Category Archives: rants

AI: Applied Indirection

You read that right. AI at most companies is not Artificial Intelligence. It’s not Autonomous Intelligence, Augmented Intelligence, Assisted Intelligence, or even Amplified Intuition. In reality, it is marketers taking Green Day’s AI a little to literally (and treating everyone like an American Idiot*) and repackaging old tech with a new label.

You see, most of what the Marketing Mad Men are trying to sell as AI are just old-school statistical algorithms in a brand-new wrapper. And the only reason these technologies are finally hitting the market and getting good results is the sheer amount of processing power and data we have at our disposal — because dumb algorithms (which is what they are) only work well when you have a lot of processing power, a lot more data, and the power plant to run that processing power 24/7 at 99% capacity across dozens, if not hundreds, of trial parameterizations until you find something that, well, just works.

But it’s not intelligence. It’s advanced curve fitting, regression, k-means clustering, support vector machines, and other statistical inference techniques that existed in SAS in the 1990s. Except now, the curve fitting is nth degree polynomial, advanced trigonometric, geometric, n-dimensional, step-wise, and adaptive. The regression is nonlinear, non-parametric, stepwise, and much more robust … and accurate because you can process millions of data points if you have them. The k-means is not clustering around one or two dimensions, but one or two dozen if necessary in a large multi-dimensional space — and the clusters can be of arbitrary n-dimensional geometric shapes using kernal machines. The support vector machines are not just based on primal, dual, and kernal classification with a bit of gradient descent but enhanced with multi-class support vectors, advanced regression, and transduction (to work with partial valued data). And so on.

And don’t think there’s anything new about “deep neural networks” either. They are just multi-level neural networks which were common-place in the 1990s with more levels and more nodes per level with more advanced statistical classification functions in each node trying to figure out how to extract patterns from unclassified data to classify and structure it, which happen to get better results because they can work on millions of data points, instead of thousands, and do tens of millions of calculations and re-calculations instead of tens of thousands. And that’s the only reason they get better results “out of the box”. There is absolutely nothing better or more advanced about the core technology. Nothing. It’s still as dumb as a door-knob, no matter how whizz-bang the markets make it out to be.

And at the end of the day, the “active” part of the neural network is a fraction of the overall network (which means as much as 90% of the computation is wasted), and if that can be identified and abstracted, you typically end up with a small neural network no bigger than the ones being used twenty years ago, which, even if more than three or four layers, can probably be redesigned as a three-or-four layer network. (See the recent article on the recent MIT Research, for example.) [But if you’ve studied advanced mathematical systems, this is not an unexpected results. Over-dumbification has always led to unnecessary processing and inferior results. Of course, over-smartification also leads to ineffective algorithms because data, typically produced by humans, is not perfect either and we need to account for this as well and detect small perturbations and deal with them. But it’s always better to be thoughtful in our design than to just brute force it.

In other words, many modern marketing madmen in enterprise software have become the new snake-oil salesmen, often selling simple statistical packages for a million dollars or raising tens of millions for yesterday’s tech in a shiny new wrapper. But it’s not intelligent, or even intuitive, by any stretch of the imagination.

That’s not to say that there isn’t technology that can qualify as assisted technology (and maybe even augmented in special cases), just that the majority of what’s being pushed your way isn’t.

So how do you know if you are among the majority being subjected to Applied Indirection or one of the few minority being offered a solution with true Assisted Intelligence capabilities? Stay tuned as we discuss this topic more in depth in the weeks to come …

* It’s much preferable to be a Canadian Idiot. We’re nicer and the “AI” marketers don’t bother us as much.

A Mere Eighty Nine Years Ago Today …

The Tariff Act of 1930, known as the Smoot-Hawley or Hawley-Smoot Tariff, was signed into law and implemented protectionist trade policies that raised tariffs on over 20,000 imported goods to the highest levels since 1828 (when the US relied very heavily on tariffs for public funding purposes).

Why is this act so significant? Most economists agree that this act and the following retaliatory tariffs by America’s trading partners were MAJOR factors that resulted in the reduction of American exports and imports by more than half during the GREAT DEPRESSION.

