Good question, and one that both customers and vendors are going to have to answer very, very soon. As per our post on What Makes a Sourcing Suite, a decade ago, it was pretty simple. If you had decent e-Negotiation support with some document management and reporting, you could claim a Sourcing suite. It might have been a bit of a stretch, but that was the accepted baseline. If you had contract management and some basic spend analysis, then you were best-of-breed. If you had basic project management or category guidance, you were awesome. And if you had optimization, you were a true market leader and way ahead of the pack (as even the majority of The Famed Hackett 8% weren’t there yet).

But that was then, and this is now. These days, if you are a vendor and you don’t have basic Source-to-Contract [S2C], which consists of decent spend analysis, extensive e-Negotiation (customizable RFX and e-Auction), and Contract Management, jacked up with Supplier Information Management, you’re not even a contender (and shouldn’t even get in the ring). Plus, given that many providers offer some project/workflow management, expert driven category guidance, bill of materials support for direct sourcing, [deep] contract analytics [which is not the same as contract management], deep SRM (Supplier Relationship Management, which goes far beyond 1^st generation SIM and 2^nd generation SPM), Contract/Award Performance Management, Compliance Management, Risk Evaluation and Management, and even true Optimization (as well as other non-core S2C related offerings that they expect to bring them market share), you need more than just a core to compete.

So how do you, as a customer, evaluate an offering? The answer is, on each and every product component that should be there, across every core and supplementary feature that is required and/or adds value. And yes, that’s a lot. But fortunately for you, Spend Matters and Sourcing Innovation have teamed up to help you. As you may know, with the departure of the anarchist (who has since ended up at Coupa as Thought Leader), the doctor took over Sourcing and Supplier Management as Consulting Analyst. But now that the medic is on-board and handling standard sourcing and supplier management as well as business / market analysis, the doctor is now Consulting Analyst for Advanced Supply Management Technologies, including Advanced Sourcing, and putting his PhD (in computer science) and technical chops to good use (putting vendors through the wringer on a regular basis — and, to this end, has co-authored 45 deep dive vendor reviews over the past year, which, if you’re counting, puts most analysts at the big boy firms to shame).

As part of this new Consulting Analyst role, the doctor will be leading the Solution Map efforts for Sourcing and Spend Analysis and co-leading the Solution Map efforts for Supplier Management (with the prophet) and Contract Management and Analytics (with the maverick), as these collectively cover advanced sourcing, advanced analytics of a traditional kind, advanced metrics and process management, and advanced analytics of a semantic kind. Sourcing Innovation and Spend Matters are in the process of finalizing the RFIs now, which will go out over the next week to leading vendors in these categories, and in July you’ll see multi-persona analyses of all the major vendors.

As with the Procurement Solution Maps, the core of the RFIs and the evaluation criteria will be made fully public, as well as the high-level analysis of each vendor across all relevant categories and functions for each of the covered areas. And you will have a robust, completely vendor independent, baseline to evaluate perspective vendors for inclusion in your technology RFIs going forward. And unlike the vendor created RFI templates that used to proliferate and give certain vendors an unfair advantage (as those vendors would always score high on their own feature-rich templates, whether or not the majority of the market needed those features), no vendor is going to have an edge here. First of all, no vendor does everything. Secondly, any vendor that rates themselves higher than a 3 (on a 5-point scale) on any function is gonna have some serious ‘splaining to do as a vendor can only truly innovate in a few areas (and deserve a 4), and there is only one best-in-class vendor against any function, and, thus, only one best-in-class vendor that can actually win business on that function alone (and deserve a 5). Since the doctor is known for being [the] ruthless [honey badger^* of the space], these RFIs have been designed so that an average best-in-class vendor will score a 3 [rounded up]. The idea is to fairly evaluate each vendor and push the market forward. And while a slight majority of vendors will likely have been Spend Matters customers over the past year, the number of vendors that have had a relationship with SI over the past year will be around the 10% mark if all of the invited vendors participate, so there should be no doubt in your mind that these will be objective and independent weightings that you should be able to trust and use as a foundation for your evaluations.

So please encourage your potential vendors to participate when they get the RFIs and maybe even go so far as to tell them that you expect them to participate if they want to be considered in further technology buys from you. Because if they truly are a BoB solution, or approaching a BoB solution, if they vendor is not included in the first round, they will definitely be included in the second round.

