Category Archives: Technology

Technology Trials 2012 – Part II

Yesterday, we began our Technology Trials 2012 series with a post that indicated that in order to get to the right decision, you have to start with the right question. And the first question you needed to answer is whether or not, if you have a current solution, was it supporting the process you need. If the answer was Yes, or No, but not enough time to get a new solution in place, then you stick with the current solution for the time being, and if the answer was No or Yes and No, you look for a new (partial) solution. (And if the answer was, we don’t currently have a solution, then, by default, the answer is an emphatic No.)

At this point, we’re going to assume that the answer is (at least partially) No, as the series would be over otherwise, so the next question you need to ask is:

(02) What part(s) of the process is not being supported?
This is critical to understand, because you can not select an appropriate solution unless you know what it has to do, and you typically can’t justify a new solution unless you have a gap analysis between what you have now and what you need. But you have to do more than just this. You also need to answer

(02.1) Which part(s) of the process must be supported by the system?
The system doesn’t necessarily need to do everything. For example, while it might be necessary to have a real-time conversation with multiple parties to resolve an issue, it doesn’t have to be through the system. As long as there is a way to import and record the solution determined after the fact, many of the “social media” features of consumer platforms are not necessary. For example, given the choice between “real time problem resolution” and “3-way match” in an e-Procurement system, I’d choose the latter. The first may be cool, but it isn’t going to prevent millions of dollars in over-spending (like the second will).

(02.2) Will any of the target functionality interfere or conflict with any other solution(s) currently in use by the organization?
This is often overlooked during a gap analysis, but can greatly impact how long it takes to get a new solution approved. If, for example, your problem is that your sourcing/procurement solution doesn’t store contracts (and associated meta-data), and you want to fix this, and there is a(n incompatible) contract management solution being used by Legal, you might get push-back from IT as they would have to support two CM systems (that they are unable to distinguish between) or the CFO who doesn’t want to spend more money (as he thinks you should just use the other system). While this should not deter you from identifying the right solution, if you don’t have all the facts, and the counter-arguments, up front, you could be considerably delayed in your quest for purchasing fire.

(02.3) Can the process requirements be integrated with the requirements for the existing system that are still current?
Don’t overlook that you are looking for an end-to-end process solution, and the RFP should specify the functionality required by the end-to-end solution, including that functionality, existing and not existing, that is critical.

In our next post, we’ll discuss what comes next.

Technology Trials 2012 – Part I

As indicated in Monday’s post, for many of you it’s contract renewal time with respect to many of your installed and SaaS platforms, and time for you to decide if it’s time to move on to new pastures or keep grazing the one you’re in.

It’s a tough decision, and the software giants don’t make it any easier. With new buzzwords every year, new features by the dozens (that may or may not help), and new delivery models with pricing models so complicated that your CA’s head spins, it’s often tough to know what to do.

And every situation is so unique that there’s no way that one post can even begin to give you all the answers (which is why SI did a very rare thing and ran a “best-of” technology post week to try and illustrate the breadth, and complexity of the problem).

But no matter what your situation is, there is some common ground and some questions that must be answered in order to find the path that will lead you to the right decision.

(01) Is your current solution supporting the process you need?

By this I mean the process you have identified as being the right process to support the requirements you have identified for your sourcing, procurement, logistics, etc. function. And by support, I mean that you can implement the majority of the process adequately in a reasonable amount of time. If you can implement all of the core functions and 80% of the non-core functions, and can you do so without a noticeable slow-down in productivity, then it is, at the very leaset, adequately supporting the function. It doesn’t have to be a 100% solution (as we all know there is no such thing; there is a special case that will break every solution), and it doesn’t have to be the fastest (as shaving 10% off the top of process time doesn’t really save enough of your time to be considerably more productive or value generating), but it has to be at least average.

Yes – then, unless costs are increasing significantly, or a strategic solution analysis has indicated that another solution will provide considerably more saving or value generation opportunities in the future, then you should probably stick with the existing solution as the cost of switching will not be made up in the short-, or even mid-, term

Yes-And-No – the solution does most of what you need, but there are a few notable deficiencies that need to be addressed: if there are best-of-breed / standalone solutions that can address these deficiencies, then it’s probably best to stick with what you have and fill the holes with point solutions, otherwise, the answer is really No

No – you need to find a new solution – the only question is how much time you have until renewal and how broad a footprint your current solution has; if the footprint is broad (beyond one function) or has many years of data, then you will need at least 3-6 months to replace it; so, if you have less than 3-6 months, you have to pretend the answer is Yes, keep the solution for one more year and start a strategic solution analysis; otherwise, you start searching for a new solution right away

In Part II we’ll discuss what comes next.

Optimizing Your Procurement Technology Investments


This post originally ran on March 24, 2009.

