Category Archives: rants

Is Your Potential Vendor a Dead Company Walking? Part 2

In Part 1 we reminded you that our space is filling up with dumb companies and that this number, at least in the view of the doctor, is likely at an all time high.

We also reminded you that the doctor believes that your favourite vendor likely won’t be around, or at least not in it’s current form, within two years (or less), as he’s predicting a failure rate of 20% (or more); which, while it sounds pretty significant, is actually a mild prediction compared to THE REVELATOR‘s bold prediction that 75% of companies won’t be around, or at least not in their current form, within 18 months. Wow!

Why? First of all, as highlighted in the doctor‘s revised Dumb Company article, the companies that are (finally) starting to panic (internally) are starting to make the classic mistakes that often signal the beginning of the end.

Secondly, they have been, or are starting to, make the Dead Company mistakes, first highlighted by the doctor in December, 2008, as well as some scary new mistakes that weren’t as common, or that were overlooked by the doctor, sixteen years ago.

And while we can’t compile an exhaustive list for a number of reasons, as per Part 1, we can identify a number of common mistakes that companies who are dead companies walking tend to make (in the final days, even though they don’t always know it’s the final days yet). So if you see these mistakes in spades as a buying organization, best to steer clear until the ship is righted (assuming the vendor recognizes they are off course before it is too late and takes action). (You don’t want to go down with a sinking ship!)

In Part 1, we identified the first six common mistakes we are seeing too often. Today, we identify the next six.

Buzz and Sound Bites are more important than timeless educational content

As the doctor has been lamenting for months and months, the marketing madness is apparently at an all time high, buzzwords have replaced meaningful messages, and the hogwash doesn’t convey any useful information a prospective buyer can use to figure out what the product actually does! (And that’s one of the major causes of the current Procurement Stink, as we hinted at in this article about the Vendor Contribution to the Procurement Stink.)

Sure the hype gets attention, but it doesn’t deliver results!

So if all your research uncovers is buzzwords, sound bites, and hogwash, then you best stay clear of that vendor. As THE PROPHET has stated, M&A is about to make a comeback and the best you can hope for is that they get bought and merged.

If there is interest, your product is the solution

Not only is the doctor seeing too much rapid fire sound bite marketing to see what sticks in the marketers equivalent of throwing pasta against the wall, doubling down on whatever is getting the mot interest, assuming that their solution is the perfect solution for whatever they sold and, finally, assuming that any organization that contacts them is a potential customer and that their product will be the solution, no matter who the organization is, what the organization needs, or what their product actually does.

In short, they are adopting the Big X consulting playbook, everyone’s a client, sell whatever they can, whenever they can, and then hope they can figure out how to deliver later (without the deep strength across domains or the deep bench depth to take on big projects that the Big X have). But they are not consulting firms, they don’t have a suite of third party vendors they can proffer up, and they certainly don’t have the budget or bench to build custom solutions on the fly.

So if the first thing you get to an inquiry off of a sound-bite marketing advert is a hard sell, take a hard pass. A good vendor learns about you and your problems before proffering up a potential solution.

Sales is about numbers, not solutions

As outlined in detail in our recent article on why are there so many tech failures, at the majority of tech enterprises:

  • sales people are compensated on how much they sell, not how successful the solution is for the customer
  • sales people are pressured to hit numbers, or be cut if they have even ONE quarter in the bottom 10% of performers
  • sales people don’t stick around long enough for success to matter

There’s a reason that THE REVELATOR has outright stated in a recent article that after 40-plus years, I say this with the deepest sincerity -– 90% of salespeople aren’t worth the gum stuck on the bottom of a shoe, and that’s because the majority of them are just focussed on selling, not on actually solving a customer’s problem.

If the sales person is rushed to sell, keeps making one time offers that expire at the end of the quarter, or promises rapid returns without a detailed use case analysis, you can be sure they only care about getting your cash in the door, not about whether or not the solution can actually solve any of your problems.

Any temporary price cut to get those initial clients can be made up later!

When times start to get desperate, that’s when desperate organizations that know they need to sign customers now to keep the investors happy (including the venture capitalists and private equity investors) will offer “a few select marquis organizations an initial discount in exchange for joint press releases, quotes, case studies, and marketing sound-bites“, thinking that they can satiate the investors for a while by telling them that those success stories will allow the organization to jack the prices further and that they’ll be able to jack prices considerably at renewal time because of “all the added value” they will have built by then.

However, investors are not dumb and not going to fall for the “price cut now will lead to riches later”, because they’ve seen that fallacy over and over again (and they know that the prices never go back up). Plus, if the solution is really worth 1 Million, there’s no way any successful vendor is going to give you an introductory rate of 100K for a “case study and positive recommendation”. That’s a big red flag for any organization looking for a vendor with a successful solution.

