Category Archives: rants

Dear Fellow Independent Consultants: How Can We Dispel the PROCUREMENT STINK!

Hopefully you know by now what the doctor is talking about, but if not, as per the Sourcing Innovation article from two months ago, PROCUREMENT STINKS and we should not deny it anymore.

In a nutshell, and just is just the tip of the garbage heap:

  1. Case studies are ranker than expired fish in a microwave on high.
  2. Approximately 85% of companies are AI-washing everything.
  3. The Gen-AI claims that it will deliver Procurement to the enterprise are FALSE.
  4. Intake/Orchestration is totally useless on its own.
  5. Consultancies are often more in the dark than the Procurement departments they are claiming they can help.
  6. DEI is being misused to push agendas and sometimes to Do Extra-legal Initiatives,

And, as per a poll put out by THE REVELATOR, we are especially concerned with the fact that 14% of practitioners would rather trust a salesperson or a marketer than a consultant or an analyst! (Now, part of this is probably due to the lack of independence from many consultancies who continually pushed their vendor “partners” on the client whether or not the “partner” was the best solution, but still, it’s not ideal. [And, hopefully, as a result of the bloodbath, the consultants who weren’t offering value to their clients were the first to go.])

As far as the doctor is concerned, the most trusted advisors in the space should be:

  1. analysts
  2. independent consultants

and that’s it! No sales people, no marketers, no influencers, no made up positions. Sales people are paid to sell, not to solve problems, and marketers are paid for leads and, in some organizations, there is no correlation between “leads” and the sales funnel.

So how can those of us not at a bigger consultancy, where we would be joined at the hip to preferred partners or subsidiaries (and not recommending them results in a pink slip), dispel some of the stink and regain some trust?

The first thing the doctor wants to state is that he has even less ideas here than he does for his fellow analysts. In fact, the ideas he does have should be pretty obvious.

1. Disclose any (formal) relationships we have with vendors that are recommended.

Even if a partner is the best recommendation for the client, we must still disclose the relationship, especially if there is any additional benefit we get from the recommendation (and definitely if the benefit is financial). (In addition, we should make extra effort to demonstrate that we did thoroughly evaluate the identified alternatives and have a number of reasons for the partner recommendation that are specific to the client’s needs).

2. Create RFPs based on identified needs, not free vendor templates or analyst map outlines.

It’s critically important that we don’t take shortcuts here because vendor templates are designed to ensure that the vendor who gave the template away always comes out on top (by focussing in on the requirements that the vendor executes best) and analyst map requirements focus on a set of requirements that the analysts can use to compare vendors on the same scale, not on a set of requirements that is relevant for selecting a platform for a specific customer, or even a customer of a specific size in a specific vertical.

3. Recommend vendors based on technical fit and hard requirements, not cultural fit and soft requirements.

Just like it’s not an analyst’s job to judge cultural fit or other soft factors in their analysis (as that varies too much by company to even take a shot in the dark), it’s not our job to tell clients who is a good fit — that’s for them to decide. We’re there to tell them which companies can provide a good solution, and let them decide who they are comfortable with as they will be stuck with the vendor for 3, 5, 7 or more years (not us)!

4. Make recommendations on expected ROI for the customer, not follow-on work potential.

At bigger consultancies, where the consultant is often joined at the hip to partners (and must use/recommend their solution if it can be force-fit), they are often also pressured to making the recommendation that will lead to the most follow-on work and engagement extensions (and, preferably, long drawn-out implementations and integrations). As far as the doctor is concerned, this is one of the most egregious things you can do. Especially considering that, in Procurement, work is never done and the client will always need more advice, new technology, and more help.

If we focus on the technology that will deliver the most ROI, then we are enabling the client to generate funding for additional projects and, hopefully, make us their consultant of choice in the process by focussing on them before us. The reality is that there isn’t a Procurement organization anywhere, not even in the upper quartile of Hackett Group top performers, that has all of the resources, technology and knowledge it needs. So we should never think it’s a one-and-done situation if we do well (and, moreover, do it at a fair price-point where we deliver an ROI).

