Category Archives: Technology

The Cloud Is Not a Fluffy Magic Box

It’s just another delivery method for multi-tenant SaaS. That’s it. Nothing more. After reading some recent articles trumping the tenets of the Cloud, and this article in World Trade in particular that asks if “supply chain management [is] emerging from the clouds”, I feel that I need to make this point abundantly clear. Reading this article, I get the feeling that most people think the Cloud is a fluffy magic box that will solve all their problems. It’s not. Nowhere close. It’s just another multi-tenant SaaS delivery model where a third party maintains the data centre that is used by the software / service / solution provider you buy / license / contract your supply chain management solutions from. This allows the vendor to focus on their strengths (software development & delivery) and the third party Cloud provider to focus on their strengths (on-demand data centre).

To help you better understand what the Cloud is, I’m going to point out what it is not using egregious examples from the aforementioned WT article.

  • two aspects to the benefit of cloud computing … the second is … increased visibility across organizational boundariesThis has nothing to do with the delivery model, but who is given access to the platform and how many suppliers and partners buy in to the platform. If you don’t give more of your employees, partners, suppliers, and customers access or if they refuse to use the platform, it doesn’t matter if its Cloud, traditional multi-tenant vendor-hosted SaaS, or ASP.
  • critical information can be analyzed by using cloud-based supply chains to see if cost efficiencies are being realizedThis has nothing to do with the delivery model, but the data and analytics software at your disposal.
  • Cloud-based supply chain solutions give these organizations the ability to quickly scale and compete as the global economy bounces backSo does traditional multi-tenant SaaS.
  • a means to automate many standard processes while managing the exceptions more effectivelyThis is entirely dependent upon the capabilities of the software.
  • a typical cloud supply chain solution already has all of the infrastructure in place … when a client comes to us, we are able to connect them to a rich community of partners almost instantaneouslyThis is true of traditional multi-tenant SaaS vendor platforms that maintain supplier communities, as well as current marketplaces and third-party exchanges. The Cloud just provides a new delivery model for the platforms.
  • cloud-based supply chain solutions can improve competitive advantageThis comes down to the TCO and ROI of the solution and how it stacks up to the TCO and ROI of the other solutions under consideration.

And if this wasn’t bad enough, just before it went offline, Purchasing reached new lows in software’s future breaks through the “clouds” where it called cloud computing a killer app, which shows a complete and utter lack of understanding about what the cloud is. An app is what you run on a platform, it is not the platform. (Of course, it’s still better than calling Twitter a killer app for Purchasing, which they also did. Aargh!)

Don’t get me wrong, I think the Cloud is great because, done right, it maximizes the efficiencies of SaaS and virtualized, on-demand, data centre models. However, it’s not a magical box that will solve all your problems and hyping it like it is does more harm than good because the uninformed will buy in, and then quickly abandon it when they see it does them no more good than their current solution because they didn’t take into account that everything has to fit perfectly — software, platform, solution partners, etc. — in order to realize additional value, and this will often necessitate upgrades to systems and software and processes across the board.

Share This on Linked In

Is Egypt Trying to Make BRICE out of BRIC?

Late last year, I noted how “Made in China”, for a growing number of operations, is now “Made in Egypt” as even China is adopting outsourcing. According to a recent Industry Week (Made in China now Made in Egypt) article, over 950 Chinese companies have set up operations in Egyptian free zones and made an investment of about 300 Million to take advantage of cheap labor, investment incentives, and unrestricted exports.

But an even bigger story, as pointed out in a recent paper in “Education and the MBA in the outsourcing sector” by Mark Kobayashi-Hillary of the Egypt ITIDA, is probably the imminent rise of IT Outsourcing In Egypt, which, despite only having 77 Million people to India’s 1.1 Billion, has a large annual graduating class of 330 Thousand students, with 63 Thousand graduating in commerce, 17 Thousand graduating in Engineering, and 14 Thousand graduating with science degrees. Within this pool, you find a large number of technologically skilled, achievement-focused, and multi-lingual students (who also speak English, French, German, Spanish, Italian, Portuguese, or Dutch) suited to the IT services sector. Furthermore, the government is funding a number of workforce development initiatives (which it also initiated) that is currently contributing 6,000 to 8,000 graduates for the IT-BPO industry annually, with plans to scale the efforts until Egypt is producing 40,000 graduates suitable for IT-BPO by 2015.

Furthermore, as highlighted on the “Outsourcing Intelligence Network”, the Egypt IT-BPO Industry aspires to export revenues of 1.1 Billion US this year. And while there are single long-term multi-year outsourcing deals that exceed 1 Billion in the US, for what was, until recently, a relatively unknown player, that’s significant, especially when you consider that Cairo was recently ranked 7th in a recent study by Global Services in its list of the top 50 emerging outsourcing cities. This followed a ranking of “Offshoring Destination of the Year” by the UK National Outsourcing Association in 2008. And, over on Horses for Sources, Ashutosh Vaidya, in a conversation with Phil Fersht, notes that he believes that new emerging countries like Egypt will play a role — in a Hub and Spoke strategy, which was echoed by Phil in a comment.

