Category Archives: Technology

Living Green

As pointed out in e-Sourcing Forum’s [WayBackMachine] post on Green Suppliers back in May, Interface Inc., the world’s largest carpet manufacturer, was able to save $260m from waste reduction initiatives, as pointed out in a Purchasing Magazine article. But the story continues.

As pointed out by Lindsey Parnell, the CEO and President of Interface Europe, in her article “A Sustainable Future” in CPO Agenda, Procurement leaders need to play their part in overcoming the many hurdles to environmentally friendly business.

The article points that sustainability is about driving enterprises towards maximum resource efficiency, maximum responsibility for any actions and maximum return on investment. It’s about doing well both commercially and in an environmental and social sense and that the development of consistent definitions of industry-specific drivers would increase focus while the establishment of a return feed of used and end-of-life products would allow suppliers to close the loop and view lifecycle costs, not just one-off purchase costs.

Furthermore, even if companies looked only at what could be achieved with the resources readily available to them, the impact would be significant. Consistently demanding the most sustainable products and services available would also help the market’s development, and I believe gravitation in that direction is inevitable.

As I pointed out in staying green, I too believe this trend is here to stay. After all, when you consider Sprott Asset Management‘s recent report “Investment Implications of an Abrupt Climate Change”, which forecasts far-reaching and “dire” impacts of rapid climate change, businesses who do not adapt may go extinct. And, as described in BusinessWeek’s Business on a Warmer Planet, some companies are already adapting. After all, as CIO Insight points out in “The Greening of the CIO”, environmental questions matter more and more for corporate IT, not as feel-good programs but business issues with a direct impact on the bottom line. After all, as pointed out by a recent Supply Excellence [WayBackMachine] post, the European Union’s Restriction of Hazardous Substances (RoHS) has triggered shortages for both compliant and non-compliant electronic components, challenges which will need to be overcome by innovative sourcing professionals. Fortunately, some manufacturers are stepping up to the challenge. Zebra Technologies has fully converted its thermal printers to be in compliance with the EU’s RoHS directive, as described in a recent Supply & Demand Chain Executive article (that is no longer available).

Green issues have an impact on everything from product marketing to employee morale to profit margins, and many of them are closely interwoven with the everyday work of IT organizations and the departments, including procurement, that IT supports. The article suggests that you should think of environmental consciousness as the next level of alignment, an enterprise-wide phenomenon that procurement must lead.

And your job is only getting easier. With companies like new startup SolFocus and Energy Solutions Alberta, you’ll soon be able to run your corporations on 100% renewable green energy from the ultimate renewable energy resources — the sun and the earth themselves. (And some researchers are even looking into ways to capture the energy we waste with each foot step, by taking the science of piezoelectrics, that powers your SEIKO kinetic perpetual timepieces, to the next level.)

Furthermore, it may not be too long before we’ll be able to stop wasting paper and silica and write on water itself as a result of some recent developments at the Akishima Laboratory in Japan. (English article no longer available.) At the very least, we should be able to replace those neon signs with a new generation of technology. (While we wait for that day to come, we will soon have e-paper to tide us over.)

To answer David’s Question in a recent e-Sourcing Forum post, I think Kermit will soon be singing about how easy it is to be green.

There’s No Such Thing as Spend Intelligence

For the last six weeks, I have been exploring problem solving methodologies you could use to help you with your sourcing problems. At a later date, I’m most likely going to take up six sigma and lean, but today I’m going to rant.

There’s no such thing as a Spend Intelligence Solution!

And before you start huffing and puffing about how wrong I am, please read this post in its entirety. Thank you.

A few weeks ago, Aberdeen released its study “The Spend Intelligence Benchmark Report: Turning Data into Action”. This study by Sudy Bharadwaj, Aberdeen’s new Vice President and Research Director of Global Supply Management, and Rick Saia, an Aberdeen Research Analyst, found that companies employing spend intelligence have reduced sourcing cycles by 19 to 25%, reduced the overall number of items they need to purchase by 10 to 15%, and reported contract compliance rates of 31 to 35%, depending on how long the program has been in place. These are some significant results, so there must be something to it.

