Emptoris Optimization -- Setting the Record Straight
Tonight, I'd like to welcome Olga Raskina, PhD., Optimization Engineer, and Ammiel Kamon, SVP Marketing, of Emptoris. They requested an opportunity to respond to Michael Lamoureux's post, "The Optimization Doc's Perspective on Emptoris" from Friday.
We agree with Jason, it is often wise to consult a doctor in an area where one is not an expert. However, if the 'Doc' renders an opinion without ever seeing the patient, one ought to question the prognosis, and a second opinion is likely required ...
Emptoris' overall offerings are second to none, and in this area we've received specific recognition from unbiased third parties (more on this below).
By Michael's own admission, he is not actually knowledgeable about Emptoris’ capabilities in optimization and advanced sourcing. And much of the post tries to ferret out information through cursory means. Failing to get substantive information, Michael concludes with an un-informed, doubt-inspiring negative opinion. Thus making his post nothing more than a long FUD piece.
The post includes some bold claims regarding the superiority of the Mindflow engine to Emptoris'. Since Mindflow had a very strong offering, and it was Michael's "baby", we can understand where he is coming from emotionally. But the reality is much different, particularly if one takes an informed view. Given that Emptoris acquired Mindflow and retained core engineers and product management talent, we are in a unique position to truly assess relative strengths of these two systems:
Here are just a few of the significant Emptoris advantages, in the area of optimization and event creation, over Mindflow:
- When there are conflicting constraints, the system will actually identify them (in MF the user had to manually look for them)
- Ability to identify secondary suppliers (MF only identified the primary suppliers)
- Handling of delivery constraints
- Ability for suppliers to create bundled bids and business volume discounts (in MF the buyer had to create these on behalf of the supplier)
- Step Volume Discounts (MF only supported basic volume discounts)
- Ability to run sensitivity analysis on supplier count (cost for 6 suppliers, 7 suppliers, 8 suppliers, etc. w/o running separate scenarios)
- The system will notify the user if a scenario has become outdated due to constraint changes
- MF Lacked Supplier-specified capacity constraints
- Ability to specify a count on something other than supplier and ship-from
- Ability to specify a limit on attributes other than price and quantity (e.g., lead time, total miles, etc.)
- Bid adjustments on ANY numeric value
Michael portrays our optimization capabilities as having a simpler model, relative to Mindflow. However, we support all of the elements he calls out as missing, and we go much further. Specifically relevant to the mis-statements are the following corrections:
- Ability to create an unlimited number of basic and advanced constraints (count, limit, allocations)
- Full ability to handle item substitutions and alternates
- Flexible supplier bundling, including ship-to considerations
- "Feedback information with alternative scenario suggestions" is not based on rounds; rather it is provided in close to real-time.
- A powerful optimization engine which goes far beyond simple usage of Cplex
- Tremendous in-house experience in developing large-scale optimization systems
Now if Michael mis-judged the Emptoris capabilities to this degree, could it not be that perhaps there is much more to our offerings then we’re being given credit?
Specific to the Advanced Sourcing Service, an element of the solution that was completely missed is the overall solution packaging, which goes way beyond a brilliant engine. We provide skill sets and infrastructure to help customers contend with mega-events; as well as readily available category specific expertise (transportation, packaging, etc.); and proven processes for handling this scale of event. At first blush a technologist may not value these at all, but the reality is that there is tremendous value here, particularly when we're making this entire package available to qualified consulting partners for their own delivery needs.
All of which, amount to an extremely powerful offering, and one that has been recognized as such. The premier academic optimization organization, INFORMS, has uniquely recognized Emptoris for our optimization achievements and real business impact for our customers. Every serious sourcing optimization player tried to win INFORMS' Edelman Award, and we were the only ones to receive the top honors.
In fact, public details about some of our foundational capabilities can be found in our Edelman paper - no need for guess-work.
