Sourcing Innovation: Next Generation On-Demand
Yesterday, I posted a blog describing the potential to securitize direct materials buying and selling. Today, I will tackle an unrelated subject, but also one that I've thought -- and blogged -- about in the past: next generation On-Demand. In a previous post on the subject, I wrote that future On-Demand approaches will "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." But this sort of thing is just the start. The real power of On-Demand will come when providers learn how to leverage the user network as the strategic advantage of the application itself. Early examples like this already exist. Consider how Open Ratings, for example, aggregates supplier financial, operational, and performance data from many sources -- including the users themselves -- to better predict supplier financial viability. In this case, the distributed eyes and ears of dozens of customers play a critical role in improving the predictive nature of the solution.
The Open Ratings approach collects, centralizes, and analyzes information, and only then pushes out its supplier viability predictions to users. But other next generation approaches will probably rely on decentralized information query, retrieval, and analysis. In this context, I was blown away by the agent-based search approach that Vinimaya already deploys to search, aggregate, and pull disparate punch-out data in real-time, accomplishing a level of extended catalog search and information presentation which the eProcurement and network providers cannot begin to achieve with their current technology. Note to Ariba, Ketera, or Perfect: one of you should pick up Vinimaya, as their punch-out search capability would be a huge competitive asset on the network side. At a conference I attended earlier in the year, Hackett's Pierre Mitchell posited a similar decentralized search model that could revolutionize the spend visibility and analytics market.
But next generation On-Demand will offer more than just network intelligence and better access to decentralized information. They will also enable a new type of decentralized service delivery – a virtual knowledge and action network, if you will. As I wrote in an earlier post on the subject, "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."
I chuckle when I think about the power that first generation exchanges such as Covisint might have gathered if they were able to embrace the power of new On-Demand approaches to leverage the collective intelligence, skills, and distributed information and sensing ability of their member participants. Truth be told, 99% of first generation (i.e., current approaches) On-Demand models only deliver value through reducing the cost of ownership for member participants of existing types of technology offerings -- or customers -- rather than offering a new value proposition entirely. Granted, there are other small benefits as well, such as reduced deployment risk, frequent updates, ease of use, etc. But nothing in the current model delivers a fundamental new type of value. There's nothing wrong with this -- and I say this as a card carrying member of the On-Demand camp -- but I believe we're all leaving far too much on the table if we continue to treat On-Demand as just a shared-services approach to defraying application deployment and delivery costs. The potential is so much greater!
- Jason Busch
The Open Ratings approach collects, centralizes, and analyzes information, and only then pushes out its supplier viability predictions to users. But other next generation approaches will probably rely on decentralized information query, retrieval, and analysis. In this context, I was blown away by the agent-based search approach that Vinimaya already deploys to search, aggregate, and pull disparate punch-out data in real-time, accomplishing a level of extended catalog search and information presentation which the eProcurement and network providers cannot begin to achieve with their current technology. Note to Ariba, Ketera, or Perfect: one of you should pick up Vinimaya, as their punch-out search capability would be a huge competitive asset on the network side. At a conference I attended earlier in the year, Hackett's Pierre Mitchell posited a similar decentralized search model that could revolutionize the spend visibility and analytics market.
But next generation On-Demand will offer more than just network intelligence and better access to decentralized information. They will also enable a new type of decentralized service delivery – a virtual knowledge and action network, if you will. As I wrote in an earlier post on the subject, "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."
I chuckle when I think about the power that first generation exchanges such as Covisint might have gathered if they were able to embrace the power of new On-Demand approaches to leverage the collective intelligence, skills, and distributed information and sensing ability of their member participants. Truth be told, 99% of first generation (i.e., current approaches) On-Demand models only deliver value through reducing the cost of ownership for member participants of existing types of technology offerings -- or customers -- rather than offering a new value proposition entirely. Granted, there are other small benefits as well, such as reduced deployment risk, frequent updates, ease of use, etc. But nothing in the current model delivers a fundamental new type of value. There's nothing wrong with this -- and I say this as a card carrying member of the On-Demand camp -- but I believe we're all leaving far too much on the table if we continue to treat On-Demand as just a shared-services approach to defraying application deployment and delivery costs. The potential is so much greater!
- Jason Busch
you're right in that something like a Zycus/Vinimaya combination (working in conjunction with supply registries like mfg.com, openratings, D&B, marketplaces, etc.) to emulate a Google-like a real-time "guided buying" experience to the end user will be as natural as a shopping cart (patented by ePlus of course - oi vay!) metaphor a la Ariba and Amazon. And real-time decision support integrated into a structured workflow will indeed have to become more complex and knowledge oriented.
there's a (very) few forward-looking CPOs that are thinking about implications of social/knowledge networking on their business, namely doing better talent management and supply intelligence. Think mySpace/LinkedIn/Edmunds meet the Ariba operations center. Remember now defunct 'question.com'?...from 2000...
"Question.com's eBusiness services turn questions into commerce by connecting people in need of information to the expert sources with answers. As a result, buyers gain the ability to make informed, merit-based decisions; sellers gain the ability to differentiate and build brand equity; and eMarket Makers gain the ability to become trusted and valued information sources." ahhh, those were the days! So, who will step up? I was hoping app vendors could've done it (e.g., remember PeopleSoft Business Network), but heck, try to even find a SaaS deployment of SAP (Bueller? Bueller? ok, Accenture maybe starting to get there). One of the elk-lodge dinosaur non-profits or CSSL? nah. Maybe the once and future king of the munchkins (Ketera, Procuri, Perfect, Iasta)? maybe. $250K market reports from ShareMax (RIP!) or D&B? nope. Emptoris? nah, too much money dumped there already. I think Ariba has the biggest opportunity if they can monetize more innovatively than market making - you gotta cannibalize if you want to energize! Coupa? 'Open source supply knowledge". Lots of possibilities. To quote Bruce Richardson (who I hear has "left" AMR, although still occasionally writing and likely keep his "options open") who quoted Ken Sharma....."All things are possible"!
Alas, I wish we could see your thoughts more often! Stay foolish!
What if, for your site content to be used by Google, you had to build a Punchout with Google, or send them a copy of your site content every few weeks, which is the case with a supplier whose customer is using Ariba, Oracle, etc.! If that was the case, Googles founders would be driving Ramblers in instead of Gulfstreams! Seeing I mentioned Punchout...
J - appreciate the mention (Vinimaya). I'm really starting to hate the term "punchout" because it's really just an EDI implemention that uses XML as the text language in place of ansi or ascii text, creates many usability issues and functionality limitations, and also requires a major IT investment by both sides (buyer and seller)...nothing really good there. In contrast, Vinimaya's technology can search, parse and syndicate content from ANY online source (offline sources like databases and spreadsheets too), right from the HTML interfaces, with or without the XML interfaces punchout provides...only one side (buyer or selller) needs the Vinimaya technology for the process to work.
Also, the consensus of my marketing people is we need to do a better job differentiating and distancing ourselves from "punchout", and I alway listen to my marketing people (unless they're wrong)!