And let us point out that it wasn’t called the GREAT DEPRESSION as a marketing gimmick. It was called the GREAT DEPRESSION because it was one of the greatest declines of the global economy in all of recorded history! In a mere three years, the worldwide GDP fell by an estimated 15%. That’s FIFTEEN times the decline of GDP during the Great Recession of 2008-2009.

In most countries, this depression lasted until the late 1930’s — a whole decade — and in some countries it lasted all the way until the beginning of World War II! In other words, it was 15 times as bad as the Great Recession (which is a marketing gimmick as this was just a blip when all was said and done) and lasted 15 times as long!

And while it officially stated on Black Tuesday (on October 29, 2009), the Tariff Act of 1930 only served to exacerbate a bad situation, and turned what might have only been a truly great recession into a great depression.

So, my American Readers, tell me what you think is going to happen if you decide to keep your current trade-war happy President in charge for another term (assuming the world survives his first term)? [The worst thing is that his father had to live through the Great Depression and should have not only understood how bad protectionism can backfire but passed that message on as a successful businessman.)

It’s Been Four Years Since I Told You About The Procurement Damnation of Project Management …

… but what has your vendor done to abate it? There’s a reason that the new iteration of Spend Matters’ Solution Map, designed by the doctor, has two subcategories dedicated to Workflow and Project Management (and two other sub-categories dedicated to Data and Document Management) … and that’s because of the importance of project management to your sourcing and procurement efforts.

Remember, while project management works good with the physical world, it doesn’t work so good with the virtual world. For example, where software development is concerned, there is a rough definition of what is desired, but the beginning and end is a best estimate that is no more accurate than a wild guess in some cases, the resources required (while defined as software architect, developer, network specialist, etc.) are not well understood (as a non-skilled software architect cannot define what makes, or identifies, a good software architect), and the amount of money required is relatively unknown (due to uncertain work effort requirements, unknown support requirements, etc.). And that’s just software.

When it comes to supply chain, the difficulty is intensified. There’s the management of the sourcing, the management of the negotiation and contracting cycle, and the management of the procurement. But before that, there’s identifying the right supplier, which requires detailed understanding of the product technical requirements and the supplier production capabilities. There’s identifying the expected costs, based upon understanding material costs, labour costs, energy costs, tariffs, and overhead. There’s managing the supplier relationship. There’s dealing with disruptions and disasters. And taking corrective actions.

Most supply chain projects don’t have well defined beginnings, or endings, or static workflows. There’s no one-size fits all and the platform needs to be able to adapt.

But even before we get to workflow and adaptation, we first need the ability to define a project and a workflow to support it – be it a full strategic sourcing project with supplier discovery, supplier selection, multi-round RFI, and online negotiations; a simple 3-bids-and-a-buy RFI for a services engagement; an automated auction for regular MRO purchases; a deep optimization project for multi-national transportation or services; a regular catalog buy for a regularly occurring purchase; etc.

How many platforms can define an appropriate project? They all have the capabilities, but in many platforms that’s it. You can’t define a workflow. You can’t capture basic category intelligence. Everything is one step at a time, where the steps can only be performed by an experienced platform master. You can create an event, and then do stuff in the event, but you can’t abstract the workflow, just copy it and edit it for next time.
And if you need a new workflow, you need to create a new event.

Even four years later, only a few platforms have any real semblance of project management, and that needs to change. But will it?

(If it doesn’t, at the very least the platform should integrate with a project management workflow tool like Per Angusta which was built to do precisely this and integrate your disparate best-of-breed Sourcing and Procurement modules into a unified platform with workflow and project management.)

Be Sure to Check Out the Prophet‘s Treatise on Industry vs. Technology Analysts

Before you fall for the advice of an industry analyst when making a critical long-term S2P technology platform selection. (Just today I heard about a company four [4] years in to a six [6] year Ariba implementation. That’s right! Six years! Wowzers. I’m not even sure Slow Poke Rodriguez could do an implementation that slow! But I digress … )

You see, as the prophet clearly states in Industry Analysts vs. Technology Analysts, industry analysts provided company/solution-level analysis and evaluation while technology analysts provide product/module- and architecture-level focus and comparative solution analysis. That’s a big difference.