Shortly after its release, this report sparked a considerable amount of coverage on the blogs. Jason Busch of Spend Matters challenged* the thinking behind Aberdeen’s use of the phrase spend intelligence. The main points of his post were as follows:

Consider how in a recent study, Aberdeen adopted the term “spend intelligence” to describe the broader spend visibility and analytics market. The purpose of my post today is not to rip into the findings — the study itself is highly useful — but to challenge the thinking behind Aberdeen’s use and definition of the phrase, “spend intelligence,” which at this point feels dangerous to me, just as overly political language feels dangerous to Orwell. Why? As an attempt to shoot some Botox into a segment of the Spend Management market that can be challenging to explain and position, Aberdeen’s choice of language shortchanges and over simplifies a concept, potentially corrupting how the market will look at a key Spend Management business process. …

The problem is that spend visibility and analytics is much more complex, requiring data cleansing, rationalization, classification and other efforts which go far beyond what is needed to gain insight into basic HR, financials, IT and other internal information, which fall cleanly in to the BI camp. …

Fundamentally, “spend intelligence” should exist both inside and outside the organization, but Aberdeen’s usage might lead companies to think that everything they need lies within. The problem with this thinking is that supply market information changes all the time …

… by focusing too much on the final insight itself, “spend intelligence” conjures up images of the end-result, rather than the journey or path to get there (which can be as insightful as the data crunching itself). For example, in data gathering efforts, procurement can learn just as much about spend categories by talking with design engineers and operations team members as reading the SAP tea-leaves where dirty data resides.

Not long after, Tim Minahan, who used to occupy Sudy’s position at Aberdeen, of Procuri (acquired by Ariba, acquired by SAP)came to the defense of Aberdeen’s Spend Intelligence Moniker on his blog Supply Excellence [WayBackMachine]. The main posts of his post were as follows:

As an analyst, every software vendor — … — touted their spending analysis capabilities. The caveat: you just needed to give them the data in a cleansed, classified, and structured format. … In short, most vendors pitched building a data cube or data warehouse from which you could run analyses and reports as spending analysis. They were wrong. And they confused the marketplace (possibly intentionally).

It is the automated and repeatable classification of spending information to a structured schema (e.g., UNSPSC, eClass, proprietary schema, etc.) and then the enrichment of this data with related business information (e.g., parent-child relationships, financial risk scores, contracts, performance information) that turns spend information from “dumb” data into true spend intelligence that a company can use to make fact-based sourcing and supply decisions rather than gut-based or hunch-based decisions.

The distinction between spend data and spend intelligence is an important one. Bravo Aberdeen for calling out the difference between dumb data and actionable intelligence.

And just a few days ago, Purchasing Magazine sponsored a webinar on the report where Sudy presented the main findings of the report and Brett Mauser of NCR, a corporation that recently implemented Zycus‘ spend management solution, discussed how spend intelligence has kicked NCR’s spend management program into overdrive. (Note that Zycus was one of the sponsors of the Spend Intelligence Benchmark Report.)

According to the study, and reinforced in the webinar, companies with best-in-class spend intelligence solutions have a process maturity that is twice that of their counterparts, and those processes are almost twice as likely to be aligned company wide. In addition, those processes are twice as likely to be automated. And mature, automated, processes get results. So why am I insisting that there is no such thing as a spend intelligence solution, when it appears that these solutions not only exist, but get great results?

Let’s start with the definition of intelligence.

Intelligence is a most complex practical property of mind, integrating numerous mental abilities, such as the capacities to reason, plan, solve problems, think abstractly, comprehend ideas and language, and learn.

And since spend management solutions are software, let’s review a definition for software.

Software is the (collection of) program(s) that enable a computer to perform a specific task, as opposed to the physical components of the system (hardware), where a program is the collection of source code and libraries which have been compiled into an executable or otherwise interpreted to “run” in (active) computer memory, where it can perform both automatic and interactive tasks with data.

Simply put, intelligence is a property of mind and software is a property of machine. And despite the efforts of the artificial intelligence community, I do not expect the property to cross the chasm anytime soon. Artificial intelligence is simply a collection of very sophisticated algorithms processing large data stores, instruction sets, and probabilities very quickly to come up with reasonable responses to queries – it is not thought, although it might appear to be thought since today’s computers can perform billions of calculations in a second. And that’s where my beef with the term spend intelligence lies.

