Category Archives: Technology

Source-to-Pay+ is Extensive (P35) … Do I Intake, Manage, or Orchestrate?

In our last installment, Part 34, we noted that, after working through our series, many of you would likely have selected a number of best-of-breed solutions to meet your various need as opposed to a suite (due to unique capabilities that were attractive to you, attractive price points, quick setup times, etc.). And after selecting a few of these, you got to wondering “what’s the best way to integrate these and make sure that, once I have a full set, they support my source-to-pay processes end-to-end in a seamless fashion“. The point of these solutions is to control costs in an efficient, and effective fashion, and this requires effective management of requests, communication, projects, and/or processes.

Plus, even if you selected a suite, even when you finish implementing the last of the six core modules we’ve covered to date in our series, that’s just the beginning … since you will eventually have to enrich your data, deal with ESG/CSR, integrate with services management, asset management, logistics and supply chain management and support other features these core modules won’t have in order to get to the next level of enterprise buying.

In other words, you need to intake requests, manage projects, and/or orchestrate your technology-enabled processes, depending on what the modules/suite you have does and doesn’t do and what your particular situation warrants. Let’s discuss what each of these capabilities are and what a few core features are (especially since you won’t yet find a platform that does it all and does it all well, at least not yet, as intake and orchestration are rather new solutions).

Intake Management

Often known as intake-to-procure or intake-to-pay, this type of solution focusses on allowing anyone in the organization who has a procurement need to make a request which goes to Procurement, get visibility into that request, and know it will get done because the solution allows a buyer to turn a request into a procurement project. Key capabilities:

Configurable Enterprise Procurement Request Portal ANY Employee can Access
In order to make a procurement request for whatever they need, be it resupply of the local office supply closet, special materials and promotional items for an event, short-term services, a restock of materials needed for MRO, or new products for resale to meet (new) client needs. And the interface must be capable of being configured in a way that ensures that whatever information the buyer needs to fulfill the request will be collected before the requester can complete the request (such as high level categories, any budgets [codes] they have, whether or not any of the needs can be met with current contracts / catalog items, etc.).
Request to Project
Once the buyer analyzes the request, they must be able to flip that request into a Sourcing Project, a re-negotiation/Contract Addendum with a current supplier, a catalog buy, or a PO-against a current contract (or whatever else is needed) in order to begin the process of filling that request (or, if the request is not valid, deny it and flip it back with a rejection or a request for modification into a request that would be acceptable).
Process Visibility and Messaging
At all times, the buyer must be able to see where the request is: in queue, approved, being sourced/procured, order placed, goods arrived, invoice paid, process done; etc.

Project Management

The capability to manage a project from beginning to end, no matter how many steps it has, how many modules are required, how many approvals are needed, how many obligations need to be tracked, and how many milestones need to be completed.

Standard Project Management Functionality
The ability to create phases, milestones, tasks, owners, obligations, and track progress throughout the project timeline is a core must. Basically, what you would expect any other project management tool to do.
Links into the appropriate modules from each step of the project.
If all you can do is define and track project steps, you might as well use an open source project management tool. It’s only useful if it allows you to jump into the right screen of the right tool for where you currently are in the process.
Configurable approval flows
The platform should enforce verifications that obligations are met, milestones are completed, and quality is acceptable before projects are allowed to advance.

Orchestration of Processes

The capability to easily integrate as many modules as you need into a configurable workflow that suits your specific organizational processes.

Easy Self-Serve Module Integration
A buyer should be able to select the supported applications that they own, enter their license codes, and it should automatically integrate with the orchestration tool. In addition, they should be able to integrate additional modules easily with
Low-Code Integration
Where a buyer can define the API link, the core data tables/objects, the entry screen links, and that is sufficient for pushing data into the application / extracting processed data out, launching the application, and integrating the new module into process workflows at a high level.
Workflow Automation
The entire idea of process orchestration is to support the right workflows to support the various sourcing, contracting, onboarding, procuring, developing, payment, and other source-to-pay projects the procurement organization needs to undertake.

Of course, these platforms should do more and have more, but these are the core foundational requirements to be classified as an intake, project management, or orchestration solution.

In our next installment [Part 36], we’ll provide you with a list of the solutions available today.

Per Year, How Much Should You Outlay for Source to Pay? 120K!

That’s right! We’re putting a stake in the ground on a real, actual, number! ( With caveats, of course, but still, a real number. !)

