Comments …

Here are some comments from Lisa Reisman and Michael Lamoureux (until our comments section is up with our new upgrade, drop me a line (jbusch@spendmatters.com), and I'll post them). - Jason

Forbes/IBM Article (Lisa Reisman) –

Yeah great story on air shipping light weight small components from China. Start trying to do that for die castings and steel stampings and I bet the math won’t work out in the buyer’s favor!

Rethinking M&A Spend Management (Lisa Reisman) –

Great post. What is fascinating from our perspective is the number of middle market private equity firms that have formed partnerships or are bringing in similar sourcing talent to quickly help improve their portfolio companies. This isn’t just a KKR-type opportunity!

On Demand: The Next Generation (Michael Lamoureux)

Since I happen to know that David Bush is on vacation for the next week and a half, I'll jump in and provide my viewpoint since I expect Jason is expecting a flurry of rapid (or should I say rabid?) feedback. As for my background, I have over 5 years of experience building capability-leading eSourcing suites and 10 years building eCommerce solutions, backed up by a PhD and experience at visionaries such as MindFlow that brought one of the first optimization solutions to the eSourcing marketplace (, even before CombineNet in terms of its backroom what-if sourcing analysis capability, although CombineNet was first from the logistics modeling perspective).

Revolution is for the brave, the bold, and the insane! Although it sounds great, especially coming from a brilliant and charismatic speaker, just like the best southern backwoods-tent preacher can work her congregation into a frenzy, the reality is that Russian Roulette with a six shot pistol with only a single chamber empty is a much safer bet for any corporate executive considering the purchase of a new IT system.

The reality is that even when we want revolution, we're never ready for it. Most enterprises have ERP systems as antiquated as the organizational model on which they run. Simple spend visibility across the enterprise and all categories is still next to impossible for all but the market leaders. Most companies don't need revolutionary solutions or processes, they need solutions that will allow them to implement basic sourcing processes and best practices, and do so without casting even the slightest breeze on their current house-of-cards infrastructure.

On-demand eSourcing tools are precisely what these companies need. Furthermore, these tools, which can already offer many of the “revolutionary” capabilities in an evolutionary fashion, can be deployed over the web and interoperate with existing systems though well-defined touch points using controlled import/export, which makes IT happy, since they don't have to worry about the system crashing down underneath them, finance happy, since they still maintain the same control over their data, and procurement very happy, since they can get the tools they need to operate at the level they understand.

Which brings me to my next point, your average senior sourcing professional has been out of school for at least ten, if not twenty, years in a job where they are at least as overworked as everyone else in the organization (if not more so!) and where they have spent much of their career in an economic cycle where education and training budgets and opportunities have dwindled from minimal to next to nothing. Thus, their skill levels, despite their best efforts to learn and keep up on their own time, are not that far above the market average corporate skill level and they are not ready for anything too far above the level they are at now, i.e. they are barely ready for an "evolution", yet alone a "revolution" that will pull the rug out from beneath their feet.

Furthermore, those companies that build solutions too far ahead of the curve, unless they have the deep pockets of Microsoft, ultimately fail - every time. I know. I've worked for at least three companies that had solutions far superior to everyone else on the market in one or more respects. They all ultimately failed since no one was ready for, or in most cases, even ready to understand, just what the solution could do. (Now it is true that these companies do pave the way for a future generation, but who wants to die fighting?)

In addition, those companies that try to do too much ultimately spread themselves too thin and instead of being able to offer you a handful of really good solutions, they end up offering you your pick of the garbage trough. Let's take databases as an example. Before Oracle and SQL Server, the current market leaders, back in the early 90's there was this database called Ingres. At the time, it beat the pants off of all its competitors in performance and capability. Then it was bought by the software clearing house called Computer Associates. Although they were one of the few companies in the 90's that could offer you an integrated IT solution for every IT related need you had, by the end of the 90's, not a single solution they offered was anywhere near competitive on its own.

I fully agree that "external content and insight" should be a fundamental part of a value proposition, but there's no reason it has to be part of your core e-Sourcing platform. As long as the platform allows for integration of external knowledge sources, as many platforms are now doing as part of the "evolutionary" model of development, you can still take advantage of the knowledge and best practices it dictates.

As for "leveraging community and shared instances for the benefit of all participants", this is a very easy "evolutionary" step for many of today's on-demand platforms. However, until the organizational users of these platforms mature internally to the point that they are ready to use these features, their incorporation is more likely to scare off customers whose legal departments will be fretting over the fact they (will believe they) currently have no way to protect their IP in such arrangements.

Finally, there's nothing to prevent current on-demand platforms from "transforming internal spend management service delivery models" and allowing a "castings category manager from a non-competitive automotive company to work with her counterpart from an industrial manufacturer". Company and user management in most of today's tools is very fine-grained and powerful. A company can grant a 3rd party limited access on a project or category basis or the two companies can join together in a virtual instance of the platform for shared projects. Again, this is just another "evolutionary" step when the time is right.

In other words, evolution will get you there, and unlike revolution, it will cause a lot less turmoil for all parties involved. And it's a proven model -- why abandon it now when it's just starting to get really, really good?

- Michael Lamoureux (ToP KaTS Consulting) michaelglamoureux@topkats.com

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