Category Archives: rants

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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There’s Something to Be Said for Private Equity

And the ability to tell Wall Street to take a hike. I was absolutely disgusted when I read this piece on the intersection of Wall Street and Private Equity with the Supply Chain and saw the following:

one large retailer had the opportunity recently to save an expected $50 million from a supply chain network redesign project, included shifting from a number of smaller distribution centers to larger ones. The project had a great ROI and the capital was available — but the company delayed the project just because of the potential for Wall Street to view the project as too risky operationally and financially.

There’s wanting a good Return On Assets and then there’s pure stupidity. What do you think this is an example of?

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Are You Ready for Your Talent Shortage?

Don’t be fooled by the current economic environment, there’s still a global talent shortage and we’re headed towards an impending crunch because the talent war is going to heat up again along with the recovery. And chances are that you’re going to be on the losing end according to some recent research from TopGrading Solutions. (Tip-of-the-hat to Kevin Cornish.)

According to the research, 67% of currently employed personnel surveyed will be looking for new opportunities once the economy picks up. That’s right, if you’re an average company, when the economy recovers, you can expect that two thirds of your workforce will be looking for work. If you thought you had turnover problems before, you ain’t seen nothing yet. Why? Well, if you’re an average company, you cut your staff by 10% to 20% and pushed those that remained to their limits with pay cuts and unpaid overtime. That’s why over 78% of employees do not feel that they were treated well (enough to stay in their current position).

All I can say is that you better get started on your succession plan. Given that there’s a 4 in 5 chance that you’re going to be hit by an internal talent shortage real soon, I don’t think you can afford to turn a blind eye to the issue any longer. Good luck!

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There are Analysts and There are Analyst Firms … Guess Which One You Really Need to Understand?

Recently Dan Gilmore, Editor of Supply Chain Digest, published a “first thoughts” piece on Understanding Supply Chain Analysts. In it he made a number of valid points, including:

  • Analysts can provide useful information and insight
  • Analyst research / opinions can have a significant impact on how a company views specific technology vendors and options.
  • Technology vendors often change product roadmaps and messaging to match what they think the analysts want to hear.
  • Some analysts are primarily vendor focussed on their client base while others are “consumer” focussed and others still sit somewhere in the middle.
  • Most analysts today will not write any “negative” research/opinions on a specific vendor for fear of the fire and brimstone it would bring.

The last point is both scary and true. Printed negative opinions in the analyst community are going extinct. However, negative opinions are still strong in many of the top analysts in our space. So what gives?

What gives is the analyst firm. Today, most of the top analyst firms frown seriously on quoting or printing any negative opinions and, in some case, have steadfast policies banning the public iteration of a negative opinion about any past, present, or potential client in fear of the fire and brimstone wrath that could result in the termination of funds or, where some of the more successful analyst firms are concerned, a frivolous lawsuit against their flush bank account.

Before you engage an analyst you need to understand, at a minimum, the following about their firm:

  • Revenue Model: Vendor-Driven, Enterprise Buyer Driven, Consumer Driven, or some combination thereof
  • Management Team: Primarily Former Analysts or MBAs
  • Ownership: Management &/| Employees, Private Equity, or Public Equity
  • Clients: Who are they?

Why? Each of these will have an impact on organizational policy and, as such, on the analyst focus and their freedom of speech. For example:

  • Vendor Driven Revenue Model
    The analyst firm will likely be very careful in what it allows to be conveyed about any of its clients.
  • MBA Management Team
    The analyst firm will likely be more focussed on profitability metrics than on quality research.
  • Private Equity Ownership
    The bottom line will likely be the most important success metric the analyst firm is judged against.
  • Vendor X is a Client
    Any “research” produced will likely echo the importance of whatever the vendor says in its marketing and positioning, regardless of what is said.

In comparison:

  • Consumer Driven
    Since none of the vendors being reviewed are clients, and since the analyst firm’s revenue will likely be linked to the credibility of their research, the analyst firm will be less likely to censor itself.
  • Former Analyst Management Team
    The analyst firm will be more focussed on quality research than on profitability metrics.
  • Employee Owned
    The analyst firm does not have to meet external success metrics and can set their own agenda.
  • Vendor Y is not a Client
    The analyst firm does not have to worry about subscription renewal fees.

Essentially, if you understand the firm, you understand the level of trust can you put into an analyst report and, more importantly, the level of openness you can expect if you engage the analyst in a one-on-one conversation. In the second case, a good analyst will likely give you the full monty.

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One out of Eight Organizations Get It. What Do We Do About The Other Seven?

According to AMR’s latest research, summarized in this piece on “driving supply chain transformation through the Chief Supply Chain Officer”, only one out of eight organizations have a CSCO, CPO, or equivalent that reports directly to the CEO.

The supply chain is the life-blood of a modern company but seven out of eight companies still don’t have a C-suite leader?! This is just crazy. What can we do? If you have any ideas, I’d love to hear them!