Category Archives: rants

Dead Company II: If You’re Hoarding Cash …

Like my fellow bloggers, I talk to a lot of companies in the run of a week, and many more in the run of a month, and one thing I’ve been hearing too much of lately is “we’ve cut back on X” — where X is marketing, development, or outside consulting — “because we have to conserve cash to get through the current crisis” — where the crisis is the current recession, downturn, etc. And it saddens me because the truth of the situation is thus: If You’re Hoarding Cash, You’re Not Going To Last … you’re just prolonging a slow, agonizing death!

As I’ve reminded you many times before, great companies are born in recessions … especially in Spend Management! This is a spend management company’s best time to shine … and the time you are most likely to get the undivided attention of senior management who dismissed you as unnecessary when times were good and the stream of cash was overflowing. Plus, it’s an opportunistic perfect storm like none you’ve ever seen: companies are desperate for savings, prices have nose-dived in many commodity markets which had been climbing steadily for years, and many types of spend management technology — including sourcing, procurement, analysis, optimization, supplier information management, and trade management — are now mature low-risk technologies in the eyes of even the most conservative techno-phobes. Plus, SaaS has hit mainstream and advances in cloud infrastructures allow you to keep your costs, and prices, low enough to make your solutions, and the returns they offer, within the budgets of even the lower end of the mid-market. In other words, everyone needs it, everyone can benefit from it, and everyone can afford it — especially if you can offer SaaS and they don’t have to come up with a large amount of cash up front, before they see savings.

But you’re not going to see a single sale if:

  • they don’t know you’re there
    and they won’t if you don’t keep your brand out there where they can find it
  • you’re not keeping your technology up-to-date
    because even the most technology illiterate procurement professionals know that advantages are fleeting and the only real value will come from solutions that are continually being improved and updated
  • you’re not innovating ahead of your competitors
    because it is always a buyer’s market and customers are going to buy the best solution … and you’re not going to know what that is if you don’t bring in some expert help once in a while to help you do a competitive analysis and chart the right roadmap

Now, I’m not saying that you should go out and spend 50K to 100K on a trade-show and staff your booth with magicians, super models, and sports stars just to get attention; that you should double your development team and see how much you can pump out in the next year; or that you should go out and hire a McKinsey or A.T. Kearney to do a complete end-to-end analysis of your software and service offerings — just that you need to conduct business as usual against a thought-out growth strategy. Otherwise, you might as well pack it in and go home, because odds are that you have no future.

However, I am saying that you need to maintain visibility where it counts, and especially on-line as some recent studies have found that appropriately designed on-line campaigns can easily be three times as effective as print campaigns; that you need to continue to enhance your current offering and continue to develop one or more new offerings with a high ROI potential, and that you need to continue to validate your offerings and directions with an external expert. And if you’re smart, you can stretch smaller marketing, development, and consulting budgets and get a big bang for your buck.

Because if you decide to hoard your cash, here’s what happens.

  • You cut your marketing budget and fade from memory because no one remembers you exist in the face of constant marketing from your smarter peers; as a result, you don’t get invited to the table when new opportunities arise and your pipeline shrinks until there’s no one left to sell to.
  • You cut your development budget and your solutions get stale, and even when you do get invited to the table, you lose because your competition not only has more functionality, but has new features and functions that streamline processes, improve analysis, and identify more savings.
  • You cut your consulting budget and you lose touch with your target market, going down tangents that your CEO thinks are important but that, in reality, are only valuable to one or two companies with obscure processes and, as a result, what you thought was a great new feature that would put you ahead of your competition actually scares potential customers away.

And even if you manage to make it through the recession to the next boom, you’ll be one to two years behind your competition, who will likely grow by leaps and bounds and decimate you on all fronts when you emerge from your cocoon. So, unless you’re sitting on at least three to four year’s worth of cash in the bank, which I know is not the case for over 99% of companies in this space, remember this: those who hoard cash don’t last. Another shake-out is coming … and it is the predators, and not the prey, that are going to win this round. The question is, which are you?

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.