Category Archives: rants

The Wit & Wisdom of the SpendFool 2008

In keeping with holiday tradition, I again bring you the Wit and Wisdom of the SpendFool, culled from all of the foolish comments I could find on Spend Matters * during the last year. As usual, the SpendFool left some juicy tidbits again this year, and I hope you enjoy them, along with his 2006 and 2007 contributions, because, if the Fool is true to his word, 2008 might be the last year he leaves any tidbits of merit. (See the seventh comment on “Emptoris Empower: Additional Comments to Share”.)

The Wit

From Everything IS Bigger in Texas But 15 Million Suppliers is Not Something to Brag About

Well, if there’s one thing you can’t accuse Texas of (besides turning the town drunk into the governor and the POTUS), it’s supplier diversity!

From
The WSJ Shows No Love for Aberdeen

As Groucho Marx quipped, “I wouldn’t want to belong to a club that had me as a member”.

From
Charlie Dominicks War

I’m going to be introducing a certification called the Society of Professional Analysts in Supply Management, or SPASM for short. Some of the modules will include key skills such as:

  1. seeing some trends in business week, writing them up, and then claiming credit for them the following year
  2. knowing when to create a good rumor or dredge up an old one (e.g., Ariba getting bought is always a good one)
  3. knowing when to write up a lovely alert on Emptoris and their success at GSK and Motorola (when the bill comes due on their renewal)
  4. running from the ERP vendor analyst handlers at a trade show in order to actually go look at real functionality and talk to real customers

I’ll also add an extra training module on an old system that is important to know about it if you’ve never been exposed to it, and that is the Manufacturing Information Access Software System. If you’ve never heard of it, I HIGHLY recommend you Googling it to find out some great user comments about it.

From
What’s in Store for SAP SRM 7.0

Thermodynamics says that vapor will become solid at higher pressure, and I can tell you that the pressure is definitely on at many marquis SAP shops where the Procurement executives feel like Charlie Brown with the football getting pulled away again.

From
Wahhooo! We’re Making More Money — Just Not Enough to Fight Off Inflation

As a sidenote, if you all think I’m too sarcastic, please consider it a marker of higher evolution, not cruelty:
Sarcasm Seen as Evolutionary Survival Skill

From
Emptoris Empower — Additional Numbers to Share

It’s due to an arcane mathematical effect called Avnermatics where all reported figures geometrically multiply at a constant determined by the proximity of an acquisition and it’s also like “Schrodinger’s cat” in quantum mechanics because you can’t actually measure it, and if you do, you’re likely going to kill it.

The Wisdom

From
Do We REally Need Analyst 2.0?

If the commodity manager doesn’t pay attention to the innovative new suppliers out there, then the commodity manager is an idiot and not doing his/her job, merely prone to racking and stacking stale incumbants rather than identifying discontinuous improvements in the market on behalf of his/her clients. These are the true analysts, those that analyze where things are going, and where the innovations are happening (and putting it into context for a client with a very complex organization situation) rather than trying to put new shinola on old sh&t.

From
How Will Green e-Procurement Play in a Recession?

If you set the way back machine to the great sensei Genichi Taguchi and his definition of waste, it was actually a loss function to the consumer and to society – so this correlation is both understandable and natural.

From
The WSJ Shows No Love for Aberdeen

What’s funny is that nobody from Aberdeen ever chimes in on this blog defending themselves and their “honor” (ok , stop laughing). Why? Because they know it to be true and the analysts are using Aberdeen (to build their personal brands) as much as Aberdeen uses them. To quote Bob Seeger, they were “getting their share”.

From
Exploring the True Costs of SaaS

You have the 2 opposing philosophies of the assemble/maintain your own versus going for a turnkey low-maintenance option. Thing is … both are needed (strategic stuff for the former) … in line with “IT doesn’t matter” (in fine print: for the commodity stuff) … BUT, mass customization hinges upon great design, and SaaS offerings can’t just have the many-to-many data model and a few data dictionaries. SaaS is the right concept, but time will tell how much customization features will be available as native functionality so that the platform will be commonized, but will be tunable (e.g., plug-in’able content) to specific user requirements.

