New Non-Consultancy Model: Producing Results in Weeks Versus Years

In June 2009 I aired a broadcast titled Emerging Giants: The New Titans of the SaaS World which featured a number of organizations that were (or almost were) dominant players in the new SaaS-driven world of procurement automation.

It was an interesting 60 minutes which provided a brief glimpse into the mindsets of the company leaders of the upstarts whose approach to providing their respective solutions were tied to what has now become the non-consultancy model.

Specifically, and unlike their ERP-based counterparts where implementation timelines are traditionally measured in terms of years and millions of dollars, the new SaaS-based vendors operate in a world of months, weeks and yes even days. And they do it for a fraction of a cost of the SAP or Oracle-type licensing model which also includes a hefty and ongoing monthly maintenance fee.

Think of the ERP model as a race, although started, that never actually sees a runner reach the finish line — with the runner still having to pay to use the track. But people grew tired of paying and just walked off the track.

But did they go?

This is where disruptive innovation comes in to play because it provides a bonafide alternative to the accepted technologies of the day, many of which have been or are now out of touch with how the real world operates.

What is interesting is that most ERP-centric software (according to my March 2010 TMA House post) had “historically been delivered as an inflexible code,” which was myopically focused on the “originally intended application.” This is what I have always referred to as software development using a rigid equation-based model.

Conversely, the bolt-on applications (and I have always considered the term “bolt-on” to be both inaccurate and even to a certain degree condescending), were structured around an agent-based model utilizing artificial intelligence coding. This meant that these “best of breed” solutions were “easier to manage, upgrade and connect.”

Despite the apparent benefits of the new and highly adaptable “open system architectures,” the “underlying philosophy” of early ERP systems focused more on internal integration versus real-world operability. Translation: the business model of the ERP giants was built around a cumbersome and inflexible code that provided a perpetual revenue stream to support a bloated cost model. Introducing bolt-on solutions that could easily accept modifications, additions or linkages to external software, thereby dramatically reducing both the lengthy implementation time lines and corresponding high costs presented a significant barrier to entry for the Oracles and SAPs.

However, the challenge until recently is that the market was trapped in the aforementioned perpetual loop of a payout without end for several reasons, and was therefore slow to embrace the promising alternatives.

Market perception has now changed, as reflected in former SAP executive John Wookey’s acknowledgment late last year that “he doesn’t blame these customers for going out and getting SaaS.”

Although Wookey did add cautionary caveats such as bringing “cohesion to the model, a cure for SaaS sprawl” and, my personal favorite, “on-demand orchestration,” in an effort to legitimize ongoing ERP vendor influence, the truth is that the days of the big solution vendor’s control over the market’s overall direction are indeed waning. Especially has it pertains to convenient and cost effective integration with SaaS solutions.

In a comment that underscores this new reality Ravi Thakur, a senior executive for California-based SaaS player Coupa, made the observation that “we don’t even need to contact SAP, let alone engage them in any meaningful way to implement our solution.” They are “not necessary to the implementation process.”

In fact, Thakur added that SaaS implementation flexibility actually enhances the value of an existing ERP platform by “delivering solutions that extend existing enterprise investments to make these systems more valuable to their respective organizations.”

In short, SaaS is the ideal amalgam of technological advancement and superiority, cost efficient acquisition and a simple and seamless integration process that a holistic enterprise thinking CPO can champion with confidence.

Over the past six years, Aberdeen Group has unveiled a multitude of strategies and approaches for companies struggling with the processes around expense management, procurement and other functions that have significant financial repercussions if executed inefficiently.

This five-part blog series, hosted by Coupa, will highlight the advancements made in both the expense management and procurement arenas and detail how cloud technology solutions have become a critical component of modern programs.

Aberdeen’s Expense Management for a New Decade research study, published in February, detailed the evolution of expense management as a once-back-office function that has been catapulted into a strategic realm due to the many cost and efficiency benefits that arise from effective management of expense-processing. The new report also found that the average company spends over $23.00 to process a single expense report, a figure, which translated across tens of thousands of expenses for the typical organizations, will result in critical effects on corporate travel budgets.

