Category Archives: rants

Business Intelligence is More than Data Mapping and Cleansing!

BI, more BI, and even more BI. Every time I check a supply management or technology publication, I see yet another article on BI, like this recent article from Inside Supply Management on “getting smart at business intelligence”. Now, you think I’d be pleased at this as I’m always promoting advanced sourcing applications like decision optimization and spend analysis because good technology can help you do good analysis which helps you to make decisions which make you efficient and cost effective, but I’m not. Because every frickin’ BI article, just like every spend analysis article, always starts with mapping and cleansing, and then dwells on it like it’s the be-all and end-all.

Now, I probably shouldn’t complain because what is your average journalist supposed to think is important when even the high-and-mighty analysts — who are supposed to know that “It’s the Analysis, Stupid” — write long-winded thirty-five (35) question spend analysis surveys where twenty-nine (29) questions are about mapping, cleansing and categorization and only one (1) question is about analysis, but I am going to complain, because it’s not helping any of us. It’s not helping those of us trying to teach you what real high-end technology should, and can, do for you and it’s not helping you find the best tools for the job.

You see, real Business Intelligence, when you get right down to it, is not mapping and cleansing, not business unit involvement (because all you really need is the data), not rapid prototyping (because any solution you use should already be built as there are already lots of tools out there), not integration (because modern middleware platforms do that for you with point-and-click interfaces), and not canned reporting (which only tells you what you’re doing, not what you should be doing). Real business intelligence is making smart decisions based on insights gleamed from real data analysis … and real data analysis requires a tool that can cube, slice, and dice data any way you can think of looking at it. Face it, just like there’s no such thing as (a) spend intelligence solution, there’s no such thing as a business intelligence solution — because half of the “solution” is the brains in your head. Brains which won’t get to realize their full potential without a real data analysis tool to provide answers to their inquiries. So what is the definition of a real data analysis tool? I think I’ll let Eric answer that in his forthcoming series. (See the recent Spend Rappin’ repost for quick links to his previous ground-breaking and forward-thinking series on spend analysis.)

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Why Your “Peers” Buy Stupid Products

In yesterday’s post, I told you that this was going to be a leaner, meaner year on Sourcing Innovation. I meant it — and, as you probably guessed from yesterday’s other post, it starts right now!

To kick it off, I’m going to address a question that’s been burning me for quite some time now. For a while, I was thorougly confused as to why your not-so-enlightened peers (who aren’t the smart and sexy leaders and innovators that you are, as they don’t constantly educate themselves and read industry leading blogs like this one) buy stupid products. While there are a number of great products out there, which I attempt to profile here on Sourcing Innovation as often as circumstances permit, there are also a number of bad products out there (which fall into the “products I don’t cover” bucket, which, to be fair, also contains “products of vendors who still think new media is a fad not worth spending time on”). This mix includes some really bad (installed) products that, year after year for reasons that escape me, keep selling, often for obscene amounts of money — especially when you consider what these products actually do compared to what newer, leaner, meaner, SaaS products do for a fraction of the price.

After a few enlightening conversations with some old pros and highly intelligent consultants (who shall forever remain nameless to protect the innocent), I have realized it is either because

  1. the buyers are timid field mice afraid to make a mistake;
  2. the buyers are lazy and inept, they know it, and they don’t want anyone to find out; or
  3. the buyers are yes-men and work for managers who are morons and
    • way too easily impressed by flash without substance; or
    • way too easily impressed by name dropping; or
    • (real) good buddies with (a member of) the vendor management team (who they just happen to be sharing a hotel room with on a regular basis)

In the first case, the buyers often look for the biggest vendor in the space who currently has the “best” reputation and simply use the “Well, no one ever got fired for buying IBM” excuse, replacing IBM with the “big” vendor of the day (and probably buy Oracle, SAP, Ariba, Emptoris, Bravo, or Hubwoo). This isn’t always bad, as some of the current “big” vendors do have some pretty darn good solutions, but it often is a bad choice because not all products in their “big” vendor solution suite are equal, and, most importantly, even the best product the “big” vendor has might not be appropriate to a particular company’s situation. An MRP won’t solve your problem if what you really need is an on-line RFX and e-Auction tool.

