Category Archives: SaaS

Trade Extensions is Redefining Sourcing, Part I

At their recent User Conference in Stockholm, recently covered by the public defender over on Spend Matters UK, Trade Extensions unveiled the upcoming version of their optimization-backed sourcing platform. With it, Trade Extensions are redefining the sourcing platform.

In first generation sourcing platforms, you have stand-alone Spend Analysis, RFX, e-Auction, Decision Optimization, Contract Management and, maybe, Supplier Information Management (SIM) modules where each module feeds into the next in a well-defined linear order: Spend Analysis into RFX. RFX into e-Auction, Decision Optimization, Contract Management, and/or SIM. e-Auction into Decision Optimization and/or Contract Management. Decision Optimization into Contract Management. Contract Management into SIM.

In second generation sourcing platforms, which permeate the market today, these modules are better integrated and data is more fluid. Data can flow back and forth between all of the modules. However, flows are still well defined. Data can flow from any module into any other, but only using well defined, scripted, workflows. You can’t break a process, or enhance a process, with capability from another module. For example, you analyze the spend data, and issue an RFX. You can analyze the costs that come back, and when you do, you can pump additional data into the optimization module. But as it’s not common to output multiple scenario awards into spend analysis, slice and dice for cost variances, and understand how the cost models and bids affect the global supply chain, there’s no easy way to push them into the spend analysis module. As a result, a user typically has to save the scenarios in .csv or Excel format and then import them into spend analysis.

In an optimization-backed sourcing platform, like TESS, that is properly defined all data is centralized in a data store and can easily be accessed by the RFX, Auction, Analytics, Optimization, and Contract Management modules. Because the system works off of common centralized data (known as fact sheets in TESS), cost models, and scenarios and not predefined, rigid, workflows, the user can approach the sourcing event the way they want to approach the sourcing event. They can create RFIs, send them out, get data back, create cost models, send them out for completion, analyze them, optimize them, go back to suppliers for cost concession or innovation requests, jump straight to negotiation and award if they get an innovative proposal, realize that a supplier can only satisfy 75%, cut the contract, and then push the unsatisfied demand back to the RFX for a subsequent round for a secondary supplier and so on. It’s extremely flexible. But it takes a skilled user to understand how to manipulate a tool that requires an advanced understanding of models, scenarios, workflow composition, and analysis. In fact, considering the user may not only have to design the workflows, but also the fact sheets, formulas, constraint definitions, and sourcing process, the skill level required to maximize the value potential of a sourcing is often more programmatic than an average user can handle. It essentially takes a skilled software developer to maximize what the platform can deliver.

And even though Trade Extensions, with their leading, state-of-the-art, optimization-backed sourcing platform has dozens upon dozens of clients making very extensive use of their platform and getting industry leading returns, they have also realized that the best results are from the most capable users and that there is always an opportunity to do better still. And not ones to settle for anything but the best there can be (even though they have the most powerful optimization-backed sourcing platform there is), they decided to figure out how to do better still. However, realizing that they were optimization experts and not design experts, they took a step back to figure out what was needed. After much consultation, soul searching, experimentation, user canvassing, and testing, they came up with an approach that will allow not just the pros, but the beginners, to use the platform with the same ease and achieve the same results, no programming skills, or training, required. And, even though they are already industry leading, that’s how they are redefining sourcing.

So what in particular is Trade Extensions doing?

We’ll get to that. But first, a little background on what’s missing (in Part II).

Societal Damnation 47: XaaS

This is a damnation so damning that it was one of only two damnations that required two entire posts just to overview (and one of the few damnations the doctor could literally write an entire book on)! So just what is XaaS?

XaaS, short for Everything as a Service, is the latest craze that is going to cause your Supply Management organization nothing but suffering and pain. While it sounds really cool, because, historically, the transformation of a non-core but essential function (legal, accounting, etc.) or utility (water, electricity, waste disposal, etc.) into a service made your life easier. But, as with any good thing, it’s always possible to have too much … and with XaaS, to have too much forced down your throat even if you’re already choking on your own regurgitations.

And while the right services can provide an organization with advantages that include, but are not limited to,

  • expertise,
  • cost reduction, and
  • efficiency

for an organization that does not have the dedicated personnel, or expertise, to perform the function as good as a third party, if the wrong services (or service providers) are provided (or selected), the organization will instead be burdened with a number of considerable disadvantages that included, but are not limited to:

  • cost increase,
  • efficiency decrease,
  • loss of control, and a
  • 3rd Party Management (3PM) nightmare.