In other words industry analysts tell you about the stability and market acceptance of the company while technology analysts tell you about the stability and market appropriateness of the technology, as well as the future outlook of its effectiveness post-implementation. [Just because your hardware is obsolete the minute you open the box doesn’t mean your software should be.]

Furthermore, what’s going to give you more reliable insight into a potential platform — information gathered by phone-based customer discussions, powerpoint presentations, and the odd customer survey — or — ground-up technology evaluation through interactive, in-depth, live product demonstrations focussed around granular RFI questions and important platform elements. If you trust an industry analyst, the best you’re going to get is second hand insight from happy customers where the blush is still on the rose and a review of the UI — from static screen captures in a powerpoint presentation. Not good. Not good at all.

For more insight on what makes a technology analyst, and just how rare they are, check out the prophet‘s article. FYI: as far as the doctor is concerned, the chances of encountering a true technology analyst is less than 100 to 1. Especially when you consider the educational and experiential background needed. (FYI: operations, MBA, psychology, history, etc. are NOT the right backgrounds to understand algorithms, software architectures, and modern technology at a deep technical level.)

Five Years Ago We Told You to Blame the Bankers …

… for the biggest risks in your supply chain, as per our classic post where we told you don’t blame the lawyers, blame the bankers because they were ultimately responsible for three of the top four most likely risks to disrupt your supply chain.

(Even though the doctor can sympathize with William Shakespeare when he said the first thing we do, let’s kill all the lawyers, the lawyers are not responsible for the current state of the global economy, the bankers are. And while it’s true that the lawyers are not innocent, happily taking the bankers money to do things that disrupt entire economies, it is the bankers that were the ringleaders here.)

But do we still blame all the bankers? Well, yes, we blame them for the economic risks that continue to persist to this day. But we no longer blame them for the top three risks in our global supply chains.

That honour goes to … The United States of America. Yes, that’s right. The root cause of the three biggest risks in your supply chain is the United States of America. (And not China, although there is a massive risk there as well. And if we wait a few more years, they might get their turn on top.)

How can it be? How can the United States be the single cause of the three biggest risks in your supply chain?

To explain that, we’ll start by repeating them for those of you that have not read The Global Risks Report 2019, 14th Edition, from the World Economic Forum.

According to this report, produced in partnership with Marsh & McLennan Companies and Zurich Insurance Group, the three biggest risks are:

  1. Extreme Weather Events
  2. Failure of Climate Change Mitigation and Adaptation
  3. Natural Disasters

and, as should be obvious, these are all interconnected.

Many (if not the majority of) natural disasters are the result of extreme weather events, and many (if not the majority of) extreme weather events are, whether your choose to believe facts or not, the result of the failure of climate change mitigation and adaptation.

And why has climate change mitigation and adaptation failed? Because it hasn’t happened. And why hasn’t it happened? Because countries aren’t aggressively working toward it. And why is that not the case? Because only 175 parties, of 197, have ratified The Paris Agreement (the UN Convention on Climate Change) … and one party that initially accepted has withdrawn (and done so in a very public manner). Guess what that country is? You guessed it!

The United States of America has withdrawn from the Paris Agreement. If the country that is responsible for approximately 25% of global GDP refuses to support the most important initiative in the world (which still falls short of where we need to be to truly mitigate climate change, but would make a substantial impact on slowing climate change down), especially when it comes to preventing the three biggest risks in your supply chain, then that country is unilaterally responsible for those risks.

So next time a typhoon sinks the freighter carrying all your goods, don’t blame God, Poseidon, or Mother Earth. Blame the United States of America. Or, if you really want to, blame Trump. But don’t blame God or nature because, with the current rate of increase in the number of natural disasters annually, there will soon be a 90% chance that it the natural disaster is 100% the result of climate change brought on by the United States inaction to do anything about it.