Category Archives: Technology

Best Practice Technology Vendor Selection for True Multi-Nationals Reprise Part I: RFX – You’re Asking for the Wrong Information!

This is a reprise of a series that first ran in 2012. It’s as relevant, and important, today as it was then.

It’s that time of year again. Your budget has finally been approved — a month late — and you’re ready to begin the process of obtaining that e-Sourcing, e-Procurement, Source-to-Contract (S2C), Procure-to-Pay (P2P), Source-to-Settle (S2S), Source-to-Pay (S2P), Supplier Information Management (SIM), Supplier Relationship Management (SRM), or Third Party Management (3PM) that you’ve been dreaming of. You think you know what you want, but you have to go through an RFP and, more importantly, you know that you’ve only had time to look at a few options while building the business case as you were doing it evenings and weekends on your own time because the project wasn’t approved. Now you want to go to market and either verify that you’ve identified the best solution or find the best solution to meet your needs. Since you are a sourcing organization, that process demands an RFP. However, this RFP is not like your RFP for direct materials or indirect spend. This is a very specific technology solution RFP for a platform to meet your needs and support all of the other RFP / sourcing / procurement / supply management processes of the organization. It’s crucial to get it right.

That’s what we are going to discuss in this series — the proper process and approach to acquiring the right e-Sourcing / e-Procurement / S2C / P2P / S2S / S2P / SIM / SRM &/| 3PM solution for your needs. Furthermore, let us clearly state that this series is specific to the selection of technology and technology-based vendors to provide enterprise software platforms, and/or implementation services, back-office (processing) functions, or technology-driven consulting services for your multi-national organization. While some of the best practices contained herein should also apply to the selection of (strategic) suppliers for high-value and/or complex products and/or services, this series particularly relates to the selection of a vendor to provide an enterprise software backbone, and, in particular, a backbone for e-Procurement and/or e-Sourcing technology for your Supply Management organization. As one size does not fit all where RFX and category selection processes are concerned, no claims, express or implied, are made with respect to any other vendor selection process and, in fact, if you’re only buying paper and pencils, some of the best practices contained herein will, in all likelihood, be overkill.

Now that the preamble is out of the way, let us begin by noting that the traditional RFX processed is well understood, and well documented in many places, including in the e-RFx for Total Value Management wiki-paper, co-authored by the doctor over on the e-Sourcing Wiki over seven years ago. And, in the wiki-paper in particular, the high-level process is still more-or-less correct.

As per the wiki-paper, you start with a three-stage RFI before an RFP, which is solution focussed (and not cost or contract focussed), which is issued before a final RFQ, which is when you collect quotes and start the actual selection / negotiation process. Specifically, the high-level process is:

  1. RFI #1: Stakeholder Requirements
  2. RFI #2: Vendor Interest
  3. RFI #3: Vendor Pre-Qualification
  4.    RFP: Solution Inquiry
  5.    RFQ: Clearly-Defined Specifications

So what are you doing wrong, especially if you’re a Multi-National? To answer that, let’s look at how this is typically translated:

  1. Product Needs, Service Needs, Preferred Vendors
  2. Vendor Info. Request, Vendor Interest, NDA
  3. Product & Service Capability Profiles
  4. Solution Design Request
  5. Explicit requirements, process definition, and bid request

See the problems?

