Category Archives: rants

Purchasing Gets it Wrong Again: Spend Analysis IS Cheap.

A recent article in Purchasing on “what $100K buys in spend analysis software” has me jumping up and down again (their 2007 article on the “ABCs of Spend Analysis”, which was beautifully dissected by Eric Strovink in What Purchasing.com Got Wrong, had me fuming for weeks). According to this new article, being able to analyze spend is critical (which it is), but it isn’t cheap and price tags start at $100K — and buyers may have to pay more for insight into new opportunities for sourcing and consolidation. WTF?!?!?!

Allow me to say that again. What the frack? It is cheap! Pricing starts at $36K/year for the most powerful spend analysis tool on the market. That’s significantly less than the $100K price tag they list. $64,000 less. (I guess that’s the real $64,000 question!) A one year single user license for BIQ is only $36,000. It includes unlimited utilization by your senior analyst and all of the new features described in their last press release, including nodal and transactional computed measures, dynamic referencer filters, a super-fast 64-bit loader, and the ability to drill-down on 50M transactions in real-time on your laptop. (You might need a quadcore with 16 GB of memory for that size dataset, but those are pretty cheap these days.) And, you can get a 100 user license for much less than $100K/year, even if you pay by the month with the option to quit at any time.

As usual, it’s obvious that Purchasing.com’s research consisted of a simple web search, product description screen-scrapes, and a quick call for pricing, as opposed to the in-depth web demos that I insist on before Sourcing Innovation will even acknowledge that a product exists. And the results are dismal. While Ariba, Bravo, CVM, Etesisus, Global e-Procure, Ketera, SAP, and Zycus all have spend analysis solutions, they are not equal. Iasta’s is actually built on third parties (BIQ and Spend Radar), FieldGlass is limited to services, Insight is a services organization which, to the best of my knowledge, still uses third party tools, and I’m sure big players like Emptoris (which just announced faster reloads and data warehouse restructuring time) and new SaaS players like Rosslyn Analtics (which are trying to take a cloud-based approach) are sure to be annoyed at being wholly (and unaccountably) ignored.

You’re better off starting with a Google search and visiting individual vendor sites than reading this article.

Once again.

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Implementing Best Practices: The Procurement Maturity Model You Won’t Get From ISM

In the procurement profession, there is a broad set of external factors which directly affect organizational performance: customers, policy, staff, processes, vendors, tools, and organization. Regardless of whether the external factors are enabling or inhibiting, the procurement function must deliver value — usually in the form of cost savings, enhanced vendor performance, and mitigated legal and operational risk. That’s why the The Procurement Maturity Model (PMM) was developed to assist procurement professionals in implementing procurement best practices as a means to improve organizational performance.

One of the things the Procurement Maturity Model (PMM) facilitates [is] the process of benchmarking by pre-defining over 60 procurement best practices. These best practices may include:

  • the Procurement organization involved in 95%+ of spend
  • purchase orders electronically generated for 80%+ of spend
  • 75%+ of spend flows through approved vendors
  • 80%+ of contracts executed within 30 calendar days;
    95%+ of contracts executed within 60 calendar days
  • Procurement staff receives 24+ hours of training annually

The model enables a gap analysis between an organization’s performance and the corresponding performance of a best-practice enabled organization and, based on the gap, identifies measures and actions the organization can take to become best-in-class.

For more information on the Procurement Maturity Model and how it can help you become World Class, check out the presentation that Stephen Guth (of the Vendor Management Office blog) was going to deliver at ISM*1 (who I’m going to call a hot dog vendor of procurement certifications), available for download through this post (Stephen Guth to speak at the ISM Annual Conference).

*1 I’ll agree that the presentation is pretty basic, but you can’t tell me it’s more basic than most of the material that they publish on a regular basis, or most of the presentations they accept, or that a significant portion of their audience, unfamiliar with the PMM, would not benefit from a good introduction. Especially one from an experienced practitioner and speaker who wrote the book on The Vendor Management Office.

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2010: The Year of CUTS?

According to a recent piece over on Supply Chain Digest that chronicled the Supply Chain Guru Predictions for 2010, this will be the year of CUTS:

  • Consolidation,
  • Uncertainty,
  • Training, and
  • Specialization.

In other words, the year will be pretty bleak. We’re already at the point where, with the exception of BIQ’s inclusion of a new Computed Measures Language as part of their spend/data analysis package , I haven’t seen anything truly innovative on the technology side in over a year.

I’ve seen lots of great stuff, but almost all of it falls into the better, faster, cheaper category. For example, the recent upgrade to Trade Extensions’ platform, which can now handle Billion-dollar sourcing projects with over 60,000 lanes and 400,000 bids in a single model, is incredibly powerful and really (really) cool (because even five years ago it was hard to imagine being able to solve such a problem on anything less than a supercomputer), but it’s still just a (large) incremental improvement on fundamental technologies and capabilities they’ve had for a few years. Rollstream’s enterprise community management application, built on the better principles of social networking, is really slick, but not a fundamentally new idea. And SupplierSoft‘s integration of their full SRM platform into SalesForce, which gives customer organizations a 360° supply chain view through a single platform, is a unique implementation, but P2P, SIM, SRM, and (Environmental) Compliance solutions are not new.

Now, you might say that the fact that organizations are finally expected to focus on training is a good thing, because it makes your people more productive and, in supply chain in particular, can deliver amazing ROI, but most companies are not going to do it out of respect for their employees. They’re going to do it because they think it will allow them to shovel even more work onto their already overworked employees, delay hiring, and continue to contribute to the jobless recovery in a negative fashion.

