Category Archives: SaaS

Why Your Tech Selection Should be KPI, and not Bell-and-Whistle, Focussed If You Are Not Technical! Part II

If you won’t admit your TQ (Technical Quotient) is rock-bottom, you won’t spend (or aren’t allowed to spend) budget on an outside expert focussed on Project Assurance, and decide to go ahead with selecting your own ProcureTech solution, then you should make a point to focus your selection around your best practice KPIs. First of all, your management will be happy if you improve against them. Secondly, some of the best KPIs actually require you to have good platforms in place if you are to improve against them.

To demonstrate this, in our first installment, we began a discussion of the 21 Key Performance Indicators (KPIs) for Procurement that Tanya Wade shared because they are a good starting point (as you don’t want too many KPIs as THE REVELATOR pointed out in his analysis). Today, we’re going to continue with the next 6 KPIs, bringing our discussion to 14 total.

Compliance & Risk

   PO Compliance

This requires a good P2P (Procure to Pay) or I2P (Invoice to Pay) solution that can do 3-way match against the PO, the Invoice, and the good receipt to ensure that the supplier is honouring the contract pricing and the PO quantity, and ensuring this ensures that the cost savings you negotiate actually materialize.

   Contract Compliance

This requires a great P2P or I2P solution that can not only ensure the supplier is honouring the price and quantity, but also the lead time, quality, milestones and rebates that they promise. It also requires a great contract lifecycle management solution that can track the organizational’s obligations, such as hitting an order volume by a threshold to unlock a rebate or additional discount, reviewing a new product design or doing a quality test, or making investments/payments on time (to keep the supplier’s cost of capital, and your costs, down).

   Supply Base Risk

This requires a great SRM/TPRM or (spend) analytics solution that can build integrated risk cubes that allow you to determine your overall supply base risk by geography, category, or other relevant factor.

   % of Audited Suppliers

This will require a best of breed S(P/R/L/X)M+ / TP(R/C)M solution that tracks supplier audits and can tell you the percentage of suppliers who have been audited over the past quarter and year. This is especially important if you need to adhere to carbon/GHG regulations or there is a risk of labour exploitation in the supply chain.

Operational Efficiency

   Procurement Cycle Time

This requires a great P2P platform that tracks every action from requisition through RFQ through PO through acknowledgement through invoice through receipt (in the warehouse) through delivery to the requisitioner, can compute the average cycle time end to end as well as the average time in each step, because if the cycle time is longer than industry average, or not decreasing over time, it’s critical to understand which step is the problematic one.

   Automation Rate

This is key. Your automation rate for data processing and tactical tasks should be 90% or higher. There is no excuse today for anything less. And it doesn’t have to be new-fangled experimental Agentic AI that may or may not work. Classical RPA, finely tuned for various Sourcing and Procurement activities, is just fine, as long as you are not manually shuttling data from one system to another, setting up a sourcing event for something you’ve sourced before when the contract is coming up for renewal, manually doing that monthly PO to restock inventory when demand is steady/contracted and predictable, manually building those dynamic spend cubes and manually refreshing them, etc.

Come back tomorrow for the final set of KPIs that Tanya states you need to address and how they will help you select solutions that might actually realize value for your Procurement organization.

Why Your Tech Selection Should be KPI, and not Bell-and-Whistle, Focussed If You Are Not Technical! Part I

If you won’t admit your TQ (Technical Quotient) is rock-bottom, you won’t spend (or aren’t allowed to spend) budget on an outside expert focussed on Project Assurance, and decide to go ahead with selecting your own ProcureTech solution, then you should make a point to focus your selection around your best practice KPIs. First of all, your management will be happy if you improve against them. Secondly, some of the best KPIs actually require you to have good platforms in place if you are to improve against them.

To demonstrate this, we are going to take the 21 Key Performance Indicators (KPIs) for Procurement that Tanya Wade shared because they are a good starting point (as you don’t want too many KPIs as THE REVELATOR pointed out in his analysis). Today, we’re going to start with the first 8 (even though 8 is clearly not enough).

Cost Management

These KPIs will require you to have an e-Sourcing platform in place with good reporting, and/or a spend analysis platform in place with good category management (since, theoretically, if you like the extra work and headache, you can continue to source using e-mail and PDF/Excel templates and get good results if you are guided by a good category management solution and have a good analytics platform to compare the results).