  1. Stakeholders typically don’t know what they need in a solution. They aren’t technology experts. They aren’t supply management experts. They are domain experts. It doesn’t matter what they think they need in a product or a service, it matters what problems they are having today. You need to ask them what problems they need to solve, so that you can ultimately select a vendor with the solution that solves as many of your stakeholder’s pain points as possible.
  2. A preferred vendor is one that can offer you the best product or service from an organizational perspective, not a single stakeholder’s perspective. For example, a stakeholder might rate a vendor A+ because the representatives always responds quickly. But this is not necessarily indicative of great service. If the answer is always “we’ll send someone to fix that with 72 hours”, and you need the machine up 80% of the time, that’s still poor service if the machine breaks down regularly because 3 days downtime every few weeks will not support an operation level of 80%.
  3. Asking a vendor if they can provide you with the necessary functionality or service levels after you have shortlisted them as a possibility based upon a review of their collateral is not likely to get you anything other than a “yes we can”, especially if the vendor also offers consulting or “value added services”. One has to remember that most (big) consulting (and value-add) organizations are driven by partners with a strong desire for as many dollars as possible and the reps are told to always say yes and take on as much work as possible, leaving the question of how to get it done (if the organization is already stretched or weak in that area) until after the ink is dry.

Which brings us to the biggest problems with the current selection process, which we will discuss in Part II.

Technological Damnation #75: Mobile Movement

Two damning posts ago we wrote about influential damnation #75 Consortiums and how they were the damnation you couldn’t live with but yet couldn’t live without. However, consortiums are not the only damned-if-you-do but damned-if-you-don’t situation that you need to deal with this year. The other is the mobile movement.

Consumerization has been coming to supply management for almost a decade, heralded in by the likes of Coupa who lead the quest to bring B2C to B2B. And the current consumer craze is the mobile craze (which, by the way is so bad as a result of the social media frenzy that recent studies indicate that mobile devices are damaging 70% of relationships). It’s not just taking consumer sites by storm — every enterprise software provider and their doggy mascot are running around in circles trying to figure out how to implement mobile functionality in their supply management software suite.

This will be both a blessing and a curse. A blessing in that you will be able to access reports and key data on the go, your delivery personnel will be able to log deliveries on the go, and your customers will be able to check the status of deliveries on the go — but it will also be a curse. First of all, your ability to work anywhere, anytime means that you will be expected to work anywhere, anytime. Secondly, even small amounts of data entry will be painfully difficult due to small screens and even smaller keys. Third, the limited computing power and mobile bandwidth will make even simple processing tasks difficult and drive you absolutely crazy when you try.

And then there’s the social media craze that that’s going to ride the mobile movement bandwagon and bring a whole new level of craziness to the B2B world. You need to manage relationships with your suppliers, which means you have to manage relationships with your suppliers’ personnel — who believe that relationships are best maintained on FaceBook, that brief communiques are best delivered through Twitter, and that pictorial communications are best communicated through Instagram — on your phone. It’s mobile mania — and it’s going to take over your organization and your personnel. (And continue to ruin society.) Get ready!

It’s Only Been One Hundred Years

Since U.S. transcontinental telephone service was inaugurated by a call between Alexander Graham Bell, who invented the first practical telephone, and Thomas Watson, his assistant who later used his royalties from the Bell Telephone Company to found the Fore River Ship and Engine Building Company, which would become home to one of the biggest shipyards in America by 1901.

That’s right, it’s only been one hundred years since the inaugural telephone call from New York to San Francisco was made by Bell to Watson. And yet, one hundred years later we can call, email, tweet, and message in real time not just with New York and San Francisco, but with London and Shanghai.

When you consider how many years we existed as a civilization before we even had a light-bulb, it’s simply amazing.

Thirty Five Years Ago Today

Europe made its bid to get in on the space race and prepare for inter-planetary supply management with the first successful launch of the Ariane rocket. Developed by the European Space Agency, it was a four stage vehicle designed to put two telecommunications satellites at a time into orbit.

While it wasn’t a big step forward, like the Voskhod 1 which was launched 50 years ago on October 12, it put a new player in the inter-planetary game (as communication relay stations are going to be necessary, and that is going to be accomplished by way of satellites), and a player that would contribute to the International Space Station.

It may have been Christmas eve, but dedicated scientists kept working. It’s unfortunate that corporations, including General Dynamics, who promised us a convoy to Mars in 1975 back in 1963, didn’t show the same dedication.