Category Archives: SaaS

Arena – Taking PLM Deep Into the Supply Chain Part I

When we last covered The Arena Solution in 2007, we stated that Arena were the providers of an effective, on-demand, PLM solution that could manage the information associated with the entire lifecycle of a product from conception, through design and manufacture, to service and disposal, which, for a low margin manufacturing organization, could be the difference between costly inefficiency and profitable efficiency. One of the unique features of the solution was its support for collaboration between the buying organization and the supplying organization through an online portal.

Since the release of their first on-demand solution in 2007, which was focussed around BOM (Bill-of-Material) Management, Item Management and Change Management, over the last few years they added (better) Document Management, Quality Management, and Compliance Management. The Document Management capability, built on their change management and collaboration tools, streamlines the document management process, manages the revision process, supports privilege-based access for anyone who needs to access the document, be they employee or supplier representative, and supports the meta-data categorization required for advanced search and rapid retrieval.

The Quality Management capability supports your CAPA (Corrective and Preventive Action) process and allows the organization to track progress on quality improvement processes over the long term. The Quality Management capability allows for the creation of issues, corrective action requests, and tasks necessary to resolve the issues identified by the corrective action requests. It also associates the issues to requests, BOMs, and associated documents and allows the process to be managed from beginning to end and the entire history to be archived for the institutionalization of knowledge.

The Compliance Management capability was designed to allow an organization to meet regulatory requirements and track compliance information for products and processes with BOM-level control to allow an organization to comply with medical, environmental, regulatory, safety, and process standards and regulations. From import restrictions to quality standards to safety standards to reporting regulations, a manufacturing organization often has more regulations to adhere to than it has items in its largest BOM (which can be quite large, especially if it’s manufacturing automobiles, airplanes, or automated control systems for nuclear power plants). This is not an easy task when the organization often has to track the materials in every item in its BOM, the insurance certificates for each supplier, and the third party certifications for each product. But with a proper solution that allows the suppliers to upload the relevant documents, and manage them, the process is a lot easier.

And, finally, they added more Enterprise Integration. A PLM solution that doesn’t integrate with your ERP/MRP solution has almost as many disadvantages as it has advantages. And those disadvantages revolve around data, and data entry. At some point, orders have to be placed, and those orders at some point have to flow through the ERP system that manages the payables, the inventory, and the demand tracking. If there is no integration, the BOMs for all of the existing products will have to be manually entered or loaded into the PLM solution and the BOMs for all of the New Product Introductions will have to be manually entered into the ERP. Not a pretty picture. That’s why Arena spent a lot of time integrating with all of the major ERP and MRP systems out there over the last few years. But Arena didn’t stop there. Realizing that, as they progressed up the supply chain capability curve, that demand needs to get into sourcing systems, that regular orders need to get into procurement systems, that compliance information needs to get into reporting systems, etc., they figured out that no matter how many systems you integrate with, it will never be enough so, in their current release that just came out this quarter (which contains a number of new capabilities on top of the capabilities discussed so far), they built a new Open RESTful API that can be used to push data into Arena from any system and pull any and all data out of the Arena solution that needs to be pushed into other organizational systems. We’ll discuss this more in Part II when we talk about the four new capabilities that were just released as part of the new Arena solution.

What do the recent NSA revelations and the US Patriot Act Mean for Procurement?

Earlier this week, on Spend Matters UK, we saw a guest post from Jessica Warren of Hubwoo that asked “what the US surveillance programme means for procurement systems and people”. It asked some good questions, and gave some good answers, but it missed the most important question. However, before we get to that, we’re going to provide some background and a few other important pieces of information to put everything in context.

The post, written largely from the EU perspective, notes that the requirements of the European Data Protection Directive (95/46/EC) defines rules for the transfer of personal data outside the EU to ensure the best possible protection of personal data when it is exported abroad and that the transfer of personal data to non-EU countries that do not meet the EU “adequacy” standard for privacy protection are prohibited.

The EU is not the only political body to take privacy seriously. Canada has the Personal Information Protection and Electronic Document Act (PIPEDA) that recognizes the right of privacy of individuals with respect to their personal information and the need of organizations to collect, use or disclose personal information for purposes that a reasonable person would consider appropriate in the circumstances and the Privacy Act that extends the laws of Canada that protect individual privacy to government institutions. These laws imply that personal information cannot be provided to any party that is not bound by laws at least as strong as the Canadian laws (which are also augmented with additional regulations in the provinces of British Columbia, Alberta, and Quebec). So storing Canadian data on US servers that can be seized by the US government at any time for any reason under the Patriot Act could also be a big no-no.