The Expense Management for a New Decade study was meant to be a real-time perception of the expense management function and the specific solutions required to streamline processes and drive financial value.

When looking at Aberdeen’s Best-in-Class Maturity Framework for the report, it was clear that top-performing organizations (top 20% level of performance across expense-processing costs and compliance to corporate travel and expense policies) are relying on particular approaches to enhance their expense management programs. One such strategy is reliance on cloud-based technology solutions.

Blog posts to follow over the next several weeks will address these issues and detail how cloud technology fits into the current spectrum of both procurement and expense management, as well the cloud’s link to operational performance and efficiencies within key processes.

Upcoming posts will not only feature my analysis on the expense management and procurement markets and hard-hitting data findings fresh from Aberdeen research, but also comments and real-life success stories from end-user organizations, including Alta Devices and the California Academy of Sciences. We’ll detail exactly how both of these companies have leveraged cloud-based technology to streamline key processes and generate true corporate business value.

Thanks,
Christopher
chris.dwyer@aberdeen.com

Here at the Coupa Cabana, we strive to provide industry professionals with the most salient and valuable information and insights on procurement and spend management issues to help them achieve the bottom results they seek. However, from time-to-time we like to reach outside our own walls and welcome thought leaders from around the industry to provide their own perspectives on what advancements are being made in procurement and spend management – particularly when it comes to how cloud technology fits into the current market landscape.

Starting today and continuing each week for the following weeks, Coupa Cabana will be featuring a five-part blog series from Christopher Dwyer, a research analyst with Aberdeen Group. Christopher is a recognized specialist in the fields of procurement, sourcing and complex category management, and provides guidance and direction to procurement and sourcing professionals around the globe, helping them streamline the procure-to-pay process and drive superior performance. As such, he is an ideal industry thought leader to provide Coupa Cabana’s readers with compelling and valuable insight and perspective into the topic of the future of procurement and expense management and how cloud technology solutions have become a critical component of modern programs.

We hope you enjoy Christopher’s posts and look forward to hearing your feedback and insight on the topics presented in the comments section.

During my periodic discussions with different industry stalwarts, cloud computing often comes up. Normally these discussions focus on comparing the benefits of the Cloud to traditional ways of hosting your enterprise data. If you’ve read previous blog posts I’ve written on this subject, you know that I believe the Cloud brings several major benefits to the table, including:

* Requires no capital expenditure
* Move from license to subscription
* Flexibility of change
* Full functionality availability
* More data security
* No support infrastructure required
* Ease of implementation

Most people I talk to agree that a lower cost of operations is a huge advantage, especially now when reduction in TCO and increase in ROI are among the major business metrics on which the performance of the business is measured. For the rest of the benefits, I normally get questions on how these features of cloud computing translate into actual  improvements in tackling day to day challenges. A very fair question indeed!

So, let me take a different route here and highlight the main capabilities that an organization would like to have in its repertoire. I agree that these will vary from industry to industry and again within industry from company to company. Other factors that might influence this wish list is the current status of the company as best in class, average or laggard. Even so, every company’s wishlist would include something like the following:

1. To react to changing demand patterns in the shortest possible time
2. To keep pricing competitive to remain ahead of competition
3. To avoid losing customers to competition just because they could not be delivered a particular product or service in the expected time period
4. To keep the highest possible focus on their core strengths and business without having to worry about the support infrastructure
5. To improve operational effectiveness and efficiency at least possible cost

All of these objectives or capabilities above can be achieved more easily with the help of the Cloud, as you can pick and choose things like where, how, and how much enterprise data you’ll store, which features of the application you want and for which geography (as it is mostly user-base based), and there’s no need to be concerned about attracting  and paying experts with specific skill sets to support your business. This strengthens organizational abilities to reduce time to market, and to improve customer responsiveness and overall operational effectiveness by leveraging best in class features without paying extra in huge licensing costs. According to one private study that gauged the impact of outsourcing organizational non-core work to BPO companies and the benefits it can bring to the table, if employees have 15% more time to devote to their core work, the chances of innovation in work increases by 40%. So in a way, the Cloud is a big facilitator in improving your innovative abilities.

