Buyer Beware: Buzzwords Are In The Air ...
This morning, I'd like to welcome a guest blogger to Spend Matters. Charles Dominick is President of Next Level Purchasing and also authors the blog Purchasing Certification. For this guest post, I asked Charles to jot down some of his opinions about On-Demand Spend Management.
It's difficult to miss how, all of a sudden, purchasing and supply management technology companies are touting "on demand" spend management solutions. But I am personally concerned that the term "on demand" is being misused.
And the worst part about the use of "on demand" is that it somewhat positions the purchasing and supply manager for perceived failure.
What do I mean?
Well, let's think about the general perception of "on demand." One example of an on demand service is on demand movies available through your cable television provider.
If you decide you want to watch "Big Momma's House 2" at 1:43 AM, a cable provider's on demand service will allow you to watch that movie, from the beginning, at exactly that time.
So, an on demand spend management solution will enable you to begin executing eProcurement transactions at a moment's notice too, right?
Wrong.
While it is true that eSourcing and, to an extent, spend analytics solutions can be implemented rapidly, the eProcurement segment of any spend management suite is not necessarily one that can be implemented in an hour, a day, or a week.
"But the system is hosted on the spend management solution provider’s servers. You need no IT support. Doesn't that mean that you can have an instant implementation?"
Well, in my experience, it is not the hardware and software installation that is a critical path task. The tasks that can choke an eProcurement implementation are things like:
1. Identifying and implementing account code access constraints 2. Identifying and implementing approval rules 3. Integrating the output of the system with your financial systems 4. Gathering, formatting, and loading data, like users and ship-to addresses 5. Enabling suppliers that aren’t in the solution provider's network 6. Rigorously testing the system
So, on-demand may actually mean 70, 90, 120, or more days between contracting with a solution provider and actually executing your first eProcurement transaction. While that may be perceived as fast by some standards, executive management will not likely view it as on demand.
And who is to blame? Probably the purchasing and supply manager!
A related caveat about on demand, hosted spend management solutions is the claim of no IT support or hardware or software to buy. That's not necessarily 100% true in all cases.
What if some of the features of the spend management solution require Internet Explorer 6.0 Service Pack 2 and not all of your mid-market company's users' computers have that version? Will there be IT support required to upgrade? You bet.
What about integration? Will there be IT support required? You bet.
Now am I criticizing these spend management solutions themselves? Absolutely not. There are some excellent solutions out there with great functionality and the capability to support rapid return on investment.
But I am criticizing how they are marketed.
Spend management solution providers, listen up: Just because "on demand" is being used to market everything from cable movies to printing services doesn't mean that you have to use the term for marketing your solutions. If everyone else jumped off a bridge ...
So sell your value, not the buzzword of the day.
You just may be keeping your friend, the purchasing and supply manager, out of the proverbial hot water.
Charles Dominick authors the blog: Puchasing Certification. He suggests that you also read a related blog post here.
It's difficult to miss how, all of a sudden, purchasing and supply management technology companies are touting "on demand" spend management solutions. But I am personally concerned that the term "on demand" is being misused.
And the worst part about the use of "on demand" is that it somewhat positions the purchasing and supply manager for perceived failure.
What do I mean?
Well, let's think about the general perception of "on demand." One example of an on demand service is on demand movies available through your cable television provider.
If you decide you want to watch "Big Momma's House 2" at 1:43 AM, a cable provider's on demand service will allow you to watch that movie, from the beginning, at exactly that time.
So, an on demand spend management solution will enable you to begin executing eProcurement transactions at a moment's notice too, right?
Wrong.
While it is true that eSourcing and, to an extent, spend analytics solutions can be implemented rapidly, the eProcurement segment of any spend management suite is not necessarily one that can be implemented in an hour, a day, or a week.
"But the system is hosted on the spend management solution provider’s servers. You need no IT support. Doesn't that mean that you can have an instant implementation?"
Well, in my experience, it is not the hardware and software installation that is a critical path task. The tasks that can choke an eProcurement implementation are things like:
1. Identifying and implementing account code access constraints 2. Identifying and implementing approval rules 3. Integrating the output of the system with your financial systems 4. Gathering, formatting, and loading data, like users and ship-to addresses 5. Enabling suppliers that aren’t in the solution provider's network 6. Rigorously testing the system
So, on-demand may actually mean 70, 90, 120, or more days between contracting with a solution provider and actually executing your first eProcurement transaction. While that may be perceived as fast by some standards, executive management will not likely view it as on demand.
And who is to blame? Probably the purchasing and supply manager!
A related caveat about on demand, hosted spend management solutions is the claim of no IT support or hardware or software to buy. That's not necessarily 100% true in all cases.
What if some of the features of the spend management solution require Internet Explorer 6.0 Service Pack 2 and not all of your mid-market company's users' computers have that version? Will there be IT support required to upgrade? You bet.
What about integration? Will there be IT support required? You bet.
Now am I criticizing these spend management solutions themselves? Absolutely not. There are some excellent solutions out there with great functionality and the capability to support rapid return on investment.
But I am criticizing how they are marketed.
Spend management solution providers, listen up: Just because "on demand" is being used to market everything from cable movies to printing services doesn't mean that you have to use the term for marketing your solutions. If everyone else jumped off a bridge ...
So sell your value, not the buzzword of the day.
You just may be keeping your friend, the purchasing and supply manager, out of the proverbial hot water.
Charles Dominick authors the blog: Puchasing Certification. He suggests that you also read a related blog post here.
Well put. Solution providers are once again focused on the wrong messaging. On-Demand, SaaS, or whatever, it's all about providing a solution (not just technology) to solve a critical business issue for customers: managing, not just capturing spend.
My thought, give the platform away. The value is not in the monthly subscription fee, which is a commodity based business (my requisitioning process is prettier than yours)...for God's sake this is a basic transaction based process. Instead, true providers should be working with companies on the merits of linking "what they buy" and "how they buy". In my work experience, the external market dynamics of sourcing a category are unique to the commodity; however, the actual transaction comes in 6 to 8 flavors...that's it! (for example, sku-based, travel, 3rd party managed service, labor based, etc.). The goal is to link the "what you buy" with "how you buy" to realize savings!
Solution providers need to be in the 'gap fulfillment' business for sourcing, with their services overlapping the capability & constraint issues of their customers. On the downstream, providers need to focus on the 6 to 8 process streams so the sourcing output can flow cleanly to the bottom-line. This is the leg work...the technology, at a minimum needs to provide this conduit, but the technology is a means to an end...
Finally, let the ankle biters fight over the low hanging fruit and argue the merits of feature functionality...a true solution provider will see that the technology for what it is (a key enabler), a technology company will see it as the holy grail.