Category Archives: rants

The Sourcing Innovation Source-to-Pay+ Mega Map!

Now slightly less useless than every other logo map that clogs your feeds!

1. Every vendor verified to still be operating as of 4 days ago!
Compare that to the maps that often have vendors / solutions that haven’t been in business / operating as a standalone entity in months on the day of release! (Or “best-of” lists that sometimes have vendors that haven’t existed in 4 years! the doctor has seen both — this year!)

2. Every vendor logo is clickable!
the doctor doesn’t know about you, but he finds it incredibly useless when all you get is a strange symbol with no explanation or a font so small that you would need an electron microscope to read it. So, to fix that, every logo is clickable so you can go to the site and at least figure out who the vendor is.

3. Every vendor is mapped to the closest standard category/categories!
Furthermore, every category has the standard definitions used by Sourcing Innovation and Spend Matters!
the doctor can’t make sense of random categories like “specialists” or “collaborative” or “innovative“, despises when maps follow this new age analyst/consultancy award trend and give you labels you just can’t use, and gets red in the face when two very distinct categories (like e-Sourcing and Marketplaces or Expenses and AP are merged into one). Now, the doctor will also readily admit that this means that not all vendors in a category are necessarily comparable on an apples-to-apples basis, but that was never the case anyway as most solutions in a category break down into subcategories and, for example, in Supplier Management (SXM) alone, you have a CORNED QUIP mash of solutions that could be focused on just a small subset of the (at least) ten different (primary) capabilities. (See the link on the sidebar that takes you to a post that indexes 90+ Supplier Management vendors across 10 key capabilities.)

Secure Download the PDF!  (or, use HTTP) [HTML]
(5.3M; Note that the Free Adobe Reader might choke on it; Preview on Mac or a Pro PDF application on Windows will work just fine)

The B2B Software Marketplaces Will Rise. Then the Hammer will Fall!

Thanks to Apple, every consumer thinks there’s an app for that. And for most consumer desires, there probably is. Especially since Apple’s App Commerce climbed to 1.1 Trillion in 2022. Yes, that’s 1,100,000,000,000 US Dollars! That’s a lot of money, especially when most apps are being sold for a few bucks.

When you consider:

  • consumer app marketplaces are now a Trillion dollar business
  • enterprises are buying more SaaS than ever, as every employee in every department wants an app(lication) to support every task they do
  • enterprises pay 10X to 100X what individuals pay per user license, and, thus, the opportunity of enterprise app marketplaces is in the tens (to hundreds) of Trillions
  • enterprises want easy, centralized, acquisition to limit the number of vendors they need to deal with / handle subscription invoices from

It’s easy to see why all the big software / cloud vendors are opening their own app marketplaces. A recent article on IOT Analytics shouted the rise of the B2B software marketplaces while quoting their B2B Technology Marketplaces Market Report (2024-2030) that noted that:

  • they are the fastest growing procurement channel (for software)
  • dedicated platform providers are seeing success
  • some sellers make Billions

And they will continue to grow for a few years. But then, the hammer will fall.

What one has to remember is the following:

  • many of these marketplaces are taking a big cut, like 30% or more, which is what a sales partner would have taken to compensate its employee(s) that actively sold the product, but they are doing NOTHING but creating a listing, making it searchable, taking an order, collecting a payment, and providing a license key … even when you consider cloud fees, payment processor fees, platform maintenance fees, they could be very profitable at 13% (remember that recent article on how roughly half a trillion dollars will be wasted on SaaS spend this year … well, this is only going to increase that as you’re paying almost 20% more than you need to for the licenses you do need and use)
  • apps, licenses, and overspend is going to proliferate rapidly as “approved” app stores make it easy for every employee with a p-card to buy what they want, when they want
  • those SaaS audits and rationalizations that identify 33%+ overspend are only going to reclaim at most 20% of that, if you’re lucky, because, even if the software developer is willing to refund unused licenses, they’re not going to refund that 30%+ they already paid the marketplace … and that’s if they’ll even talk to you because you acquired the license through a third party
  • there’s no real negotiation opportunity when you buy from a marketplace

So as businesses race to digitization, they will embrace the marketplace as it will help them get part of the way there very quickly, but then when they realize just how much they are spending on app(lication)s, and turn Procurement on strategic procurement of SaaS, the first thing to go will be the app marketplace purchases … and then … it will be time for the hammer to fall.

Beware of Magical Thinking In Your Procurement!

Back in 2017 (yes, that was 7 years ago, but the subject is still relevant), the doctor penned a post asking if there was magical thinking in your procurement noting that:

the Procurement Department that is getting the worst deal is the one that hallucinates the most — and needs to — in order to keep their worldview intact

And, furthermore, it was these Procurement departments that were most against modernizing their processes or platforms because their worldview requires them to believe that the antiquated processes and (severely) outdated platforms they are (still) using are just fine. (And they don’t recognize that their Procurement departments still run on the island of misfit toys principle — staffed with people who are nearing retirement, related to the boss, or technologically adverse and have been doing it this way for far too long.)

the doctor also noted that the easiest way to identify these organizations was by their telltale arguments of:

  • our processes are just fine, we just need more people
  • our platform is just fine, we just need more people
  • it’s not worth the cost, and it will slow us down

which were soon augmented with the additional telltale arguments of:

  • the problem isn’t with us, it’s with logistics / risk management / compliance / support
  • the problem isn’t with us, it’s the suppliers who aren’t holding up their end of the contract
  • our needs are just too unique and there’s nothing out there that will close the gaps

as supply chains started to crumble under disruptions. Because, if you just gave them more time, money, and people, everything would work out fine with a little pixie dust.