And if different business units decide to start outsourcing what they perceive as non-core functions (which are in fact core to the business or which should be managed by Supply Management or a different business unit), functions for which the service provider cannot achieve economy of scale, or functions that have not been optimized for outsourcing (which will result in an efficiency decrease as a best-practice provider will not be able to optimize inefficient workflows) willy-nilly, Supply Management will have quite a third party management mess to deal with.

In a nutshell, services are good, but, as clearly illustrated in our second damnation post on the subject, Everything-as-a-Service is a ridiculous concept and any organization that buys into it is just asking for trouble.

So what can you do when you are pushed to buy into this latest outsourcing craze?

1. Get an organizational policy in place that all services spending goes through Procurement.

This will be very hard, but unless Procurement knows about an outsourcing initiative or a XaaS buy, it can’t make sure that the organization makes the right buy, if a buy is even required at all!

2. Do your homework on each request.

Why is the service being requested. What does it do and what processes or services does it replace. Why could a third party do it better and are the third parties being considered capable of doing it better. If the process is outsourced, will the organization lose important skills or knowledge. Should a traditional product to enhance in-house be considered instead?

3. Figure out what processes are truly strategic and what process are just tactical.

Strategic processes should be kept, or at least managed, in house while tactical processes are the prime candidates for XaaS providers. From the list of tactical processes, identify those that would be best suited for outsourcing through efficiency gains or cost savings.

In other words, the key to sustentation is not jumping on the bandwagon and doing everything you can to prevent the rest of the organization from jumping on when you’re not looking.

Just What Is A Next Generation Supplier Network?

Just about every vendor with a supplier network these days that is doing any development at all is claiming to have a next generation supplier network, but just what is a next generation supplier network?

To answer this, we first need to define what was a first generation supplier network. But this is easier said then done.

According to the procurement dynamo, in his post on how marketplaces transformed into next generation supplier networks that was posted earlier this year, last generation supplier networks were marketplaces. And that’s more less accurate.

By definition, a marketplace is where suppliers can list their wares, buyers can search and review wares of interest, and contact the supplier to place an order. And that’s pretty much what first generation networks, which weren’t that much more powerful than craigslist or e-Bay, could do.

But that doesn’t a network make. Once these “marketplaces” began to allow buyers and sellers to transmit electronic documents, manage their offerings on a public and private basis (for current customers), and securely collaborate they became networks. And this is all many networks do.

So what is a next generation supplier network? According to the procurement dynamo, first and foremost a supplier network is a collaboration framework where both parties exchange business information in order to perform better together. And the doctor agrees. But any secure messaging portal fits this description, so we need to elaborate.

Secondly, a next generation supplier network is one that allows for seamless e-document exchange in EDI, XML, and other standard, accepted, and (government and regulatory body) approved e-format between buyer and supplier supply management systems. It must provide an open API for integration into these systems because if a buyer or supplier has to log in to send or receive a document, it’s first generation.

Thirdly, a next generation supplier network is one that allows suppliers to manage public and private catalogs, with multiple price tiers on the private side, to allow potential customers to find and browse their ways, and current customers to buy, buy, buy. Similarly, it allows buyers to announce tenders, define their typical needs, and be discovered by suppliers they might miss in their searches.

And fourthly, and this is the biggie, a next generation supplier network must support the development of custom apps that allow a supplier to access a supplier portal or capability on a buyer’s platform (to do VMI, for example) or a buyer to access a buyer portal or capability on the supplier’s (sales) platform to access shipment and status information or query factory stock levels. It must not only be the “glue” that allows people to connect, but processes and platforms to connect as well. We’re not really seeing much of this yet, but this will truly distinguish a next generation platform from a current generation one.

Basware: P2P for the Global “E” Part VI

In Part V, we noted that since we discussed Basware last in 2014 — where we covered their invoice and payment plan capability, their Basware Commerce Network (BCN), supplier/buyer portal, and their analytics offering — Basware has continued development in each of these areas and their invoice, spend analytics, and payment plan capabilities are quite powerful. But this is not all Basware has to offer.

Their standard e-Procurement capability is also very competitive, and, while you can’t claim to have e-Procurement without good requisition and PO management, Basware does have this down pat. Requisitions can come from every corner of their platform — RFx, forms, catalogs, T&E, and the shopping cart. This allows all spend to be put through the requisition process. Also, approvals can take place through the platform, e-mail, or even a smart phone app, allowing an approver to review an urgent requisition at any time or any place, negating the excuse “there wasn’t time for an approval”.

Once a requisition was approved, POs can be created from scratch, a blanket order, an approved purchase plan or saved shopping cart, and flipped from a requisition. The PO can be entirely processed in the Basware system, with complete history tracking and audit trails, and distributed to the supplier using e-mail, the supplier portal, EDI, or the BCN.