   Cost Savings

You can’t compute, track, and present the cost savings KPI in real-time without an e-Sourcing solution with integrated reporting, or a modern spend analysis solution that updates the cube on every synch with the CLM and ePro system. Both improve your Sourcing focus!

   Cost Avoidance

This requires understanding the current market price vs. the price negotiated, which might be higher than the previous price. If the price paid under the last contract was $1.00 per unit, the current market price, due to supply shortages, is $1.30, but you negotiate $1.15 per unit, you have a cost avoidance of $0.15 per unit, which can be substantial if you need 100,000 units and would have to pay market price without a contract. Without a spend analysis solution that can pull in these market prices and your negotiated prices, it’s very hard to show the cost avoidance your team secures.

   Spend Under Management

This requires a top notch spend analysis system that can suck in all organizational spend across systems, categorize it against a sufficiently defined taxonomy, link each category that is under contract to the associated contract, and then compute spend under management vs. spend available to be managed vs. all organizational spend.

Supplier Performance

These KPIs will require you to have a good supplier management system in place that goes beyond simple onboarding and relationship management system (which even the suites have, even if clumsy), and allows you to truly track supplier performance and supplier ratings.

   Supplier Lead Time

In order to track supplier lead time, you need a good e-Procurement platform that tracks the lead time promised in sourcing, the date the order was placed, and the date the goods receipt was logged in the system. This way, you can track the average lead time across all orders as well as against the promise, and if the supplier is not meeting the promise, you know you need to order earlier and kick off a supplier development project.

   On-time Delivery

You need a good e-Procurement system to track both the delivery date vs. the expected delivery date based on the lead time, but the delivery date vs. the promised delivery date in the acknowledgement, because if a supplier indicates they need extra time for a larger than anticipated order, and you don’t cancel, they are on time if they meet the promised delivery date.

   Supplier Fill Rate

You need a good e-Procurement system to compare the order to the goods receipt to track the fill rate over time. This is critical because if the supplier keeps underdelivering, you risk costly stock-outs, which become more costly if they shut down production lines in a manufacturing or cause customers to start shopping at a competitor’s (online) storefront because the competitor actually has the stock they promise.

   Supplier Defect Rate

You need a good e-Procurement system or a good Supplier Management System to track the number of defects and compare that to the fill rate to track the defect rate, which is very critical, especially if you have SLAs that you are depending on when you make your orders (as a higher than allowed for defect rate could result in stockouts and even expensive production line shutdowns).

   Supplier Rating

This requires a top notch supplier performance management solution (which is a small fraction of the supplier management platforms); a top notch spend analysis system that allows you to build and analyze performance, compliance, and risk cubes; or a top notch SXM+/TP(R/C)M solution that allows you to build Supplier 360 ratings, which is critical to understanding how well your supply base is serving you and how well you are supporting your supply base.

Come back tomorrow for the next set of KPIs that Tanya states you need to address and how they will help you select solutions that might actually realize value for your Procurement organization.

Why Is It So Hard to Buy Software?

A recent post on LinkedIn by Robert Goodman asked Why has it gotten really hard to buy software?, which is a really good question, because, while it should be easier in the modern SaaS age, for an enterprise, it’s much, much harder.

Robert started his vent by noting that the companies I want to partner with on average do a bad job selling/explaining/connecting/not making me dislike them or generally making the process frictionless and the companies I have little interest in are incredibly responsive and almost stalkerish. He goes on to state that Most companies are still WAY too much about making their numbers at month or quarter end (a them issue, not a me issue) and this seems to dominate their “strategy.”

And I’m sad to say that he’s right. Not just because I’m hearing this from multiple buyers (on and off LinkedIn), but because, for the past year or so, most of the companies approaching me / having conversations with me are only interested in “how I can help them sell”, as if that’s the role of an analyst/product consultant. (Well, as I noted in Vendors Have Lured Big Analyst Firms Astray Because Buyers Don’t Understand They Get What They Pay For, this is probably what they expect if their only dealings have been with big analyst firms where it’s pay for promotion, and leads, and no real advice on product strategy and direction.) The majority are focussed on sales, and not on understanding what they have, whether or not it actually solves customer problems, and what is missing from their product, process, or marketing that is preventing them from selling.