Our tech works, any failure is the result of the implementation team/org

Going back to our recent article on why are there so many tech failures, we noted that one of the primary reasons there are so many tech failures is that, as also noted above, sales people are being forced to sell at any cost. And the reason that even those with a conscience can do this is because they have been told the solution can be adapted and customized as needed, and if it doesn’t work, then it’s the fault of the third party consulting partner’s implementation team for screwing it up.

But that’s bullcr@p, and you know it! First of all, it’s the vendor’s responsibility for selecting their partners as much as it is the partner’s responsibility for recommending the vendor. Secondly, even if the vendor has vetted the partner and assured that they are good people, it is still the vendor’s responsibility to train the partner’s people on their solution, implementation requirements, and best practices. Thirdly, and most importantly, it is the vendor’s responsibility to ensure they don’t make any promises the tech can’t keep, as well as insuring that any customer referrals don’t come with unrealistic expectations. (Heightened is okay if the vendor is willing to put the extra work in, but it must be within the realm of possibility with the current solution … not a future roadmap that may never materialize.)

We know what we’re doing

Just because a founder ran a Procurement Department or convinced an investment firm he knows how to run a company, that doesn’t mean he actually does, especially if it’s his first time. And it doesn’t matter how fast he can learn, how smart he is, how good he can sell, or how charismatic he is. Startup success requires a suite of critical skill sets (which are outlined in Garry Mansell’s Simplify to Succeed), each of which takes years to learn and sometimes a lifetime to master. You can’t wait to learn what you needed to do yesterday. Selling investors is not like selling Procurement technology buyers. And charisma only gets you in the door, on the stage, or an interview with Mr. X himself. It doesn’t necessarily get you the signature, the return invite, or the limelight.

This results in two major mistakes. Unless the founders raised (way) too much money and are under pressure from the investors to put a proper management team in place, they’ll go too light on real operational management (and sometimes marketing management, opting for the attention seeking sound-biters over the steady-state educationally focussed marketers that hook real customers with real problems the vendor’s solution might actually solve), thinking that all they need are a few rock-star developers, a sound-bite marketer, and aggressive sales people. Which isn’t a complete team and not a complete recipe for success.

The next mistake is believing they can do everything in house, and that they “don’t need no advice from no one“. Not other founders (including those who failed once or twice and know what not to do). Not consultants, who specialize in startups and helping companies operate successfully. Not analysts, who’ve seen hundreds of companies come and go (and seen the commonalities in successful solutions and successful companies). And definitely not independent Procurement technology experts who’ve had 20+ years in the space and seen thousands of companies come and go over the decades (and analyzed hundreds and hundreds in detail).

In the mid to late 2000s, even the above average companies, who (in hindsight) probably didn’t need any help, would look for any expert they could find with a decade of experience to help them survive the (coming) downturn (which came, as it always does), improve their solution offering, and grow. Today, a significant percentage of the new generation of founders, high on raising ridiculous amounts of early stage (often pre-beta) funding, running companies making a significant number of dumb company and dead company mistakes, won’t even consider that a third party with a decade or more of experience on them in the space could actually help them.

And while this is a hard mistake to tell directly (as the smart companies won’t necessarily disclose the experts they are working with to give them an edge), if you pay attention to their messages, their speech, and their words, you’ll get some indirect hints as to where the egos might still be too inflated for the company to see success (and you can hence identify it as a company that needs to be evaluated against the dumb company and dead company walking checklists). Phrases such as “I was a buyer for F500 for years managing $B categories“, “We raised 100M because our investors know that we know what the next generation of tech is“, “I’m not a sales guy, I’m a practitioner like you“, “Don’t worry, we know what you need” even before they’ve even asked a single question about your problems and reason for reaching out, etc.

Before we conclude we’d like to again remind you that this is not a complete list of mistakes soon to be dead companies often make, but a starting list of red flags you should look for as a potential buyer of their solutions. There are real, solid, solutions out there from real, solid, vendors who care about your success and who will likely survive the coming implosion. You might have to look quite hard to find them (especially if THE REVELATOR is right and 3/4 will not survive unscathed), but the effort will be worth it because the last thing you want is your solution to fall out from under you just after the implementation is complete.

(And it’s critical to remember that any deep solution is going to take multiple quarters to implement, especially if you need to collect, classify, cleanse, and map years of historical data from multiple systems. For a mini-suite, always expect six [6] to twelve [12] months as a mid-market, and more for a full suite. Yes, some functionality that doesn’t require historical data will be available day one, and other functionality that only requires a year or two of data to get going will be available day ninety one, but no solution with depth is going to be completely implemented in under a quarter. So the next time a vendor says they can do an end to end complete enterprise Procurement installation in 60 days, they don’t have anything deep besides a shiny faketake-to-nowhere UX or a wrapper on third party tech from a company that poses more risk than they do.)