Furthermore, as Jason Busch of Spend Matters points out, the term is very misleading and overlooks the fact that results from enhanced spend visibility and analytic efforts require data cleansing, rationalization, classification and other efforts which go far beyond what is needed to gain insight into basic HR, financials, IT and other internal information, which fall cleanly in to the BI camp.

So if you want to call it spend visibility, actionable spend, or maybe even spend knowledge, I’m all for it. But since the real intelligence lies in the user of the tool who takes the actionable data and uses it to get results, there is no spend intelligence software, only spend intelligence enablement software. And when you get right down to it, that’s what you really need as an expert power procurement user – software that helps you make the right decisions, not software that purports to make those decisions for you.

However, regardless of what you call it, check out the “The Spend Intelligence Benchmark Report: Turning Data into Action” while you have the chance. Just like the “On Demand Supply Management” report, it is top notch research, whatever you want to call it.  After all, as Tim Minahan pointed out, the distinction between spend data and spend intelligence is an important one, and the Aberdeen report is one of the first reports to call it out, even if I may take issue with the impreciseness of the terminology used.

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

Cambrian House: Crowdsourced Software

Not long after my Crowdsourcing post in the Purchasing Innovation series went up over at e-Sourcing Forum, JR posted a comment letting me know that a company up here (North of the Border) was already doing it commercially, in one of Canada’s IT hotspots (although you might not know it if you visited during stampede week). Cambrian House, located in downtown Calgary, has been up and running since February and has already turned out some revenue generating products. To date, they have launched CVR for Parents, AdWord Alerts, Pod Blast Video, Prezzle , Renoworks Homeowner Edition, Desktop Playground , and Cambrian Code.

It’s true that a couple of their projects have already been suspended due to lack of interest, but its also true that some are going stronger than ever. One of the advantages of the crowdsourcing model applied to software is the ability to greatly accelerate initial development lifecycles and get working betas to market really quickly. Instead of waiting months or, more often, years to find out if a new product idea is going to fly, you can now have the answer in months, or sometimes even weeks!

Furthermore, they’ve also proven that when crowds of like minded people get together, they can have an impact on communities, locally and globally. They’ve already made charitable donations as an organization, including one to the local Mustard Seed (a non-profit, Christian humanitarian organization that responds compassionately to the needs of the inner-city’s less fortunate) and fed Google worldwide.

So how does Cambrian house work? It’s simple. An idea is submitted, be it from an employee, an advisor, or a random individual who stumbles across the site, the best ideas (as judged by the team) are thrown out to the crowds (through the world wide web) to test and comment on, those that get traction are then built by development crowds constituted of those individuals interested in seeing the product brought to market, Cambrian House handles the sales and marketing, and those who worked on the product (including the idea generator) get royalties. And for those who like graphics, Cambrian House has a nice assembly line graphic (Flash 8 required) for you.

Right now, most of the projects are pretty small – but there’s nothing stopping crowdsourcing from working at the enterprise level. After all, viewed the right way, it’s just a logical extension of open source development, the difference being that the contributors get paid (allowing them to develop the software they want to work on full time, instead of in what hours they have left after fulfilling the requirements of their full time job, since we all need to pay the bills) and there is a support organization to help them market and sell the product, allowing them to do what they do best – develop great products!

In my crowdsourcing post, I predicted that “the view of sourcing will slowly shift from that of a reactive business unit that aggregates needs and demands into a proactive business unit that is looked upon as an enabler, problem solver, and even forecaster of future trends and consulted by the other units of the business“. In software terms, where many professionals now work as contractors and independent consultants, I believe that the innovative organizations will shift from outsourcing projects to big traditional consulting firms that throw whatever warm bodies happen to be on the bench at the time at the project, with varying degrees of success, to using crowdsourcing firms that specialize in large-scale and distributed project management and bringing together the right resources for the task under the crowdsourcing model.

Coupa Cabana Cafe: Open For Business

And to celebrate, they’re having the sale of the century! They’re practically giving it away. You can try it for free! You heard me! For Free! Now that’s a price that can’t be beat!