In terms of the marketing of the Advanced Sourcing Service, it is our choice not to disclose the nitty-gritty of the specific engine enhancements that were made. In our judgment there is little benefit in detailing these on our website or press releases at this time. Our goal with the news was to highlight the complete solution package. But one shouldn't conclude from this marketing decision, that there were no optimization innovations -- or an even more outlandish suggestion, that our top notch optimization team, has been resting on their laurels for three years. That makes no business or competitive sense.
We like Michael, and several of our team members have worked with him in the past. The reason we stopped briefing Michael is because he was and is a technical and strategic consultant to at least one of our competitors. We perceived two down sides that we simply could not overcome 1) A direct transfer of key technical and business insights to competitors 2) The bias that inherently enters the coverage once someone is financially and emotionally committed to a competitor. This bias is not a good or a bad thing, it just 'is'. We are not angry or upset, but we recognize the situation for what it is, and therefore have decided not to do an in-depth briefing with Michael on the Advanced Sourcing Service.
Thank you,
Olga Raskina, PhD., Optimization Engineer
Ammiel Kamon, SVP Marketing Emptoris
Spend Matters would like to thank Dr. Olga Raskina and Ammiel Kamon for their post.
We agree with Jason, it is often wise to consult a doctor in an area where one is not an expert. However, if the 'Doc' renders an opinion without ever seeing the patient, one ought to question the prognosis, and a second opinion is likely required ...
Emptoris' overall offerings are second to none, and in this area we've received specific recognition from unbiased third parties (more on this below).
By Michael's own admission, he is not actually knowledgeable about Emptoris’ capabilities in optimization and advanced sourcing. And much of the post tries to ferret out information through cursory means. Failing to get substantive information, Michael concludes with an un-informed, doubt-inspiring negative opinion. Thus making his post nothing more than a long FUD piece.
The post includes some bold claims regarding the superiority of the Mindflow engine to Emptoris'. Since Mindflow had a very strong offering, and it was Michael's "baby", we can understand where he is coming from emotionally. But the reality is much different, particularly if one takes an informed view. Given that Emptoris acquired Mindflow and retained core engineers and product management talent, we are in a unique position to truly assess relative strengths of these two systems:
Here are just a few of the significant Emptoris advantages, in the area of optimization and event creation, over Mindflow:
- When there are conflicting constraints, the system will actually identify them (in MF the user had to manually look for them)
- Ability to identify secondary suppliers (MF only identified the primary suppliers)
- Handling of delivery constraints
- Ability for suppliers to create bundled bids and business volume discounts (in MF the buyer had to create these on behalf of the supplier)
- Step Volume Discounts (MF only supported basic volume discounts)
- Ability to run sensitivity analysis on supplier count (cost for 6 suppliers, 7 suppliers, 8 suppliers, etc. w/o running separate scenarios)
- The system will notify the user if a scenario has become outdated due to constraint changes
- MF Lacked Supplier-specified capacity constraints
- Ability to specify a count on something other than supplier and ship-from
- Ability to specify a limit on attributes other than price and quantity (e.g., lead time, total miles, etc.)
- Bid adjustments on ANY numeric value
Michael portrays our optimization capabilities as having a simpler model, relative to Mindflow. However, we support all of the elements he calls out as missing, and we go much further. Specifically relevant to the mis-statements are the following corrections:
- Ability to create an unlimited number of basic and advanced constraints (count, limit, allocations)
- Full ability to handle item substitutions and alternates
- Flexible supplier bundling, including ship-to considerations
- "Feedback information with alternative scenario suggestions" is not based on rounds; rather it is provided in close to real-time.
- A powerful optimization engine which goes far beyond simple usage of Cplex
- Tremendous in-house experience in developing large-scale optimization systems
Now if Michael mis-judged the Emptoris capabilities to this degree, could it not be that perhaps there is much more to our offerings then we’re being given credit?