^*Youtube it. (Best video NSFW.)

A lot of vendors will tell you a lot of what they do is so hard and took thousands of hours of development and that no one else could do it as good or as fast or as flexible when the reality is that much of what they do is easy, mostly available in open source, and can be replicated in modern Business Process Management (BPM) configuration toolkits in a matter of weeks.

So, to help you understand what’s truly hard and, in the spend master‘s words, so easy a high school student with an Access database could do it, the doctor is going to bust out his technical chops that include a PhD in computer science (with deep expertise in algorithms, data structures, databases, big data, computational geometry, and optimization), experience in research / architect / technology officer industry roles, and cross-platform experience across pretty much all of the major OSs and implementation languages of choice. We’ll take it area by area in this series.

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E-SOURCING – RFX

Technical Challenge: NOTHING!

I’m going to burst a lot of bubbles here, but there’s nothing technically sophisticated about the development and implementation of an RFX solution by any stretch of the imagination. In this day of age, one could pretty much implement a basic RFX application in HTML5, javascript, and MySQL with a bunch of open source libraries in a couple of days. Form elements, templates, basic branching workflow, weighting, etc. … you even see most of this in free survey tools. Even bulk file upload is just naming conventions. ( But it’s amazing how many vendors haven’t even figured this out. 🙁 )

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E-SOURCING – e-Auction

Technical Challenge: NOTHING!

Again, more bubbles bursting by the dozens. Twenty years ago, implementing an e-Auction was a real challenge with relatively simple web technology, slow internet speeds, and lack of graphical frameworks that could be updated in real time. But today, there’s a host of cheap / freemium solutions that implement basic e-Auction functionality. Unless the vendor is tying in with an optimization solution in real time to create a optimization-backed auction solution, no reason you should pay much for these dime-a-dozen solutions.

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E-SOURCING: Optimization

Technical Challenge 1: MODELLING

This comes in two forms.

1. Structured for “Easy” Definition

Creating one or more templates that allow a user to quickly define the entities of interest — suppliers, products, services, locations, lanes, etc., collect the bids, define the constraints, and solve unconstrained, and maybe default constrained scenarios (3 suppliers, geographic split, etc.). Making what’s hard easy is no easy task.

2. Free-Form for Custom Models

Not every model the organization will need to create will fit in a template — especially if the organization wants to optimize working capital, minimize risk, cross-optimize related categories, etc. This requires the ability to allow end users to define the models they want using a modelling interface, which will not be easy to build because how do you hand over all the power but still make it understandable by a non-programmer / non-mathematician.

Technical Challenge 2: SOLVING

It’s hard to build these models, but it’s much harder to solve them. First of all, you have to map them to a system of equations that can be solved by your, hopefully, mixed integer linear programming solver (as you want to use a solver that is mathematically sound and complete), optimize them, optimize the solver settings, and hope that everything was translated consistently and there are no conflicting or unsatisfiable constraints and the model can be solved in a reasonable amount of time. Given that solution time grows exponentially with model size, this can be quite a challenge even for moderate sized models.

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E-SOURCING – Contract Management

Technical Challenge 1: Contract Analytics

A simple contract management application, which is nothing more than meta-data based contract indexing and tracking, can literally be built by a high-school student with an Access database and go head-to-head with most of the basic contract management modules out there today! In fact, most of the capabilities of most contract management modules are pretty simplistic and can be built in a matter of days with a good BPM configurator (and companies like Agiloft have done it). The exception is contract analytics (like that provided by the likes of Seal Software).

Using semantic analysis to figure out what contracts contain clauses of a certain type, what contracts are missing clauses that pertain to a certain regulation, and whether a certain clause is close enough to a required / suggested clause is not easy. Not easy at all! Semantic technology is still emerging, and trying to capture a user’s wants, even given a set of sample clauses, is quite computationally difficult!

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IN SUMMARY

With the exception of decision optimization and contract analytics, baseline e-Sourcing is pretty much common fare today that can be bought off the shelf from dozens (and dozens) of providers, but, as you can see, it’s not all equal — any provider with true decision optimization or true contract analytics is leagues ahead of anyone else.

And, of course, in this series, we’re not discussing the User Experience, and in some cases, a good User Experience, while not always challenging to code, can be
very challenging to define.

Next up, baseline e-Procurement!