From
Mickey D’s — Eating Cost Increases for Customers

The biggest cost though of beef is its impact on global warming. Methane is 21x more ‘warming’ than CO2 and organic beef is even worse given the time it takes to get an organic cow to slaughter weight. Dairy cows also are part of the equation. So, my friends, it’s great that you’ve switched to a hybrid car and changed your lightbulbs, but you now need to give up cheeseburgers and milk in order to save our planet. I guess it’s veggie burgers and soy lattes in our foreseeable future. Otherwise, we need start doing methane reclamation not just in landfills, coal mines, and manure piles, but also in livestock, and that’s just not a visual that I care for on a bike ride through Vermont or Wisconsin.

From
Supplier Management Lessons from Steely Dan

A Procurement organization should be ‘fit for purpose’, and it’s less about the size of the spend than how you use it… which is to deliver lasting value.

From
RNC Final Dispatch — I Blog You Decide

In procurement, it’s all about talent, and transformation. And we need a whole lotta both.

Well, that’s likely it. I hope you enjoyed this three-part series.

* Note that all posts pre-2012 were removed in the 2023 site upgrade.

Dead Company

Two weeks ago, I brought you Dumb Company, a starting list of things that companies who fail the CIRCUIT rating (Corporate Intelligence Rating Calibration Under Inflationary Times) tend to do. Today, I bring you Part III of the series, which will attempt to explain why your favorite vendor likely won’t be here next year at this time.

The harsh reality is that this year has seen a couple of big vendors, with credit lines severely diminished or cut off due to bank failures, lost lawsuits, and VC belt-tightening, go through a number of layoff rounds. Two of the larger vendors in the space, despite claims of “regrouping”, are in serious trouble and (could soon be) on the block … and they could soon be joined by up to a dozen small companies that, relatively speaking, took too much VC money, and sold too little product, in the last few years. Some have great products, and will be sorely missed if they don’t get a quick cash infusion and close their doors, but it’s a harsh reality when you don’t manage for frugal growth, don’t continually focus on innovation not just in your products but in your internal operations as well, and don’t bring in outside expert help when you need it.

Why is this happening? The reasons vary from company to company, but the following reasons are common.

Too much VC money, too soon, against an overly ambitious business plan

The days of your average company spending seven figures on yet another enterprise system are over. Especially if such system is unproven. The way to succeed is to plan for slow and steady growth; delay sales, marketing, and CXO hires until the product is (almost) ready for massive deployment; and take as little money as possible early on so that there’s equity left to get more money later if the market declines and throws a crimp into your five-year plan.

Poor Approach to Sales

Many companies believe that if you bring in a few big guns (knowing that 20% of the sales force is responsible for 80% of the revenue at enterprise software companies) or get enough feet out there, you’ll get sales. This isn’t automatically true for a number of reasons. (1) The big guns are used to selling proven systems with large organizations backing them up. (2) It’s not the size of your sales force that matters, it’s the quality. (3) If they’re not getting the right message through to the right people, they’re not going to sell a thing.  (And if you haven’t had one lately, a sales and marketing review by an expert in the space might be a good idea.)

Too Many Assumptions, Too Few Verifications

A lot of entrepreneurs come from big company backgrounds where they’ve worked in a job for a number of years and grew frustrated at the lack of a solution for a problem to which they’re sure they know the solution. What many don’t understand is that not every company has the same problems, or the same processes, or the same viewpoint as to what constitutes a solution and, believing they are the expert, they over-engineer the solution to the point where it only solves one problem for one company.

Belief that Innovation Bursts are Enough

Some companies believe that once they have a product that represents a new solution to an unsolved, or poorly solved problem, they don’t have to do anything else for at least a couple of years. They effectively stop New Product Development and divert all their efforts to Sales & Marketing. The problem is that anything that can be built can be copied and improved upon many times faster, and the way to gain, and keep, customers is through continual innovation.

Our Way is the Right Way

The entrepreneurial team comes up with a way to structure, and run, the business, usually on-the-fly and by the seat of their pants, and runs with it, no matter what. If the structure is ripe with inefficiencies, it can prevent scalability and lead to discontent, which can, in return, result in the loss of key personnel.