So how can best of breed solutions increase your capability to innovate? We all are well aware of the fact that the current set of established ERP products empowers us with a single source of truth, a strong data repository and reporting system as well as a system to record all enterprise level transactions. It has improved staff efficiency and reduced staff costs by providing automated solutions and assisting in decision making. The first (& second) generation of ERP products did all that organizations wanted.

But as they say, change is only thing that is constant these days, and the ever changing demand patterns and expectations of customers forced businesses to reexamine supply chain costs and staff costs. Best of breed solutions in niche areas like warehouse management, indirect procurement, transportation management or collaborative planning & forecasting emerged, and the beauty of their architecture was their seamless integration with the base ERP products. This meant that customers did not have to alter their IT roadmap much and could take benefits of these solutions.

One of my favorite areas in this space is indirect procurement and sourcing where revolutionary products like Coupa Software emerged from nowhere a few years ago and demonstrated to the world about how easy procurement practices and processes can be handled to increase efficiency and lower costs. This not only brings cost benefits to the customers but also provide them the best of features like:

• Integrated internet search on best deals available
• Personalizing the product options or vendors
• Multi currency support
• No click requisitions
• Mobile phone PO approvals
• Integration with the social web

This isn’t even close to a full list features provide by Coupa but it ensures that the staff efficiency is at its highest when using this solution so that time is freed up for employees to focus on innovation.

About the Author:

Puneesh Lamba is a seasoned Supply Chain Management and ERP Expert who has more than 16 years of experience in SCM, ERP and Distribution areas in multiple industries and various organizations. He has worked across the globe with his major assignments in India, Americas and Europe. He keeps on contributing in the ERP and SCM space leveraging the knowledge he has gathered over the years and likes to debate on new trends as well as strategies for organizational growth in his areas of interest.

Today’s post is the third in a three-part series by author, PI Window on Business host, and ProcurementInsights.com blogger, Jon Hansen. Part One of this series on Vendor Blogs can be found here, and Part Two on Interactive Intelligence can be found here.

Special Introduction to Procurement Professionals, from John:

Some may suggest that Social Media, the “Power of Publicity” and “Increasing Your Profile,” have very little to do with the world of procurement.  However, and as we are finding out, by not paying attention to these important areas of professional development it can, and often does have serious consequences regardless of your profession or area of practice.  Just ask the individuals whose expertise is in the areas of Lean and Six Sigma.

Amongst the first to be laid off in large numbers were those professionals whose very role was to drive the efficiencies and savings that were supposedly indispensable during an economic downturn.

As we have discovered in recent segments of the PI Window on Business Show, remaining part of the faceless herd no longer guarantees job security, let alone advancement within an organization.

It is within this renewed lens that I invite you to listen to my interview with Marsha Friedman. My own thoughts on the interview follow, below.

Why Purchasing Professionals Should Care About Personal Branding

There were many tremendous insights provided in my September 17th broadcast in which national radio show host, author and Public Relations Genius Marsha Friedman shared the “Three Step Method to Increasing Your Profile and Exploding Your Business” from her new book “Celebritize Yourself.”

One piece of advice that Marsha gave in terms of helping people to Stand Up and Stand Out in the ephemeral world of social media is to “write a book.”

While writing a book may be too ambitious a task or perhaps even a tad overkill for most purchasing professionals the strong underlying message is simply this: Have you done anything to build your personal brand and community of first level contacts?

As you know, it has always been my belief that purchasing professionals are more than the positions they hold in a company.  Like CIOs and CFOs, the artificially established historical boundaries associated with functional silos are becoming blurred.  This means that the traditional, and in retrospect narrow, definitions of one’s duties are ceding to a more holistic or enterprise-wide understanding of the many operational areas that were previously off limits.

Included in this broader horizon, is the need to effectively communicate and establish a brand presence with what is a diverse group of internal, as well as external stakeholders.  Many with whom the average purchasing professional has had little if any interaction.

This of course doesn’t mean ignoring the indigenous or traditional aspects of purchasing.  What it does mean is that we now have to view the world though a more enlightened lens that takes into account a bigger role on a much larger stage.