5. Don’t take on projects we’re not qualified to do.

While this might get you fired at a bigger consultancy where the motto is the traditional consulting motto of “sign now, figure it out later” (because they have enough expertise and people across enough areas to do it), we need to be better (because we don’t have expertise anywhere or a lot of people to fall back on). If we’re approached with something that’s not in our wheelhouse as a consultant, we take it to the rest of the company. If it doesn’t fit anyone’s wheelhouse, we need to politely decline the work. If it means we never get asked again, then we know that’s a client we wouldn’t want to work for as any client with working brain cells would be impressed and honoured to know a consultant who didn’t just say yes but instead thought about whether or not they could deliver enough value relative to their price tag before accepting the work.

Furthermore, if we take the time to educate the client on what our services are and where we could help, we should be the first call they make when they have the right project, and maybe even get it in a sole-source negotiation if the project doesn’t cross a mandatory public bid threshold. People worth working for value honesty, and are very likely to come back to you, either at their current company or their next company, if you are honest about what you can and can’t do and what value you can provide. (Furthermore, if you investigate the company and can identify something you could do to help them, nothing stops you from proposing that project and working with them to close that project while helping them find the right consultant for the project you can’t do.)

At the end of the day, no one ever ruined their reputation by saying no to work they weren’t suited for — they ruined their reputation by taking on work they weren’t qualified to even talk about and then f6ck1ng it up royally.

the doctor‘s not sure it’s enough, but it’s a start, and if other independent consultants make an effort to figure out how to restore our reputation, maybe we’ll find the answer, provide the value that we are engaged to provide, and get back the trust we should have.

The Gen-AI Crash Can’t Come Soon Enough!

Author’s note: this first appeared as a LinkedIn post, elaborated upon in the comments of THE REVELATOR‘s post it referenced.

“$1 trillion rout hits Nasdaq 100 over AI jitters in worst day since 2022!”

This is a headline from the Economic Times this week. And a foreshadowing of things to come.

As far as the doctor is concerned, the impending The Gen-AI Cr@p market collapse can’t happen fast enough! Too many people don’t remember the 80s and how all the AI “promises, promises, that were made were the promises, promises they betrayed” …

because processing power, new languages/models/constructions, and expert mimicry is not enough!

The reality is that, until we have a fundamentally better understanding of human intelligence, or can at least assemble and properly support as many cores as humans have neurons [which, FYI, we shouldn’t conceive of as we couldn’t produce the energy requirements with current technology globally to power it] (and not the equivalent of a pond snail at best … look where that got us, it’s golden nugget of insight is we should eat one rock a day), there is zero chance of a new AI “breakthrough” actually approximating anything close to intelligence.

All of the true advancements in our lifetime are going to come from human intelligence (HI!) (that creates better algorithms, models, processes, etc. and then properly, manually, embeds those enhancements in next generation tech).

Remember, they’ve been promising us true AI since the [19]70s … and they are no closer now then the great minds who created, and in their wiser years abandoned, AI (which has materialized as Artificial Idiocy) because some pursuits are still beyond the grasp of mice and men (and others shouldn’t be attempted)!

Every 3 to 5 years they promise us that the brand new shiny tech is the Staples Big Read Easy Button, and every 3 to 5 years this brand new shiny tech fails to deliver. Gen-AI is just the latest in a long line of over-hyped, under-performing tech whose “hype” cycle is almost over and the next tech that is going to bring us a great market crash (which, giving the ridiculous amount of money dumped into this technology which will never be appropriate for the Enterprise, could bring about a crash that might rival the great dot.com crash of 2000 – and if you don’t remember that, you really should look it up — a lot of software providers, especially those whose solutions provided limited actual value relative to the investment made [or money wasted on “marketing” and “brand”] bit the dust).

The even sadder reality of the situation is that we don’t need the tech. In almost every business domain, there has been software which, with a bit of manpower and human intelligence, has solved the majority of our current business problems, even the most complicated global supply chain/trade problems. All we had to do was stop using the monolith technology from two-plus decades ago and take a small chance on newer, better, more powerful players who started to solve real problems with software the average Jane could use.

In Procurement, the vast majority of companies aren’t using the tech we had ?????? ???? years ago! (When the doctor built the leading strategic sourcing ???????????? solution (the first with multi line item support) and THE REVELATOR had a leading ML (machine-learning) based application for ????????? ????? ???????? ?????????????? and realization [for everyone else, think guided sourcing strategy, like Levadata does for electronics, based on market and organizational data, with execution support]).