In the second case, the 9-to-5 buyers — who give intelligent, hard-working, and successful procurement professionals like you a bad name — are pretty sure that a good product would quickly uncover the millions of dollars of waste from unmanaged or non-compliant spend, or quickly uncover the lack of process that allows maverick spend to run unchalllenged, or quickly uncover the sheer amount of work they are not doing but should be (like managing spend, sending out RFPs, doing post-bid briefings, etc.) and want to do everything in their power to make sure that they get a solution that is as inept and inefficient as they are.

In the third case, even if the yes-men identify, and want, a good solution, Maury the Management Moron steps in and strongly recommends the worst solution identified (and indicates the buyer’s job could very well depend on making the “right” choice) because:

     

a) it has a nice flash interface with (useless) dashboards and colorful graphics-rich reports that make his under-developed brain go “ooh” and “aah” (while failing to tell you anything that you didn’t know already, like you spent 800M and your top 10 suppliers included 8 of the suppliers you regularly send million-dollar purchase orders to)

b) the company has a lot of “big-name” competitors as customers and / or a number of “big-name” companies your CXO really admires and, therefore, must know what they’re doing and be the right choice (even if they haven’t upgraded their solution in 5 years).

c) the company “obviously has a superior product” even though the real reason is that the company has one or more senior managers that are your boss’ golf buddies and/or hotel room buddies.

And sometimes, it is a combination of these reasons. The buyer knows he is lazy and/or inept, isn’t overly concerned with improving himself, but desperately wants to keep his job (which pays very well considering the amount of effort he actually puts in). He also knows he works for Maury the Management Moron who is easily impressed by flashy dashboards and pretty reports and so chooses a solution that will simultaneously make Maury’s mouth moisten while failing to uncover anything that could be embarassing and jeopardize his job in any way.

For example, for our timid buyer with Maury the Management Moron for a boss, it would be really bad if he acquired a modern contract compliance system when he recently spent Millions on the current EIPP system two years ago and just found out it contains a big gaping hole, that a few of his suppliers have been exploiting since it was installed, that allows the supplier to charge whatever they want on substitutions and holds, regardless of what contract pricing is in place. For example, he just found out that if:

  1. he punches out for a SKU and
  2. the vendor is out of stock and
  3. the vendor places the order in the “on hold” queue because they don’t want to reject the order then
  4. when the SKU arrives and
  5. the vendor brings up the “on hold” order to “fill” it
  7. the price field isn’t carried forward to the “active” queue so
  8. the vendor can enter any price it likes, which is usually “list” and
  9. the system doesn’t do an invoice-price-vs-contract-price comparison, allows the “list” price, and doesn’t even flag it as pricing that violates the contract.

So, because he thought a few million would buy him perfect software (and didn’t do his homework), he just assumed everything was wonderful, paid what the vendors asked, and lost millions over the last couple of years. He’s not entirely sure how many millions, but is fairly certain that 15% to 20% of purchases were made off of contract pricing. He can’t let the boss find out! (Even though there are specialist consultancies out there who are great at finding these overcharges and helping their clients recover their money.)