Another thing to remember is that hosting in the biggest Canadian Data Center that will give you the best deal, which used to be the default answer if you wanted to service North American clients with fast response times and ensure Canadian and EU privacy protections were in force, is not necessarily enough anymore, even if the data centre adheres to the U.S.-EU Safe Harbour Framework. (The Safe Harbour Framework was originally designed to provide guidance for U.S. organizations on how to provide adequate protection for EU personal data so that US companies could store and process EU data without violating EU laws. Even though the intent was sound, the execution was weak, as the first case under the framework was not brought forth until 2011, and the framework has come under significant criticism under two external reviews by the EU in [2002 and 2004] and one by Galexia [in 2008].)

Why can’t you just ask that your US solution provider store the data in Canada and be done with it? The US Patriot Act. This diabolical piece of legislation gives the US government the right to demand any data held by any company governed by US law, no matter who or what the data pertains to, how or when it was acquired, or where it is physically stored. In other words, even if your US-based solution provider stores your data in Canada or Germany, the US can still demand that data. (Even Microsoft had to admit that regardless of where it stored it’s European Customers’ data, it could not ensure such data would not be turned over to the US government. [Source])  It’s not enough to just ask the provider whether or not it can guarantee that your data is safe from the Patriot Act as most services providers don’t understand the full extent of the power granted the US Government by the Patriot Act and many believe that if they are on the Safe Harbour list then that ensures their customers have adequate protection, which is not the case.  (That’s why a European Parliament Committee is recommending suspension of US-EU Safe Harbour. [Source]) Furthermore, if such data is stored in a data centre that participates in Safe Harbour, even if it’s on Canadian soil, you’re more-or-less in a double-jeopardy situation as that data centre, by participating in the program, has agreed to adhere to US regulations and will immediately hand that data over on official request!

This says that the most important question is not where is my data hosted but

1. What law governs the data you store on my behalf?

Simply put, if the company is bound by US law, it doesn’t matter where your data is, it is still subject to the US Patriot Act, and can be demanded by the U.S. Government at any time.

If your organization is subject to EU or Canadian privacy directives (which, in most provinces, prohibit the export of private data outside of Canada), after you have verified that US law does not govern the data stored on your behalf, then you ask:

2. Where is my data being stored?
2b) If you are storing my data in Canada, has the data centre opted into a US Safe Harbour program?

If privacy is a concern, not only do you not want your data stored in the US, but you probably don’t want it stored in a Canadian Data Center that has opted into a US Safe Harbour program (and agreed to enforce requests made under the US Patriot Act). (Note that there are a number of data centres in Canada that have not opted into this program that are still really good choices for servicing your North American operations.)

3. Is the storage provider (which might be a data centre contracted by your solution provider, as most Sourcing and Procurement SaaS providers do not manage their own data centres) bound by laws at least as strong as the privacy laws my organization is bound by?

If the answer is yes, you’re good to go.

There’s also three lessons here for US-headquartered Sourcing and Procurement Vendors who want to go global (and conquer Europe).
Specifically:

1) Move your headquarters somewhere else.
The UK would be a good choice if being located in an English speaking country is important to you.
2) Open a Canadian subsidiary to manage your North American service delivery operations.
3) Use a Canadian Data Center that does not participate in the US Safe Harbour program to store your customers’ data.

Early Payment Discounts vs. Early Payment Rebates

Are we dealing with six of one and half a dozen of the other? After reading “The Art of the Play” (PCubed.com), I have to wonder.

They are different in that you get one right away and you get the other later, and they are different in that one is just a reduction in spend and the other can be treated as an income stream, if the CFO so desires, but in the end they both have the same effect on the bottom line — less spend.

So why would an organization favour one over the other when the big difference is capturing the savings now versus capturing the savings later? If the organization was limited in cash and was trying to maximize savings, then capturing the savings right away would definitely make more sense, but if the organization was flush with cash and the supplier offered tiered rebates that improved with volume, then the organization might want to wait until later. Otherwise, the doctor can’t see much of a difference.

However, one area where there is a big difference is paying for a platform vs. paying for a service, especially for a big company. For example, the Oxygen Finance model described in the article is to provide you with a service where you pay up to 50% of the discount or rebate captured by transaction. While this is a good deal for a mid-sized company that might not have the up-front cash required to implement the end-to-end e-Procurement solution required to effectively take advantage of discounts and rebates offered by suppliers for quick payments, this can be a very expensive solution for a large enterprise. Consider a company that spends 250 Million a year, the low-end of the market for Oxygen Finance. If the average rebate is 1.5%, and you give one third of that up to the service provider, then the organization is paying 1.25 M a year for the solution, and only achieving a 2X ROI.

A company of this size can acquire a SCF solution for a fraction of this cost and realize a much larger ROI.