I’m Getting Fed Up of all These “Thought Leader” and “Influencer” Lists. How About You?

As I stated in a response to Jon THE REVELATOR Hansen in his comment on my M&A Mania post,

How is a newly minted Procurement professional with no training, no support, and very little technical training supposed to find the educational resources she needs to learn what she needs to progress in the overwhelming tsunami of marketing sound bites and influencer dribble?

Especially when, every other day, you have some yahoo PR person at Vendor X picking 10 random people and calling them “procurement thought leaders” and telling you to follow those individuals when the PR person doesn’t even appear to have a real Procurement thought in his head to begin with and has no clue who the experts are and aren’t? And, more importantly, which of these “thought leaders” will actually try to educate you vs dribble influencer garbledy-gook at you in hopes of getting another subscribe.

For the majority of these people, it’s all about subscribers, and not about actually helping you.

At the end of the day, all that most of them care about is:

  • the ego boost when they can say that after only 2 years they have way more subscribers than you
  • the nickel and dime subscriptions they will convince you to sign up for (because those can apparently add up if you get thousands of them, but I’ll never know because I’ve never charged a reader and I never will)
  • the notoriety they get that will help them land a high profile job and a higher paycheck

And when that last one happens, say sayonara to them as their blog/site/newsletter will be shut down faster than a greased pig powered by greased lightening.

If they even last that long.

For those of you who only entered Procurement in the last decade, I know you probably don’t know who I am (as I ignored linked in while at Spend Matters because that was the job of marketing) and I’m fine with that (because I don’t want you following me or chewing up my site resources until you’re ready to stop chasing these 15-second-of-famers and start learning, but more on that later), but you need to know this:

Sourcing Innovation, only six months younger than Spend Matters, is the second oldest independent Procurement blog/site in the space [June 2006] (with THE REVALATOR‘s Procurement Insights being the third [May 2007]) and the one with the most FREE educational content sitting there for your perusal and consumption (with over 6,000 articles, which is now considerably more than Spend Matters since the great purge of ’23 during the site upgrade and 3 times that of Procurement Insights — but it wouldn’t be fair of me to not note that THE REVELATOR was one of the first to venture into regular podcasting for a while and has an archive of those podcasts that SI doesn’t have).

Over these past eighteen (18) years I have seen over a dozen dozen blogs / independent sites (that’s 144 for those of you who don’t like mental math) come and go, along with over a dozen major publications and “associations”, with a considerable majority of these influencer blogs/newsletters fizzling out within 3 years when the newly minted blogger / thought leader / influencer didn’t get the fame and fortune they expected and decided it was just too much work for too little, or, in most cases, NO, return. (And if they got noticed and got a nice job offer by someone desperate for some expertise, bye bye blog.)

Side note: For those without the long term memory, from ’07 to ’17 I maintained a resource site that tracked, among other things, all of all the blogs, publications, associations, annual events, webinars, vendors, and consulting firms, so when I say I’ve seen over a dozen dozen come and go, I mean it. (For those who don’t know the history, I stopped because I started working with Spend Matters in 2016, and thus suspended conflicting sponsorships and I wasn’t going to continue it for free because it was a massive amount of work that brought no value to me and little to my readers relative to other efforts I could focus on [especially when vendors couldn’t even be bothered to fill out a simple web-form for their events and listings] — but Spend Matters did have the Almanac, did track and advertise the important events (for a while), and did provide some of this service to the space.)

In short, most of these “thought leaders” or “influencers” aren’t here for the right reasons, and of those that are, most of them won’t stick around for the long haul when they realize the financial return is not here.

But this is not my biggest problem with these “thought leader” and “influencer” lists, because we’ve always had people out for fame and fortune, and always will. My biggest problem is that they don’t help you, even the well intentioned ones.

The average level of Procurement maturity today, unfortunately, is not much better than it was two decades ago when those of us in the space since the beginning (by 2000) started writing about it, along with what was needed process, training, and technology wise to make it better. As a result, you don’t need “thought leadership”, you need “executable advice” and “real-world education” that can help you improve your understanding, processes, and platforms (with proper selection) to get you to the next level, or at least through your job today. And you need no nonsense advice to help you cut through all the sound-bites, buzzwords, and marketing hogwash that you are linguistically assaulted with on a daily basis. Not some feel good life stories, fantasies, or divine prophecies that may never come to pass.

And not only do you need this education, you need it from someone who will still be here tomorrow, the day after, next month, and next year and will stay here until they are found dead hunched over whatever replaces the laptop writing yet one more article to try and help you be a better Procurement professional, which THE REVELATOR has stated is how he expects to be found. Furthermore, nless technology improves to the point where I trust AI dictation and editing software, it’s likely how I’ll be found as well.