But we know there’s no silver bullet, and the only answer is to implement the best technology, with the best processes, so you can identify the biggest risks, plan mitigations, detect when they have occurred, respond quickly, and, the rest of the time, deal with exceptions and not standard operating procedures that can be entirely automated.

And, in the late 2010s, that was the extent of the magical thinking theorem. But now, thanks to the Gen-AI garbage marketing overload, and the addition of tail end Millenials (who replaced those put out to the Procurement pasture when they called it quits during COVID or when companies tried to force their return to the office), we have a new corollary to the the Magical Thinking Theorem:

the Procurement department getting the worst deal is also the one that thinks they only way to solve their problem and get the best deal is to adopt and implement Gen-AI as fast as possible

because the Millenials, who grew up glued to their smartphones, and always received instant gratification via Google and Apple, believe there is an app-for-everything and that a natural language Gen-AI app combines the best of both worlds and will solve all their problems.

Their thinking is not only as magical as the last generation thinking (that more time, money, and people can solve anything), but more dangerous (because their answer is to just turn their problems over to the artificial idiocy machine and blindly accept whatever comes out of it, no matter how hallucinatory or ridiculous the answer is).

the doctor said it before and he’ll say it again. There’s no room for magical thinking in Procurement. Just like alchemy needed to be replaced with science, magical thinking needs to be replaced with realist thinking, and random unpredictable Gen-AI replaced with proven deterministic procedural (rules-based) solutions that use tried and true mathematical techniques. (Because, the classic analytics, optimization, and machine learning that you have been ignoring for two decades will do just fine.)

Supply Chain Certifications Lost Value Quite a While Ago …

… and they won’t ever reclaim any value until they start offering training on digitally friendly processes and the core of modern digital technology. That’s why it was no surprise to the doctor to see this recent article over on the Acceleration Economy that noted that Supply Chain Certifications Lose Value as Product Expertise Gains Traction.

He was surprised to hear that the research foundation found that a whopping 18% of certifications issued through career and tech education programs are sought by employers. As someone with a background in tech, he can honestly say that he’s never worked for, or with, any employer that actually valued a tech certification because they were outdated before they were issued — the leading tech employers valued good education and experience that provided a candidate with the ability to learn and adapt on the job. Which, by the way, is exactly what a Procurement professional has to do.

As the article notes, since the machine has taken over the task of doing the calculations — computing the inventory, creating demand plans, and analyzing lead times — we don’t need in depth courses on how to do this manually, we need certifications in whatever technologies our companies have chosen to use so we can take the utmost advantage of that technology, or at least a certification that covers the basics across all technologies of that type.

But even though it’s now the mid-2020s, we still don’t have any certifications that even cover the basics of the tech that hit the scene across Source-to-Pay in the mid 2000s. After all, the basics they convey haven’t change either. So, as some have noted, while they are a decent starting point for someone just getting into Procurement, it won’t get them very far. And they certainly don’t add any value to anyone with more than 3 years of experience.

Hopefully this will change, because it would be nice if Procurement professionals had a certification option that would allow them the opportunity for a lifetime of learning, vs. checking the box for a certification where they know more than the teacher.

Will AI Make Us Irrelevant?

Short Answer: No. But Improper Use Will Make Us “Redundant.

James Meads asks “Will AI in Procurement make us all irrelevant?”

So I will answer. No, it won’t! But it will make those companies who dive off the deep-end on Gen-AI irrelevant as their supply chains crumble with no real human intelligence there to save them when the next crisis hits. (See the myriad of rants here on Sourcing Innovation on just how over-hyped Open Gen-AI technology is and what you actually need to solve your problems.) Also, if we’re lucky, they will take a few providers with no actual platform capability (or Procurement value) down with them. (We need them to get out of the way for those platforms that have been offering real, deterministic, math-based, tried-and-true analytics, optimization, and machine learning solutions [for up to two decades] as there are many companies that need those solutions today.)

While custom-trained closed LLMs can seemingly do a lot of the work for us, they are NOT intelligent, they don’t know good from bad, they don’t know right from wrong, and they definitely don’t know critical from irrelevant. Thus, even though they can put together an NDA or RFP in seconds, it doesn’t mean it’s “fully functional”, that it protects you from all the risks, or that it captures all your requirements. Only an expert human can verify that. [And it doesn’t matter how good your “prompting” is. It can still fail, with a reasonably high probability to boot! (Which is what you can give it!) There’s a reason that Tonkean, an intake automation/enterprise orchestration solution provider, ALWAYS does pre-validation on inputs and-post validation on outputs before showing you anything when it incorporates your LLM technology, because they know just how often it fails and if the response doesn’t closely resemble something expected with very high probability, they won’t even show it to you.]

“AI”, or, more accurately, rules-based automation, will replace humans who are just doing tactical data processing, but it cannot replace humans who can do real strategic analysis, interpretation, and problem solving. Unfortunately for Procurement, given that 80%+ of the time is tactical data processing and fire-fighting, this will cause companies to think they can eliminate 80% of the Procurement team, even though the reality is that the Procurement team isn’t even addressing 20% of spend strategically in any given year, meaning that they should be augmenting the Procurement team with every useful technology they can find to try and get that spend coverage above 80%!

And if you want to know what companies are truly offering valuable “AI” (where the best you will get is Augmented Intelligence, level 2 on the 4 tier scale, as there is no such thing as Artificial Intelligence and many companies still don’t even offer Assisted Intelligence, level 1, and instead disguise their Artificial Idiocy in slick marketing), talk to an analyst who CAN do the math AND the programming.

First published on LinkedIn.