And when you dig deeper into the predictions, you see that consolidation is referring primarily to consolidation of supply chain assets, which sounds good at first (more use, revenue, and thus profit per asset), until you realize that having all assets almost 100% utilized allows no room for growth. And you see that uncertainty means that no one is willing to step up and say “this is the year we’re going to recover, economy be damned” which means another year where the majority of companies are going to just hunker down and hope “magic happens” before they go broke. And while specialization, or, in the words of Art Mesher, selective specialization, sounds great, since that presumably means that supply chain systems will get better and better, until we have an open source standard for supply chain data interchange, the visibility nightmare is going to get worse before it gets better.

All I can say is that it’s time to Shape Up or Ship Out, and by that I mean either get on with your business or shut down operations and make way for someone who will. Magic isn’t going to bring the economy back, hard work and forward momentum is, and someone has to start it. Due primarily to the large positive impacts that Supply Management has on the balance sheet, it has the potential, but only if it’s willing to step up, use it, and drive the business.

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Only 7 Mistakes to Kill a Business?

A recent article over on Chief Executive on “the 7 mistakes people make that kill their business” made some great points, but when I saw the title, all I could think was only seven?

The article pointed out these 7 classic mistakes that so many business owners make that often result in the demise of their business:

  • Doing Too Much Yourself
    As the article notes, this will bog you down in day-to-day issues and fire-fighting and take you away from managing the core business and long term strategy. And considering you will not be well suited to many tasks, the opportunity costs alone are crushing!
  • Not Recognizing You Don’t Know What You Don’t Know
    It’s one thing to do something you’re not good at because you can’t yet afford to outsource it, but another to think that you’re effective at it (especially when you’re dismal). If you think you’re a great sales guy, but you’re the worst there ever was, you won’t stay in business long.
  • Growing Too Quickly Before Your Model is Proven
    Sometimes when sales pick up quickly, it’s only a blip. Ramping up too fast can deplete the accounts and bankrupt the business if the sales don’t last.
  • Not Bouncing Your Ideas Off Of Seasoned Pros
    Sometimes, when your track record is great ideas, it might be hard to spot the great idea that won’t work. Failing to do so can quickly lead you down the wrong track. But if you can talk to seasoned peers, you can catch these ideas before they do any damage.
  • Bringing in the Wrong People
    Many business owners hire in their own image — so the gaps are not actually filled. Too true. Others overvalue the wrong skill sets — like sales and marketing or services in a venture being built entirely on a technology platform. Others hire for the wrong reasons. I once worked for a manager who hired someone because they liked their cover letter. And while that would be a top requirement for a communications person, a developer only needs good communication skills — and coding / engineering ability should be the top priority.
  • Lack of Self Awareness
    The article notes that many owners refuse to face their fears and insecurities, often because they don’t trust other people, which is a key problem. You have to identify your weaknesses, bring in the people who are strong where you are weak, and trust them to do the job you hired them for. If you can’t, it’s over.
  • Staying in the Comfort Zone
    As the article points out, it’s easy to stick with people you know and understand – but there’s one downside, who’s challenging and testing your thinking. If all of your managers are ass-kissing yes-men, you might as well just pack it in now.

But what about these classic mistakes:

  • Bringing in the Wrong Investors
    If the investors don’t get your business, they’ll take you down the wrong path and lead you to a quick demise.
  • Going After the Wrong Market
    In many cases, this is the “market of one”. I’ve worked with a few start-ups where the entrepreneur said “we need a product/service to solve this problem”, and even though they were right, their view of the problem was very limited and their solution was only appropriate to the company they came from.
  • Doing the Wrong Work In House
    Some companies are afraid to build on anything not built in house, others try to use everything they can find in the public domain, whether or not it is appropriate to the problem at hand, and others try to do services they can be outsourcing.

Or the countless others that we’ve all seen kill many a good business over the last two decades?

Leave a comment below with your favourite mistake!

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Has Twitter Already Turned Too Many into Twits?

Last Saturday, I pointed out a recent article on how “students [are] failing because of Twitter, texting” (Canoe.ca), covered in a CNet video which asks “does Twitter make you stoopid”?. The article pointed out that, at the world renowned University of Waterloo, thirty percent of students who are admitted are not able to pass at a minimum level, a failure rate that has increased five percentage points in the past few years. The cause, according to experts in the field, is “cellphone texting and social networking”, which are collectively degrading writing skills. And as we all know, Twitter combines both into one happy little medium that will zap your IQ much faster than your backyard bug-zapper solves the mosquito problem.

Shortly after I penned that piece, I found this piece on CNet that noted the “blogging decline among teens, young adults”. Now, while it’s true that most blogs will eventually be abandoned (with the abandonment rates in line with the 3-3-3 rule), relatively speaking, the average number of blogs that survive over time, and, thus, the average number of relative bloggers, should still be increasing slowly as the online population increases. However, a recent survey by the Pew Research Center found that while 28% of teens (12-17) and young adults (18-29) were bloggers in 2006, by 2009, the number of teens and young adults blogging dropped in half (to 14%).

The Pew Research Center attributed the decline in blogging to changes in social network use, arguing that people use social networking sites less as they get older. While this may be true, it’s certainly not true for teens and young adults, which are using social networking more by the day, and it misses the fundamental cause entirely. Simply put, they’re not blogging because Twitter has made them stoopid and given them ADD (Attention Deficit Disorder).

If you can’t spell well, compose an expose, or think beyond 140 characters, you can’t write a blog post worth a damn. And all this leads me to the very important question posed in the title — Has Twitter Already Turned Too Many Of Us into Twits?

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