If the average organization even had this V 1.0 technology, they’d do SO MUCH better across the board (and now we are at V 3.0 in most Procurement applications; in optimization, what I did at Iasta [acquired by Selectica, rebranded Determine, who sunset what they didn’t understand] and consulted on (in other players) after was V2 and Trade Extensions (acquired by Coupa) gave us V3 with full supply chain support and modelling capability beyond your dreams (and now maybe Coupa’s understanding with Arne and Fredrik (founders) gone … but there are those of us who still understand the phenomenal vision and realization thereof of the great Arne Andersson).

Also, the reality is that if anyone understood what Coupa Supply Chain Optimization [Llamasoft] or Logility [Starboard] could do in the right hands … THE REVELATOR‘s parts management dreams and scenario-based Procurement guidance from the late 90s and early 00s would come true.

(And we don’t need no fake-take to make it happen! Proper catalog-enhanced true SaaS solutions have been built with integrated intake for the last decade. You just have to look beyond the same old, same old 10 to 20 vendors that Gartner and Forrester tell you about every year (pretending that the other 656 don’t exist). Vroozi [see our 2-part summary: Part I and Part II] has had this capability since day one, and once all these Gen-AI and fake-take plays come crashing down because they don’t actually enable true Procurement or have any real Procurement capability under the hood, you’re going to see a new generation of true Strategic Procurement providers rise up and offer something that every enterprise, and mid-size enterprises in particular, needs and can benefit from. And when this reckoning comes, it will humble any organization still on one of these powerless platforms. So the time to find a real platform is now!)

If You Still Don’t Believe That Gen-AI is Bad for Procurement …

Then maybe you should do the math.

It’s very expensive for what it doesn’t do. You can pay 10K a month or more just for a conversational interface to search your data or push data into your applications. For 10K a month, you can get a decent core P2P application or source-to-contract application that, well, actually does something.

It’s even more expensive to train these systems on your policies, connect them to your applications, test that basic requests generate reasonable responses, train it to guide your users to get to an eventual answer, and so on. This could easily be more than a year or three of license fees.

But the true costs are in the utilization. Every time a user asks a question, or responds to a question posed by the Gen-AI to try and elicit the users intent, it takes compute time. LOTS of compute time. At least 10X the compute time of a standard search engine or keyword based retrieval system. In some cases, 30X. (The wattage required is easily 10 to 30 times traditional Google search.) So if you’re a mid-sized organization with more than 1,000 employees, a portion of your cloud computing costs, which average between 2.4 Million and 6 Million a year (according to CloudZero), is going to increase 10X to 30X. Let’s say 5% of that was basic search and inquiry, 120K to 300K. Almost inconsequential. But multiply it by 10 to 30, and you’ve just added another 1 Million to 9 Million to your bill. Think about that.

That “low-cost” Gen-AI “chatbot” that makes enterprise search and application interface “easy” (but not as easy as a well designed workflow, FYI), that you think costs 10K a month after implementation, training, and most importantly, cloud computing costs could actually be costing you 100K a month (or even 500K). For what? A fancier Google?

As Procurement professionals, you can, and should, do the math. So even if you don’t believe the doctor when he says Gen-AI is a fallacy, then believe the math.

The math says Gen-AI is just NOT worth it.

Cost Savings is NOT Cost Cutting …

… and we need more articles that hammer this point home!

A recent article over on the Supply Chain Management Review (SCMR) focussed on how strategic cost savings differ from cutting costs, highlighted a recent survey from Boston Consulting Group (BCG) that found that while 65% of executives are prioritizing supply chain and manufacturing costs as the biggest levels for organizations to pull for cost savings, 52% [are still focussed on] labour and non-labour overhead costs. OUCH!

Most Supply Chain / Procurement Departments are understaffed and/or under platformed due to lack of talent and lack of available budget. They’re also a very small part of the organizational headcount, which in many organizations is now a small part of total spend. As a result, labour is not the problem. External spend is.

And kudos to the SCMR and Laura Juliano from the Boston Consulting Group for pointing out that strategic cost control is the right approach.