And while there are again hundreds of want to be “thought leaders” and “influencers” (like there were about two years after I started), there are still very few I trust will still be here in two years after the next big market reset (which THE REVELATOR predicts will affect 3 in 4 companies), as there are very few now that have been around 4 or more years, who have been through good and bad times, and who have demonstrated they are here to stay, no matter what hardship is thrown their way.

But where’s that list?!?!?

Unfortunately, only in the heads of those of us who’ve been here since the early days and seen so many come and go, and that’s where it will stay because you can’t create a lot of regular bullshit PR posts when you can only make one or two ten educators to follow lists.

So if you truly want to learn, do your research and find those of us who’ve been around providing free advice for over a decade, while sometimes living like penniless artists, because we believe education is paramount for the space to progress and get the recognition it deserves.

Or if you just want entertainment, or a good story, go watch a TED talk instead. It will be more inspiring and more useful in the long run.

And unless you want education, direct advice, truth, and a constant attack on the massive levels of bullcr@p in today’s marketing that have reached peaks that have never been seen in the 29-year history of our space*, don’t follow me!

(As Bif Naked would say:
GET OFFA ME! AWAY FROM ME! GET ME OUTA HERE!
LET GO OF ME! DON’T FOLLOW ME! DON’T WANNA BE YOUR LEADER!

I want to educate, not lead. Besides, as I said before, I’ve been there and done that. #)

 

* FreeMarkets, the first Procurement company, was founded in 1995; it was later acquired by Ariba, which was later acquired by SAP as their Source to Pay platform that all of you who have had to use it love and hate today.

# Before Spend Matters in ’16 (to ’22), Sourcing Innovation (and vendor consulting) was my full time job, my goal was to pay the bills (though not necessarily live well) off of SI alone, and I did. From 2008 onward, I tracked the stats on the site and every third party ranking engine (there used to be five big ones: Alexa, Traffic Estimate, Quantcast, Compete, Ranking). Between 2009 and 2014 SI regularly took the top spot away from Spend Matters, even when THE PROPHET built out a small team and it was just me at Sourcing Innovation. So, yeah, been there, done that, held the top spot and it’s not as glamorous as this new generation of “influencers” thinks it is. And yes, if you go wayback through the archives, the stats are still there to prove it.

Is Your Potential Vendor a Dead Company Walking? Part 1

Not long ago we noted that our space is filling up with dumb companies and that this number, at least in the view of the doctor, is likely at an all time high.

the doctor believes that your favourite vendor likely won’t be around, or at least not in it’s current form, within two years (or less), with the doctor predicting a failure rate of 20% (or more); which, while it sounds pretty significant, is actually a mild prediction compared to THE REVELATOR‘s bold prediction that 75% of companies won’t be around, or at least not in their current form, within 18 months. Wow!

Why? First of all, as highlighted in the doctor‘s revised Dumb Company article, the companies that are (finally) starting to panic (internally) are starting to make the classic mistakes that signal the beginning of the end. (Considering the marketing madness, the buzzword overload, and the hogwash still coming from the firehose, you wouldn’t know it yet, but early warning signs are starting to appear.)

Secondly, they have been, or are starting to, make the Dead Company mistakes, first highlighted by the doctor in December, 2008, as well as some scary new mistakes that weren’t as common, or that were overlooked by the doctor, sixteen years ago.

While there are a large number of mistakes, often with individual nuances, that vary from company to company, and an exhaustive list would be too long to digest (if it could even be compiled by one person), there are still a number of common mistakes that can be identified and the elimination of these, or at least an immediate course correction (as some mistakes can’t be undone) with respect to these mistakes, will go a long way to making sure that their company is not the next dead company walking. If you see these mistakes in spades as a buying organization, it’s probably best to steer clear until the ship is righted. (You don’t want to go down with a sinking ship!)

The top 12 the doctor is currently seeing are:

Too Many Assumptions, Too Few Verifications

Too many founders didn’t do their research, assumed that just because tool X they were forced to use at their last job didn’t do something then no tool did it, or assumed that because they were a buyer buying a few categories at one company in one industry they know what every buyer wants. And, thus, they know enough to design the tool that is going to take the Procurement world by storm! This is rarely the case. Especially if they only ever saw three potential solutions of the 40 to 200 that were out there (depending on the module they were looking for, see the Mega Map).

While it’s hard to tell what is in someone’s head, the words, directions (to the marketing and sales teams), and outputs (in terms of product) speak volumes. They tend to focus on how they were a buyer and know all the problems (without even asking about your problem), focus on user experience more than actual process or solution (look how easy it is for Bob to make a request on his phone and see a virtual avatar of Alice receiving it — woo hoo), and direct their marketing and sales team to sell sizzle, not steak.

