Category Archives: Technology

Gartner’s Quadrant for Strategic Sourcing Application Suites …

Magic or Tragic?

There’s been a lot of hullabaloo about Gartner’s new “Magic Quadrant” for Strategic Sourcing Application Suites, including a lot over on Spend Matters in “we report, you read, and we all decide” and “clarifying a few questions”, and with good reason. As one of the two publications that are supposed to “define” the strategic sourcing space, the other being the Forrester Wave, there are a large number of expectations that it will be fairly complete, mostly correct, and useful to the client base. But considering that only 14 vendors made “the final cut”, that one of those was an “exception”, that up to 3 more appear to have slipped in on “technicalities”, and that, depending on your viewpoint, up to a dozen other suite providers were excluded for no immediately apparent reason (including some you would expect to slip in under “technicalities” as well), it really makes you go “hmmm”. Especially when, upon diving in, you encounter a number of statements that make you go “huh?” and leave you with the nagging feeling that the report was as rushed as the survey process itself, which upset a large number of vendors, as you can see from the comments to “Gartner’s Two-Week Fire Drill” and “Too Little Time In The Oven?” over on Spend Matters.

Before I start ripping it to shreds, which you know by now I’m going to do, I should point out that I thought this was better than some of the previous quadrants because it was clear to me that, with respect to the criteria used, 10 of the vendors definitely deserved to be there. (Not that I agree with all of the criteria or definitions, or the final rankings. However, it’s reasonably clear that Debbie made a conscious decision to define criteria, as arbitrary as some of them seem to be, and stick to them.) Furthermore, most of the information about the included vendors was correct. (I thought it was better than Mickey’s 5th piece on Reaching Sourcing Excellence, “Sourcing Technology Is a Commodity With Short Time to Value and Immediate ROI”, that was released around the same time. Though her article was well written and made a number of valid points,   it, unfortunately, contained a poorly-constructed “Category Profile and Qualification Table” that attempted to rate the capabilities of 27 vendors across 12 capabilities.   This, in my opinion, ruined what was otherwise a pretty good piece.  But that would be another post in and of itself)

So what didn’t I like? In short the criteria — as some of them didn’t make any sense; a few of the definitions — as some are non-standard and confuse the issue; the implied and unwritten technicalities that resulted from the criteria and let some vendors slip in when there are others who were left out who are bigger, have a better reputation, and/or, in some cases, are more innovative; the amount of notice vendors were given — which may have resulted in a number of exclusions; and the results. I’m sorry, but when you ask me who the “visionary leaders” are in the space, I’m not going to say SAP, Emptoris, or Ariba. SAP is, as it’s always been, a slow lumbering giant in this space. It’ll get there, but not before just about everyone else. Not only does Emptoris have a history of acquiring most of its innovation, but up until it’s recent acquisition by Marlin Equity Partners, it spent the better part of two years downsizing and outsourcing all of its development and most of its support (to India), and you can clearly see the lack of innovation that resulted with respect to other companies in the market. And while Ariba, like Emptoris, is still a “leader” from a market size and solution footprint perspective, they’re still, in reality, dealing with the long-term effects of the Procuri acquisition and trying to fully integrate the code-base and capabilities into their platforms, some of which they still need to integrate and normalize separate from the Procuri acquisition.

Stay tuned for a more in-depth discussion and expose.

Does a Quick Start Imply a Quick Finish?

It seems that the fashionable thing to do these days if you’re a Supply Management technology provider is to build a “Quick Start” platform and promote a rapid initial implementation, and the “obvious” rapid ROI that will result. Coupa, Rosslyn Analytics, and Aravo, among others, have all been making noise about their new SaaS platforms that allow for rapid results. And while each platform will give you rapid results if you listen to their advice and apply it properly, I’m starting to worry if this is the right thing to do.

Just like a narrow focus on “cost savings” can actually result in overspending and financial devastation if taken to the extremes, a narrow focus on quick wins can also cause you to miss the big picture, and the incredible savings opportunities that can result from good long term planning and cost control policies. A focus on short-term wins usually focusses on overspending recovery (which is good, but doesn’t solve the fundamental problems that led to the overspending), re-sourcing or re-negotiating high-spend categories (which may or may not have high savings opportunities), auctioning commodities (with little oversight), and “automating” processes (which is good if you take the time to redesign the processes first, which most companies don’t). And while all of these activities are good, because they always result in some cost reductions, there’s only so much low-hanging fruit on the spending tree and once it’s gone, if you don’t have a plan for reaching the bigger fruit in the higher branches, your new cost reduction program will finish as soon as it starts.