So what can you do if you don’t want to end up like your favorite vendor?
Remember that consultants are cheap and

  • Get a Sales Review
    Are your sales people getting the right message through to the right people? Are they aligned with marketing? Are they selling at the right price points?
  • Get a Technology RoadMap Review
    Are you solving the right problems? Is your solution advancing at the right rate? Do you have enough innovation to get, and keep, a customer’s attention?
  • Get an Operations Review
    Are you efficient? Are your people enabled? Are you ready for growth?

And if you don’t know who to call, call the doctor (or e-mail him). If he can’t help you, he’ll help you hook up with someone who can.

 

Dumb Company

Two weeks ago I brought you CIRCUIT, “Corporate Intelligence Rating Calibration Under Inflationary Times”, where, I’m sure, many of you (who work for, and run, intelligent companies gifted enough to recognize the genius you display as a regular reader of Sourcing Innovation) asked “Can a company really be that dumb?”. The answer is, an unfortunate, yes. And in recessionary times, dumbness spreads like a disease. (Although it’s a meaningless statistic, it is interesting to note that a search for “dumb company” in Google brings up 16 Million hits. That’s almost Christina Aguilera level of popularity … in fact, it’s only dwarfed by the popularity of Britney Spears and the Circus she is due to unleash on the world on December 2.)

So today, helped by Google, I decided to bring you a starting list of other things that dumb companies do. Feel free to add your own in the comments, to help your fellow reader stay on the straight and narrow.

  • Brochure Mania
    As highlighted in this Remarkable Communication article, you can’t afford to print 10,000 brochures and then dump 9,950 in a toilet. (And the environment can’t afford it either!) If you feel you need a brochure, this there’s neat little technology called word processing that can generate industry standard formats, like PDF, that every computer can read.
  • N-Tuple Opt-In Everyone who E-mails You
    Just because someone emails you to say they like, or don’t like, your product, that doesn’t mean they want to be added to every single e-mail list your company has.
  • Assuming all of your customers are hip 25 year-old caucasians who listen to i-Pods, drink Starbucks, and hug trees in their Gap outfits.
    Chances are the majority of your customers aren’t who you think they are. In the enterprise space, assuming all of your customers run SAP and think it’s the greatest gift to man since sliced bread isn’t a great assumption either.
  • Lawyering Up …
    And suing everybody who might be infringing one line of a 100-page patent that should never have been issued in the first place. Only money-grubbing lawyers win in patent wars. If you were smart, you’d lobby for the US to go the way of the EU and abolish software and business process patents. They’re just stupid. There are laws for copyright. There are laws for espionage. There are laws for theft. Beyond that, if you can’t compete fairly, maybe you shouldn’t be competing at all.
  • Forgetting the Customer
    Maybe the customer doesn’t know the best way to solve his problem, but he knows more about it than you do. Don’t assume that only you can solve it, or that you know more about it than he does.
  • Forgetting Value
    Cost matters when money is tight, but so does value. If it sucks, it doesn’t matter how cheap it is. Once word gets out it’s a piece of trash, very few people will buy your product.
  • Cutting back on Customer Service
    When a customer is irate because you sold him something that doesn’t work … putting him on hold for hours or promising a solution “in next year’s release” isn’t going to win you any brownie points. It’s going to make him look for an early exit from your relationship.
  • Forgetting Your Employees are People, not Chattle
    They’re not resources to be reallocated, or liabilities to be released … they’re your dedicated employees who are there to help you through tough times.
  • Forgetting Sustainability
    You can always afford to go “green. Maybe you have to be creative. Maybe you have to do it in baby-steps. But you can always afford to go green.
  • … and many, many more.

Now it’s your turn. What are the dumbest things you had the opportunity to experience in the corporate world (and that led you on the path to your current job, where your intellect and dedication is appreciated). Alternatively, if you are among the unlucky few who joined a company that masterfully hid its ineptitude during the recent mini-boom, and that is now showing it’s true colors (and causing you to search for a smarter company), what dumb things are you seeing?

Blogger Relations Part II: Fire Your PR Company!