And even the Wall Street Journal recently had a blog entry on Egypt: Land of Pyramids, the Sphinx … and Outsourcing? which noted how Egypt just cracked Gartner’s list of the top 30 countries for outsourcing and how Intel, the innovative company which transformed its operations from a memory producer to chip producer and shook the industry (and made a market where it’s all about the Pentiums) recently announced it is going to open a production centre in Egypt.

So while Egypt may still be a long way off from making BRICE out of BRIC, it looks like that is their intent. What do you think?

Share This on Linked In

There Are Fifty Ways IT Can Help To Optimize Global Supply Chain Management …

However, NOT ONE of the five ways offered up in this recent Supply & Demand Chain Executive article on “Five Ways IT Can Help Optimize Global Supply Chain Management” are included! Let’s look at the feeble five suggestions profferred up for (what I can only assume is for) our amusement:

  1. Partner CollaborationBy it’s very definition, collaboration requires people to work together. It’s irrelevant if your systems talk to each other if your people don’t … and no fancy UI is going to get people talking if they don’t want to.
  2. Clear, Concise CommunicationsIf your people don’t speak the same language, no piece of software is going to fix that. You need to invest in training to overcome the cultural divide, not technology.
  3. Process ImprovementAll technology does is take your process and accelerate them. It doesn’t fix them. Unless your people undertake a project to methodically improve your processes, you’ll just end up executing your bad processes, 5, 10, 50, or 100 times faster.
  4. Invest Wisely in ITHUH? This isn’t even an action … it’s what you have to do! Is the article saying that IT can help you invest wisely in IT? I hope not! There’s no such thing as BI, SI, or any other XI vendors want to sell you. The intelligence is in your head, not the software. All the software can do is present you with the ability to look deep into your data to make a good decision.
  5. Manage MetricsWrong again. Five for Feeble Five. Software tracks metrics. It doesn’t manage them … people do. And, as per my piece on why dashboards are dangerous and dysfunctional, if you track the wrong ones, your performance will only worsen over time!

While S&DC Exec usually isn’t at the top of my list when you ask me what the best publications in the space are, it’s usually not at the bottom either. I can’t tell if the editorial staff was sleeping at their desks when this article came their way or if they were jealous of all the recent attention I gave Purchasing who recently told us about Purchasing 0.3 and got it wrong again. What do you think?

Share This on Linked In

Don’t Fall for the FUD!

Now that money is trickling back into technology budgets, many vendors are going on the offensive again. As a result, you need to be ready for the emergence of the vendor FUD (Fear, Uncertainty, Doubt) machine that is sure to resurface. We’ve already tackled how you calculate the true TCO/TVM of each product under consideration, thereby helping you to dispel the first piece of FUD you’re sure to hear, which will be along the lines of “we’re the cheapest and have the highest ROI, while our competitor is the most expensive and your ROI will be negative if you go with them“, but once you get past this, any vendor with a decently aggressive sales force will have more FUD loaded up and ready to fire (if they feel they are at a disadvantage). Here are three common pieces of FUD that, to be blunt, don’t mean nothing.

  • Our competitor is being sued (by us).So? Many of the lawsuits in this space are nothing more than desperate attempts by the bigger vendors, who haven’t innovated in years, to literally sue their smaller competitors out of commission with baseless lawsuits that plaintiff hopes will be too costly for the defendant to defend (as the plaintiff will attempt to draw the discovery phase out for years before the case gets inevitably thrown out).
  • Our competitor can’t do Fliggle-Flaggle-Floogle.Many vendors with less competitive or innovative offerings will focus on one or two impressive sounding (but essentially worthless) features that their competitors don’t have and turn up the tech talk dial to eleven in hopes of confusing you into buying their product. Don’t fall for the tech talk. It’s not about the technology, but about the value it can deliver to your organization. And sometimes its best not to buy the technology at all, but to contract with a consultancy or BPO who can maximize its potential (especially if the value curve flattens out quickly, as it does with tactical spend analysis [reference]).
  • You have to go all-in.Many providers will insist that you have to buy the whole suite, complete with licenses for every user in the organization, or you won’t realize the full value available to you. So what? It’s not about how many pennies you can squeeze out of the technology, but about how many pennies you can push down to the bottom line. Let’s say you can buy a solution for Procurement only from a competitor for 50K and that you expect you would drive 500K in savings from the purchase. Now let’s say you can buy their solution for the whole organization for 250K and drive 1.250M in savings. Which is better? The Procurement solution. It has a 10X ROI, compared to the 5X ROI the full organizational solution offers. Furthermore, when you look carefully, you see that the extra 200K only saves you an additional 750K, which is an ROI of only 3.75X. Yes, you want to save that additional 750K, but if you keep looking, you might find another 50K point solution from another vendor that will save you 500K of that 750K, which gives you another 10X ROI (and makes the organizational solution a bad buy since you’d now be spending another 150K to save 250K, which gives you an additional ROI of only 1.67X …. which means that one stumble on the organizational solution path and you would have been better off with the (much) less expensive and (much) lower risk point solutions).

