Category Archives: rants

Have You Been Aribaed: The Harbinger of Getting Paid

Today’s guest post is from Richard Adin, founder of Freelance Editorial Services and blogmaster of An American Editor. It originally appeared on An American Editor on September 23, 2010 and is reprinted with kind permission.

Have you been aribaed (that’s ariba + ed to somewhat simulate the verbing of a company name)? I have and I must admit, I don’t like it.

It’s the modern megacorporation’s way of further shafting (squeezing mercilessly) the little person who really can’t fight back. It isn’t the battle between near-equals or almost-near-equals or even fantasy-almost-near-equals, but the battle of multiple giants against an ant.

Okay, I hear you asking, “so what’s the problem?” The problem is this: freelance editors are generally 1-person small businesses. They do not make million-dollar grosses, do not file SEC reports quarterly, and do not worry about being delisted on the stock exchanges. Instead, they worry about keeping expenses down, getting enough business to earn a living that is at least equivalent to what they could earn working at the local convenience store, and getting those who hire them to pay them the agreed-to amount on time. In other words, we are part of that cadre that both Republicans and Democrats seemingly want to protect when they speak of small business but consistently fail to protect because we don’t fork over enough cash to them.

What is Ariba? Ariba is a megacorporation1 that serves as an intermediary between suppliers and clients for invoicing and payment. I assume that the reason for a company to sign on with Ariba is so that it can eventually eliminate its own accounts payable department, saving the costs of writing checks, verifying invoices, and, of course, all the costs associated with having human beings working in these departments; I don’t know this for certain.

So far, so good — right? Well, setting aside the idea that if American companies continue to forcibly retire low-level workers so they can increase the perks to very-high-level executives there soon will be only a handful of people able to afford to buy the company’s products because the vast majority of people will have no disposable income (and let’s face it, if you manufacture a book, how many copies of a title is the company CEO likely to buy), there is nothing particularly wrong with delegating to a third party bill paying.

Except when you — the supplier of labor or goods — are aribaed, because when you are aribaed, you have to pay Ariba a percentage of your invoice in order to get paid. Imagine this. MegaMonolith Corporation (MM) hires you to edit a book and because of competition and outsourcing to packagers, in order to compete you have had to set your price at the same level as it was in 1995.

So you do the job with great skill and care, working long days and weekends to get the job done in time to meet MM’s compressed schedule — and getting no additional monies for working more than 8 hours in a day or on weekends — and submit your invoice for payment. Previously, your invoice went directly to MM, the client.

But out of the blue MM gets the bright idea to use Ariba. Now you get your chance to be aribaed. In order to edit books for MM, you have to get a purchase order (just like before, so no big deal) but now you have to submit your invoice through Ariba, who won’t process your invoice unless there is a matching purchase order. On the surface it looks great until you get your check and discover that you’ve aribaed — Ariba charges you a percentage of your invoice for sending you the money you are owed. And, if you don’t join Ariba, process your invoices through Ariba, and pay Ariba’s fee, you can no longer sell your services to MM. Welcome to the group of people who have been aribaed!

On wonders if MM needs to replace a thousand computers is it likely that Dell or IBM will voluntarily pay this fee? My guess is not, but they have the power that us freelancers don’t and offer goods that are relatively unique, which we don’t. In the end, it is the small fry like us who will pay MM’s operational costs or be barred from doing business with MM.

Ariba’s pitch is that it is a place of networking. Other potential customers will find you in its database and send you business. And my great-great-great-great-grandmother will be elected president of the United States right after her resurrection. Do they really think we are so naive as to believe that the people who make the decision to hire a freelance editor are searching Ariba’s database?

Unfortunately, just as many publishers have forsaken quality for quarterly returns, so they will squeeze the little person because they can’t squeeze the IBMs and Microsofts of the world. They will squeeze where they can, which means the workers in the trenches. And aribaing freelancers is just one more way to do so. It is a natural next step to the outsourcing of editorial services to packagers that began in earnest in the late 1990s as a way to squeeze editorial pricing.