In addition to great invoice management, the system also has great p-Card management. The buying organization can integrate the platform with their p-Card provider, import the transactions, and automatically match the transactions on the monthly p-Card invoices with purchase orders and goods received. Once each transaction is matched with an associated, approved, business document, the invoice can be automatically approved and queued for payment. And if a transaction cannot be matched within a certain time window, the transaction can be flagged for manual review and brought to the front of the list for manual review.

The T&E capability, not yet covered, is also quite good. It goes beyond simple gathering, approval, and re-imbursement of travel and expense management and allows for the creation of entire travel plans for preliminary review, approval, and eventual claims. Rules can be set up so that if claims come in for approved expenses within a threshold (and with receipts for any amount above a threshold), the claim can be automatically paid, minus any advance. This is a very powerful capability. Once a plan is approved, if the employee sticks to the plan, the expense report doesn’t even have to be touched by human eyes. Good Procurement is only approving something once, and only looking at at something again if there is an issue. In addition, the solution can also integrate with banks and credit card companies and allow receipt amounts and claims to be automatically validated, especially if the expense is not on the corporate P-Card. Finally, the solution also collects all data required for tax authority reporting and tax authority claims (if the organization is entitled to reimbursement) as it implements VAT compliance for dozens of EU countries.

But perhaps the best capability is the Basware early payment discount management capability where it’s not only easy for buyers to manage an early payment option and a supplier to sign up, but for buyers to manage early payment discount campaigns when they first introduce, or re-introduce, early payment discounts. It’s set up on a e-mail marketing campaign system, which just about everyone understands.

There’s more, but for a much deeper dive into the platform, as well as a detailed SWOT analysis, check out the upcoming in-depth Spend Matters Pro [membership] series from the doctor, the revolutionary, and the prophet. This is one of the most in depth, most complete, and most accurate reviews you will find of this European juggernaut anywhere, and worth your time if you are looking for a truly global P2P platform.

Basware: P2P for the Global “E” Part V

When we last discussed Basware two years ago, we did a deep dive into their solution, particularly with respect to their invoice and payment plan capability, their Basware Commerce Network (BCN) and supplier/buyer portal, and their analytics offering. You can review this coverage in our four part series: Part I, Part II, Part III, and Part IV.

Since that coverage, there have been a few updates to the platform in these areas, but the biggest news is the recent Verian acquisition that extended their procurement offering, and we’ll cover this shortly.

From an invoice processing point of view, the match algorithm has been improved, as has the interface to the invoice. The upgraded UI makes it very easy to see not only unmatched invoices, but unmatched data, the closest match purchase orders, and all associated history of both. The pop-up windows allow a user to view the invoice and PO side by side, as well as the full audit trail if need be. From a payment plan point of view, the solution supports very powerful rules that allow a payment plan to match as many invoices as needed, and be automatically paid and approved subject to the rules.

From the BCN point of view, it’s growing year over year, at a transaction growth rate of 37%+, and should be processing 250M invoices by the end of 2018 and continues to add digital signature and tax compliance as more and more countries add regulations and allow digital signatures. The supplier portals have gotten a face lift, and it’s easy for a supplier to not only manage all communication, but multiple versions of their catalog for multiple buyers, as well as multiple price lists for different order volumes.

Their analytics offering keeps getting extended and improved as well, with the standard reports and dashboards now meeting 90% to 95% of what a typical buyer or AP clerk would ever need to look at. The reports have been grouped into three categories: spend, which are focussed on actual spend; procurement, which are focussed on overall process metrics and quality; and AP, which focus on financial data, process metrics, and overall end-to-end P2P KPIs.

The spend reports capture actual invoice data and payments and summarize, among other things, spend under control in a reference period, spend by supplier, spend by category, percentage of supplier spend under control, payment terms, and top n suppliers. The Procurement reports are focussed on quality and metrics. The quality reports focus on supplier quality and summarize active suppliers, (average) quality metric summary, rank by quality, rank by category, etc. The metrics focus on value. PO counts, by supplier, and by value. Average total order time by supplier, by category, and geography. Average procurement task time (for requisition approval, PO flips, etc.) and duration. The AP reports focus on finance, process, and KPIs. The financial reports summarize cash flow, cash flow forecast, discount availability, discounted invoices, discount trend, and similar financial data. The process reports summarize invoices — open, exception free, resolved exceptions, and average resolution time; tasks and durations; and average supplier acknowledgement/response times. The KPI reports summarize overall e-Invoice metrics, spend under control, auto-match performance, on-time payment, and average cycle times. It’s a very complete set of reports.

In other words, even though everything discussed above was quite good when we reviewed it back in 2014, Basware has kept developing and improving and streamlining, but that’s not all Basware has to offer. In our next post in this series, Part VI, we will discuss the other capabilities Basware has to offer.