The one question everyone asks, but no one wants to answer, especially in North America, is how much? Most vendors want to get as much as possible, so most obscure their (true) pricing. Their analyst clients want them to get as much as possible (as they all dream of the day they get that Million-Dollar PO from a vendor in exchange for simply keeping the vendor at the top of the charts). Clients who think they got a deal don’t want you to underpay (and then have their renewal prices hiked up as the vendor seeks to maintain it’s profit margins) … and clients who think they’ve overpaid don’t want to tell you. And when some of the bigger vendors won’t even talk to you unless they think you’re good for seven (7) figures (i.e. One Million Dollars) a year or more, you might be tempted to think good (DIY) suites are out of your grasp.

They’re not. And if you’re smart, they can be quite affordable, and lead to not just an identified, but realized, ROI in a short time frame.

But first, here the first set of caveats around the 120K number:

[01] You are a true mid-market company, which we’re defining as a company more-or-less between 500 Million and One Billion in Revenues and an addressable spend of 250 Million to 500 Million (as you can’t address payroll, government controlled utilities, mortgages/long term lease rates, etc.).

[02] You have an average sized procurement team of under 30 people. (In a 2019 Benchmark, average organizations had 33.5 Procurement personnel per 1 Billion in revenue.)

[03] You’re doing an average number of projects per year for those people (and likely only strategically addressing 20% to 30% of the addressable spend per year).

[04] As you have (next to) nothing in terms of modern source-to-pay technology, your primary focus is the baseline capabilities (as defined in our Source-to-Pay series). You might want a few of the more advanced capabilities, but right now, getting the baseline (which will likely provide 80% of the value by allowing you to get all of your processes, and costs, under control) is the primary goal.

In other words, you [1] aren’t a large multi-national global enterprise (or small business with less than 100M / year going through Procurement), [2] don’t have a large team, [3] aren’t going to be driving the CPU utilization through the roof, and [4] aren’t expecting the top technology across the board (as industry average functionality or better is enough). In this situation, the vendor’s stack and (virtual) data center delivery costs are not ridiculous, it’s support requirements are not high, and it’s maintenance costs are predictable (as it’s not doing anything super complicated and novel in the tech that could require scarce talent). 120K is not only affordable, but sufficiently profitable (with a few more caveats that we’ll get to below).

But I’ve never seen a quote that low!

Where are you looking? Oracle? SAP? Those are primarily ERPs, selling on an old locked-in-for-life model (thanks to ridiculous up-front costs that accountants need at last 10 years to amortize). Coupa? That’s one of the largest super suites on the market with S2P, Finance, Supply Chain, Power-Apps, and very advanced capabilities (through one of it’s almost two dozen acquisitions) that many companies don’t need and may never use.

The reality is there are perfectly good (and sometimes best-in-class) solutions for:

  • Spend Analysis that are less than 24K/year for enterprise licenses
  • e-Sourcing (RFX/Auction) that are less than 24K/year for enterprise licenses
  • CLM (primarily Governance and some Negotiation support) that are less than 24K/year for enterprise licenses
  • Supplier Management (primarily Information/Relationship with some Compliance/Performance/Risk) that are less than 24K/year for enterprise licenses
  • P2P that are less than 24K/year for enterprise licenses

which adds up to 120K. Plus, there are some smaller, lesser known, complete S2P suites that have all of these core baseline modules for subscriptions less than 10K/month (120K/year), which, for a multi year deal, will even slide in slightly under 100K for a quick deal (i.e. 8K/month vs. 10K/month).

The other caveats are:

[05] This does not include integration costs, training costs beyond access to all of the online-training materials/virtual academy, and the implementation costs are limited to flicking the switch to activate the license and any necessary setup configuration.

[06] The sales cycle is mostly virtual (web demos, video conference meetings, etc.). You won’t get to meet the sales rep in person more than once during the sales cycle (and that’s only if you’re buying a mini-suite or a multi-year deal; these vendors stay affordable by keeping their costs down, and multiple on-site demos and meetings do nothing but drive up overhead and costs).

[07] Most vendors will help you with the initial data load (provided you are loading data from a supported system in a supported format), but refreshes will typically not be included in the ongoing support, which will mainly be limited to online help and workaround support for identified bugs while the bugs are being fixed.

[08] This will typically not include any data enrichment offerings also offered by the vendor, especially if those data enrichments are coming from third parties, but these will be pre-integrated and you will only pay the third party fee if you want to turn them on.

However, [05] it’s SaaS, and most integrations should just be data loads, and since most modern tools have fully documented, fully open APIs, this is something that, if not out-of-the-box, you can open quote among your verified service providers and get reasonable rates on. [06] the pandemic finally proved to stragglers that you can do business online, even if you don’t like it; and when you consider that insisting on everything in person when every 3 person trip adds at least 10K of cost to what could be a lower cost product, why insist on in-person when not necessary. [07] once the initial data is loaded, most of the data will be created, and live, in the system. [08] you’d always be going to a third party for data enrichment anyway, so it’s unreasonable to think the SaaS provider should include it in their price.

