLM series concludes, which will be co-authored by the doctor, the maverick, the prophet, and the anarchist!)

Knowledge Management

According to Hackett, Sourcing will need to master content-driven analytics which integrate external data into internal data models …. We’re not there yet. Less than 1 in 2 Procurement departments are even doing basic spend analysis, yet alone more advanced content-driven analytics using multiple internal and external data sources! Knowledge is still quite poor. (Maybe that’s because only the leading sorcerors in the leading Procurement departments read Sourcing Innovation and Spend Matters CPO?)

Talent Management

After years of reducing the training budget to almost zero following the last big recession in the late 2000’s, there’s still been no sign of restoration and talent is still not getting the training they need to do the best job they could do. Until this happens, there’s no way that Supply Management will be the career path of choice for new talent.

Next Level Strategic Sourcing

Most companies still aren’t doing true TCO modelling or using strategic sourcing decision optimization, which is the only other supply management technology (in addition to true spend analysis) that has been demonstrated to find year-over-year savings. And a true next level company should be at TVM modelling and decision optimization, multi-tier analysis, trending and predictive analytics, long-term strategic supply chain redesign, and other advanced initiatives that will save money now and for years to come.

New Product Development & Introduction

As Hackett said long ago, Supply Management will have to include advanced design-for-supply support that incorporates multi-tier cost modelling, scenario planning and optimization, but seeing as how the majority of Supply Management departments are still struggling with TCO and weighted RFXs and e-Auctions, even though companies like Arena Solutions and DirectWorks (formerly Co-exprise) have been promoting this for close to a decade, this is still a ways off from being main-stream.

In other words, even though 2020 is approaching fast, we’re still a long way from 2020 Vision in Supply Management, despite the doctor‘s best efforts.