Are you ready to be aribaed? If not, get prepared, because it is coming.

Thanks, Richard!

1 As per a recent post by Debbie Wilson on the Gartner blogs, it is a megacorporation with a market cap of 1.73 Billion.

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An Analyst Finally Gets BI Right!

After reading report after report after report from analyst firm after analyst firm after analyst firm for the last decade or so on how more BI is the answer (it’s usually not), I was very pleasantly surprised by this recent post by Lora Cecere (ex-AMR) of the Altimeter Group over on Supply Chain Shaman on why you should free the data to answer the questions that you don’t know to ask.

The first paragraph captures the situation perfectly:

It happens all the time. IT says to line of business leaders, “Tell me what you need for Business Intelligence (BI), and I will go find the right technologies“. The issue is that we don’t know, and we will not know soon. We only know that applications are changing and that the data is growing exponentially. The answer to the question of: “What is the right data architecture for demand-driven value networks?” is “It is evolving. We don’t know“.

This means that no fixed BI or OLAP solution is ever going to solve your problem! I don’t care if it can handle and/or is designed for geo-spatial data, sentiment analysis, loyalty programs, POS, or CRM. It won’t work. That’s why, as I keep stressing, you need a real data analysis solution that can cube, dimension, map, slice, dice, augment, expand, re-map, re-cube, and start again on data sets of millions of transactions in real time on your high end laptop or workstation. Until each of your analysts has this type of solution on their desktops, they’ll never get the intelligence they’re looking for.

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Why SI is Multimedia Free

It seems that the current craze in the blogsphere is to do podcasts and multimedia videos (posted on YouTube). Just about everyone’s doing it, so why isn’t SI?

Well, first of all, as my regular readers know, I’m not a lemming. I didn’t follow the spacers when they went la-la over MySpace. I didn’t follow the facers when they want stupid over Facebook. And I didn’t follow the twits when they went tweeters over Twitter. I’m not a mindless pitch-fork wielding zombie farmer who simply follows the loudest guy with the biggest burning stick. I’m capable of free thought and free expression and willing to make up my own damn mind.

But the real reason SI is multi-media free is this: I like being literate, and I assume that because you keep coming back, you do too. It’s bad enough that Twitter will make a twit out of you, demonstrated by the fact that it’s causing 30% of students to fail English competency, but if we move entirely to multimedia, it won’t be long before the majority of the population is unable to read at a high school level and becomes functionally illiterate. And that’s a fate I don’t want to share in. So I’ll stick to the written word. We’ll all be smarter for it.

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Headline From the Land of D’OH: Bypassing Proven Supply Sources Invites Unacceptable Risk

Really? I did not know that! Tell me more!

Don’t we all know this by now? Needless to say I was a little disappointed when I saw this headline in Industry Week on “bypassing proven supply sources invites unacceptable risk”, one of my favourite publications in recent times as they usually avoid the obvious diatribe I expect from the WSJ (and used to expect from the now deceased Purchasing) and focus on the core issue, such as how to maintain quality and proven sources of supply in tough times.

There wasn’t a single sentence in the article that I don’t think we all know by now. We know cheap often translates into poor quality, lack of service, and all too often as of late, recalls. We know that production line downtime costs tens or hundreds of thousands of dollars. We know that moor Procurement needs to meet regularly with Engineering and they have to work together to maintain the necessary budget.

What we need is advice on how Procurement can stave off the incentive to “go for the lowest cost no matter what” when the top line design and production managers know that the associated costs of such a decision far outweigh the savings. We need some advice on how Purchasing can qualify the total cost and risk associated with a decision and show that “the 10% cheaper solution will in fact cost the company 10% more”. We need a discussion of cost modelling, optimization, and simulation that can be used to demonstrate the true total costs.