This is not to say that the companies I mentioned don’t have the tools and techniques to help you reach the fruit in the higher branches (after all, I’ve reviewed them all in the past and noted many positive aspects of each platform), but that you will have to take the time to build the ladder to get there. You’ll have to carefully research high-spend categories and build should-cost models to see which ones offer opportunities for immediate cost reductions, and which ones you’ll need to spend time working with engineering to come up with new product designs or delivery models to enable real cost reductions. You’ll have to move beyond auctions to decision optimization to tackle custom manufacturing categories where you have to consider dozens of costs which could include unit, shipping, storage, production, tariffs, taxes, currency exchange, hedge, utilization, and other costs. You’ll have to move beyond pure spend data to understand why production costs are higher than you expect — are your production times lagging industry average?, is your equipment out of date?, is your plant too big or too small?, etc. And you’ll have to implement end-to-end sourcing and procurement technologies to do true m-way matches that match contracts to purchase orders to invoices to goods receipts to payments to make sure you’re only buying on contract at the contracted price and only paying for what is actually delivered. True, long-term cost and risk reduction is a marathon, not a one hundred meter dash. And just like a quick start can wear out a marathon runner and prevent him from finishing the race, an uncontrolled quick start can set unreasonably high expectations or deliver less than optimal results, which can kill support for your project before you reach the end of your journey, where the real cost reductions await.

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RollStream: Steamrolling Your Compliance Problems into Submission

Just before the last summer solstice, I introduced you to Rollstream, a provider of a new SIM-centric Enterprise Community Management platform you can roll out to your community. Since then, they’ve been hard at work extending the capabilities of their Enterprise Community Management platform to be more useful and solve new problems.

Specifically, after listening to their customers, they decided to tackle the recurring problems of dispute management and compliance management, the latter of which is becoming a big issue with the Consumer Product Safety Improvement Act that came into effect on January 15. (That’s right, if you’re importing consumer goods you have to worry about the 10+2 security filing and CPSIA because violations of either can result in six figure plus fines. That’s right, a single violation of either can result in fines in excess of $100,000!)

Building on their new workspace capability that was launched last fall, which is conceptually similar to Salesforce Chatter, Microsoft Sharepoint, and business-focussed social networks like Linked-In (but implemented in a manner more conducive to their unique ECM platform), these new applications allow these often difficult and time-consuming problems to be solved simply and efficiently in a collaborative on-line environment where all parties can participate.

The workspaces capability, which builds on their base platform that allows you to manage suppliers and partners, their profiles, and associated data, attempts to bring together the best capabilities of modern social networking sites to allow you to hold, manage, and keep track of online conversations that, without the platform, would need to happen offline. It incorporates forum capabilities that allow for conversations, multimedia — which allows you to include audio and video for training purposes, survey capabilities, task and project driven event calendars, file management capabilities, and activity state tracking capabilities. It enhances the supplier on-boarding experience as your supplier can feel like it’s part of the initiative and interact with your global team on-line, 24 hours a day.

Based on this new workspace capability, Rollstream has built it’s new dispute resolution management solution, which will hit general release in a month or two. Based on the repeated observation from their customers that there are millions to be saved if shortages, damages, and mis-shipments can be identified immediately on delivery and resolutions reached before an overpayment is made, Rollstream has developed a collaborative environment where a warehouse worker can raise an issue as soon as it’s noticed and kick-start a resolution process before a payment is made. While it won’t solve all overpayment issues (since off-contract pricing — especially in “best price” contracts, prohibited substitutions, and downright fraud can be difficult to detect at time of delivery), a number of their customers expect to save a few Million a year simply by preventing overpayments for short, damaged, or incorrect shipments. The solution is built around a configurable dashboard that allows you to automatically sort and prioritize issues according to your rules (which can be based on status, merchandise disposition, issue date, and / or value and other attributes) which can be searched on any attribute. All affected parties can query, see, and comment on issues until an owner or administrator determines that the issue is resolved. It’s quite simple in implementation, but getting an open dialogue on the issue started as soon as possible is a powerful tool in the quest for a successful resolution.

