On-Demand: The Next Generation
Even though I know that Tim Minahan and David Bush, two friends and fellow bloggers that subtly pimp their On-Demand Spend Management solutions in their virtual pages, will take me to task for saying this, I'll do it anyway. So here goes: the current generation of On-Demand Spend Management applications is but a shadow of what they could be. Rather than take advantage of the most powerful, inherent advantages of online, networked models, all Spend Management vendors that deploy On-Demand capabilities today have focused on evolution, not revolution. What do I mean by this? The current generation of On-Demand solutions is essentially a faster and cheaper way to gain access to legacy installed application models. Don't get me wrong. This is a good thing. Today's On-demand solutions reduce up-front costs, cut out IT, and create a cycle of frequent upgrades for customers, while enabling steady, recurring revenue streams for vendors. I'll admit that there's significant benefit to this, but I also believe that vendors are selling themselves -- and their market potential short -- by merely operating in this paradigm. The potential for On-Demand is so much greater. We need revolution, not evolution!
What will the next generation of On-Demand applications look like? For one, they'll incorporate external content and insight as a fundamental part of their value proposition. For example, rather than just include the capability to configure a business process for global sourcing and category management, they'll include insight into supplier capabilities and supply market conditions on a continuous basis. Vendors might decide to license this capability from third parties in syndicated content models, or they might provide it themselves. But they'll be forced to offer the option because access to this type of embedded information will become the ante to compete.
Next generation On-Demand models will also leverage community and shared instances for the benefit of all participants -- not just to reduce the cost to deliver applications via multi-tenant delivery models. Consider the power of a community like eBay or Zagat.com to provide feedback and insight to all members. Users of On-Demand applications, for example, could share their experience in a feedback or ranking system not only with different suppliers, but also on business processes, internal best practices, and other areas.
Ultimately, On-Demand solutions will have the power to transform internal Spend Management service delivery models themselves. For example, consider how an On-Demand platform could enable the creation of virtual shared services teams between organizations based on processes, skills and availability. A castings category manager from a non-competitive automotive company could identify and work with her counterpart from an industrial manufacturer to share or barter processes, information, and even available capacity and on-the-ground global resources through an On-Demand application or hub. Consider this an On-Demand "skills punch-out" and shared services business process network if you will, made possible by entirely by On-Demand capabilities.
There's no doubt that the future of On-Demand Spend Management is incredibly bright. We're talking about a potentially incredibly transformative force here -- one that is far bigger than any standalone application area. My only question is who will get there first, preaching revolution, not evolution.
- Jason Busch
What will the next generation of On-Demand applications look like? For one, they'll incorporate external content and insight as a fundamental part of their value proposition. For example, rather than just include the capability to configure a business process for global sourcing and category management, they'll include insight into supplier capabilities and supply market conditions on a continuous basis. Vendors might decide to license this capability from third parties in syndicated content models, or they might provide it themselves. But they'll be forced to offer the option because access to this type of embedded information will become the ante to compete.
Next generation On-Demand models will also leverage community and shared instances for the benefit of all participants -- not just to reduce the cost to deliver applications via multi-tenant delivery models. Consider the power of a community like eBay or Zagat.com to provide feedback and insight to all members. Users of On-Demand applications, for example, could share their experience in a feedback or ranking system not only with different suppliers, but also on business processes, internal best practices, and other areas.
Ultimately, On-Demand solutions will have the power to transform internal Spend Management service delivery models themselves. For example, consider how an On-Demand platform could enable the creation of virtual shared services teams between organizations based on processes, skills and availability. A castings category manager from a non-competitive automotive company could identify and work with her counterpart from an industrial manufacturer to share or barter processes, information, and even available capacity and on-the-ground global resources through an On-Demand application or hub. Consider this an On-Demand "skills punch-out" and shared services business process network if you will, made possible by entirely by On-Demand capabilities.
There's no doubt that the future of On-Demand Spend Management is incredibly bright. We're talking about a potentially incredibly transformative force here -- one that is far bigger than any standalone application area. My only question is who will get there first, preaching revolution, not evolution.
- Jason Busch
The Telegraph appealed to large companies due to the complexities of Morse Code and the ability to communicate over long distances. However, this was just part of a subset of a basic need: communication. Western Union got caught out satisfying its large, profitable companies, missing out on telephony, and its customers ended up buying telephones anyway.
eProcurement and its associated applications appealed to large companies because of the complexities of installation, training, integration and upgrade. However, this was just part of a subset of a basic need: saving money. Will Enterprise Software companies similarly get caught out satisfying their traditional customers, and miss out on a new service, and their traditional customers end up buying it anyway ?
In the famous book the Innovators' Dilemma, this is highlighed as the fact that non-consumers look small and unattractive to the incumbent. Who are Spend Management non-consumers ?
• Staff at Nike are putting together the Women’s beach volleyball championships in San Diego. They have a budget of $10m. They want to manage the budget, find suppliers, manage staff expenses, hire temporary contractors, approve and pay invoices and submit a final report to Nike.
• San Jose Congregational Church has an annual budget of $800,000. They have very rigorous rules for re-imbursing parishioners for expenses and want to be able to make sure they get competitive bids for their sanctuary refurbishment project
• Marios is building a new bathroom. He is spending £200,000, but he doesn’t know where the money is going. He’d like to be able to review the quotes the contractor is getting from the plumber, electrician and architect.
• The American Redcross just wired $35m to Medicins sans Frontiers who have people managing disaster relief in Indonesia. They’d like to see how their money is spent, and have an oversight of any large or controversial purchases.
• H&R Block has hundreds of independent tax advisors working out of very small offices. They’d like to offer a list of approved services for printing, couriers, notaries using partners they have set up arrangements with.
• The City of Boulder Colorado Chamber of Commerce wants to encourage their members to use in-city firms. They want to put together lists of suggested suppliers with standard methods of requesting and responding to quotes.
An On-Demand next generation Spend Management vendor doesn't have to be better than Ariba, it just has to be better than nothing.