Category Archives: SaaS

Is it the case that Spend Matters Most?

As per my Noteworthy last week, Iasta (acquired by Selectica, merged with b-Pack, renamed Determine, acquired by Corcentric) is about to release it’s new Spend Analysis platform SmartAnalytics, Emptoris (acquired by IBM, sunset in 2017) building on it’s acquisitions of Zeborg and diCarta, just released the new version of its enterprise suite with its new and improved Spend Analysis Solution, and earlier this year Procuri (acquired by Ariba, acquired by SAP) consumed TrueSource to offer TotalAnalytics – and Zycus is gaining ground everyday. It looks like the time has finally come for the big spend analysis vendors. And none too soon. After all, how can you identify your ripest targets for strategic sourcing without understanding your spend? And as Jason points out over on Spend Matters, spend visibility and analytics applications can become an invaluable solution for tactical everyday procurement activities as well as areas that are truly strategic on the board level. It’s definitely a growth area for the eSourcing vendors – especially the on-demand ones.

But is it ready for prime-time? Not only are some of these offerings new and relatively unproven in the field, but they also require a level of sophistication well beyond your simple RFXs and reverse auctions that are still the mainstay of many eSourcing users. And I know there are still many individuals that believe a centralized ERP will give you the spend visibility you need to do proper spend analysis – which is not the case, and you should check out Tim’s response in the comments to Jason’s post for a real world example as to why.

In most cases, I know the solutions are there. Zycus is one of the only remaining pure players and has a very attractive offering based on its success stories alone. Zycus has amassed numerous wins over its seven year history and Procuri has successfully integrated TotalAnalytics to amass some success stories of their own. As noted in Spend Matters, Consider the case of a pharmaceutical company — who will go unnamed — which has used TotalAnalytics to help quantify and accelerate procurement cost savings synergies in three multi-billion dollar acquisitions. This company has used the solution’s capabilities to define and track over 60 category management programs, enabling them to leverage spend and rationalize suppliers across acquired and existing divisions. This leaves us with Emptoris and Iasta.

Iasta’s solution makes the cut since they based it on one of the most powerful on-demand spend analysis engines available, integrated it into their platform, and extended the out of the box reporting capabilities available. I’ll have more to say after the formal release, which is forthcoming in the very near future.

Emptoris has also had some big wins, and has had their eSourcing suite with their initial spend analysis solution ranked #1 by Forrester in Q4 of 2005. So they are definitely a real player, but I’m a little concerned if their new solution is ready for prime time from a usability perspective. It is probably the most aggressive spend analysis offering on the marketplace today, with a new Spend Data Classifier, a new Real Time Spend Classifier, new import / export facilities, and a slew of add-ons for government watch list, credit score, and diversity rating integration, among other features. Now I know that Emptoris knows their stuff, it’s a challenge to find a question on an Emptoris product or capability that Kevin (Potts) cannot answer and Avner (Schneur) is absolutely correct when he says that with accurate and granular spend visibility, companies can gain greater control over and impact on their bottom line through improved sourcing and supply and contract management – and they have already delivered significant results. But when your average eSourcing user is still daunted by basic spend classification and decision optimization (just look at the recent Purchasing Survey), I wonder if they are going to be able to digest Emptoris’ new offering, especially considering Emptoris is still a traditional installed behind-the-firewall application where you only get maximum value from maximum deployment? I know it looks great in a power point presentation, but it can be hard to hide that much underlying complexity. If you’ve seen it in action, used it, or have your own take, please feel free to leave a comment.

Eight Figures for an ERP? Think again. Think Compiere.

ERP – Enterprise Resource Planning – the be-all and end-all of business software – all of your transactional data in one place – everything you need to run your business – only seven figures! That was the promise.