Finally, he knows that his boss, easily impressed by flash, is too dumb to realize that dashboards, static reports and “real time alerts” are — when you really think about it — incredibly stupid ideas at the core. For example, so what if the boss can instantly see that 90% of shipments are on time. All that tells you is that 10% of the shipments are not on time. It doesn’t tell you what shipments, to whom, why, and more importantly, what to do to fix the situation. A report that you spend 10M with Wesley’s Widgets isn’t very useful. If that’s all I have, here’s how the negotiation is going to go. “We demand a 10% discount because we spent 10M last year.” ‘So? The price of steel went up 20% … you should be thankful we only raised prices by 15%!‘ “Uhm … erm …” If I don’t know what % was on steel parts, and what % of cost was steel in those parts, I can’t negotiate anything meaningful. And how useful is a “real time alert” at 3 am in the morning that tells you that your container is stranded 500 miles from port because the 3PL forgot to transmit the manifest 48 hours in advance and the carrrier isn’t allowed to enter American waters. Not! You need a system that tells you what you have to do before the order is shipped.

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Supply Networks CAN NOT be too flexible

Every now and again I see a headline that really grinds my gears. A recent headline over on Supply Chain Brain that asked can supply networks be too flexible is one of them. Even before I read the article, I can tell you I was quite annoyed because a supply network can never be to flexible. When you consider the almost infinite number of things that can go wrong in today’s supply networks, and that the ability to recover on a dime could be the difference between profit and bankruptcy in today’s economic climate for a company that’s operating on razor thin margins, it’s absurd to even ask this question.

Then I got more annoyed when I read the first line, which quoted MIT professor David Simchi-Levi that said “I will not tell you the obvious”. Great … not! Another ivory-towered academic leaving the question vague and open-ended and further strengthening the stereotype that all of us PhDs are arrogant and don’t understand business and the need to get to the point — quickly. (While the former may be true, the latter is not where those of us that left the ivory tower is concerned.)

The saving grace is that before the paragraph ended, the author noted that “companies can spend too much time and money on achieving total flexibility in their sourcing and fulfillment strategies”, which is true. There is always a trade-off, and after a point, returns will diminish quickly. But the question isn’t whether a supply chain can be too flexible — because it can’t, but whether the cost of adding additional flexibility is justified with respect to the risks you are trying to mitigate, or whether the savings that can be achieved by reducing flexibility is worth the risks you are going to add. After all, any flexibility you can get for free is always worth it. You do need to do a(n optimization supported) total value analysis to figure out whether or not you have enough flexibility, or whether you could sacrifice some for worthwhile cost savings, but you never need to ask yourself whether flexibility is good. It’s always good. It’s just a question of whether or not you can afford it if it has significant operational impacts.

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What Sourcing Innovation IS Going to Do This Year

In my last post, I started off by announcing what sourcing innovation is not going to do this year because I thought it was important that you understood that Sourcing Innovation is going to stay the course it set out on day one, and not give in to the vendor marketers, especially the ones who, whether they realize it or not, are looking to invade your privacy. (Which means, if I were you, I’d be asking just how much that vendor who just cold-called really knows about you, considering they can know a heck of a lot more than what you filled out on that download form if you happened to visit a site, which could include their web-site, that gave in to a BI marketer’s demands.)

In this post, which, for the most part, will be less exciting than yesterday’s, I’m going to tell you what Sourcing Innovation is going to do this year. Hopefully most of it won’t surprise you.

1. Continue to offer FREE Product Reviews to any Vendor who wants them.

Sourcing innovation has never done a sponsored solution review and never will. (It’s all in the FAQ.) I will continue to review any supply management solution a vendor wants to demo in order to better educate you on what your platform options are.

2. Bring you more insights and innovation from the thought leaders.

Sourcing Innovation has always been where thought leaders converge. I intend to keep it that way. If I can’t bring you the best there is to offer on a certain topic, I’m more than willing to invite and publish someone who can. I also hope to announce a couple of new best-in-class contributors in the next month or so.

3. Keep you on the leading edge.

Sourcing Innovation was covering topics like sustainability, supply chain finance, and decision optimization before they became “in”, and was often doing so in what seemed like a void. Sourcing Innovation intends to keep on the leading edge and will continue to cover new topics, technologies, and trade issues as they emerge.