The Sourcing Interests Group recently ran an interesting article on “optimizing your procurement technology investments in 2009”. Although it had some good suggestions, my top five suggestions would be the following:

  1. Get Visibility Into Your Spend (Spend Analysis)
    If you don’t know how much you’re spending on each category, sub-category, product, and service, who you’re spending it on, in what amount, by unit, you need to get this visibility. Get a good spend analysis solution and dive in!
  2. Take Your Strategic Sourcing up a Notch (with e-Sourcing)
    Start with the most attractive savings opportunities that were outlined in step 1. This is your best bet to negotiate big savings in this downturn.
  3. Focus on Contract Compliance (adopt Contract Management)
    You need to enforce hard-won savings by insuring that internal staff and suppliers are compliant with contractual agreements.
  4. Implement e-Procurement
    Done right, this will make it easy for your buyers to buy on contract.
  5. Get a Grip on Global Trade (adopt Trade Visibility solutions)
    Chances are your global sourcing endeavors are needlessly costing you more than you think! As per my recent Illumination on why you need trade visibility, you’re probably paying more than you need to on duty, using costly inefficient processes, paying unnecessary document preparation costs, and making costly errors that are costing you million of dollars a year.

It Doesn’t Matter How Strategic The IT Vendor Is …

This post originally ran on April 1, 2010, which is ironic as this post was as serious as you can get. And, in case you haven’t figured it out yet, this is technology selection week as it’s that time of year when many of you will be renewing your technology solution provider agreements or looking for new ones. Since SI has already given you a lot of the secrets in these classic posts, I’m reposting them to set the foundation for my Technology Selection 2012 post. So be kind, refresh, and rewind.

It Doesn’t Matter How Strategic The IT Vendor Is … it matters how strategic the solution they offer is! I shouldn’t have to point this out, but after encountering a recent article in Intelligent Enterprise on the “10 most strategic IT vendors” which basically just tooted the horn of the usual suspects (IBM, SAP, Microsoft, Oracle, Cisco, HP, Teradata, VMWare, and EMC), I feel that I have to because most of their primary offerings — namely operating systems, hardware, networking products, and virtualization software — are not strategic to your business at all! Even relational databases and ERPs on their own are not strategic anymore. Everyone and their dog has a database these days, and ERP is open source software now (think Compiere). You can even get a professionally managed solution with unlimited records in the cloud for as little as €99 a month from providers like Erply.

And just because no one ever got fired for buying IBM, it doesn’t mean it was the right decision. The value isn’t in the name, it’s in the solution that is being delivered and the returns you are able to generate. If SAP or Oracle was everything you need, why would
BravoSolution, CombineNet, DecideWare, FieldGlass, Global Data Mining, Hiperos, Iasta, JDA, all the way through Wallmedien, and hundreds of other companies have successful businesses when they all have solution offerings that are fundamentally based on the analysis of transactional data stored in relational databases? Because the “strategic” is in the advanced analysis that the big-name vendors offering old-school solutions don’t have yet, or only have through acquired solutions (as SAP has acquired Ariba and IBM has acquired Emptoris since this post first aired).

So don’t get suckered by the name or the market size. What’s important is what the solution can do for you and whether or not the vendor is financially stable and will be around to support you on it. If the ROI is there and the vendor’s not going anywhere, after confirming that the solution meets your (global supply management) needs, you go for it. Simple as that!

Why Your “Peers” Buy Stupid Products


Since we’re on the topic of technology acquisition, which for many of you translates into SaaS renewals, it’s a great time to dig this post up from the archives, that was originally posted on 6-Jan-2010, on why your “peers” buy stupid products because it’s a great education on the pitfalls you could fall into if you lose sight of the goal.

For a while, I was thorougly confused as why your not-so-enlightened peers (who aren’t the smart and sexy leaders and innovators that you are, as they don’t constantly educate themselves and read industry leading blogs like this one) buy stupid products. While there are a number of great products out there, which I attempt to profile here on Sourcing Innovation as often as circumstances permit, there are also a number of bad products out there (which fall into the “products I don’t cover” bucket, which, to be fair, also contains “products of vendors who still think new media is a fad not worth spending time on” [even though they should probably be covered on SI]). This mix includes some really bad (installed) products that, year after year for reasons that escape me, keep selling, often for obscene amounts of money — especially when you consider what these products actually do compared to what newer, leaner, meaner, SaaS products do for a fraction of the price.