A few months ago, over on the Silicon Alley Insider, Jason Calacanis wrote a phenomenal post “On How To Get PR For Your Startup: Fire Your PR Company“. It’s the post I probably should have written for Part I of Blogger Relations. It’s that good.

Jason Calcanis, who has the best, and shortest PR philosophy I’ve ever read, says that you just need to be amazing. be everywhere. be real. It’s the last two words in particular that get my attention. Be Real. A PR firm with a lackey parroting a press release is not real. A media monkey with some sound-bites who cares more about your monthly cheque than your product is not real. A voice who never wavers from a script is not real. And, if you haven’t guessed already, I don’t give a r@ts-@ss about press releases (don’t ask me where you can put them — just don’t), sound-bites, or scripts. I care about products. I care about solutions. I care about results. And, above all, I care about openness, honesty, and a commitment to the customer. If you don’t have that, in all honesty, regardless of the size of your corporate bank account [and at this point I know I should be sticking both feet in my mouth or shooting them off with a shotgun], I don’t give a r@ts @ss about you either.

This blog is about innovation. If you’ve got that, and want to talk about it, you’ve got my attention. As Jason says, You don’t need a PR firm, you don’t need an in-house PR person and you don’t need to spend ANY money to get amazing PR. You don’t need to be connected, and you don’t need to be a “name brand.” You just need to be out there, open, honest, and willing to make a connection. That’s it. And if you don’t get it, Jason has 10 tips that you can use to do PR at your startup — or — small company, that I will summarize (and then elaborate on as it pertains to this blog), but I still strongly recommend you read Jason’s post. (Just reading it will improve your credibility factor!)

  1. Be the Brand
    Us bloggers are overworked underpaid masochists who survive on caffeine, adrenaline, supplements, and sheer stubbornness. If you’re not in love with your brand and inspired by your brand’s mission, and if you don’t *really* believe in your product on a deep, intrinsic level, it’s going to come across *immediately* to the bloggers you’re pitching and I’m going to use the call time as nap-time.
  2. Be everywhere.
    Talk to people outside your company regularly. CEO also stands for Chief Education Officer. You’re the face of your company, so show it!
  3. Always pick up the check — always!
    As Jason notes, PR Firms … who, in my view, do nothing for you … cost $5,000 to $15,000 a month. Buying dinner for a group of people at a conference ten times a year will cost you about one month’s worth of PR … and those bloggers will remember an inspired face and a dynamic voice, not a PR drone from the Sirius Cybernetics Corporation. And remember, even those of us that make a few dollars from sponsorships are still relatively poor — every hour we devote to learning and spreading knowledge is another hour we’re not working or looking for work. (I’m sure I could go back to a CTO role and make twice as much. And my fellow blogger could probably make considerably more as a partner in a large consulting firm.) Just remember … we want to spread the word, but we can’t go broke doing it.
  4. Be a Human Being
    Journalists hate PR people and they hate being pitched. It’s the only thing I hate more than a company who raises the drawbridge and arms the guards. Just tell me what you’re doing, why, and what you hope to achieve … and I’ll ask the questions that need to be asked.
  5. Form a Bond
    Realize that journalists and bloggers are constantly getting banged by lazy, clueless PR folks who fire first and don’t understand what the word “aim” even means. Take the opportunity to cut to the front of the line by spending just 30 minutes researching the journalist or blogger you want to pitch. Not only is it courtesy and good manners, but it helps you understand what the journalist, or blogger, looks for and how to best convey your story … often in less time than it would take to convey your PR drone’s script! (And I make it easy for you. Check out the About post and the What Does the doctor Do? post and then a sampling of random posts.)
  6. E-mail a Journalist in Your Voice
    Journalists and bloggers are very busy and PR people are, by and large, considered an inefficiency in the system by them. (And that’s putting it nicely. I’m more likely to label them a clog.) If you say “Let’s do a call about your blog and interests and I can put you in touch with the right person …” I hear “blah blah blah … I’m a moron … blah blah blah“. If you won’t talk to me, why should I talk to you? So talk to me, and when you do, say something (intelligent). (And get bonus points if you get to the point quickly.)
  7. Speak to the Journalist Intelligently
    And find out his preferred way of getting quotes if he wants them. Call recording? Good old-fashioned note-taking? Or a (follow-up) e-mail interview where you can respond to direct questions in your own voice. Make it easy for the journalist/blogger, and chances are you’ll get preferred coverage in the future.
  8. Invite People to “Swing By”
    Your office. Your trade show booth. The lobby of the hotel you’re staying at for a business meeting. Relationships help. More than any PR Firm EVER will.
  9. Attach Your Brand to a Movement
    Welcome your competitors to the race, because no one is going to tune into a one-horse race. In other words, don’t tell me you’re the only company with a solution for X when I know damn well there are at least five other companies out there that have a solution for X. It’s okay to have a unique take on X (and if you don’t, I probably won’t cover you), but acknowledge the market you’re competing in. Bloggers HATE B.S. (Well, good bloggers anyway … )
  10. Embrace Small Media Outlets
    Jason makes two very, very good points:
      a) Small publications have more time for you
    b) Big publications troll the small publications for stories
    To which I’ll add one more, that might shock you:
    c) I am personally familiar with a number of companies that have gotten more press, more leads, and more sales as a result of a single post on Sourcing Innovation than they got by sponsoring an Analyst white-paper, than they got from buying a booth at a trade-show, and than they got from taking adds out in magazines like Purchasing. (So for all you marketing types out there, imagine for a second how well my blog, Illumination, and white-paper sponsors are doing. Just imagine.)
      Niche publications like Sourcing Innovation are the future.
    The sooner you accept it, the better off you are.