The reality is that the’ve forgotten that you don’t sell by marketing, or doubling-down on the latest and greatest feature function your dev team just added, stalking your prey when they need time to digest, or threatening them that they made a bad decision when you don’t get selected (and/or trying to bypass the process by skipping the CPO and going direct to the CFO or CEO).

You sell by focussing on the customer. The successful vendors:

  1. take the time to understand the customer’s problem
  2. explain how they will solve it
  3. help the customer build the value case (especially if the customer needs help getting (additional) funding)
  4. work side-by-side with the customer until the solution is fully implemented and the customer is realizing the ROI while
  5. not making you feel like you are walking on hot coals through the entire process.

Moreover, when they reach out to an expert analyst/consultant, they would

  1. focus on understanding the market: who the customers are and what they want
  2. what they have and don’t have to serve that need
  3. how they could better position and market what they have so customers would be more interested

But the reality is that, with so many companies having taken too much money at too high a valuation during the last two M&A frenzies, we have the situation where, at many vendors:

  • their ego is through the roof (because they think they are the only option of their caliber based on the raise) or
  • they have to meet a ridiculous sales target to keep their jobs, and they don’t care about your value or experience, just getting the sale.

And that’s why we have the situation that Robert is complaining about where it’s really hard to buy software these days. We don’t have the space we had 20 years ago in ProcureTech post dot-com crash where every vendor was doing anything it could to prove value because investment (potential) was low and there wasn’t a single vendor with a ridiculous sales target … they were just focussed on survival and real growth.

Now, this isn’t to say all vendors are bad, or that you are guaranteed a bad experience … there are still vendors out there who didn’t get, or didn’t take, too much investment, have greater control over their own destiny, and will do whatever they can to make you successful. However, don’t be surprised if you end up with the experience with your initial shortlist that this is the exception and not the norm. In other words, do your best to track down the best, but don’t expect a chill experience every time.

Cutting Edge Tech Is NOT Defined by the C-Suite, …

… Financiers, or the Marketers pushing hype (from the A.S.S.H.O.L.E.) at you 24/7.

Nor is it defined by the algorithms it uses, the software stacks it runs on, or the hardware stacks it makes use of.

Cutting edge tech is ANY and ALL tech that

  • solves one or more significant problems that not being solved by your tech today and
  • does it by automating at least 90% of the tactical data processes that can be automated

It can be based on the latest AI algorithm or twenty year old RPA. It doesn’t matter if it shines a light using a LAMP stack, if it is an edgy MEAN stack, an Austin Powers inspired Grails stack, or even a .NET stack (though the doctor personally shuddered typing those last three caps out). The entire point of enterprise software is to solve your problems.

The point of software is NOT to provide

  • an excuse for a C-Suite to cut his tech-bro buddy a fat check,
  • a new Tulip Market for greedy financiers who think they can score big and get out before the crash, or
  • marketers a platform to pump out pompous poop on a daily basis.

As Mr. Koray Köse penned in a recent piece on LinkedIn on how you are in need of cutting edge technology, the last thing you want to do is take your direction from the VC-pumped C-Levels who do nothing but repeat the marketing garbage they are fed, sometimes changing the baseline of the garbage mid-sentence!

You have to remember:

  • All the VCs and most of the PEs want to create the next unicorn and get rich quick overnight. So most of these VCs and PE firms are pumping huge amounts into companies with little to no product (to support their grand vision that even SAP and Oracle haven’t managed to achieve after 5 decades and trillions of dollars) and directing the majority of that to be spent on buzz-creating sales and marketing (and not real product development). After all, you don’t actually have to create anything beyond buzz to get rich — market crashes throughout history have proven that since Tulip Mania. (What was created there of value? Nothing. But hype made a few men rich and many men poor.)
  • Even though today’s LLMs are dumber than a doorknob (and demonstrate more than any previous generation of the tech that AI should stand for Artificial Idiocy), with performance degrading every iteration (because there is no more data to steal, and the AI engines are now training each other on regurgitated digital garbage), marketers are still taking storytelling to a whole new level (and we mean storytelling because ALL the claims are fake) with a spin that even the Spin Doctors of old would be envious of. (Little Miss Can’t Be Wrong now, right? They want to Make You A Believer so you hand over all your Money when you should Exit … Stage Left and Run To The Hills!)
  • This copy is being pushed onto the C-Suites of all of the other investments in their portfolio with assurances that it’s all true, and being similarly echoed to all of the CXOs that attend the conferences they speak at, the golf outings they are invited to, and the exclusive social gatherings they arrange.