4. Do more deep dives into more technologies and processes.

Sourcing Innovation is known for it’s deep dives into decision optimization, spend analysis, and other sophisticated technology platforms. However, this year, it also branched off and did a deep dive into Overcoming Cultural Differences in International Trade, with the help of Dick Locke, and brought Norman Katz on-board as a contributor to address the rising importance, and risk, of fraud in your supply chain. It will continue to do deep dives into emerging and relevant issues that are not being adequately addressed by the big name publications and other blogs.

5. Get Meaner and Leaner

Up until now, you’ve probably been saying “that’s what I’ve come to expect from Sourcing Innovation — so what’s going to change?“. The answer is, as I tried to make clear in yesterday’s post on what sourcing innovation is not going to do this year, not much. Sourcing Innovation is going to stay true to it’s mission, no matter what the cost.

But it is going to get meaner. I’m fed up with vendors who still:

  • say blogs and other new media are irrelevant,
  • can’t be bothered giving me a demo but yet have their PR firms flood me with all of their trivial and BS press releases, and/or
  • try to pull the wool over our eyes by making much ado about nothing.

So, from now on, if they flood me with trivial and BS press releases but won’t give me the time of day and / or try to pull the wool over your eyes with a big announcement on a “ground-breaking” technology that doesn’t do anything more than a competitor’s solution did five years ago (but does come with a useless flash interface), I’m going to expose their BS for what it is. While I’ve been relatively nice to date, as I’ve been focussed on the innovation and positives in my reviews (as many of the vendors I reviewed were small companies trying very hard to bring value to their customers and deserved some slack), I can just as easily focus on the negative and rip any solution (or press release) to shreds if I want to — and from now on will happily rip into any BS thrown my way (or, if I’m too busy, throw it over to the Sourcing Maniacs). (Remember, I’m the one blogger in this space who can actually build world-class enterprise software systems so I not only know what can be done, but when I’m being BS’d.)

And it’s going to get leaner. Unless I can find more smart marketers who realize that even “qualified” leads are useless without credibility — which starts with visibility, who also work for companies that realize that the best customer is a smart and educated customer (and that their education should be sponsored) and give these smart marketers enough budget to actually do their job properly, the reality, which I made clear in yesterday’s post, is that there’s a chance that I’m not going to be able to afford to spend as much time on the blog as I’d like to this year. So, I’m going to work even harder to cut through the noise and focus in on what really matters to bring to you what no one else does. Even more than before, I’m going to make sure that every post is going to matter.

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What Sourcing Innovation Is NOT Going To Do This Year

While most blogs start the year with grand announcements on what they are going to do this year, I thought I’d be different and start the year with an announcement of what Sourcing Innovation is NOT going to do.

1. Refocus the blog as a launching pad for my new-media personality.

One of my fellow bloggers has veered slightly off the procurement track and become a big internet radio personality. And even though it’s great that he managed to bust out of the procurement ranks and shine a spotlight on how multi-functional and extremely capable good procurement personnel really are, that’s not a road I have any interest in following. I started this blog because I noticed a big gaping hole when it came to blogs offering you deep product, technology, and innovation coverage with an educational focus. Furthermore, as far as I’m concerned, the hole has only gotten bigger with the departure of some big name bloggers from our space over the last few years. There’s a big need for what Sourcing Innovation (SI) does and, as a result, it’s going to keep on doing it.

2. Slightly retool an analyst model and announce it’s the next big thing.

If it hasn’t already, very soon, from what I gather, you’re most likely going to see a big name blog in the supply management space announce a brand new content model that, when you look under the hood, is going to look suspiciously like a slightly updated version of the Aberdeen research model, and you’re going to be right. While it’s true that many of the vendors in the space will likely be thrilled with this announcement if the blog-master can produce high quality research-oriented content — especially considering that, at least in my view (and I know I’m not alone), the quality of the research coming out of Aberdeen since the departure of the likes of Tim Minahan, Beth Enslow, Sudy Bharadwaj, and Vance Checketts has been lacking to say the least — I’m not convinced it’s what you need. So while I’m still willing to do vendor sponsored Illuminations for any vendor willing to educate you (because the focus of SI is your education), I’m not going to be offering anything similar.

