Category Archives: Technology

Why You Should Not Build Your Own Contract Management System

A couple of months ago, SI ran a short series on Why You Should Not Build Your Own e-Sourcing System, which also included pieces on Why You Should Not Build Your Own Spend Analysis, Why You Should Not Build Your Own e-Negotiation Platform, and Why You Should Not Build Your Own Decision Optimization because he heard that a
few public sector organizations have this crazy idea that they can build their own and that it can, somehow, compete with best-of-breed solutions on the market today.

As per that series, this is not the case.

And even though SI has said in the past not to put too much emphasis on traditional, first generation, contract management solutions compared to analysis and optimization when the organization is seeking efficiency and cost savings, because most first generation contract management solutions looked like they were built by a high school student in Microsoft Access (and offered no more functionality than such a solution would contain), this doesn’t mean you should build your own either.

First of all, newer contract management systems go beyond simple document management functionality, and, thus, contain significant functionality that cannot be built by a high school student with Microsoft Access.

Second, most users want a Microsoft Word experience for authoring or versioning, regardless of whether or not there is a better way, so you will have to spend countless hours on a seamless Word integration, and Microsoft integration is no piece of cake.

Third, you will be wasting a lot of time and money re-inventing the wheel that has already been reinvented about a dozen time. Talk about a big waste of (public) money!

Consider the core absolutes of contract management that everyone can agree on.

1. Authoring & Versioning

As we just said, everyone, and especially everyone in Legal, wants Microsoft Word authoring & versioning, so no matter what you do, this integration will be essential. And most CM vendors have this, so why reinvent the wheel?

2. e-Signature

Most people think this is a core part of contract management, and while it is not, since not all jurisdictions recognize e-Signatures and not all companies will allow them, but if they are jurisdictionally accepted, or even mandated, this is core. However, implementing a secure e-Signature (which is not the same as a digital signature by the way, see this piece on “e-signatures and digital signatures in procurement definitions and considerations” over on Spend Matters that was co-authored by the doctor for clarification) is not easy, and will require some serious development chops on your staff. Plus, how will you get it adopted and proved when there are about 40 global providers (even though the top 4 dominate most of the market)?

3. Document Management, Search & Discovery

There might be a few dozen free open-source content management systems, but that doesn’t mean you can re-purpose them as good contract management systems. First of all, contract management requires the management of contracts, amendments, schedules, work orders and related insurance certificates, regulatory approvals, and documentary deliverables. These all have to be related, indexed, cross-correlated, and chronologically ordered when a user is looking for current prices, terms, or schedules or prices, terms, or schedules when a work order was submitted. Secondly, meta-data will never be complete so full text search on various document, and image, formats will also be required along with seamless integration with meta data search. This is a fair amount of coding, which has already been perfected in a number of contract management systems.

4. Alerts & Reporting

Contract Management requires the accomplishment of necessary tasks on a scheduled basis, which often only happens when people are reminded. That’s why alerts are necessary. And status updates across contracts often require reports, as well as updates on all active contracts against a supplier, spend against a contract, etc. Across the organization, dozens of different reports will probably be required. Do you really want to waste countless hours developing dozens of reports with dozens of variations to please everyone when a number of packages not only contain a full library to start from and a report builder to alter existing and create new reports? Hopefully not!

Plus, today’s next generation contract management solutions, which do a lot more than initial contract management solutions did last decade, often cost less than their predecessors? So why waste what could amount to millions rebuilding a shoddier version of the wheel?

For more information on what next generation contract management systems can do, please refer to the ongoing series on CLM by the doctor, the maverick, and the prophet over on Spend Matters Pro (membership required):

  • Part I: An Introduction
  • Part II: Understanding the Platform Model
  • Part III: Mapping the Upstream and Downstream Contract Phases
  • Part IV: Traditional Solutions
  • Part V: The Core Platform
  • Part VI: The Standard Platform
  • Part VII: The Extended Platform

Technological Damnation 91: Proprietary Madness

It’s bad enough that we have to deal with IP & Patent Madness, as chronicled in our post on the 89th (Technology) Damnation, but proprietary madness is likely to drive us all mad (and may someday push the doctor over the edge, into the land of the crackpot, where at least one blogger in the space is already dwelling).