Specific to the Advanced Sourcing Service, an element of the solution that was completely missed is the overall solution packaging, which goes way beyond a brilliant engine. We provide skill sets and infrastructure to help customers contend with mega-events; as well as readily available category specific expertise (transportation, packaging, etc.); and proven processes for handling this scale of event. At first blush a technologist may not value these at all, but the reality is that there is tremendous value here, particularly when we're making this entire package available to qualified consulting partners for their own delivery needs.
All of which, amount to an extremely powerful offering, and one that has been recognized as such. The premier academic optimization organization, INFORMS, has uniquely recognized Emptoris for our optimization achievements and real business impact for our customers. Every serious sourcing optimization player tried to win INFORMS' Edelman Award, and we were the only ones to receive the top honors.
In fact, public details about some of our foundational capabilities can be found in our Edelman paper - no need for guess-work.
In terms of the marketing of the Advanced Sourcing Service, it is our choice not to disclose the nitty-gritty of the specific engine enhancements that were made. In our judgment there is little benefit in detailing these on our website or press releases at this time. Our goal with the news was to highlight the complete solution package. But one shouldn't conclude from this marketing decision, that there were no optimization innovations -- or an even more outlandish suggestion, that our top notch optimization team, has been resting on their laurels for three years. That makes no business or competitive sense.
We like Michael, and several of our team members have worked with him in the past. The reason we stopped briefing Michael is because he was and is a technical and strategic consultant to at least one of our competitors. We perceived two down sides that we simply could not overcome 1) A direct transfer of key technical and business insights to competitors 2) The bias that inherently enters the coverage once someone is financially and emotionally committed to a competitor. This bias is not a good or a bad thing, it just 'is'. We are not angry or upset, but we recognize the situation for what it is, and therefore have decided not to do an in-depth briefing with Michael on the Advanced Sourcing Service.
Thank you,
Olga Raskina, PhD., Optimization Engineer
Ammiel Kamon, SVP Marketing Emptoris
Spend Matters would like to thank Dr. Olga Raskina and Ammiel Kamon for their post.
(1) Read the post again.
(a) I said MindFlow was in many ways far superior, that MindFlow had a better sourcing model, and that it contained many elements that should have been incorporated. In other words, it had, to the best of my knowledge at the time JB asked me to write the post, better features. It DID NOT have a better engine. I even acknowledged this during the great debate last summer. As you well know, there's a difference between what the model supports and what the underlying engine can solve. The Emptoris engine, being based on a current version of ILog CPlex, with custom in-house extensions, is far superior.
(b) I did not state there was a limit as to the number of constraint instances you could handle - I simply quoted an article indicative of a representative large model the engine has solved.
(c) There is a difference between stating I did not see much progress in the product with respect to the information available and stating that a development team has been resting on its laurels. The reality in a software company is that (i) a team could be working its butt off, innovating like crazy, but have its work delayed or cut from a release, or three, because product management feels other enhancements are more important, schedules are tight, and there is not enough QA to cover everything and (ii) considering the skills required to build an optimization solution, it's often the case that these individuals are among the company's best developers, and they could have been reassigned to the complex analytic algorithms of the spend analysis solution. My observation was on the product, not the team!
(2) Your marketing person could be a little more honest in the fourth paragraph ... although, in my opinion, you did retain the best product management talent a company could ever hope to acquire, by the time the acquisition completed, MindFlow management had let go of almost all of its engineers. That being said, you did acquire all the IP, code, design documents, research, notes, etc. ... and your team is definitely competent enough to make use of any innovations Emptoris did not have at the time of acquisition.