The reality is much different. Seven figures for the software license. Multiples of that for the installation. That much again for the annual maintenance contract. In the end, it was an eight figure system – that if you were lucky recorded the majority of your transactions, in such a way that you couldn’t derive any intelligence out of the system without buying expensive modules for each business domain that sat on top of the ERP to allow you to create your financials, run human resources, create your manufacturing plans, negotiate your contracts, etc.

And that’s if you were lucky – if you weren’t, you couldn’t afford a real ERP and had to settle for a smaller, imitation system that probably only contained some set of transactions for the business unit that maintained it, was only accessible by a few people, and didn’t even meet their needs – leading to home-grown ad-hoc systems created by mavericks in an effort to do their jobs.

Either way – you probably have a solution that does not meet your needs. A system that requires more modules or third party add-ons than you can afford to be truly effective or a system that does not have the core capabilities or third party support. But what can you do? If you haven’t fully depreciated your mainstream ERP, you can’t afford to rip-and-replace, and if you don’t have one, you just can’t afford one.

You can look to open-source! And no, I’m not stark raving mad. Once the exclusive domain of big international multi-billion dollar software vendors, even ERP is now available open source. Compiere is a fully functional open-source ERP with built-in CRM functionality that is being used today by hundreds of companies all over the world. In addition, Compiere has amassed almost 100 partners in countries all over the world – so local support is available. And because it’s open, anyone can build extension modules on top of it, and custom modules for various domains are already being offered by it’s partners. Furthermore, Compiere and some of its partners are already hosting instances on-demand. And no, I do not believe I’m insane.

If you’re not an IT company, why not host your ERP on-demand? If it’s not your core business, why maintain an expensive 24-hour IT operation with redundant power supply, internet connectivity, real-time failover, automated off-site backups, IT security experts, always available on-call tech support, etc? After all, with today’s encryption and security protocols, communication security is probably the least of your security concerns.

For those of you who are already open source converts, you might be a little disappointed that Compiere was built on Oracle, but fear not! Compiere just received a significant amount of funding, relocated to Santa Clara, is in the process of completing a Sybase port, and it’s a safe bet that a MySQL(X) port may occur in the future!  (MySQL(X) may not have the required functionality to support Compiere yet, but MySQL(X) improves every year!)

It’s a procurement professional’s dream come true. No huge up front spending for an ERP system that may or may not deliver. With Compiere on demand, you’re paying for the system and support that you use, when you use it, and you’re not locked in!

Furthermore, you just know that a complete open-source-based on-demand procurement system with Compiere at its base is around the corner. After all, Rearden Commerce is less than 30 miles away in its San Mateo offices and there are a number of e-Procurement companies, like Ketera (which was acquired by Deem in 2010) nearby.  If these three companies adapted their APIs to allow you to merge their solutions, it would not be long before you could manage 100% of your contracted materials and services procurement spend. Rearden excels at services, Ketera is good for indirect procurement, and ERP-based planning and forecasting systems are the foundation of your direct materials spending.

I know it’s just pure speculation, but if these three companies made it easy to integrate their solutions, you’d be able to run your entire procurement effort on-demand! Then you could run your entire sourcing and procurement operation on-demand! After all, with respect to a complete solution, we have only left out sourcing (remember, procurement is the acquisition phase, sourcing the predecessor negotiation phase) and visibility (since, at a high level the cycle is Source-Acquire-Monitor). But wait — companies like Iasta (acquired by Selectica, merged with b-Pack, renamed Determine, acquired by Corcentric) have been offering (complete end-to-end) sourcing suites on-demand for years and now we have companies like Apexon offering on-demand visibility solutions!

As a side note, Compiere is holding it’s annual Partner Conference next month in Santa Clara – October 20-21 at the Embassy Suites at 2885 Lakeside Drive in Santa Clara. Check out Compiere’s Events Calendar for more details.

The Unique Solution for Travel Procurement

Earlier today we discussed the unique challenges of travel procurement – a nightmare shared by your employees as well as your finance team. After all, when booking a single trip can take an hour by the time you book your flight, rental car, hotel, airport transportation, off-airport parking, and dinner reservations and when finance has to sort through (tens of) thousands of expense reports literally by hand to determine whether their preferred carrier owes them a discount, how could you call it anything but?