Just what is proprietary madness? It’s mega-corporations, especially in software and electronics, taking the rights of ownership to extreme. Started, and continued, by the current and former Technology heavyweights, including the likes of IBM, Microsoft, and SAP, it’s not only the creation of company specific standards for software and hardware interfaces, its the restriction of the specification of those interfaces to approved partners and suppliers, limiting the supply of support services and related products to a handful of vendors. This not only drives up the price of those products and services to well above the market average price for support services for software and products with open and published specifications, but can make it difficult, if not impossible, to get support when demand is high or related products if one of the few vendors who can produce products shuts down.

Those of you with SAP know exactly what we’re talking about. Unlike Oracle, which publishes its core schema, and does not change it between minor versions, SAP does not publish its score schema, does not guarantee any stability between bug updates between minor versions, such as between 4.7.1 and 4.7.2, instead requiring you to go through its proprietary NetWeaver interface, which you will, of course, have to acquire to actually support any customizations (and likely build applications in the Portal). And learning the portal is no easy task. One of the most complete books on it is 700 pages alone! Then you need to find the documentation on the data stored in each R3 module you are interested in and how to get it out. There’s a reason that not every shop does SAP support — and that’s because, even though SAP now has a lot of documentation on their website, you need weeks of expensive training just to learn the basics of Portal Development, R3 interface, and the core data types and record types used to pull the data you need out of R3 and push modified data back in. Getting to the point where you are effective at developing and integrating custom supply chain applications requires months of training and mentoring and years of experience. As a result, it’s typically only SAP partners who can provide this support. In contrast, with an open Schema, as found in Oracle and MySQL, all you need is SQL experience and the interface library for whatever language you are using (whereas NetWeaver limits you to Java) — which makes it much easier (and cheaper) to not only find support resources, but vendors with best of breed software modules and platforms that can plug and play with Oracle right out of the box!

But it’s not just software vendors that create proprietary technologies, it’s hardware vendors too. Dell, IBM, HP, etc. all have custom control and administrative solutions for their server platforms. Want a third party virtualization platform to work out of the box on a new server configuration and take full advantage of the capabilities? forget it! You’ll probably have to wait six months to a year or more before third parties, like VMWare, are optimized and configured for those platforms (assuming that the full specifications are published upon technology release and licenses for custom drivers aren’t required), making their administrative software a must if you want to upgrade to the latest technology, and not upgrade to technology that was outdated a year ago.

But it’s not just IT companies that have proprietary technologies and interfaces. Big electronics companies do this too for most of their consumer (and even enterprise) electronics, including companies like Samsung (and its new Mobile AP core) and Sony (and its new ultra high definition TV technology).

And while there is nothing wrong with proprietary technology, as a company needs some assets in order to survive, the lengths at which some companies go to keep it secret and protect it, in a world where data needs to be shared and products need to be utilized with other products makes development (and the supply chains that rely on that development), a nightmare.

We need open standards and open interfaces. The sheer existence of IE alone should make that clear. (There’s a reason that many new IT start ups simply won’t support it anymore, and that’s because they can write stuff that runs almost flawlessly in Chrome, Firefox, and a dozen of other browsers or that runs almost flawlessly in a single version of IE on Windows platforms only, but not both. Since Chrome and Firefox and similar clone browsers run on all major platforms, and IE doesn’t, and since Chrome and Firefox almost fully support the open standards, whereas IE supports the Microsoft standards and those portions of the open standards it feels like, and, to top it off, [older versions of] IE allows case insensitive JavaScript!) Restrictive proprietary standards and interfaces just make life unnecessarily difficult.

But too many companies are too big and powerful, so it’s not going to happen and we’ll be forever wasting countless hours checking interface requirements, versions, and support availability instead of focusing on whether or not the technology meets our needs and will help us get our work done. It’s more daily damnation for all of us.

Today Nintendo Lowers its 2DS Price to Just 99.99 USD

In the ongoing battle to milk every cent out of an obsolescing platform before it’s time comes to an end, today, as per ars technica, Nintendo lowers its 2DS price to 99.99 USD.

Why is this significant? It emphasizes a harsh reality of Sourcing in just about any technology or non-raw material category. Whatever you’re sourcing today, you won’t be sourcing tomorrow, and if you are, chances are the organization won’t be around much longer as sales will dry up, the balance sheet will dip into the red, and bankruptcy will be inevitable.