(3) You are correct in that:
( a) MF did not identify conflicting constraints ... glad to hear your product does that now - this is something that should be advertised, as the only other solution I know that does this (or at least does it well) is CombineNet
( b) MindFlow did not do sensitivity analysis automatically (but this really isn't too hard to automate)
(c) MindFlow did not support counts (it could have, the base functionality was there, but the architect chose not to build on it)
(4) You are mostly correct in that:
( a) MindFlow did not identify secondary suppliers;
it wasn't automatic, but you could create a "what-if" scenario off of the original, exclude primary suppliers, and get secondary
(5) You are not correct with respect to
(a) MindFlow did not support Step Volume Discounts;
the last version of the model did, but I seem to recall it was not obvious through the UI how it did
(b) MindFlow lacked supplier-specified capacity constraints:
it had them, but, as with the bundles, the buyer had to create them
(c) MindFlow did not have an ability to specify a limit on attributes other than price and quantity; it did by way of the qualitative constraints, but it was not as straightforward as it could be
(6) I cannot comment on
(a) "handling of delivery constraints", as I do not know what you mean by that
(b) bid adjustments on any numeric value; this is easy enough to do, but it requires front end as well as back-end support, and I do not know what was ever done on the front end in that regards in the MindFlow solution; I'm guessing not
(7) If you now have ( a) alternate support, ( b) ship-to support, (c) automatic conflict constraint identification, and (d) flexible attribute support then
(i) your solution is more powerful than any analysis of easily, and not-so-easily, locatable public information will lead one to believe
(ii) you should be advertising this information, since it clearly sets the solution apart from the vast majority of other optimization(-based) solutions out there
(8) As per my previous comment, I was not evaluating the overall Advanced Sourcing Service. I was focused only on what JB asked me to focus on, the optimization component. I have also analyzed the entire offering, with respect to everything I know, and I will post that shortly on my blog. I think you'll like that analysis significantly more than this one. (Let's just say it's considerably more positive for now.)
(9) As for your final paragraph, I fully understand why you should not want to brief me, and more important than the points you list, is the missing point (3) as an optimization expert, if you simply provided me with an idea I did not have before (you did not in this post, but I have to admit a few things you mentioned I only started thinking about seriously within the last year or two), then there is a good chance I could figure out how to do it on my own.
With respect to (1) and (2), that is unfortunate, since it also implies you can no longer brief JB either, as he also consults with your competition from time to time, and his blog is the only blog in the space that is read more regularly than some of the big publications!
(10) I'd like to see more of these posts in the future! I know the Emptoris philosophy is more along the lines of "share as little as humanly possible", but I'm of the opinion that if you have something good, you shouldn't be afraid to show it! It certainly helps analysts and buyers figure out where you stand from a competitive perspective, and reduces the FUD factor, and, I assume, would also help sales, since people would see where the application is better and better suited to their needs.
Also, there is a big difference between "what an application does" and "how the code does it" - and it's been my experience that if something is innovative, even if someone can infer on their own how it is done, by the time they actually figure out how to duplicate and implement it, if you really are good, you're at least one, if not two, generations ahead.
http://blog.sourcinginnovation.com/2007/04/30/an-o...
You can find my disclosure here (which you can get to from the right navigation pane on Spend Matters):
http://www.spendmatters.com/Disclosures.cfm
http://www.sourcinginnovation.com/blog/disclosure....
Ammiel:
Your Edelman paper - "Reinventing the supplier negotiation process at Motorola (Internet enabled supplier negotiations software platform)" - does not help a user as much as this post does. (As this post outlines some capabilities that the MindFlow model did not have.) It only proves that as of 2004, although you had a better engine than MindFlow, you did not necessarily have a better model.