Last week I was fortunate enough to see the answer. It’s called the Rearden Commerce Network (rebranded Deem in 2012) For those of you who read Spend Matters regularly, you’ll probably remember Jason more-or-less gushing about them as well in posts such as “Rearden unShrugged”* where he called Rearden the future of “personal” services Spend Management for employees.

Services are tough. They’re calendar-based, time critical, and dynamically priced. There’s a reason there is no Amazon, Google, or Yahoo for services. Even the brightest software engineers cringe at the thought of trying to build a single platform to handle such a diverse array of services. But as far as I can tell, Rearden has done it. Sure the interface still looks Web 1.0, but the capabilities are Web 2.0 all the way. And when they say you can book a complete trip in 10 minutes – they mean it. I saw it – and it works! I’ll tell you one thing – from an applications perspective, few software packages on the market today impress me. Even today, I equate most software applications with undifferentiated organic fertilizer (which is probably why you hear me mention so few companies in this blog – that, or I really am another one of those arrogant PhDs). But Rearden’s solution impressed me.

If you are a mid-size or larger company with a lot of travel related spend, I can not think of a single reason why you should not be using Rearden now! When your employees who travel regularly are probably wasting up to 20% of their time on travel arrangements (instead of a more palatable 5%, or less), when you have no way of easily tracking who you are spending your travel budget on (and if you qualify for discounts) and, more importantly, no way of enforcing that employees are buying against your preferred contracts when possible and sensible when there is this easy to use system that lets your employees do almost everything they need in a one stop shopping experience, allows your finance team to figure out whom you are spending on and in what amount, and allows your procurement team to enforce flexible spending rules. It’s a great addition to your supply chain suite!

Now, I’m not entirely sure whether it will scale up in the future to support all services in a consistent, coherent manner, even though they claim the platform was built to support any service you can imagine, but it is certainly capable of supporting any T&E service you can throw at it, and this is a very significant feat from both a business and a technological perspective. I can’t wait to get some time with their senior technology guys to do a deep dive into the architecture and technology. (After all, I need to use the PhD sometime!) If it’s as impressive as the business capability, I might just be inquiring as to whether or not that Director of Applications Engineering position that they are advertising can be done remotely.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Apexon and Performance Visibility

I’ve been blogging a lot about visibility lately and mentioning Apexon (acquired and merged with Infostretch in 2022) rather frequently even though I’m sure most of you haven’t heard about this little company or what they do. Last week I had the opportunity to sit down with Kevin Brooks (an occasional guest blogger here on Sourcing Innovation, in other words, his commentary on The Future of Sourcing is not slated to be his last post) and discuss where Apexon was, where it was going, how Apexon goes beyond spend visibility to performance visibility, and how this will eventually translate into actionable intelligence. (A topic I’ll be diving into in the future.)

Whereas most visibility solution providers (like Zycus, Procuri TrueSource [Procuri was acquired by Ariba, which was acquired by SAP] and biq [which was acquired by Opera Solutions, which rebranded ElectrifAI]) focus on spend visibility, or the determination of how much you spend on each of your suppliers, Apexon focuses on performance visibility, or the determination of how each supplier you are spending on is performing. Spend visibility solutions slice and dice on dollars, performance visibility solutions slice and dice on performance metrics – and the good ones slice and dice on the performance metrics of your choosing .

At this point, you’re probably asking are not all visibility providers equal, since all they do is aggregate, slice, and dice raw data ? Technically, they are very similar, but functionally they are quite distinct. The difference lies in the presentation, reporting, and intelligence they provide. Spend visibility solutions are configured to slice and dice on dollars, the data they extract from your underlying systems is your transactional data, and the drill down reports they provide are all pivoted around spend. Performance visibility solutions are custom configured by you to slice and dice on the metrics you track, the data they extract is the data relevant to your metrics, and the drill down reports they provide are all pivoted around metrics. Could one system do both? Yes. Do any current systems do both well? In my view, not really. (But I’m up for a conversation and a demo if anyone disagrees with me!)