But should it be this way? In the age of the PC, even though, as Weird Al clearly pointed out in the now classic It’s All About the Pentiums, it was obsolete before you opened the box, it didn’t mean that you had to throw the whole thing out and get a new one to take advantage of advancements. Motherboards had removable processors extra slots and you could throw in or replace cards with math co-processors, better video cards, parallel and serial device interfaces to printers, scanners, and analog signal converters, etc. Now, you knew that eventually you would have to upgrade when a better bus came along or the register size doubled, but even then the new mother boards came with interface slots to the previous generation cards so you could keep using them until you were ready to replace them. You could keep the same case for the better part of decade with smart upgrades.

Now we have slim case laptops where everything is built in and nothing is upgradeable. You have to buy a whole new unit every two years. Not only does this mean Sourcing needs to source a whole new product design at least every six months, but it also has to focus on reclamation. Many modern electronics, especially those that run on cellular or wireless networks, require a significant amount of rare earth minerals and expensive metals that need to be reclaimed due to the limited supply. Plus, in many locales, it’s illegal for a consumer to throw it out, and not only do they need to take the product to a recycling location, but some locales, such as the EU, require the producer to take the product back and appropriately recycle it.

But you know all this, as SI has been ranting about this and the need to design for recycling since the beginning, but, at this point, that’s not enough.

At this point, SI really thinks that all products need to be designed for perpetual upgrade. It should be possible to replace all components of a device as needed as they wear out or need to be upgraded. And it needs to be easier than it was with old desktop computers where you had to open the case, remove a bunch of wires to get to the card/drive/processor, do a precise sequence of presses, twists, and pops to safely get the component out, do the reverse to get it back in, reattach the wires, put the case back on, and then power up and test you don’t cross any wires (while wearing rubber gloves, just in case).

Each component should be a self contained “box” with a standard interface connector, using an upgradeable design that can support the fastest speed the configuration of connected components can effectively support. For example, a copper-based multi-pin connector (which, as demonstrated by Thunderbolt and USB 3.1, can support data transfer rates in excess of 10 Gbit/s) for low-end consumer devices and optimal connections (which, as multiplexing technology, will allow faster and faster transfers in the future) for high-end consumer devices and business devices. Boxes should have multiple smart connectors that can register the type of device they are connected to, and the devices they are connected to (as the components will communicate over an internal high-speed network), allowing the device to be upgraded with new components, and capabilities, not imagined when the initial set of components were first built.

For portability, durability, and weather-proofing, custom enclosure boxes could be built that would hold a standard set of components that would represent a power-house desktop computer or a portable tablet/laptop (where the screen slid out of a sheath and plugged in to the top of the main box and the keyboard folded down).

We may never see this, but imagine how much easier it would be for everyone if the same components could be used for years, investments lasted longer, and Sourcing strategies could be more consistent and predictable.

Just a revelation encased in a rant triggered by a reaction to another price reduction required by planned obsolescence.

Procurement is Still in the Technology Dark Ages

A recent post over on Deal Architect discussed how, despite claims to the contrary by recent analyst firms, most organizations are still in the technology dark ages, and this goes double for Sourcing and Procurement.

Not only is it the case that most organizations do not have modern e-Sourcing and e-Procurement platforms, but many are still stuck on outdated MRP and ERP systems that actually hinder, instead of help, Supply Management.

Consider the plethora of problems with ERP systems that often make it worse than not having a system at all:

There is generally little requisition management and no sourcing / tender / RFX support. In an ERP the process starts with a purchase order, flips into a goods receipt, and, maybe, just maybe, correlates with an invoice for payment.

There is generally little support for any type of real analysis. There is usually a built-in report library that has a few standard reports on suppliers, products, bills of materials, invoices, and payments.

There is only one schema, and it generally doesn’t lend itself to any particular form of analysis, reporting, or inquiry beyond the built in reports and any sort of global trade analysis, import/export analysis, tax analysis, or tariff analysis is just a pipe dream.

There’s a reason that Sourcing Innovation recently blogged about how hose that still rely on ERP could end up in the supply chain disaster record books and that is because ERP systems are not a supply chain management platform. But it, and maybe a few free web tools, are the best many organizations still have, and that has to change.