If you’re spending 100M on a category, you should be doing a lot more than just a 3-bids-and-a-buy RFX, cutting a PO, and paying an invoice. A lot more. And looking at more than just the unit cost — at the very least the total cost of ownership from initial acquisition through warranty/repair and eventual disposal, if not full total value management which also looks at brand value, bundled services, etc. Even well managed direct categories usually have 3% or more savings opportunities, and those that were not well managed can have two to three times that (in the 6% to 9% range). In other words, giving one person the time to properly source one category, even if it takes 3 months of man effort, can save 3M. Even if the fully burdened resource costs your organization 240K a year, that’s an ROI of 50X on the proper use of that one resource’s time.

This one example surfaces the key point of strategic cost control. It requires strategy and strategy requires PEOPLE with real HUMAN INTELLIGENCE (HI!). (Not hallucinatory Gen-AI like “chat, j’ai pété”). People who can analyze the situation, the available data, case studies from similar (historical) market situations, suppliers, products, and make the overall best decision(s) for the organization. And, preferably, people who can also consider the sustainability of their decision (and the implications with respect to any regulations in laws in countries they source from and sell to). (Senior Procurement leaders can’t ignore any sustainability requirements they are subject to [40% are], they definitely can’t be unaware of legislation that could affect them [37% are], and they definitely can’t be making awards to suppliers and/or for products that might just disappear in a year or three.)

In other words, you can’t reduce headcount. (You may need to replace people if you initially hired people who thought strategic procurement was catalog comparison or invoice verification, of which 95% to 99% can be fully automated, but never, ever reduce the number of people in Procurement.)

The Procurement Space is Filled with Hogwash! It’s Time We Start Calling It Out!

Not that long ago, Jon THE REVELATOR noted that nothing matters more than getting your messaging right in an article over on LinkedIn. Quoting a piece from 2010 where, in the colliding worlds of traditional and social media, the line of distinction is not as clear. Even though there are no real technological boundaries to limit the number of blogs, websites, and news sites, it is only a matter of time before the over-abundance of writers will manifest itself in the form of Aldous Huxley’s greatest fear and lament that truth would somehow “be drowned in a sea of irrelevance.” If not irrelevance, then one of information overload.

His lament echos that of Sarah Scudder who notes to ProcureTech brands that when we look at your website, we have NO idea what you do. You confuse us and say the same thing as the other 23+ brands in your space. Your platform is AI enabled/AI backed/AI enhanced/AI driven but what problem are you going to solve for me?! That the majority of marketing is the exact same messaging with no actual meaning.

As a result of this, and THE REVELATOR‘s comments, the doctor was forced to note that he’s getting fed up with the use of the word “content“. The Oxford dictionary defines content as “information made available by a website or other electronic medium”.

The Oxford diction then defines information as “facts provided or learned”.

There are NO facts in most of the hogwash these marketers are pushing onto the market. Therefore it is NOT content. Let’s start calling it what it is: HOGWASH! (And refer to our recent piece where we demystify the marketing madness for you for some of the more common, and more egregious, examples of this Hogwash!)

Content must be informative (precisely what you sell, precisely what it does, precisely how it helps the customer, and precisely what results the customer will get). Otherwise, it’s just HOGWASH!

As the doctor has said before, there’s a reason SI hasn’t returned to sponsorships [yet] (and that the doctor hasn’t authored any public papers/books for anyone in quite a while) — and it’s because almost none of these companies truly care about their customers anymore, once they take the (Investor/Angel/VC/PE/Wall Street) money, it’s only “sell, sell, sell“).

(If these companies did care, they’d be lining up asking us for the EDUCATION the doctor and THE REVELATOR used to provide, that, in the doctor‘s case, helped every single sponsor get the exit they weren’t even necessarily looking for at the time … because, even if it sounds plain vanilla, there’s nothing [potential] customers value more than the education and insights they need to do their jobs that their employer, who cut the training budget years ago and used the bonus money for a defective “chat, j’ai pété”-bot, won’t provide).

So, dwelling on this, it leaves the doctor with a question. Should we start calling out ALL the HOGWASH as we see it? Could we even keep up? Or should we stick to the HOGWASH of the week?