A shiny exterior is more important than a modern engine

As hinted in our last point, too many founders today are too focussed on the UI and the UX, the “user experience” and not on the processes that the users actually have to do on a daily basis. As a result, while it may taste great to the eyes, it’s significantly less filling as an actual solution and leaves users wanting more, sometimes to the point where they quickly abandon the solution. As such, it doesn’t matter how quick that shiny new intake-to-orchestrate solution can be implemented if there isn’t actually a solid procurement capability backing it up that does more than allow an employee to make a request and see a shiny avatar of Alice saying “your request has been received”. If Alice can’t actually do the Procurement in tool, what good is it?

So if the “intake” demo stops with the intake, run to the hills, run for your lives! Of if when you ask them about a competitive functionality, all they talk about is the experience their solution offers, they don’t actually have deep capability.

Shiny new tech is more important than a tried-and-true methodology

At least 6 in 7 vendors have jumped on the AI-backed/AI-driven/AI-enabled/AI-enhanced/AI-powered bandwagon, even if they don’t have any AI at all and/or any AI that actually solves a real problem in a predictable, valuable fashion. Too many vendors are popping up with “intake”, which the doctor prefers to call “fake-take” solutions that, as per above, can take a request in a shiny web-based UX and then … do nothing with it, or, in the best case, act as an overpriced pay-per-view on your data!

The sad part about this situation is that a number of real, modern Procurement 2.0+ (and esp. 3.0+) applications have had “intake” built in since day one, like Vroozi that has had it since launch in 2013 and Eyvo that has had it since the mid 2010s. Even Coupa had intake support for catalog-based purchases when it launched on Procurement Independence Day in 2006 (and still does to a large extent, although the user-based pricing model does make it prohibitive for many organizations)! And when it comes to AI, the doctor has yet to see any new “AI” play offer any new capability that hasn’t existed, or been in development, since the last decade! (When the doctor did his AI in X today, tomorrow, and the day after tomorrow series for Procurement, Sourcing, Supplier Discovery, Supplier Management, and Optimization in 2018 and 2019 on Spend Matters. These are all still in the Content-Hub archives, so if you have access, check them out.) (Now, while the doctor will admit that Gen-AI can do conversational interactions better, and summarize larger bodies of documentation as it is a bigger model, that is about it … as it cannot do any task that requires basic logic or math, and thus just about any real Procurement task. Moreover, we have had semantic technology that has done a good job since the early 2010s! Sure it might have sounded a bit robotic at times, but it worked just fine.)

So if all the vendor talks about is buzzwords, find one that talks about how they solve your problem. At the end of the day, it is command line code executing on a server somewhere that solves your difficult business problems, not fancy UIs.

Over-reliance on third party tech is a sustainable business, especially if it’s (Gen-)AI

If a lot of your potential vendor’s functionality is dependent on yet another a new third party vendor (or offering that will be pulled if it causes the company to bleed money), what do you think is going to happen when it goes away? Nothing good, and that’s for certain. That’s why you want vendors who build real applications in languages supported on multiple platforms that use data stores supported by multiple vendors and cloud service providers. You don’t want a single point of external failure taking down your entire business. Especially when the third party tech has limited use (on its own) in the first place.

But way too many vendors are building these Gen-AI or intake-plus solutions first, which are totally reliant on third vendor tech that can destroy their company in an instant. And it doesn’t matter if they only build on big company tech from companies like Microsoft or Google that you know aren’t going out of business, because even these goliaths can, and will, end support for tech pretty fast if it’s not profitable. (And, if it looks like one day an application will be very profitable, cut your access to it to prevent competition with their new, inferior, in-house tech.) The fact of the matter is, they are Goliath 2.0 with full armour plating, a helmet no stone is getting through, and a legal team who will bankrupt you if you even try to fight them. So if they decide the tech is done, or at least your access to it is done, you’re done, and there’s nothing you can do. (the doctor has seen this multiple time and experienced this firsthand. And it doesn’t matter if your vendor has a signed agreement in hand, the Goliath’s legal team will find an out clause and that will be it for your vendor.)

So avoid these vendors like the plague. A vendor with great tech can still fail, but it’s not as likely to do so without a lot of early warning signs if it owns the tech and employs the people.

An innovation burst is enough, especially if it is disruptive

Another increasingly common mistake these dead companies walking make is thinking that once they have a shiny new piece of actual tech that they don’t think anyone else has (which is rarer than you think), they can slow down the pace of development and rev up marketing and sales. That’s the exact opposite of what needs to be done. If you want sustainability as a vendor, you need a big lead, not a small one that can, and will, be quickly replicated by the next startup that has the same idea and gets too much money (and is smart enough to, or lucks into, hir[e][ing] the best). Success as a vendor requires consistent product development for years, and the only reason R&D becomes a smaller percentage of the budget as time goes on is because, one the core module(s) of the product (suite) is (/are) ready for prime-time, marketing and sales spending starts increasing from 0, not because R&D spend decreases!