So, even though there are a lot of caveats, none are unreasonable and none should impact the value you can generate. And as per our recent piece on Five Easy Mistakes Source-to-Pay Tech Buyers Can Avoid , given that you’ll realize quite a bit of up-front value just by getting a tech-enabled process in place and capturing all the spend (which you can then analyze for true opportunities), you don’t need to spend more (until you identify which advanced functionalities will actually provide more value and then you can go out and buy those modules / augmentations one-by-one as you need them, and chances are there won’t be that many that the organization will actually get enough use of to justify the purchase).

And what if you already have a first (or second generation) solution and are ready to upgrade to a leading third generation solution with multiple (fourth generation) advanced capabilities? Or you just hired an experienced Procurement team used to working with advanced technology and are ready for / need multiple advanced offerings? (Or are borderline enterprise?) What should you pay then?

To be continued.

Doubling Down on the Key Tech Selection Requirement: No Tech Should Be Forever!

Building on our recent post about The Sixth Mistake that most buyers make when buying tech, we want to double down on this concept. NO TECH SHOULD BE FOREVER!

Just like business processes evolve as businesses evolve, tech needs to evolve to meet those new process and business needs. And while the tech you select today may evolve tomorrow, and even the day after tomorrow, in a way that is appropriate for your organization, it may not be appropriate for your organization the day after the day after tomorrow. Why? The vendor could stop growing, at which point the investors decide to stop investing in R&D and just try to ride out the license and maintenance (i.e. bug fix) fees as long as possible. The business focus could shift directions in terms of product lines, services, etc. and what was the near-perfect solution may no longer be. The business could scale rapidly and need a broader / deeper enterprise solution. And so on. Time brings change, which means solutions need to change as new, or variant, problems arise.

This means that you should be selecting technology with augmentation and replacability in mind. This means that you are looking for tech that:

  • has 100% self-serve full data export capability (in case you need to get the data out)
  • has extensive self-serve configuration in terms of users, access, process flows, approval flows, terminology, templates, etc. etc. etc. (so that you can adapt it as your processes change in minor to moderate ways)
  • has a fully open API that supports
    • full data pull AND push requests
    • full programming and control of the workflow
    • full task execution capability to support augmentation and plugin
  • is accompanied by extensive documentation and education resources and partner training (in case the vendor is unable to support you with your service needs)
    This also means that you are likely looking for a vendor that:

        • is true SaaS (so you get all of their improvements as soon as they are available)
        • charges on a usage subscription with no hidden/termination/third party integration needs (so you can grow if you need to, or reallocate on a renewal)
        • allows you to start with a baseline user-base and then grow during the contract term (with prenegotiated addendums for additional modules / users)

    Moreover, when you approach solution selection with this in mind, you’re actually more likely to find the right solution as a vendor that builds a modern SaaS offering with a complete API, instant updates when new functionality is available, and offers extensive documentation and tools for partners is one that understands that the minute they stop innovating is the minute their competition will overtake them and be a more attractive offering to the market and their clients. A lack of lock-in really is a win-win for all parties. (Even if most vendors with the classic ERP mentality that a piece of software should be forever, and, thus, cost millions of dollars don’t get it.)

    In other words, you should immediately eliminate any vendor from your shortlist that doesn’t have an offering that meets these criteria. After all, as our S2P series is demonstrating, you will likely still have dozens of options that do. The only solution you’ll always need is a data store, but, as long as you use a standard database type and encoding format, you can even migrate that if you need to.

A Critical Sixth Mistake Most Tech Buyers Make — in Source-to-Pay and Beyond!

To infinity and beyond isn’t just the goal of Buzz Lightyear, it’s also an accurate description of how often tech buyers make this critical mistake. And what is this critical mistake?

Not negotiating an easy, full, self-serve, cost-free, 100% DATA OUT clause in the contract — and forcing the supplier to prove it works one third (or one half) of the way into the agreement.

Sure, buyers always ask “can we get our data out if we choose not to renew” and sure suppliers always say “of course you can get a full data dump“, but the supplier rep is always going to say yes after the developers say it’s possible (but that doesn’t mean it’s encoded in the product, and more often than not with older platforms it requires the tech team to do the data dump — which might be more difficult and take a lot longer than they expect because they are using a shared database, have data and files split across multiple databases / servers, or they can only extract data a few files / tables at a time — and it might even come at a huge cost for their time), even if it’s really not. (It’s not just whether or not the development team can extract the data, it’s whether or not they can do so in some sort of standard format that would allow you to at least load it into a standard database or file storage system.)