The challenge however is that the stage is becoming increasingly crowded which means that standing out and securing your future requires considerably more than just being good at your job.  Here of course, is the rub: Fear of self-promotion is the problem.

According to a recent study, “The fear of self-promotion is a condition in which even highly competent people receive far less in position, compensation and recognition than they feel they deserve. Doing the best job doesn’t always get the best rewards. Those rewards tend to go to people who promote themselves, what they’ve done and what they can do.”

Now I am not talking about the get up on the soapbox and broadcast yourself to the world mindset.  As the international guest panel of experts on my June 4th segment “The Psychology of Social Networking” stated with absolute certainty, telling the world how great you are will get you nowhere in a hurry.

It is therefore important to remember that those individuals who are most adept at leveraging social networking and social media start off by becoming involved in a group or a community of mutual interest.  They then look for ways to make a contribution to the group or community as a whole by responding to questions and sharing expertise.

In the process, these individuals build a reputation for making a positive contribution and, as a result establish their personal brand as experts in their respective areas of practice.  In short, personal branding is getting involved and delivering value to those with whom you come into contact and associate with on a regular basis.

Think of social networking as an accelerated multiplier in that it enables you to reach more people in a short period of time from the convenience of a single location. You just add the value.

Today’s post is the second in a three-part series by author, PI Window on Business host, and ProcurementInsights.com blogger, Jon Hansen. Part One of this series on Vendor Blogs can be found here.

Social Media and Procurement: Interactive Intelligence and the Emergence of Adaptive Learning Programs

Part 2 of 3: Social Media's Impact on Procurement

“Companies are scrambling to keep the skills of their buyers and supply managers up to the task of responding to wildly fluctuating costs and availability of key suppliers. They need high quality training courses that are easily and instantly available,” said ADR North America CEO Bill Michels, C.P.M. “The ADR Academy fills that need with nine key courses that anyone can take if they have Internet access and a credit card.”

The idea of adaptive learning (and its effects on Procurement) first came onto my radar when I received word that ADR North America was teaming with the Institute of Supply Management to “provide procurement and supply professionals with educational opportunities through the ISM – ADR School for Supply Management”.

My first reaction was to reflect back on the two-part PI Window on Business series titled “Is The Traditional Association Model Dead?”
It was an interesting and somewhat controversial series in that we assembled an international guest panel of thought leaders to discuss the changing dynamics of a profession and industry with which the majority of associations had seemed to have lost touch.

Of the many topics that were discussed, none stood out more noticeably than the declining value of the available certification courses which still seemed to reflect a Rodney Dangerfield, functional silo mindset of an adjunct position.
Trapped in a static time-warp that failed to recognize the strategic value of procurement, and its significant impact on increasingly complex supply chain practices within the emerging globalized enterprise, this “excuse me” ineffectiveness was reflected in listener comments, such as the following:

“Where it once did, the value gained from the traditional Association model can no longer compete for my attention. I need to collaborate bigger, faster, stronger – and at my convenience.
Associations could better leverage Web 2.0 to deliver a greater level of service to me as a supply chain professional by more actively, rapidly and efficiently aligning with the pace at which new, useful industry information becomes available – then delivering this information in an effective way, so as to keep me abreast of trends, best-practices and exchange ideas with fellow members; thereby making me a more valuable professional.
If done effectively, this would be a value proposition beyond what I see today in many other Associations. This value, in turn, may then attract membership at a higher rate; thus creating an even larger, and more valuable platform for so many to exchange real-life, real-time expertise and experience – again, contributing to my value as a professional.
The platform could also host polls for its members – such as rating the many certification and professional designation courses available to us. This service would be valuable to the many of us that seek continual professional development, but would appreciate our peers’ comparative assessments prior to making the spend.”
From Lance, Global Logistics Specialist, Panama (Maersk Logistics)

Growing sentiments like the one expressed above should have served as a general wake-up call for associations. In some cases, such as with ISM’s teaming with ADR, it did.