In other words, if you care about your future, keep it in your hands.

How Dumb is Your Company?

Although it is likely that the majority of my regular readers — who strive to improve their knowledge, capabilities, and skill-sets by the day — work for above average companies who are reasonably intelligent at their core, it’s a recession out there, and your average company is getting dumber by the day. Moreover, many companies don’t even seem to realize how dumb they’re getting or the bad precedents they’re setting for good companies who will be pressured by investors and Wall Street to follow their lead. Thus, in my quest to keep your company on the straight and narrow, I bring you CIRCUIT: the “Corporate Intelligence Rating Calibration Under Inflationary Times”. I hope you don’t need it, but if you do, I hope it persuades your managers, and investors, from doing dumb things.

In recessionary times, companies have a tendency to execute one or more of the following 10 dumb mistakes. To determine your corporate intelligence, start with a score of 10 and subtract 1 for each act of corporate omission.

Doing Away With the Perks
Usually the first thing to go when money gets tight are the employee perks. If perks at your company happen to be box seats at the game, and a box costs your company 100K a year, then it’s a justifiable call. However, at most companies, “perks” are usually limited to refreshments in the break room, the odd meal out, and the odd office party which, when combined, account for a total cost that is a negligible rounding error on the balance sheet. The pennies you save is not worth the loss of morale, and productivity, that will result from taking away your employee’s 25 cent coffee or soda. 		-1
Delaying that Technology Purchase
Companies that win do more with less. They do that by deploying technology that increases the productivity, and capability, of their staff. Look at the Hackett numbers. Leaders spend more — way more — on technology.
I’m not saying that you should go out and spend millions on a new ERP, since some traditional enterprise solutions on the marketplace are way overpriced, but if you’ve identified a need for a system, do your homework, find a low-cost (SaaS) solution that meets your needs, and license it on a pay-as-you-go basis. 		-1
Postponing New Product Development
Recessions do two things. They break (and sometimes bankrupt) losers and they make leaders. In strong markets, the leading companies are always — ALWAYS — those companies that emerge, lean (which means cost-conscious and not cost-focussed) and mean, from a recession with new products and services to meet the needs of the market. This also means that leading companies continue to innovate new products during a recession (as well as new ways to produce or deliver them more cost effectively). 		-1
Freezing the Marketing Budget
Companies that succeed in recessionary times are companies that conduct business-as-usual. Although this doesn’t mean spending millions on a Super Bowl ad, it does mean a continued advertising presence on the web and at intelligently selected trade shows. Companies that conduct business-as-usual show their (potential) customers that they run their business responsibly, in good times and bad, and are more than capable of riding out some rough waters here and there. (And there’s a difference between responsibly getting a booth at a trade-show and irresponsibly hiring expensive magicians, professional athletes, and bikini-clad super-models to staff it when you have real-world budgets.) 		-1
Strangling the Travel Budget
Global business requires global travel — plain and simple. It’s true that you can do a lot by tele-conference and video-conference, and also true that you should be doing as much as you can with these new technologies, but this will never replace the connection formed by being there in-person, as any good sales person will tell you. Sometimes you need to visit customers, sometimes your remote teams need to come together to form a bond, and sometimes you need to go to trade shows. If you were managing your travel budget responsibly, and only traveling when you needed to, you can’t cut a single penny without negatively impacting your business. 		-1
Cutting 10% Across the Board