Emptoris MindFlow
-------- --------
Key dimensions: Key dimensions:
Suppliers, Items Suppliers, Products, Ship Tos
Item Substitutions Native Model Dimension
Tiered Bids Tiered Bids
Discounts/Rebates Discounts/Rebates
Penalties (Missed Terms) Usage Costs
Bundles Bundles
Min/Max Suppliers Supplier Risk Mitigation
Preferred Vendor/ General Purpose Group-Based
Minority Award/ Supplier Allocation by Volume
OffSet Proximity Awards/
Min/Max Award
Budgetary Limit Award Group-Based Supplier Limit
by Cost
Non-price Factors / General Purpose Fixed Costs
Switching Costs
Supplier Qualification General Purpose Exclusions
Split Award Generic Meta-Allocation Constraints
Terms Support General Purpose Qualitative Constraints
For those readers who want to read the details for themselves, and if you are interested in an optimization solution, I would encourage you to do so, here are some links you can use, as the link Emptoris provides simply takes you to the INFORMS presentation abstract. The first link is free (after you sign up for an account if you don't have one), but since it is a plain text link, it is missing the figures and a few of the more sophisticated equations. The second, Goliath, link is free if you are a member ($19.95/month), or $4.95 otherwise. (It looks like it may be text-based also, so I'd be wary of buying the article from this source, but I would check this link first if you are Goliath member.) The last link is Emerald, and I believe it will provide a true copy of the original article, but it is the most expensive, at a GBP of 14.50.
http://www.accessmylibrary.com/coms2/summary_0286-...
http://goliath.ecnext.com/coms2/summary_0199-50775...
http://www.emeraldinsight.com/Insight/viewContentI...
Olga:
Although you cannot comment, with respect to the following paragraph, I'd be very interested in knowing how you overcame the over-aggressiveness of the CPlex pruning algorithms to improve accuracy and increase the chance you truly are finding an optimal solution without sacrificing performance. Was it simply extensive trial and error and incremental parameter tweaking, or did you uncover a hidden secret of CPlex?
"Some of the rules had straightforwrd linear formulations, while others, such as complex discount structures, were nonlinear and also required very large coefficients that in most cases introduced numerical instability. We had to reformulate them to make them tractable and still accurate. The resulting MIP formulation was very complex and in many cases, especially for large auctions, was not readily solvable by commercial optimizers. We then introduced heuristics that reduced some of the problem coefficients, guided by the branch-and-cut strategy using knowledge of the specific problem structure, took advantage of the variable dependency, and iterated the solution to improve accuracy without increasing complexity. In addition, by using the appropriate settings of numerous CPLEX integer solve parameters, such as diving and probing, we further improved performance. Altogether these actions produced robust and scalable solutions, allowing the software to solve problems with hundreds of items and thousands of bids in a few minutes."
My experience with CPlex is that it's aggressive branch-and-bound pruning algorithms can be fooled even by small models. And it only gets worse in version 10. I have evaluated/constructed a number of small models that solve in less than a 10th of a second using default algorithms in CPlex (on a high end machine), but whose accuracy is off by close to 1%. In comparison, other solvers solve these same models in less than a second (although three to seven times slower) and reach true optimality. Although users want fast solutions, depending on model size, and scenario value, I believe most will wait a few extra seconds or minutes for even half a percentage point, since this translates to 50,000 on a 10M scenario. In other words, I'm curious as to whether or not you have made any significant advancements with regards to controlling trade-off in solution-time vs. optimality.
You're of the school "all publicity is good publicity" then?
What's next a PurchasePro v. B2emarkets deathmatch? Well, maybe not since Andy Bartels interviewed both of those companies for his 2007 (not 2000) report
How about Moai v. MaterialNet in a battle of eSourcing "M" giants?
Anyone?
Regarding in-depth briefings to "affiliated" bloggers -- IMHO it is also applicable to analysts and press -- Each briefing is a unique instance, and we take into consideration the topic as well as the nature of work the individual is doing with competitors. I Note that in my original post the briefing exclusion was narrow, and specific to this very topic - not a broad brush statement towards you. As a CTO for hire there is a big difference between the type of work you do and what Jason and Andrew Bartels do - especially in the area of optimization. Kudos for the above board disclosure policy, as noted, we did not feel that we were deceived, etc.