Make sure your potential vendor has a concrete, detailed roadmap for the next year and vision for the next three. Significant function-spanning developments take time, and vendors in it for the long haul realize that — and they start with the foundations first.

Too much investment, too soon, against an overly ambitious plan

This is one of the worst mistakes, and one we’re definitely seeing too much of recently. Too many companies getting tens, or hundreds, of millions of investment just because they are building intake-to-orchestrate or Gen-AI solutions, neither of which do anything on their own, and neither of which do anything significant without a lot of solid tech (and data) to back them up (for the use cases where they are good). In some cases, the investment is at stupid levels an there is no way the company is going to deliver on the investment to the expectations of the investors, which means that the company will likely be dropped faster than a hot potato when the coffers start running dry as a smart investment firm would rather eat a sunk cost than have an ongoing investment sink their entire fund. In the best case, they’ll be sold off to a bigger VC or PE (at a loss) who can right the sails and extract some value as part of a larger solution suite. In the worst case, the company will just be folded entirely.

So, before buying from any vendor, research their investment to sales ratio at investment time and now, and if they took 100M on 0, and still only have a handful of customers, that’s not a good sign … unless they are building to a very specific niche need with the intent to get them scooped up by a bigger player who needs to fill that hole, their chances of long term survival are slim to none.

 

These are just the first six mistakes we’re starting to see too often. Stay tuned for part two where we’ll go over the next six.

How Dumb Is Your Company?

And, more importantly, will you be among the 20% who will be completely gone within two years (as per the doctor‘s predictions, and remember that he has been following this market for almost 25 years and seen all the ups, down, startup explosions, M&A manias, and the following implosions) or the 75% who won’t last in their current form (as per THE REVELATOR‘s predictions).

the doctor first asked this question to the space on November 7, 2008 when he saw the first implosion (which had all the signs of the first major enterprise back office tech implosion in the 2000 crash) coming (which wasn’t the last, as there was another one in the latter part of last decade that followed the next big wave of M&A and startup mania), but this time the forthcoming implosion looks to be the biggest our space has ever seen (and while the space is too crowded with vendors who aren’t actually providing any new, solid, innovative Procurement solutions, this implosion could also wipe out a large number who are, and that would not be a good thing).

So, it’s time to ask this question again, except this time we’re focussed entirely the vendors. Last time, it was directed at all organizations generically, including buying organizations that, sensing a market correction (which was worse than expected in 2008 and 2009, were putting off much needed Procurement technology purchases which could have saved their hides during the crash) as well as poorly run vendors. But this time, it’s all on the vendors and the investors (namely VCs and PEs investing way too much in companies without any real solutions, hoping to profit from the hype cycle before it crashes). So, without further ado, here are 10 of the most common dumb mistakes we’re seeing.

1. Doing Away With the Perks

Even if money is getting tight (or the PEs are telling you to tighten your belts because they just realized they aren’t going to sell low value solutions for a Million bucks a pop), this is the last thing you want to do. For an employee, it’s the first sign the company is in trouble and for a good employee who is talented and in demand enough to get a job elsewhere, the first sign to accept the next offer that is more-or-less equal to her current renumeration package.

2. Delaying Time-Saving Technology Purchases

Your developers, back office, sales, and marketing personnel need tools too, not just your potential customers. This doesn’t mean that you should buy the first tool they request, because if everyone is on a different tool you’re not achieving economies of scale and spending 30% to 40% more on SaaS than you should be, but that for every task they do regularly that they could do much faster with an appropriate tool, they get an appropriate tool. For e.g. SalesForce isn’t the only CRM, there are a lot of marketing tools for expediting content to multiple business and social networks, and a lot of back office suites that are quite affordable, especially in the small business / mid-size business market. You just have to take the time to look.

(As we all know, just like you’ll never get a Mega-S2P Suite in our space for less than 1M a year, you can get mid-market suites with all the functionality a mid market actually needs 90%+ of the time for less than 250K. The same holds true in other enterprise technology markets too.)

3. Postponing Actual New Product Development

Remember, business need actual solutions more than ever — and this doesn’t mean wrapping a shiny new third-party Gen-AI tool and claiming success. This means researching their problem, identifying actual process-bases solutions, and coding those processes (with configurable rules-based workflows) in an easy to use manner. Now, you can use ML/AI as appropriate to analyze data and trends, and even Gen-AI to summarize available natural language documents and data, and present these insights to a user as intelligent augmentation to help her make a decision, but the tool works without it in a way everyone can trust.

4. Strangling the Travel Budget

National and global business requires national and global travel. There’s only so much that can be done (or that old school business people will allow to be done) over Zoom and Teams. Now, this doesn’t mean that travel should be granted willy nilly for every prospect, conference, etc., but at key points during the marketing, sales, and implementation cycles, on-sites will be needed. (Nor does it mean that travel budgets should be fully unsupervised, for anything over a trivial amount, at least one other employee at an equivalent or higher rank should agree it’s worthwhile.)