Not one of these groups knows what you need, and two of these groups have absolutely no interest in giving it to you — their interest is all about getting your money, building the hype, inflating the value, and, hopefully, cashing out big before the next hype cycle and/or the inevitable market crash that’s coming.

The technology you need is the technology that is:

  • built with real world problems in mind,
  • tested on real world problems in real companies and proven to deliver, and
  • scalable and extendable to your operations and needs.

This type of tech is built over years and doesn’t use unreliable probabilistic AI at the core. (It runs on traditional, configurable, RPA that is 100% reliable and auditable. Now, this tech might employe AI to help with the configuration by analyzing your systems and processes and self-assessed gap analysis by recommending configurations for you to approve, and that’s okay, because it’s not randomly making decisions, its recommending options and letting you confirm or deny. It might also use SLMs for specific problems where they work a high percentage of the time to jump-start searches, documents, and processes for you, and as long as you retain full control and can accept, modify, or reject, that’s okay too. But everything is built on a solid core, with 100% dependable automation for all key data intake, processing, and pushes that is done without any manual intervention, appropriately calibrated to your business rules, processes, and goals.)

It’s also built slow, rolled out to a small group of beta customers or development partners, and hardened in the field before being rolled out en masse.

And, most importantly, it’s built by a company that is boot-strapped or frugally running on a shoe-string budget from minority SEED investors to get that first version up-and-running successfully in its first 10 customers before that company goes for any VC funding to scale up. A company that has the time to get it right before being under constant pressure to make demanding, if not impossible, sales targets.

Moreover, to have any chance of getting this software, you need to know three things:

  1. how to identify what you need that will form the heart and soul of the RFX,
  2. how to write a good technology RFX and analyze the responses, and
  3. how to identify the right companies to invite to the RFX.

What You Need

For Supply Chain, as Mr. Koray Köse points out, if you need help identifying your true needs and cutting through the noise, he can help you out with that with the eyes of a hawk, the skill of a surgeon, and the wit of a Williams (a Robin Williams). For Procurement, Joël Collin-Demers can slice through your organizational landscape like a hot knife through butter and let you know exactly what you need in priority order.

The Technology RFP

Every consultancy and their mascot claims they can help you here, but you need to be very, very careful.

  • many of their consultants are not technology experts and tend to prioritize features over functions, as that’s all they know
  • many of these firms have partnerships with the (mega) suite players, and you don’t maintain sycophant, sorry, Gold/Platinum/Diamond, status unless you direct a LOT of business their way each year, so they tend to try to fit everyone into one of these buckets
  • many follow the old consulting model of “give the client exactly what he thinks he wants” and don’t take the time to figure out what you actually need and educate you, leading to an RFP that is no better than what you would have written yourself, as they spend half their time questioning you, and the other half writing down your responses

For true success, you need someone who is simultaneously:

  • an expert in the domain,
  • an expert in technology, and
  • not incentivized to help any vendor whatsoever and, preferably
  • an expert in project assurance (but not always necessary)

If you need help writing that ProcureTech / Direct Sourcing/Supply Chain RFP, feel free to reach out. This is my expertise. And for some tips, feel free to start with our recent series on How Do You Write A Good RFP?

Vendor Selection

Very few analysts and consultants know more than a handful of vendors. The big firms focus on the big vendors who cut big cheques, which are the 20-ish same vendors you see in their maps year after year after year. They don’t know about the other 700. Only a few of us independent analysts go far and wide and actually know what is out there and how it can help you.

For ProcureTech, SI should be your first stop. It’s the site that gave you the mega map to open your eyes as to just how wide the playing field is. Moreover, if you need something really niche where the doctor doesn’t have the expertise, he’ll find the right expert to refer you to.

For SupplyChain, Mr. Köse knows a lot of the players. But don’t overlook Bob Ferrari of The Ferrari Group. As one of the original supply chain analysts, he knows all the players and what their platforms can and can’t do inside and out.

And if you reach out to the right experts and get the right help, maybe you can get true cutting edge tech that actually helps you!