My statement on the MF team joining Emptoris made no mention of team size, etc. It was simply to state that we are qualified to judge the relative strengths of the two offerings (given PM and Eng talent), you may have read more into this than was specifically stated.
Regarding our assessment of Mindflow capabilities, this was done from the End-User perspective, as a whole-product capabilities assessment. In the case of 5(a), 5(c), and 6(b) the MF Front-end simply let down the back-end. On 5(b), we specifically meant the ability for suppliers to enter the constraints themselves - this area of our solution is very robust, and has evolved into a feature set that we've called Creative Negotiations in the past, and which has now matured to Supplier Decision Support.
http://www.emptoris.com/solutions/sourcing_offerin...
Speaking of whole-product, that is very much the point of the Advanced Sourcing Service. It is all about running mega-events better and with much less risk (Think of $50M+ riding on a single event). It is not just an engine that we provide, we help the customer by providing e-Sourcing category experts specific to help these mega-event *optimization* problems (Transportation - Ocean, Truckload, LTL..., Packaging, Print, Fleet Acquisition, etc.). When we say infrastructure, we talk about a complete HW/SW stack along with instrumentation and surrounding services to ensure that the event will not go down, etc.
The challenge with these categories is that when companies put out $100M+ on a single event, things become very risky in several business dimensions (e.g. if the event is mis-handled logistically then supplier relationships can be burnt for years, if the event runs 3 weeks longer then expected - that's $750K in lost opportunity cost, if the event misses a key deadline then a price lock-in may be permanently missed given rising fuel rates, etc.) The benefit of the Advanced Sourcing Service is that we and our partners invest and in a sense under-write some of the logistical risks the customer faces.
A benefit of this complete solution approach is that it helps accelerate advanced optimization's adoption within the sourcing domain. At the end of the day it makes the core technology even more approachable to a greater number of organizations. And that is something good that I believe we can all agree upon.
Good discussion.
Thanks,
- Ammiel
Matters not! I was simply making the points that (a) it did not prove that Emptoris' optimization solution at the time was conclusively better than MindFlow's and (b) it was outdated, and did not contain any details on some of the features this post was indicating they now have. Point (b) is important - if these features are mature and robust (like the conflict detection), than they have a few features that, to the best of my knowledge, only a small number of competitors have and this information could be used to promote their solution and set it apart. Considering that the information I was able to find indicated that it was just another run-of-the-mill basic optimization solution, and not the solid intermediate level solution this posts suggests (I'd still like a demonstration to be sure, but I guess I'm just greedy), it should be easy to see that information of this nature is important and useful!
Ammiel:
Thanks for the additional information. I hope you don't mind, but I repeated it on Sourcing Innovation as the third-last and second-last paragraphs shed some additional light on your Advanced Sourcing Service offering.
When you state, "the challenge with these categories is that when companies put out $100M+ on a single event, things become very risky in several business dimensions", it really highlights the importance of the proper tweaking of the underlying CPlex engine, that is described in the Edelman paper, to be sure you get the best answer. I'll always be curious if this was done through the usual brute-force route, or if you discovered some rules or methodologies that generally work well.
Everyone:
I'd like to remind you that I'm more than just a CTO-for-hire! If that's what you want, no problem. But I can also be a PM-for-hire, Researcher-for-hire, Change_Consultant-for-hire, or even Trainer-for-hire (but it's been a while). As long as we're talking an e-Sourcing, e-Procurement, related e-Supply Chain discipline, or underlying e-Commerce business / business model, then I am able (and possibly available in the near future) to consult on the process as well as the product aspects. But, as Ammiel notes, as a consultant who comes from the technology side and not the business side, I do offer unique strengths on the technology side and a recent long-term engagement (in pure e-Commerce) was essentially a CTO-for-hire role.
Since you're blogging, commenting on posts, etc...
Any comment on this CombineNotes posting?
http://www.combinenotes.com/default,date,2007-04-24.aspx
Seems fair game, eh?