5. Cutting 10% above the Board

Now, the Big X like to to this, but this is one of the reason the doctor keeps hearing examples of how their remaining AI and analytics teams are not delivering value relative to the price tag the Big X charge (relative to what mid-markets can charge and deliver). (Because the Big X kept hiring whomever they could during a tech boom and then kept cutting the worst as an ongoing “correction” to their over-hiring of under-skilled, under-educated, and/or under-experienced individuals, relative to the value they wanted to bring to the market, the best believe that just one mistake, or one bad quarter for their team, and they could get the axe no matter how good they are, so many left for what they perceived as better opportunities as soon as those opportunities came their way). That’s one of the two reasons the bloodbath started earlier this year (and is still ongoing). You can’t continue to charge 2X (or more than) the niche firms, especially if you have junior people who deliver 1/2 the value (or less) and expect customers to keep putting up with that, especially during non-growth and recessionary times. (So while this strategy is great for weeding out under-performers and bad apples in good times, in bad times it scares the top talent away.)  You have to charge less or increase value.

Only cut people who aren’t working out (and only after giving them time or support to find a job more appropriate to them elsewhere), and avoid hiring people who aren’t likely to fit in the first place!  (Side note: identify your core values and focus on that.  Just like there are situations when they should use Big X as a client, there are situations where they should use you as a client!)

6. Killing the Training Budget

In fact, you need to double or triple it. If you think that Gen-AI, intake-to-orchestrate, AI-backed/AI-driven/AI-enabled/AI-enhanced/AI-powered, supplier insights, or some other overhyped buzzword is the answer, then you don’t actually know what the majority of Procurement organizations need and what you should actually be building. So train your product managers on real Procurement practices and processes and how to do actual market research (or at least identify a niche consultant who can help them).

7. Shifting Focus from Infinite-Growth to Indefinite Belt Tightening

Just because you overspent on marketing hype and a sales force (who couldn’t sell because you didn’t actually have anything worth selling, or at least worth buying at the ridiculous price tag the investors hoped for), that doesn’t mean that you’ll survive if you just cut costs across the board. The only way to survive is to start building actual process-based solutions now that take a people and process centric first approach (what do our target users need to do everyday and how can we best enable that in an easy, minimal, step-by-step process with an intuitive UX), and educational messaging that will help hit this point home (and make your solution stand out from all the other hogwash that these businesses are fed up with hearing about).

8. Freezing the Marketing Budget

Just because you overspent like Montgomery Brewster in Brewster’s Millions and have nothing to show for it, that doesn’t mean you’ll do any better with $0 in the budget either. The key is to do consistent educational marketing that informs your audience not only that you exist, but on what your solution does and how it will help them solve their daily problems. And to do it through channels relevant to your industry, geography, and the communities these buyers are a member of. (Not one-time “look how great we are” conference booths that no one remembers, or one-time “groovy vendor” write-ups with limited reprint rights from overpriced analyst firms, or splashy advertising in the biggest publication you can afford.) Consistent, month after month education in small pieces such as short webinars or podcasts, bite-sized white-papers (with an e-book on your site if they are interested and/or for your sales people to use during a sales cycle), info-adverts in targeted publications. By the time the next budget season hits, you should be a name they know and trust because you took the time to learn about problems, instead of pushing magical solutions that will never work (the new silicon snake oil).

9. Stifling Real Innovation to Reduce Risk

Because optimization, machine learning, analytics, and other “real” methodologies that, with a lot of blood, sweat, and occasional tears, will actually produce solutions that actually work, is hard, requires top people (who command top salary), and has some risk (in that it could take a lot more time to get it right than you think — but at least you can get it right and it will work, as some of the best minds at the best companies in our space have demonstrated for over two decades). The biggest risk is not advancing towards a solid, trustable, usable, solution that the market will actually want!

10. Retreating into your Moated Castle

This is still the doctor‘s personal favourite. 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 newly funded company can do (because, as has been repeatedly stated, just because you can sell an investor on what you think a buyer needs doesn’t mean you can sell a buyer, especially if you don’t really know!). Often the only way of introducing significant, meaningful, cost-saving revenue-generating improvements into your company is to bring in an outside consultant who specializes in one or more types of solution-based business innovation. A consultant who can tell you what technology roadmap is right for you, 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.

And, FYI, the doctor has seen a lot of dumb over the years. That’s why he did a 5-part series on 15 common mistakes in hopes some of these founders would read it, reflect on it, and not make the same mistakes over and over again.

Fortunately, the corporate intelligence scale from 16 years ago doesn’t need updating. Start with 10 points and subtract 1 point for each of the above that you are currently doing (and be honest):

Score 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. In fact, with the right effort, you just might have to wear shades!
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 might just be able to get back on the right track.
3 Dumb You’re going to need a serious corporate make-over to survive. the doctor wishes you the best of luck!
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 (and you must have received an absolute shipload of private funding to still be around), but you’ve proven that nothing’s impossible. Have some bubbly before the money runs out.