And don’t forget, if the management/ownership team hasn’t changed much, what Tweety Bird has been saying for years still holds true. Don’t get fooled. Once a bad old putty cat, always a bad old putty cat.

Share This on Linked In

AECsoft: SIM-Powered e-Negotiation, Part I

AECsoft, a Houston-based provider of Supplier Information Management (that also has offices in Atlanta, Las Vegas, and Shanghai), Supplier Data & Diversity, and e-Negotiation solutions, is a unique platform offering as they have a very competitive (and very configurable) Supplier Information Management (SIM) platform (that can be augmented with third party supplier [diversity] data) as well as a solid e-Negotiation platform that will meet most of the needs of many mid-market companies. Most SIM companies focus mainly on SIM, SRM (Supplier Relationship Management), SPM (Supplier Performance Management), and when they branch out they root into extensive, customized, risk, compliance, or sustainability solutions. Furthermore, most e-Negotiation platforms, once they have gone as deep as they can in terms of surveys, score-carding, and multiple auction formats, branch out into (stronger) spend analysis, contract management, optimization, and (corrective) action management. In comparison, AECsoft has taken a dual approach in its efforts to create what it calls a 360° Supplier Management solution that allows you to discover suppliers, manage their information, use that information in sourcing events, and then manage their performance during contract execution — in a manner that can be customized for each client. Given that they have over 200 customers, including some of the most progressive sourcing organizations in the world, it’s obviously paid off for them to this point, but I have to wonder how they are going to fare going forward given the divergent messaging in the SIM and e-Negotiation spaces and the number of best-of-breed players now competing in each. However, that’s a question for the analysts as we’re concerned about what they have and what they can do for you.

To this end, we’ll start with a review of the Supplier Information Management capabilities, which are used by over 400,000 suppliers that are managed by over 30,000 buyers at over 200 large corporate clients, around half of which are large multi-nationals (and many of which belong to the who’s who of supply chain innovators). SIM is their most mature platform, with development dating back to company inception in 1997 and production dating back to their first implementation in 1999, as well as their most extensive. The platform is setup to let new suppliers self-identify, buyers pre-qualify (before an e-Negotiation event, so the event can focus on negotiations and not discovery), and evaluations to be conducted in a 360° manner if necessary. Compliance can be enforced during the on-boarding process (as registrations will not be marked as complete and ready for review until all fields are filled out and necessary documents uploaded), status can be monitored (as alerts indicating expiring certifications can be set-up at any time and continuously monitored), and reviews can be scheduled in advance and pushed out at any time.

The system can be configured to track any kind of information you want — general, business data, contacts, classifications, safety & insurance, quality, certifications, product & service information, risk and so on. In addition, category/answer specific questions and workflows can be configured for any category, sub-category, or question which is answered with a certain option. For example, if a supplier indicates they supply laboratory equipment, you can ask what kind — balances, centrifuges, pumps, valves, piping and tubing, and if they indicate piping and tubing, you can bring up questions on pressure, diameter, etc. Basically, it’s your standard workflow-driven SIM where the supplier, who can access and update all of their information at any time, maintains its own information, by way of one or more authorized delegates. In addition, when the supplier logs in, the supplier sees all of the outstanding information requests that need to be completed — new requests, certificate updates, data confirmations, scorecards (self-scoring or buyer scoring), and so on. AECsoft put a lot of work into their supplier portal to make sure it was at least as easy for the supplier as it is for the buyer and it shows.

And, of course, the platform can be integrated with multiple external data feeds which capture diversity data, financial/risk data, and OFAC data, among other data sources, and which can automatically check SSN and EIN data in the US.

Finally, the platform is Hybrid SaaS, which means that AECsoft can deploy and host it for you or you can deploy it inside your own four walls. Unless you’re in Finance, Gambling (Casinos), or Pharmaceuticals, and are ultra-concerned about security and have top IT security pros in-house, I would recommend you follow the lead of most of their clients in other verticals and go SaaS. However, should you choose to go in-house, you can take solace in that the current version of the platform is built on .Net 3.5, MS SQL Server, and XML … and there are tens of thousands of developers out there familiar with the technology stack (which is 100% web-based in delivery).

In our next post, we’ll discuss the e-Negotiation platform.

Share This on Linked In