The Beginnings of Adaptive Learning: ADR Academy

Responding to the need to “collaborate bigger, faster, stronger – and at (the procurement professional’s) convenience,” the high quality courses which according to ADR’s CEO Bill Michels are “easily and instantly available,” deliver information in an effective way, so as to keep (the procurement professional) abreast of “trends and best-practices.” In short, adaptive learning is now a reality through the ADR Academy!
The key however, is that the real value is not confined to the convenient venue through which the curriculum is delivered.
ADR’s Michels, who is an author and acknowledged industry expert, brings to the table 20 years of experience with more than 200 clients worldwide.

The resulting 9 courses, which take between 90 minutes and 2 hours to complete, offer practical tools, hands-on exercises and case studies to help professionals to gain a working knowledge in critical areas of a modern supply chain practice.
Having had the opportunity to briefly review the Portfolio Analysis module, the aforementioned Michel’s expertise is clearly present in the material. The fact that ADR specializes in providing “high quality professional development programs for supply managers, using workshops, eLearning modules, Webinars and blended forms of teaching,” means that the ongoing veracity and relevance of the courses will be maintained to always reflect real-world conditions.

Referring once again to Lance, the Global Logistics Specialist from Panama, the ADR Academy is the answer in terms of making him (as well as professionals in general), more valuable to their companies and the industry as a whole.
This recent teaming of an ISM with an industry innovator and veteran who brings a practical perspective to the curriculum through a more relevant and accessible venue will likely continue. So too will the utilization of social networking groups and conversational platforms where professionals can meet and exchange knowledge and experiences.

In fact, the association model itself is likely to undergo significant transformations in which emerging media such as Internet Radio and Television will be leveraged to broaden the interactive venue to include worldwide affiliates. Replacing regional or physical Chapters, which are more representative of a somewhat disconnected, geographical focus of self-interest, these affiliations of interconnected communities of purpose will reflect the framework of the social networking world.
This will include everything from LIVE Event Feeds to multi-conversational platforms in which an unlimited number of individuals can communicate and disseminate reference material including video and audio media on the fly during a live conference or roundtable discussion.

Today’s post is the first in a three-part series by author, PI Window on Business host, and ProcurementInsights.com blogger, Jon Hansen. We will post parts two and three next week.

Over the past year I have written extensively about many of the emerging trends that are shaping or perhaps reshaping the world of procurement and the global supply chain practice.

From assessing the future of Outsourcing as a viable strategy (something that to this point in time has eluded many organizations), to the emergence of Software-as-a-Service “SaaS” and the corresponding technological breakthroughs associated with the utilization of agent-based application development models, to the mainstream recognition that Spend Intelligence is not merely the marketing hyperbole that some industry pundits had once proclaimed it to be.

While each of these as well as other trends are without a doubt significant, the potential  impact or reach is not nearly as broad as the effect that social media and social networking has, and will continue to have, on the profession and the business world as a whole.

Over the next few paragraphs I will touch on three specific areas of social media and social networking that will have the greatest impact on the industry.  What is worth noting is that purchasing professionals appear to be lagging behind their counterparts from other areas of the business world in terms of collaborative intelligence and personal branding.  This is a trend that needs to change if the role of purchasing is to evolve beyond the realms of a functional adjunct to a strategic influencer.

Trend #1: Conversational Marketing and the Emergence of the Vendor Blog

In previous articles I emphasized the importance of those involved in the purchasing (and the logistics and supply chain industry as a whole) to become active participants in the emerging world of social media and social networking – and no, they are both not one in the same.

Far too often however, when entering this new realm of one-to-one direct interaction, the majority of individuals as well as vendors merely attempt to transfer the old “look at me” broadcast model to this new medium.   This of course rarely if ever results in creating any form of a sustainable brand.

You only need to look at the traditional print media, and in particular the daily newspaper industry to gain a powerful point of reference.

Long time media industry veteran J. William Grimes predicted that all daily newspapers in the US would be gone within five years.  His prognostication, which was made at a San Francisco conference in July 2009, was based on some startling statistics.  Specifically, that the daily newspapers only received 15% of the more than $60 billion spent on advertising over the previous 12-month period, which represented a decline of 10% from a decade earlier.

Grimes also stated that only 5% of the population still read the dailies.  This combination of declining ad revenues and readership is reflected in the fact that venerable publications such as the New York Times are awash in the proverbial sea of red ink.