3. Invade your privacy.

Now you’re probably thinking “what the heck is he talking about — how in the world can a blog invade my privacy“, so I’m going to tell you, but not before I tell you how this came up. As you know, Sourcing Innovation is supported by very generous, forward-thinking, innovative sponsors who know that visibility and credibility matter and who believe, among other things, that an educated customer is a good customer, even if they don’t buy from you (because an uneducated customer can cost you more money in support than you get from the sale) — and without them, I couldn’t bring you the high volume of quality content I bring you week in and week out. While I would make every effort to continue the blog if they chose to depart, I’d certainly have to scale the dial back to at most 5-7 posts a week, and do a lot fewer deep dives into products, issues, and innovation.

As a result, every quarter I’m trying to sell sponsorships. Now, seeing as I started the big push last year when the economy was tanking and everyone got their marketing budgets slashed, often to 0, it was pretty obvious it was going to be a slow uptake. What wasn’t obvious was that marketers were going to use this time to “educate” themselves in either the “Google” school of thought or the “BI” school of thought, neither of which is an “education” in my book.

What do I mean? Well, these days, most of the conversations don’t revolve around the classic truth that the Mad Men knew in the 60’s, that Oracle has known for decades, or that a few big name consultancies have determined in some recent in-depth studies researching on-line vs off-line and visibility vs click marketing (which I wish they’d publish, but which they keep quiet because they can make big money doing essentially the same study for one client after another), and that’s the simple fact that in enterprise sales, it’s brand recognition and credibility that matter.

As a result, the “Google” school of thought, which focuses on clicks, works great when you’re selling trinkets to tourists making impulse web purchase, but works lousy in enterprise software where your prospective buyer gets a budget for a major new technology purchase at most once a year. Thus, it doesn’t matter when you’re doing your big marketing push — if the buyer doesn’t have budget and isn’t going to get budget for six months, the buyer’s not going to be interested in what you’re selling today. The only way you get a real “lead” that could result in a sale is if the buyer remembers your solution at budget approval time. This will likely happen only if the buyer sees the vendor’s brand — or logo — regularly.

But now, in addition to having to deal with the Google school of thought (where the average marketer still doesn’t seem to understand that hits != unique visits != unique visitors, and that only the last stat truly matters, especially since the first stat can be wildly inflated), I’m having to deal with “BI” marketers who don’t want clicks, but “leads”*1 that they identify as “people who came to the blog, clicked on a ‘relevant’ post, and then follow a link to a related site” or “people who spent a considerable amount of time reading a related set of posts and visiting a related set of sites that can be targetted with a specific message”. As a result, they not only want in-depth Google-type analytics, but want me to make every post on the main page a “first paragraph” only post where you have to click a link to continue reading, install products like LeadLander, or worse (since some products of this nature also slurp and inspect your cookies to find out where you’ve been), and provide them with *ALL* that data in return for sponsoring.

Now, you might say after reading the LeadLander review that it’s not a big price to pay as it would insure that SI continues to produce lots of high quality content and all the vendor would know is someone at Walmart reads SI everyday, likes posts on SRM, and visits SRM sites. And in this case, you might be right*3. But what if we’re talking a mid-size company with only 50 employees and 5 in procurement? Hmm? And what if the vendor marketer skipped the ethics course and coupled the analytics program with a hacking tool that circumvented ISP security to find out what individual subscriber was assigned that non-corporate IP, cross referenced his name and location with Linked-In and FaceBook data, and then cross-referenced that with corporate data to find out that “John Smith from Walmart, who is the Director of Technology Procurement, likes to read posts about RFP Technology on SI at work and at home”. Scared now? I am! Because that IS possible today. Even the Amazon cloud was recently penetrated by a bot-net.

