HICX Solutions – Moving into the Future (Part 3)

Continuing our interview with Costas Xyloyiannis and Hassan Ismail, founders of HICX solutions (part 1 is here and part 2 here), we look at further issues including implementation of the HICX offering, and the future for the supplier information / master data management firm – and indeed, the future for procurement in some senses too.

Implementation – it’s not the system that matters …

So how long does it take clients to implement HICX (and effective master data management)? The key thing to understand, explains Costas, is that it is not the “system” issues that take the time. “We work with the client to agree data definitions, define standards and bring data into conformance. Master data management has two aspects – firstly, data consolidation, then ongoing governance and management”.

Data is usually loaded into the HICX system from (often multiple) ERP systems – load the first, then run match and merge process from subsequent systems. “That’s not as easy as it sounds.” For a start, changing data is sensitive and standards need to be agreed by the client organisation.  Getting internal agreement can have its challenges – so for instance, what will the process be for changing supplier master data? Who can do that? How many approvals are needed?

“In one client, there were 35 different compliance and risk requirements in the master data, and it took 4 months to agree on these and exactly which measures or metrics would be used”.

HICX – also relevant to risk and contract management

While HICX positions itself primarily around supplier information management, other linked issues are coming to the fore. Clients and potential clients increasingly see the importance of master data as a foundation for effective supplier and supply chain risk management, for example. We asked Costas why that seemed to be going up the agenda?

“Outsourcing over the years has led to more and more on buying from low-cost sources. CPOs and others thought initially that this meant they didn’t have to worry, but now they realise they have to take responsibility. And in some cases, there are very complex supply chain issues - think about conflict minerals. Then in banking we have seen a big growth in regulation – it all plays into the risk focus”.

A key point is that you can’t use the 80:20 approach when it comes to risk (as we described in an article here). A low-spend, apparently “transactional” supplier, as defined under typical procurement segmentation, might actually cause major risk issues in a number of different ways. So you need a view across the entire supply base.

In terms of contract management, “I see that as another aspect of supplier information management for the most part”, says Costas. Some issues have to be managed at a contract level, and some at a supplier level.  HICX is not providing a contract authoring capability, but clients are using the “contract workflow” capability within the platform, so using HICX as a contract repository and for alerts (which can also be provided via the platform).

The future

So looking ahead, where might relevant emerging technologies – like AI, machine learning and blockchain – play into the firm’s development, and the development of improved data management and information provision?

“Everything starts with and depends on good data. And the irony is that in procurement, we’ve been pushing away all that transactional data for the past decade or two – through offshoring and outsourcing services – but now we’re realising the future depends on that data. Look at how Google and Amazon use data to drive their businesses. So, to enable digital, AI and so on, you must have accuracy, for example on the identification of suppliers”.

And coming back to ERP, “there is only ever a subset of suppliers and supplier information in the ERP system. But people often don’t appreciate this until they’ve been through some pain”. So, for digital transformation, we need to focus on data, and “attach transactional data to the master data”.

In terms of where HICX is going, we asked about the possibility of a more “networked” approach – at the moment, the firm works on a SaaS, single-tenant basis. “That is because customers have different approaches, like the flexibility, and also see their information as strategic and perhaps sensitive, so each tends to have somewhat different requirements from us”. (An example of that sensitivity might be around anti-corruption actions, so caution is understandable.)

But longer term, “there may be some network solution, but we’ve seen other firms trying to do this without really understanding the issues. We will proceed carefully”.

In terms of AI generally, he thinks that “there are promising procurement areas primed for AI – support for the buying process, invoice and payment enquiries and so on. I’m not so sure about the concept of full “lights out” procurement though – anything is achievable, but the barriers are data and standardisation.”

Eventually, there may be technology to link buyers’ needs with supplier availability in an automated manner. But again, there are barriers. “The most advanced automation has happened in the financial markets – that is because money has no specification, and there are clear standards” says Costas.  Standardisation in more general procurement areas is some way off that position.

But “procurement would benefit by doing more with standards, definitions and so on – even without thinking about the AI possibilities”. And indeed, as we’ve said before, AI could be disappointing and dangerous if it doesn’t have the right data to train its models. Finally, blockchain has huge potential, Costas says, but again, “people are working in silos”.

… and finally

Just to round off our discussion, we asked about the ethos of the firm. “We are a young team, we always wanted to create ‘software for future leaders’, but we are an engineering rather than sales-led business fundamentally. We have been profitable since day one and haven’t needed big external funding rounds. We’re old fashioned – we think a business should make some profit and you do that by satisfying customers, by doing it right”.

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