When you dive in, you realize that there are only three reasons most companies can’t create or take advantage of most of the early payment discount and rebate opportunities available to them:

  1. Invoices aren’t getting in the system fast enough
    because most of them are coming in as (e-)paper.
  2. Approved invoices aren’t getting to AP fast enough
    because routings for approval take too long.
  3. Procurement doesn’t have the manpower to negotiate rebates on 100% of spend
    because there are too many suppliers.

And while these were valid problems a few years ago, without (m)any real solutions (that an average organization could afford), today:

  1. An organization can acquire a SaaS end-to-end invoice automation framework, such as the one offered by Nipendo, that will convert all incoming invoices into one standard e-format for six figures.
  2. An organization can acquire a number of rules-based e-Procurement and invoice automation solutions (including Nipendo‘s) that will automatically approve and route all error-free invoices that match a PO or contract to the AP system and route those that require manual correction or approval to the right individual for online (e-mail) approval.
  3. An organization can see significant returns addressing only 80% of the spend which is typically with less than 20% of the supply base.

An organization that takes this approach can typically acquire a solution for (much) less than 500K a year, save 1.5% on 200 M of spend, and see a (minimum) 6X return, which is the return you should be looking for from an e-Procurement solution.

Maybe there’s another reason for a large enterprise to go transaction-fee SaaS for discount and rebate management, but if there is, the doctor ain’t seeing it — and he’s been covering SCF for years. As far as he is concerned, the sweet-spot for transaction-fee SaaS for discount and rebate management is the 50M to 250M range, because the implementation cost of the necessary end-to-end e-Procurement, invoice-Automation, and SCF solution isn’t that much cheaper for a mid-sized organization than for a Global 3000, and at less than 200M of addressable spend, the ROI multiplier starts to drop considerably.

Any differing opinions?

Intengo – Mastering the e-Procurement Tango in Turkey

When we last covered Intengo back in 2010, they were doing the e-Sourcing Tango in Turkey. At that time, they provided an on-demand e-Negotiation platform built around (multi-round) e-RFX and e-Auction with a sprinkling of Supplier Information Management (SIM) and early stage catalog management thrown in. A project-oriented system, it was a breeze to set up a new RFX or e-Auction event in the system and get a new sourcing event going. One of the unique features of the platform was the calendar view, which integrated with Microsoft Outlook and hot-linked to all of the relevant screens in the relevant projects, and which allowed a buyer to get a quick summary of where they were and what they needed to do at any given time. Other cool features were item-level currency support, smart unit support, and bulk-updates on (filtered) lots or items.

Since then they have been dancing up a storm and they are now the leading e-Sourcing and e-Procurement provider in Turkey, with over 100 clients, including a few notable international clients with operations throughout Europe and Asia. That’s right, they have migrated from a basic e-Sourcing application to an end-to-end e-Procurement solution in an effort to serve their clients better. Since 2010, they have added requisition and purchase order support, price lists and full catalog support, delivery notification and tracking, and integration with the big ERPs (Oracle and SAP) for master data management, invoice management, and e-Payment / Accounts Payable integration. In addition, they have also integrated budget management into the e-Procurement process.

A user can begin a requisition from a catalog or from a free-form request. The request can be sent straight to a (preferred) supplier if it is within the user’s spending limit (as defined by the budget), turned into a Purchase Order (after being approved, if necessary), or turned into an RFX or e-Auction. If the request is turned into an RFX or e-Auction sourcing event, the RFX or Auction is pre-populated with pricing from the most recent supplier price list (at the volume level) or catalog if pricing is available. If the request is sent straight to the supplier, the supplier can accept the request and provide delivery information, reject the request, or decline due to incorrect or insufficient information. In the last case, the buyer is notified and corrections can be made. In the case of an RFX, after the event has been configured, the request is sent to the selected suppliers who can bid on the whole or part, decline to bid on the whole or part, or decline to bid because of incorrect or incomplete specifications on one or more line items. In the last case, the buyer is notified, and if the buyer agrees, he can suspend the RFX or e-Auction until corrections are made, and all suppliers are immediately notified of the event suspension. A supplier who accepts a purchase order, who is awarded an RFX, or who wins an auction is able to immediately enter delivery information into the system (which can generate e-invoice data for submission to the organization’s ERP) and when the product is received, a buyer can mark the product as received in the mini delivery module.

The catalog functionality is pretty much what you would expect and is comparable to most other e-Procurement platforms out there and the budget capability can be used to define budgets by user, project, and department and track them against requisitions and awards project-to-date and year-to-date. The built-in reporting is good, and Intengo even has canned reports by brands (which are great for retailers). Furthermore, Intengo can create and customize any report on any platform data that you want, but note that the platform is still missing a custom report builder. However, realizing this weakness, Intengo gives you the ability to export any and all data to Excel or to your ERP (so you can build your own reports using reporting tools you already have). So if you do full ERP integration (and use it for your Master Data), and you already have a best-of-breed reporting product sitting on top of that (and chances are you do), you can use that to build custom reports on your sourcing and procurement projects.