A responsible business doesn’t have more employees than it needs to get its work done, and doesn’t retain employees who are not capable of adequately performing the job they were hired to do. This means that every single employee is needed and productively contributing to the business and that, logically, cutting employees must seriously cut into productivity and threaten a business’ ability to continue business-as-usual.
Furthermore, in reality, cutting 10% of your employees is equivalent to cutting 30% to 50% of your operating capability. The first thing that happens is that morale and drive, which greatly impacts an employee’s productivity, tanks across the board. Then your employees get scared and start looking for new jobs — but since most companies aren’t hiring, only your best employees get new jobs. End result: cutting 10% across the board ensures that your top 10% take their leave as well, and the 80% who are left are operating at maybe 2/3rds capacity as they spend a lot of their time worrying about what they’ll do if they lose their job and looking for a new job. Net effect, you lose up to 50% productivity for what you thought was a 10% cost savings. 		-1
Killing the Training Budget
Not only do top companies spend more on technology than their peers, they spend more on training. Why? This allows them to do more work with fewer employees. This allows them to keep their salary expense lean-and-mean relative to their peers, and to earn more per employee, for a total cost that is usually a small fraction of the lean-and-mean salary expense. 		-1
Shifting Focus from Growth-Planning to Cost-Cutting
The leaders, innovative to the core, always find a way to grow slowly in a recession. Always. Always. Always. Maybe it’s only a few percentage points compared to the tens of percentage points they grow when the recession ends, but they grow. The losers switch to cost-cutting and, more often than not, cut themselves out of existence. 		-1
Stifling Innovation to Reduce Risk
Three words: INNOVATE OR DIE! Your choice.		 -1
Retreating into your Moated Castle
This has become my new personal favorite! Often the first thing to go these days after the employee perks is the consulting budget — and it’s often by far the dumbest thing your average company can do. Often the only way of introducing significant, meaningful, cost-saving revenue-generating improvements into your average company is to bring in an outside consultant who specializes in one or more types of business innovation. A consultant who can tell you what technology is right for you. A consultant who can help you define the right new product development roadmap that will result in products customers want to buy, even during a recession. A consultant who can help you maximize your marketing budget. A consultant who can help you save money and avoid unnecessary costs in an intelligent, non-destructive, fashion. And a consultant who can keep you on the innovation path and out of the cost-cutting abyss that ultimately spells a cruel demise to what could have been a very successful business model with just a few tweaks. 		-1

What’s your Corporate Intelligence Rating? If your score is:

  Rating Comments
10 Genius Congratulations! You are a true market leader.
9 Intelligent Quite Good! You’re best-in-class.
8 Smart Not Bad. You’re above average and on the road to stardom.
7 Average You’ve got some work to do, but if you set your mind to it, a bright future awaits.
6 Dull You’ve got your work cut out for you.
5 Deficient You’re handicapped, but if you’re handi-capable, with hard-work, perseverance, and a devout focus on change, you can be average in no-time!
4 Feeble You’re seriously lacking in corporate know-how, but if you open your heart to innovation, and bring in some expert consultants, you can get back on the right track.
3 Dumb You’re going to need a corporate make-over to survive.
2 Moron Find a Leprechaun! You’re betting on Lady Luck at this point!
1 Imbecile Start writing your corporate obituary. It’s just a matter of time.
0 Complete Idiot Congratulations! The Sourcing Maniacs lay their bells at your feet. It should be impossible to be this idiotic and still be alive, but you’ve proven that nothing’s imposible. Have some bubbly before the money runs out.