However, to truly be useful to you, a system should also provide actionable intelligence. Dashboards that tell you where you are performing well, where you are performing poorly, and provide you with alternatives to improve these poor situations. Although still a young product, with 2.5 slated for release in the near future, this is where Apexon is starting to break away from the pack. Dashboards let you view your performance relative to your key metrics, and then the system lets you drill down into the root causes of poor performance and the root enablers of good performance. Comparison reports can then be used to determine possible solutions – such as shifting supply to a better performing supplier or shifting certain components to different manufacturing lines.

If supply chain performance is a concern for you, and it should be, I’d say it’s worth checking out the solution, especially if you are a traditional manufacturer, particularly in the automotive, aerospace, defense sectors, since Apexon has a strong client base in these sectors that have helped shape the solution since day one. Furthermore, since the solution is a 100% on-demand solution through your browser, the effort required to test-drive it is minimal. The solution works on a push model – at regular intervals (which can occur as frequently or infrequently as you desire), you push updated data to it, and it slices and dices that data on your metrics to give you the intelligence you need to improve your operations.

Is it all it can be? No, I think it can improve in future versions – but more importantly, since Apexon is intent on building its roadmap from customer feedback, I think it will get there. More importantly, you don’t have a lot of choices, most are new offerings, some companies are not as eager to work with their customers to improve the solution, and visibility is an area you can not ignore. Make sure it’s on your list of candidates, and if you’re nearby, check them out at one of their upcoming executive breakfast series in Milwaukee, Chicago, and Detroit (on October 17, 18, and 19). And keep an eye on Sourcing Innovation and Spend Matters – if he’s not traveling, I’d guess that you can bank on Jason hiding out in the back row of the windy city presentation, pounding out notes on his Dell and posting them to you hot off the wire.

Managed Services

In Part XI of The Sourcing Innovation Series, John Martin of Building SaaS authored a guest post on “The Future of Sourcing … for Services” which I discussed further in Part XII where I indicated that I not only agreed with John in that services sourcing is going to become a major part of your future sourcing initiatives but provided you with the outlines of an approach that I thought you could use to start getting a grip on your services procurement today.

Little did I know how timely these posts would be at the time I was preparing them. It turns out that as John and I were collecting our thoughts, Aberdeen was releasing their Supply Chain & Logistics Market Alert “The Next Wave: Managed Services for Supply Chain”. In this market brief, Aberdeen indicates that in a recent benchmark of 180 companies, 58% indicate that they are highly interested in using at least one of the following managed services:

  1. Network design and strategic inventory optimization
  2. Supply chain execution
  3. Trade compliance
  4. Supply chain planning
  5. Periodic Operational Improvement Analysis and System Tuning
  6. Data Quality Monitoring and Cleansing
  7. Data Mining and Analytics
  8. Supplier On-boarding

The study also points out that midsize companies are most likely to be interested in exploiting the expertise and resources of their technology vendors to augment their internal staff, though large companies are highly interested in supply chain execution support.

However, one of the most interesting facts is that companies that view their supply chain capabilities as “above” average for their industry are twice as likely as their peers to be highly interested in wanting to use managed services to help in supplier on-boarding and they are also more likely to desire trade compliance managed services. In other words, top performers appear to want to take advantages of any services that can help them perform better.

Finally, I’d like to emphasize that managed services offer companies the flexibility of gaining additional staff resources and expertise without having to hire people internally or having to abdicate complete process control to a third party-organization. In other words, it appears that, managed properly as part of an overall supply chain strategy, managed services can effectively augment (but not replace!) your internal supply chain teams.