And when health and safety is on the line, we need the reminder that even the simplest of parts can spell disaster. Remember, it was a single O-ring that resulted in the Challenger disaster. That’s right, a single vulcanized rubber part brought down a Billion dollar piece of equipment. We can’t overlook quality, but until the cost of poor quality is quantified, uneducated business leaders will continue to do so. So let’s teach our buyers about cost modelling and optimization every chance we get. It’s the only way we’re truly going to end this view of relentless cost cutting as business as usual.

Why You Should Fear the Indian Juggernaut

When you think big consulting firm, it’s likely that you still think Accenture, A.T. Kearney or McKinsey, but I’m betting it won’t be long before you think Infosys, TCS, or Wipro. The Indian firms are on the rise, and it’s not just because of the cost. They are hard-working, driven, and, most importantly, the new generation of India companies is focussed on the right skills and attitude.

If you’re a North American company, the statistics in a recent article in the Harvard Business Review on “leadership lessons from India” should scare you. The skills that Indian leaders value most are the ultimate keys to success:

  • strategic thinking, the creativity to envision and articulate a path, and the ability to guide the organization there (61%)
  • inspirational, accountable, and entrepreneurial (57%)
  • careful talent selection, grooming, and the establishment of advanced business goals (52%)

In contrast, few supported the following the skills:

  • optimizing organizational structure and articulating core values
  • understanding competitors and markets and managing outside relations

Which is what I see too much of these days. If you don’t have a functioning team, reorganizing the organizational chart for the third time in a row isn’t going to magically create cohesion and bring prosperity. Leaders don’t articulate values in meaningless mission statements, they instill them in everything they do. And while competitive intelligence is important, it’s more important to understand your customer’s problems and the type of solutions they really require. It doesn’t do any good to build a better mousetrap if the house is infested with termites. And you can’t take on the world if your own house isn’t in order.

Furthermore, while they’ve been carefully selecting, training, and elevating talent through successively challenging real world projects, you’ve been cutting your top performers left and right simply because they fall to the right of the bell curve as you’ve yet to figure out that, in today’s information economy, you need more than a warm body in a seat. While it might not make sense to pay a janitor, security guard, or even a middle manager (who does nothing but convey messages up and down the ladder) more than the median, the same does not hold true when it comes to technology. The reality is that your top talent is worth their weight in gold while your underachievers would be worth more if you instead invested their salaries in coal. (Assuming your top earners are earning their wages on merit,) This is a case where you generally have to cut those who fall to the left of the bell curve. (The ability to cut & paste HTML and CSS does not a web developer make!) One of the big reasons you’re suffering so severely is because you’re asking under-performers to do more with less, when, chances are, they couldn’t even manage before the cuts.

They’re focussed on building companies, while you’re focussed on how to maintain your seven figure salary just for showing up to work. This is one place where Europe generally gets it more than you do. While compensation structures based on performance should be unlimited, salaries should not. Executives don’t deserve ten times the salary of their reports just for showing up to work. Salary-wise, a CEO should make the same as a lowly VP, who shouldn’t make much more than his top performer. The rest of her compensation should be based on corporate performance. If she grows the company valuation by fifty million, then she gets her million dollar bonus. If the company tanks, she gets nothing but her salary. It’s ridiculous that, in this climate, executives are still getting seven and eight figures for leading their company into bankruptcy, and then multiples of that when they are shown the door. If the only way they got the new Lamborghini was to work for it, maybe we’d see some progress.

And finally, they’re focussed on long term strategy while you can’t see beyond the next quarter. That’s why even the average multinational has a life expectancy of less than 50 years and why 85% of market leaders get displaced in a recession. If we don’t return to long term thinking, then the rising multinationals in India who are looking 30 to 50 years down the road, when they surpass us in GDP, will win. And since they have almost four times as many people, it’s very likely that they’ll stay at the top when they get there.

So unless you’re going to take a page from India’s playbook, you better start fearing the Indian juggernaut. Because the way things are going, I don’t see how it can be stopped.

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