They have also made enhancements to their e-Sourcing platform. One of the most significant enhancements is their formulaic auction capability. This weighted auction capability allows a user to define an arbitrary weighting, composed of one or more factors, to every bid, on a lot and line-item level, that is used in determining the rankings. The user can define one-or-more weighting factors based upon quality, warranty, shipping, associated duties, etc. The categories can be (optionally) displayed to the suppliers who can choose the ones relevant to their bids (such as shipping, warranty included, etc.) and the weighting factors can then be applied behind the scene. In addition, during an auction, suppliers can also suggest substitutions for each line-item and lot, which a buyer can accept. (And, if necessary, the buyer can pause the auction, define appropriate formulae, and provide additional information to other suppliers who might also be capable of offering substitutions on different terms.)

Intengo is definitely an up-and-coming contender on the end-to-end Procurement scene in the European mid-market and another European e-Procurement provider to watch, especially since, like other European players, they have been internationalized and multi-language since day one on their integrated, single-solution, SaaS platform that allows them to create new instances virtually on-demand. While SI doesn’t expect them to cross the Atlantic for another couple of years, it does expect that the North America companies competing across the pond are going to be seeing a lot more of them on mainland Europe in the coming years.

b-pack: Taking Root in Their Brave New World, Part III

In Part I, we discussed how b-pack, who packed it in for a brave new world back in 2010, crossed the Atlantic in their quest to spread some of their French Procurement bohemian revolution to the rest of the world, bringing with them a suite of Procurement solutions that take you from the start of a traditional sourcing cycle (RFx), through a contract, to a requisition (which may be from a catalog), against a budget, to receipt (which can include asset tracking information), and an invoice, to payment, reporting, and supplier management.

Then, in Part II, we noted that b-pack has spent the last three years implementing (or significantly improving) (collaborative) contract authoring and advanced contract management (coming out in the next release this quarter), advanced requisitioning and services procurement, OCR (Optical Character Recognition) integration, project management and project support across requisitions and budgets, an enhanced collaboration portal, a GPO (Group Purchasing Organization) module, and enhancements across the board to all core and supporting modules while at the same time extending their out-of-the-box integrations with ERP (Enterprise Resource Planning) and AP (Accounts Payable) systems, increasing usability, and taking (RAD) rapid application development to a whole new level with respect to the degree to which the platform can be customized for a new client. In addition, we did a deep dive into their requisition, budget, and project-management functionality.

Today we want to talk about their new RAD (Rapid Application Development) capability and their ability to customize an implementation for every customer off of one common platform. In the new version of their platform, each of their 30+ components have been implemented as stand-alone modules. This allows a customer to choose just the modules that make sense for their organization. In addition, each module can be custom configured to the client’s need. As discussed in yesterday’s post, the customer can choose just those requisitions that make sense for their Procurement processes in the 1Cart & Requisition Module. A customer that already has a BoB (best-of-breed) strategic sourcing module can exclude the sourcing module, a customer that has a multi-channel invoice solution can turn off the OCR module, and a customer that doesn’t have an ERP can leave the integration out.

In addition, the options that are presented for configuration in each module are then restricted to those that are related to the modules that are selected. For example, the user will not be able to configure OCR receiving rules in the invoice module if the OCR module is not part of the solution. Furthermore, the configuration of each module is workflow driven, so the user will only be presented with configuration options that make sense based upon previous selections. So, if a user selects that only user-initiated requisitions and invoice-free requisition workflows are supported, the user will not be presented with, or be able to access, configuration options for check-requisition.

Finally, the workflow-driven dashboard is extensively customizable and can be pre-configured for each user type. The user, which is only presented with the workflow elements and analytics associated with the modules the user has access to, can select what workflow elements (such as outstanding approvals, requisitions, etc.) she wants to see on the dashboard, and in what order, as well as what reports should be generated and loaded upon application log in.

Using the extensive configuration capability in their platform, b-pack is able to rapidly configure a custom-installation for each customer, that exactly mirrors their current processes, in a matter of days and deploy an appropriate instance of their platform from the start, that includes out-of-the-box integrations with ERP and AP systems and third-party punch-outs for catalog purchases. Then, all that is required to get a customer fully operational is to load any master data elements that do not exist in the ERP or AP systems and, optionally, define the requisition, project, budget, invoice, etc. templates used by the organization. In a matter of weeks, the organization is running on a fully configured, fully featured, customized e-Procurement solution that runs on one common code base that can be updated on-demand in a SaaS (Software-as-a-Service) environment, giving the customer the best of both worlds (rapid deployment and extensive customization).

In our next series, we will dive deeper into some of the new capabilities of Version 4.0 of the b-pack platform that is coming out this quarter.