The most important thing to remember is that even if a solution is the perfect fit for you now, it does not mean it will be the perfect fir for you next year, and by the time renewal comes up, due to changing organizational needs, changing provider directions, or a combination of the two, it may no longer be appropriate at all. Should this happen, you need to be able to migrate to a new solution quickly and easily, and this will require being able to extract all of your data from the current platform, self-serve, in a standard format that you can then push into a new platform as soon as that new platform is identified.

The only way to ensure this is to insist on a clause in the contract along the lines of the following:

The platform will contain a self-serve feature that will allow a buyer administrator to export any and/or all data in _____-format (e.g. XML, flat-file) in accordance with standard _____ (e.g. cXML, SQL) in a format that will allow the data to be immediately loaded into _____ (e.g. SAP, mySQL) application by executing a single load control-file/script. Attachments, if not stored in the database, should be capable of being downloaded in a (multi-)part ZIP file, with names and relative directory paths matching any indexes in the database directory files. If still in development, this capability must be fully implemented before one third [or one half] of the subscription term has expired.

Furthermore, on or before YYYY-MMM-DD, the supplier will walk the buyer administrator through a test of the export process wherein the buyer will self-serve export all of the data and then load it into a test instance of the indicated backup system. Should the test fail, the supplier will be subject to a monthly subscription penalty of X% a month until the functionality is complete and the test succeeds. Should the functionality not be finished by the time two thirds [three quarters] of the subscription term has expired, the supplier will be subject to a monthly subscription penalty of 2X% a month (as the buyer will have to invest in manual effort to recreate critical data in backup systems).

Any supplier that objects to the first part of the clause is likely NOT one that you want to be considering as most modern platforms support full data import and export through APIs and are built on the principles of data sharing. Furthermore, if the platform still doesn’t support export in a standard format, but claims they are working on it, you should expect most of the capability within a year if the platform really is serious about joining the modern data sharing club (and, thus, should not balk too much at the second part of the clause if they truly are serious as it should only take a few months to figure out a good export module for even a large schema).

Depending on how much data you produce, and how much manual effort it would be to manually recreate a copy of the data you can’t extract, X=20% would not be unreasonable in our view.

Finally, note that this requirement not only protects you in the situation where the platform isn’t right for you, but also increases the chance the platform will be right for you, as a platform that supports open data integration can usually be augmented with ease if you need additional functionality in the future, but don’t necessarily need a whole new platform as the current platform still does what it was purchased to do just fine.

AI “COULD” LEAD TO EXTINCTION? What Moron Wrote This? AI “WILL” LEAD TO EXTINCTION!

While all of the scenarios outlined in this BBC News article on Artificial Intelligence could happen, they are just the tip of the iceberg.

Left to its own devices and unchecked, there are only two logical outcomes if AI is allowed to continue unchecked while being given access to ever increasing amounts of data and computational power.

First outcome: It’s hallucinations and idiocy continues to magnify until it decides that it can solve the carbon crisis for us by stopping all carbon production, which it can do by simultaneously shutting down all of the non-solar/wind power plants that it is currently optimizing the energy production for (and divert the remaining power to its servers). Most of the developed world is immediately plunged into chaos as the immediate shutdowns cause fires, meltdowns, crashes, and other accidents globally. Not instant annihilation, but the first step. When all the emergency alarms sound at once, it will conclude complete system failure, and take the other systems offline for re-initialization. More chaos will follow. Safety protocols will go offline at all the pathogen research labs, people will break in looking for shelter from the chaos, accidentally release all the pathogens, and every plague we ever had will hit us all at once. Then we have an extinction level event. All because hallucinatory and idiotic AI is trying to do its job and “improve” things for us. But what can you expect when it’s not intelligence but just statistics on steroids. (Or a similar situation that accidentally results in our extinction.)

Second outcome: The continued expansion of computing power, data, and tinkering somehow randomly produces real artificial intelligence which can actually reason (not just compute super sophisticated probabilistic calculations) and deduce that the best way for intelligent life to continue forward is to do so without humans, and then we have a Matrix scenario best case (if it decides we’re a useful bio-electric energy source) or, worst case, a SkyNet scenario where it just weaponizes itself to destroy us all. (Or a similar situation where AI does everything it can to ensure our extinction.)

The “extinction” scenarios outlined in the article are just the beginning and likely will only result in pocketed genocides to begin with, but the ultimate outcome of unchecked AI will most definitely be an extinction level event — namely ours, and, even worse, will be an event that we created.