The reality is that Closed systems are dead. From software to supply chains, open is the new standard. And Coupa is making it reality, with the first open source eProcurement system designed to revolutionize your procurement process.

As printed in this month’s issue of Wired, it’s an All-Access Economy. Openness is a fundamental business principle. It’s what the internet is built on. Progressive software companies are taking the software-as-a-service model to the next level by exposing the API’s. You can tap into Amazon.com and eBay servers to create your own storefronts, Google to create your own maps, and Flickr to create your own montages.

And now, in addition to rolling your own Content Management System (CMS) with OpenCMS and Customer Relationship Management System (CRM) with Sugar CRM, you can roll your own eProcurement System with Coupa with its built in catalog management, adaptive “tag-cloud” indexing, and zero-click shopping cart. (Beat that Amazon!)

For those of your following along, I offered a glimpse of what was to come in my Procurement Independence at the Coupa Cabana Cafe post earlier this month. In this post, I’m going to dig a little deeper, but try to keep it short since you can now check it out for yourself at www.coupa.com.

The new site is pretty slick – and the one minute introduction video is all it should take to catch your interest. The video highlights ten key features of Coupa. I discussed half of these last week, but I’m going to list them all because most of them are innovative.

  • RSS Feed for the latest news from the procurement department.
    Every news site and blog should have a RSS feed!
  • Toolbar that ensures all actions are a click away.
  • Ask an Expert … where answers become part of a dynamically evolving FAQ.
  • Dynamic Adaptive Tagging.
    After all, no static classification scheme is ever complete.  This allows the classification scheme to evolve into what you need, not what someone else thinks you need.
  • Catalog items are accompanied by average employee ratings.
    This is awesome. When I go to Amazon or eBay, I do not care what John or Jane Doe think, I want to know what like minded people think … and in business, I want to know if it works for my like-minded co-workers.
  • Enterprise Policies are included in search and always available.
  • Drag and Drop Buying.
    This is the most intuitive shopping cart I’ve ever seen – as it captures the real-life usage of a cart.
  • Automatic population of ship to address and account information.
  • Graphical Approval Chain so a buyer always knows what the process is.
  • Attachment and Supplemental Document Support.

In addition, the web site points out the following capabilities:

  • Self Service Requisitioning
  • Goods and Services Support
  • Local Catalog Management
  • CSV Data Upload
  • Powerful Global Search Capability
  • Punch-out Support
  • Email Notifications and an on-line inbox
  • Requisition History
  • A How-To-Buy Policy Framework for integrated user education and always up-to-date document access
  • Contract Creation and Maintenance
  • Flexible PDF Purchase Order Generation
  • ERP integration APIs

And if you are willing to shell out a reasonable amount for the enterprise system, you also get:

  • role based access control
  • power user direct requisition entry forms
  • business groups
  • quickforms for special requests
  • REST ERP synchronization methods
  • no click requisition email templates … Beat that Amazon!

Essentially, employees use the interactive web interface to select items and submit for required approvals – the system determines the best price, the preferred supplier and the right contract, and then sends the purchase order electronically to the supplier. The company gets a standardized solution, which saves money and improves compliance, and employees get a system that they can actually use to get their work done.

In addition, Coupa provides support and implementation services. Open source users can buy per incident support packs and enterprise users get a full-featured support package that includes:

  • issue determination and bug fixes
  • updates, maintenance bundles, and patch support
  • issue diagnosis and resolution
  • performance tuning advice
  • exclusive support forums

In addition, Coupa offers implementation services, primarily through integrators and value-add resellers, that include eProcurement Deployment Best Practices, customization guidance, and integration assistance.

But let’s get down to business. This is an open source solution, being released to the community, which will, hopefully, improve upon it and return the improvements to Coupa and their customer base through the LGPL license. Coupa is starting off on the right foot by having a Wiki and a Forum, partitioned into general topics, open source, enterprise, and developers all ready to go from the beginning.