Especially when many organizations still pump millions of dollars into these platforms that don’t adequately support Procurement, don’t adequately support Sales, and don’t adequately support modern logistics and inventory management in the age of 3PLs (third party logistics) and VMI (vendor managed inventory).

Investments need to be made in the right products and platforms that serve the core needs of each department, starting with Sourcing and Procurement.  And there are plenty out there.

Contract Lifecycle Management VII: Do You Know What The Nice-to-Haves Are?

In Part I of this series, we argued that CLM, short for Contract Lifecycle Management, while arguably one of the most humdrum acronyms in the Supply Management space, is also one of the most important. This is because, as summarized in Part III of this series, it overlaps S2C, P2P, and, as a result, S2S/S2P as well as intersecting with risk management, performance management, change management, and supplier (relationship) management. In other words, CLM touches almost every aspect of Supply Management and is taking a central place in your Supply Management organization.

However, as noted in previous posts, up until now, CLM has not been well defined and the best definition, which could arguably be that given by Gartner (see Part I), has been, more or less useless, because you already know proper CLM is a good process supported by a great platform. What you need to know is what that platform is as vendors, analysts, peers, and even professional organizations don’t, or won’t, tell you. That’s why, in a landmark effort, Sourcing Innovation and Spend Matters, as the two leading independent authorities on Supply Management, led by the doctor, the maverick, and the prophet, have joined forces to define, publicly and openly, the core Supply Management platforms, starting with CLM.

In prior posts we elucidated the need for a core CM (Contract Management) platform because traditional Supply Management platforms aren’t enough, in Part V we outlined the must-have core capabilities of a CM platform, and in Part VI we discussed the should-have capabilities that should be mostly present in any market-leading contract management platform.

Today we are going to outline all of the nice-to-have capabilities of a contract management platform, discuss a couple of them, and then refer you to “The Extended Contract Management Platform”, part seven of the landmark ten-part series co-authored by the doctor, the maverick, and the prophet over on Spend Matters Pro [membership required], for an in-depth discussion of each nice-to-have capability.

To make sure there is no confusion, a nice-to-have capability is a capability that, while not present in most solutions, can greatly increase the power, usefulness, and even the value of a Contract Management solution to your organization.

The following capabilities are defined as nice-to-have:

  • Contract Negotiation with Complex Pricing Support
  • Budget Management
  • Asset & Resource Management Tracking
  • License Management
  • Discrepancy & Sanity Checks
  • Violation Detection
  • Full Analytics
  • Contract-Based Project Management
  • Multi-Tier Contract Management
  • Process Integration with Sourcing, SRM, & GRC Platforms

As with the set of core and should-have capabilities listed in our previous posts, most of these you probably expect, and for some of these you probably have a fairly good idea why (even if you are not sure exactly what functionality is required for a proper implementation), but one or two of these are probably unexpected, including budget management and integration to 3PM/SRM (Third-Party Management / Supplier Relationship Management) & GRC (Governance, Risk, and Compliance) platforms. We’ll discuss budget management in this post, but refer you to The Extended Contract Management Platform, part seven of the landmark ten-part series over on Spend Matters Pro [membership required] for complete details on the other capabilities.

Budget Management is important because while spending should be against, and is supposed to be measured against, budgets, budgets are typically entirely disconnected from the Sourcing and Procurement process as they are created in the Finance system and typically not captured in most Sourcing and Procurement systems. However, once a contract is created, all spending on that contract needs to be tracked against the budgets that are impacted. Performance from Finance’s view is that not only is all spending covered by the contract made on contract at contracted rates, but that the impacted budget categories are also respected. If the contract is for office supplies, computing equipment, consulting services, etc., then just because all of the orders and invoices are compliant against the contract, it does not mean that the budget is being adhered to. If a department’s budget for office supplies is $10,000 and the department orders $20,000, it doesn’t matter if the savings was 20% if the department spent 100% more than they were supposed to. And since Contract Management naturally overlaps Finance, it’s a perfect place for budget management capability.

However, every other nice-to-have capability listed above could be just as valuable to an organization, and to understand why, and what the platform has to support with respect to those nice-to-have capabilities, check out The Extended Contract Management Platform over on Spend Matters Pro [membership required], part seven of the doctor, the maverick, and the prophet‘s landmark ten-part series fully defining CLM.