4. Make a lot of money.

When you consider that:

  • I’m not going to honour any of the “Google” or “BI” marketer requests,
  • I have a very strong focus on innovation and insist on transparency,
  • SI sponsorship rates are low to make them affordable for the smaller companies in the space with limited revenue and limited marketing budgets (even though SI is consistently top two, and ranked at least twice as popular as one of the next tier blogs that charges just as much for their sponsorships), and
  • SI is not going to adopt a TechCrunch-style*4 marketing and advertising free-for-all,

there’s a very good chance this blog won’t even crack 100K this year, even though the top blog (that doesn’t even get twice as many unique visitors*2) is probably gunning for 1M this year.

5. Win any popularity contests.

Since I know that this post, and a few of the posts that are going to immediately follow*5, are collectively going to ruffle a few feathers, I also know I’m probably not going to win any popularity contests this year. However, I feel it’s important that you understand what Sourcing Innovation is all about — and that what Sourcing Innovation is all about has not changed since this blog started over three-and-a-half years ago.

 

*1 I don’t know where this focus on “leads”, which is a very nebulous concept, came from. Or why marketers think it’s so frickin’ hard to get them. Leads are easy. Presumably you know what vertical you’re going after. Use an online business directory to find, say, 100 companies that match your target profile (which you should presumably have if you built a “solution”) . Then use an online tool like Jigsaw to find out who is a head of procurement or technology at those companies. Call them up. Politely ask them if they would be interested in X, where X is a solution that will solve a well-defined (and explained) problem you think they have. If they say yes, you have a “lead”. If you’ve done your research, you’ll get more yes responses than no. Presto — 50+ “leads” that are a lot more meaningful than 50+ registrations for a white-paper. All that a white-paper registration means is that the reader thought the title or abstract looked interesting. It doesn’t mean they want an enterprise solution. And the assumption that there is a strong correlation is, to be honest, just absurd.

*2 How do I know? There’s no way this blog would have been ranked #1 on Alexa, which has migrated to a ranking model more heavily based on unique visitors and recent traffic than the meaningless hit counts it used to be based on, for almost three months last year if it wasn’t. While all of the ranking engines are woefully inadequate compared to real analytics packages, they are directionally accurate and the chances of them being off by more than a factor of two are very statistically insignificant.

*3 And then there’s this situation. What if the vendor knows someone at XYZ Co. visits SI and just read RFP Drafting Tips from DLA Piper, The 12 Days of X-emplification: Day 1 – RFx & e-Auction, and RFX Defined yesterday. They also know that there’s only 5 people in procurement and so they phone up Jim Doe, using contact information from Jigsaw. Taking a chance, the vendor rep starts the conversation with “We hear you’re interested in an RFP Solution.” Jim says ‘Yes, I am. How did you know’ and the vendor rep responds with “Well, we noticed you read these posts on Sourcing Innovation …”. Now imagine that Jim, who happens to be the individual that just read those posts, is a technology neophyte and a paranoid conspiracy theorist. How do you think this is going to end?

*4 As far as I’m concerned, you have to be missing quite a few brain cells to think the Tech-Crunch free-for-all model is a good use of your enterprise solution marketing dollars. Psychology tells us that the average person can only keep 7 things in her short term memory. So if there are 12 or more logos on a page, how many is she going to notice? Especially when she’s as sick as the rest of us with more ads on a page than content (and doing her best to ignore each and every one of thoe ads)? That’s why Sourcing Innovation has a hard limit of 6 sponsors. Sponsorships provide two types of value — visibility and customer education (since sponsors can reprint all SI posts for customer and prospect education). If I were to cloud the page with logos to the point where no one noticed a sponsor’s logo, where’s the value?

 

*5 Yup. This is rant week.

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