Seeing the writing on the wall, the New York Times entered their definition of “the social media world” through the launch of their on-line version of the printed daily.  The expectation of course was that this new electronic, web-based venue would recapture readership and subsequently the share of ad revenues, both of which they have been steadily losing over the past few years.

Much to their surprise and dismay, the electronic edition lost money as well.

The moral of the story, and one that would be best learned by anyone contemplating the necessary move into the realms of social media is simply this . . . the transfer of static, non-conversational information to an electronic format such as a blog or social networking group will not work.

As indicated in my new seminar “Leveraging Internet Radio and Podcasting to Establish a Sustainable Brand,” the rather pedestrian elements associated with the information repository framework of a web site will do little to gain and keep market attention.  Web site traffic, which has long been considered the measurement of a site or blog’s presence and influence, is largely irrelevant in this non-personal, unilateral engagement with the visitor.

This is why Alexa ratings mean very little in terms of true market reach.

Let me provide you with an example.

In June 2009, I launched the PI Window on Business Blog primarily as an adjunct support venue or medium for the PI Window on Business Show on Blog Talk Radio.

In that first month, there was a grand total of 217 visitors to the site.

In December 2009, the total number of site visitors grew to 6,144.  This past month (January 2010), we fell just short of the 10,000 monthly mark with 9,894 visitors.

Based on research, this trend in terms of percentage growth will likely continue throughout 2010.

Using traditional methods of measurement (e.g., Alexa) one might consider this to be a compelling indication of an emerging, sustainable brand.  While it certainly does demonstrate increasing awareness, it is the behind the scenes story that is most significant.

I am of course talking about the high level of cross-pollination that occurs with the PI Social Media Network’s other brands including the PI Window on Business show on Blog Talk Radio and the Procurement Insights Blog.

This cross-pollination also extends to a growing number of external venues including social networks, on-line resource sites and internet-based media outlets.

Collectively, these interconnecting venues facilitate a dynamic, real-time interaction through a conversational technology platform that engages and responds to the individual first.

Think of it along the lines of David Cushman’s analogy in which the means of communication have transitioned away from the broadcast-centric many eyes looking at a single stage, to a one-to-one interaction within communities of purpose.

Much like the proverbial honey bee returning to a hive, each individual serves as their own filtering, gathering and sharing facilitator which inevitably determines the viral potential of a particular message.

In short, instead of engaging or writing to the unknown masses, social media and social networks actually enable you to connect and ultimately build a rapport with the individual directly.  It is then the individual who spreads (re pollinates) the message to others within his or her network of contacts.  As a means of creating a point of common reference, think of it as a referral system on steroids.

For vendors who are now entering the realms of social media through the launch of a blog, the old adage that people buy from whom “they know, like, and trust” is one that they would be wise to remember in the context of building that level of personal rapport.  Or, as my good friend the Marketing Doctor Dr. John Tantillo so adeptly phrases it in the title of his new book, vendors would be well-advised to recognize and respond to the reality that “People Buy Brands Not Companies.”  (NOTE: In the case of purchasing and supply chain solution vendors, you can substitute “Technologies” in place of Companies.)

Therefore, and looking beyond the realms of technical interconnect-ability, your brand is like your signature or fingerprint.  It is personal and it is unique.  It is also at this level that you distinguish yourself in a highly competitive world.

In terms of a Vendor’s Blog, the audience is interested in your brand, which is also your unique and distinguishable personality.  It is this very “Personality,” according to Future Buzz’s Adam Singer, that is woefully lacking from the traditional mainstream’s highly polished and professional looking blogs.

In short, if I had myopically focused on driving traffic to the lone PI Window on Business Blog so that people could read about my company, and the services I offer or the products I sell there is no way, regardless of how professional or polished it is in appearance, that the blog would have experienced the same growth in readership activity.  This is the essential starting point.

However, and this is another key point to remember, you need to offer useful information in the form of “branded insight.”  It is this branded insight, which is centered on experience and expertise about a subject for which one has a great deal of passion versus a company name, logo or product offering, that builds the pre-requisite “know, like and trust” relationship.

The real question that remains is simply this . . . what brand is a particular Vendor looking to build through their new blog?