After a few enlightening conversations with some old pros and highly intelligent consultants (who shall forever remain nameless to protect the innocent), I have realized it is either because

  1. the buyers are timid field mice afraid to make a mistake;
  2. the buyers are lazy and inept, they know it, and they don’t want anyone to find out; or
  3. the buyers are yes-men and work for managers who are morons and
    • way too easily impressed by flash without substance; or
    • way too easily impressed by name dropping; or
    • (real) good buddies with (a member of) the vendor management team (who they just happen to be sharing a hotel room with on a regular basis)

In the first case, the buyers often look for the biggest vendor in the space who currently has the “best” reputation and simply use the “Well, no one ever got fired for buying IBM” excuse, replacing IBM with the “big” vendor of the day. This isn’t always bad, as some of the current “big” vendors do have some pretty darn good solutions, but it often is a bad choice because not all products in their “big” vendor solution suite are equal, and, most importantly, even the best product the “big” vendor has might not be appropriate to a particular company’s situation. An MRP won’t solve your problem if what you really need is an on-line RFX and e-Auction tool.

In the second case, the 9-to-5 buyers — who give intelligent, hard-working, and successful procurement professionals like you a bad name — are pretty sure that a good product would quickly uncover the millions of dollars of waste from unmanaged or non-compliant spend, or quickly uncover the lack of process that allows maverick spend to run unchalllenged, or quickly uncover the sheer amount of work they are not doing but should be (like managing spend, sending out RFPs, doing post-bid briefings, etc.) and want to do everything in their power to make sure that they get a solution that is as inept and inefficient as they are.

In the third case, even if the yes-men identify, and want, a good solution, Maury the Management Moron steps in and strongly recommends the worst solution identified (and indicates the buyer’s job could very well depend on making the “right” choice) because:

     

a) it has a nice flash interface with (useless) dashboards and colorful graphics-rich reports that make his under-developed brain go “ooh” and “aah” (while failing to tell you anything that you didn’t know already, like you spent 800M and your top 10 suppliers included 8 of the suppliers you regularly send million-dollar purchase orders to)

b) the company has a lot of “big-name” competitors as customers and / or a number of “big-name” companies your CXO really admires and, therefore, must know what they’re doing and be the right choice (even if they haven’t upgraded their solution in 5 years).

c) the company “obviously has a superior product” even though the real reason is that the company has one or more senior managers that are your boss’ golf buddies and/or hotel room buddies.

And sometimes, it is a combination of these reasons. The buyer knows he is lazy and/or inept, isn’t overly concerned with improving himself, but desperately wants to keep his job (which pays very well considering the amount of effort he actually puts in). He also knows he works for Maury the Management Moron who is easily impressed by flashy dashboards and pretty reports and so chooses a solution that will simultaneously make Maury’s mouth moisten while failing to uncover anything that could be embarassing and jeopardize his job in anyway.

For example, for our timid buyer with Maury the Management Moron for a boss, it would be really bad if he acquired a modern contract compliance system when he recently spent Millions on the current EIPP system two years ago and just found out it contains a big gaping hole, that a few of his suppliers have been exploiting since it was installed, that allows the supplier to charge whatever they want on substitutions and holds, regardless of what contract pricing is in place. For example, he just found out that if:

  1. he punches out for a SKU and
  2. the vendor is out of stock and
  3. the vendor places the order in the “on hold” queue because they don’t want to reject the order then
  4. when the SKU arrives and
  5. the vendor brings up the “on hold” order to “fill” it
  6. the price field isn’t carried forward to the “active” queue so
  7. the vendor can enter any price it likes, which is usually “list” and
  8. the system doesn’t do an invoice-price-vs-contract-price comparison, allows the “list” price, and doesn’t even flag it as pricing that violates the contract.

So, because he thought a few million would buy him perfect software (and didn’t do his homework), he just assumed everything was wonderful, paid what the vendors asked, and lost millions over the last couple of years. He’s not entirely sure how many millions, but is fairly certain that 15% to 20% of purchases were made off of contract pricing. He can’t let the boss find out! (Even though there are specialist consultancies out there who are great at finding these overcharges and helping their clients recover their money.)

Finally, he knows that his boss, easily impressed by flash, is too dumb to realize that dashboards, static reports and “real time alerts” are — when you really think about it — incredibly stupid ideas at the core. For example, so what if the boss can instantly see that 90% of shipments are on time. All that tells you is that 10% of the shipments are not on time. It doesn’t tell you what shipments, to whom, why, and more importantly, what to do to fix the situation. A report that you spend 10M with Wesley’s Widgets isn’t very useful. If that’s all I have, here’s how the negotiation is going to go. “We demand a 10% discount because we spent 10M last year.” ‘So? The price of steel went up 20% … you should be thankful we only raised prices by 15%!‘ “Uhm … erm …” If I don’t know what % was on steel parts, and what % of cost was steel in those parts, I can’t negotiate anything meaningful. And how useful is a “real time alert” at 3 am in the morning that tells you that your container is stranded 500 miles from port because the 3PL forgot to transmit the manifest 48 hours in advance and the carrrier isn’t allowed to enter American waters. Not! You need a system that tells you what you have to do before the order is shipped.