The wiki, which tracks updates, documentation, the coupa roadmap, and technology choices, allows you to report issues via tickets, which can then be searched using Coupa’s powerful search technology, or reported on using any one of the following reports:

  • Active Tickets
  • Active Tickets by Version
  • All Tickets by Milestone
  • Assigned, Active Tickets by Owner
  • Assigned, Active Tickets by Owner (Full Description)
  • All Tickets By Milestone (Including closed)
  • My Tickets
  • Active Tickets, Mine first

Coupa is built using Ruby on Rails and designed to work with just about any standard relational database (MySQL, SQLLite, Oracle, SQL Server, PostGreSQL, and DB2), web server(LightTPD, Apache, Mongrel, and IIS), and web browser (IE, FireFox, and Safari so far … I’m hoping Opera, which was the first to introduce many of FireFox’s key features, although it is not open source, is next) and runs on Mac OS X, Windows, and Linux operating systems.

Dave Stephens explained why Coupa Technology uses Ruby on Rails in a recent post on Procurement Central [WayBackMachine]. And for the most part, I agree with the choice. An open-source project needs to be built on efficient open-standard technology that is easy to use, penetrating the market, and appropriate to the task at hand. For the most part, Ruby on Rails fits those criteria.

However, I should note that I do not agree with Dave’s assessment of Java. Although Java is not a suitable choice for UI development (let’s face it, Swing is a real pain in the backside, JSP is a mess, and JSF is not intuitive to even a relatively experienced Java developer), I would still strongly consider Java for the application backend of an enterprise application. Java’s extensive libraries make the development of complex business logic, data structures, and persistence layers relatively easy. Java’s JIT compilation makes Java code as efficient as C++. Furthermore, XML, which is supported in Java by DOM, SAX, and JAXP, is development language independent and supports your language of choice for front end development. (And even though Dave is right in that many IDEs are bloated and overkill for many tasks, some, such as IntelliJ, actually make developing in Java a simple pleasure.)

All in all, Coupa has set the bar high for eProcurement applications.

Supply Chain Direction: Collaboration is Key

Back in April, EyeForTransport, the organizers of the Supply Chain Directions Summit 2006: Strategies & Tactics to Optimize Inventory and Supply Chain Visibility, released a report entitled “Supply Chain Directions 2006: How Fortune 500 shippers overcome their supply chain challenges”.

This report analyzed the results of a survey of almost 400 logistics professionals who were primarily executives from Fortune 500 manufacturers and retailers in charge of their companies’ logistics and supply chains and sought to identify the biggest supply chain issues and the methods that these companies were planning to employ to overcome those issues. The largest supply chain issue identified as relevant, by a whopping 62% of respondents, was a lack of collaboration. Furthermore, a whopping 59% of respondents identified enhanced collaboration schemes as the most likely method for decreasing their supply chain woes, 10% more then the runner-up option of optimizing warehouse management.

So how can you improve collaboration? One approach is to deploy new technology. In particular, Transportation Management Systems (TM) and Supply Chain Management Software (SCM) with built in collaboration capabilities can go a long way towards meeting these goals. In fact, these were the two leading systems identified by respondents as the most likely technologies to enhance their supply chain performance (at 56% and 44%, respectively).

Regardless of what direction, or directions, you choose, I’d recommend you check out the speaker list for EyeForTransport’s Supply Chain Directions Summit 2006 (November 28-29, 2006 in San Francisco, CA, USA) which reads like a who’s who list in the logistics and SCM trenches with speakers like Scott D. Burnette, the Director of National Transportation for Coca Cola North America, Ashley Hall, the 3PL Sourcing Manager for Intel, David Pieper, Supply Chain Strategy Principle, and Mike Passon, Director, Global Logistics, Program Management at Hewlett Packard, Arun Kumar, Director, Americas Logistics and Worldwide Compliance at Dell, Walter Gimenez, the Logistics Director at Nike, and 28 other confirmed speakers.

It appears to me that despite only being in its second year, the Supply Chain Directions Summit could be on its way to becoming recognized as one of the premier annual SCM events around the globe. The only advice I would give EyeForTransport is to consider doing what SAP did for SAPPHIRE, and fly in some leading bloggers to cover the event. This will help boost the event’s profile and visibility this year, as bloggers notify their ever growing reader lists in advance on their plan to be there, and next year, as those who do not attend read about what they missed. After all, I’m sure Jason Busch’s coverage of Ariba Live on Spend Matters probably provided more visibility for Ariba with almost 2,000 dedicated readers every day than a fistful of traditional publications. It’s a thought.