The new compliance solution, which will be released next quarter, is based on their new Certificate Exchange Network which solves the major problem with most current compliance solutions. In most SIM platforms, a buyer ensures compliance by having their supplier upload their compliance certificate. This sounds fine until you realize that large CPG suppliers have thousands of customers that need compliance certificates for dozens, hundreds, and even thousands of SKUs. With a buyer-focussed solution, a supplier needs a team of data entry clerks who do nothing all day but upload copies of compliance certificates until they start the process all over again when the compliance certificates are renewed. To try and solve this problem, some larger CPG suppliers have created their own compliance certificate portals that their customers can log into to search for compliance certificates on their own, but since CPG suppliers are not software companies, this solution usually isn’t any better. Customers don’t always know the right SKU or search term, the supplier’s compliance team is not automatically notified when a certificate expires, and poor processes often result in compliance certificates not getting included in a timely fashion. Customers waste time, don’t find anything, and still have to contact the supplier team to help them find, or, in many cases, upload the certificate. And since not all suppliers have this portal, the customer still has to maintain their solution, download the certificate from the supplier, and include it in their own portal to track status, receive expiry notifications, and generate accurate reports.

In the Rollstream solution, it’s a certificate exchange network and a buyer can simultaneously see, and search, all certificates from all suppliers it does business with (who only have to set a flag to give a buyer access) and a supplier has single-point access to all buyers it does business with (to which it can push updates or check the existence of any compliance certificates a buyer might need to import the product into a country). Like the dispute resolution management solution, it’s a very simple solution built on profiles and dashboards that is easily searchable at the global, supplier, and item level across all company, product, and component fields. But sometimes, that’s what’s needed.

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Supply & Demand Chain Executive Helps You Get a Better Deal

You can use a recent article on “the top 10 margin-killing myths about B2B pricing” in Supply & Demand Chain Executive to get a better deal from your vendor. Just like B2B companies must aggressively counter the closely held beliefs that are holding them back, B2B buyers must aggressively counter the closely held beliefs that are holding them back as well. Dispel the corresponding buyer myths implied in the article and you’ll be on your way to great deals.

  1. Myth: The Market Controls the Price
    You Control the Price. The vendor sets the list price, and you decide whether or not you’re going to pay it. The market doesn’t set the price, the contract you sign does.
  2. Myth: You Have More Important Things to Worry About
    Whether or not you buy a solution should ultimately boil down to expected annual ROI, which, simply, is your expected annual savings divided by the annualized software cost. If the price is too high, then the ROI will be too low, and you should not buy.
  3. Myth: Commodity Solutions Can Not be Price Differentiated
    Since different solutions can be expected to return different ROIs depending on how well they integrate with your business and how effectively they tackle your biggest problems, you should expect to pay less for a solution that offers less value.
  4. Myth: Price Improvement Puts Savings at Risk
    Remember, it’s not “savings” until you actually save the money. And if you spend more on software then you save from its application, there are no “savings” at all. While you shouldn’t quibble needlessly about a price that gives you an expected 20X ROI if it’s in market range, you should definitely negotiate hard on a price where you only expect a 2X ROI.
  5. Myth: Experienced Buyers Know How to Price
    Not necessarily. They know how to negotiate. Not how to price software, and definitely not how to get the best deal from an unfamiliar vendor. That’s why you have Deal Architects.
  6. Myth: Compensating on Technology Savings Ensures Good Buying
    It’s not about how much you can save on the IT budget, but about how much you can save using the IT you buy. Not buying an industry leading strategic sourcing decision optimization suite which can save you an average of 12% above and beyond the best reverse auction because it costs an extra 100K is just stupid if you spend over 100M annually. The software will pay for itself on your first big sourcing event!
  7. Myth: Pricing Has to Be Simple
    No, it has to be such that value is delivered. And sometimes, per CPU hour is the best price you’re going to get if you don’t use the software extensively for long periods of time between major buys. And thanks to modern software, it’s simple to calculate.
  8. Myth: Strict Compliance to Buying Rules Ensures Good Pricing
    And bad software. Comparing two software suites is often like comparing apples to oranges. It can be done, and you’ll find similarities, but there’s often a qualitative aspect to a preferred solution that can’t be quantitatively measured.
  9. Myth: New Solution Buys Require the Most Attention
    Really? So you’re going to stand for 22% maintenance on your ERP shelfware?

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Does That Report Deserve To Be Stuck Where the Sun Don’t Shine?

Then Oriental Co has the perfect solution for you! Appropriately named White Goat, this new office device can take regular letter-sized paper or shreds, including the last strategic plan from your boss that you cursed until you were blue in the face, and transform it into nearly pristine rolls of white toilet paper.

As seen in the video below, it’s quite simple to use. Plug it in, add paper and water, and about 30 minus later, remove the roll of toilet paper. While the hefty price tag of about 100K means it would take years to recoup the cost, as this CNet Review points out, what price is too high for the pleasure of wiping your butt with your boss’ memos?

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