For those of you who score 6 or below, please get help now to avoid being a casualty!

For those of you who score 3 or below, your theme song is still in the archives!

Why are there so many tech failures?

Those following along know that this is a primary concern of both THE REVELATOR and the doctor because, if we were truly progressing in technology, we wouldn’t still be seeing the same enterprise technology implementation failure rates of 80%+ that we saw two decades ago! (This is why the doctor decided to update, expand, and republish his Project Assurance series series from a decade ago. See Part 1, Part 2, and Part 3.)

THE REVELATOR asked this question again in his recent article on Why is AI such a hard sell?, in comments in my recent piece on Vendor Onboarding for Payment Assurance because it reminded him on how so many vendors miss critical solution elements required by the business in their technology-first push*, and in comments to his recent article on DPW & Comdex.

The answers are varied, and regardless of which one applies in the failure at hand, none of them are good. In fact, they are mostly so bad that THE REVELATOR, who is as fed up as the doctor with all of the sales and marketing bullcr@p, flat out stated in his most recent article that after 40-plus years, I say this with the deepest sincerity -– 90% of salespeople aren’t worth the gum stuck on the bottom of a shoe. And while the doctor would like to think the number wasn’t that high, given the failure rate, it can’t be that far off.

A lot of commentary as to why can be found in the comments to these (and other recent articles), but most of them revolve around the following reality (which the doctor also knows all too well with over 25 years in tech and Procurement).

At the majority of tech enterprises,

  • sales people are compensated on how much they sell, not how successful the solution is for the customer
  • sales people are pressured to hit numbers, or be cut if they have even ONE quarter in the bottom 10%
  • sales people don’t stick around long enough for success to matter — as THE REVELATOR has noted,
    • sales people could make a good living selling next to nothing for 18 to 24 months drawing a good 5-figure salary every month (once they made a few sales and had a “track record”) and then changing jobs as soon as they closed a few mega deals (which could sometimes net them a six-figure departure bonus)
    • sales people make more money by changing jobs just after closing a few F500 clients (and negotiating a bigger salary building on their recent high)
    • … and even more if they can do it during the rapid rise in spending (that translates into top engineers and top sales people at any cost) at the fore-front of a hype cycle (when early vendors believe they can make the biggest sales first if they just have the “best” sales people, defined as those who just closed the biggest deals at their last job with F500/G3000 customers)

It’s all about how much, how fast they can sell … not about actually selling a solution and making a client successful (and building a pipeline for upsell over time as they learn the customers’ business and create newer, better solutions for the clients who would happily fork over fistfuls of dollars to a vendor with a track record of delivering solutions that actually worked).

As to THE REVELATOR‘s paraphrased question with regards to why don’t these sales people care that the solution they are selling is going to fail, it becomes pretty obvious when you consider the above:

  • they aren’t compensated to solve customer problems; only to sell as much as possible as fast as possible and do so at ANY and ALL costs
  • if it’s a big enterprise suite deal with an F500/G3000 being implemented by a third party consultancy, chances are the implementation won’t even be finished before they move on to their next job (and if it fails, then it’s the consultancy’s fault for sending the B-team)
  • caring would weigh down on their conscience until they had to find a new occupation (and if they had no other significant skill, then what would they do?)

And if they are actually caring people?

Then they convince themselves the solution can be configured to work with the right tweaks, even if, in reality, it can’t.

So what is a buyer to do? What the doctor has been saying for years.

Their research!
And, most importantly, get unbiased third-party help with need identification, vendor identification, and proposal review!

Why, because, as the doctor has said many times, including in the comments in response to THE REVELATOR‘s comments, everyone needs to remember:

  • there are no silver bullet tech solutions
  • many “solution” providers riding the current hype cycle are just proffering a new form of silicon snake oil
  • some providers don’t have anything except this snake oil, and the minute the third party fails, so do they
  • relying on the wrong tech is dangerous, just like relying on airplanes made under poor quality control processes … you’ll get a few good flights out of them, and then the door will suddenly blow off as the landing gear falls off on the same flight, and then what do you do? (Unless you have ““Sully” at the helm, you pray to whatever deity you believe in, because at that point, there is nothing you can do.)

* whereas PaymentWorks, chronicled in that piece, started by identifying what their clients’ biggest business issues were, and solving that first — so while it’s not the broadest Supplier Management suite on the market, it is one that contains the necessary functionality to solve a very specific set of pain points that almost no other vendor does; which most of you should find shocking given that there are over 100 Supplier Management vendors, illustrating THE REVELATOR‘s comments that not enough technology providers put solving customer problems first).