HICX Solutions – Diving Into the Product (Part 2)

In part one of our interview with Costas Xyloyiannis and Hassan Ismail, founders of HICX Solutions, we looked at the history of the software-as-a-service firm. HICX provides a product to help organisations manage their vendor master data – as well as offering capability in linked areas, such as contract management, as we will see later. Today, we will examine the core purpose of the platform, and why increasing numbers of large and not so large firms are using it to manage supplier information and master data.

What is supplier master data management?

Supplier master data is generally considered to include basic factual information about the supplier, but can also include aspects such as regulatory and compliance-related data (GDPR for instance), and performance-related data linked to the supplier’s contracts and business with the buying organisation.

“Really, the concept of supplier master data is central to our thinking” says Costas. But what exactly does “supplier (or “vendor”) master data management really mean? Well, he is scathing about the misuse of terminology. “Some P2P or ERP systems claim to have supplier information management, or even master data capability, when really what they offer is not much more than a survey tool”.

But to be fair to those providers, our take is that many practitioners also struggle somewhat to really understand that. “Master data management is about capturing and recording supplier data, activating or de-activating suppliers, updating and validating data – with a common approach across every different part of the organisation however large and geographically spread it is. It is also aligned to the data governance process which leads to the single “golden record” relating to each supplier”.

Right, that’s clearer!  Of course, achieving that golden record and golden outcome is much harder than merely articulating it, and once it is laid out in that way, it becomes clear why doing this properly is not a trivial matter.

P2P records are not “master data”

So, in many cases, supplier data is created in a purchase-to-pay (P2P) system when a transaction occurs. But, as Costas explains, “at that point, when you create a new supplier number, if you have a different supplier number for that supplier in any other P2P or ERP system anywhere in your organisation, you now have different records”.  Your “golden record” is immediately tarnished.

Or it may be that local or category-specific systems, not necessarily the full P2P system, will have more supplier records themselves. Therefore the HICX offering is that “we help the data conform across all different systems”.

It is interesting therefore to note that HICX is an enabling product, not a competitor to most other procurement platforms and systems (although sometimes other firms aren’t very willing to own up to their weaknesses which make HICX so valuable!)  Clients hold the master data in HICX and then draw on it for whatever ERP, P2P or other systems in use that might require the supplier data – and this model is gaining increased interest from expert analysts and commentators in the procurement technology world.

But hang on - isn’t the market moving towards more procurement suites and platforms with broader capabilities? Won’t everyone just have one system in the future?

“I don’t think the future is in one system to cover every aspect of procurement, and every interaction with every supplier, even with the growth of suites. So SAP has kept Fieldglass, Ariba and Concur relatively separate, for instance”, Costas points out. And while many talk about integration challenges, they focus on the systems, while “the real integration challenge across different systems and platforms is data”.

Another common supplier information challenge is around change. HICX chose to go down a SaaS (software-as-a-service) route early on, to ensure flexibility and resilience. “The customer always wants to change something – so we have made sure we can enable that easily”. So, if a business needs to add another field to the supplier record (perhaps a new regulatory requirement), or introduce a new way of segmenting suppliers, that can be done quickly and cheaply – unlike in some other systems.

What could possibly go wrong?

But why does all this matter? What sort of practical problems arise when supplier master data doesn’t exist or is inaccurate, out of date or incomplete? We come back to standards and governance. For instance, what exactly is “spend”? Is it measured from the purchase order, or from the invoice?

Then we have issues around identification of suppliers and supplier linkages. One obvious example is around spend analysis, and obtaining accurate figures on spend by supplier. Some people think they will sort out their supplier hierarchy issues (who owns whom, for instance) by “sending the data to D&B”, Costas says. But then you can’t change the data in our ERP system just like that.  “If D&B gives you a central company address, you can’t just change your invoice payment address, or shipment details, based on that”.

We’ve also seen a growth in invoice mis-direction fraud recently, which comes down to poor master data governance - defining the rules that lay out how data will be managed, changed, reported. That is another key element in terms of overall effective master data management, and is a real hot topic for Costas. “Data governance is missing from P2P, which is all about workflow”.

So just because data is collected during the process doesn’t mean that the P2P system is “doing master data management”. For instance, it often lacks validation – “we often see a P2P system sending data to the ERP system, which rejects it – and it takes ages to work out why”. It is vital therefore to differentiate between true master data and transactional data. And this is a great one-liner from Costas – “ERP needs master data, but it doesn’t manage it”.

Indeed, Costas says that most clients approach HICX after having problems with P2P and / or ERP systems. They “believed the sales people”, but once they get into the details and the challenges around hierarchies, data definitions and standards, they realise they need more.

And in part 3 we’ll explore more of the HICX offering.

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